    [Senate Hearing 107-769]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 107-769

    DEPARTMENTS OF COMMERCE, JUSTICE, AND STATE, THE JUDICIARY, AND RELATED
                  AGENCIES APPROPRIATIONS FOR FISCAL YEAR 2003
    =======================================================================

                                    HEARINGS

                                    before a

                              SUBCOMMITTEE OF THE

                COMMITTEE ON APPROPRIATIONS UNITED STATES SENATE

                          ONE HUNDRED SEVENTH CONGRESS

                                 SECOND SESSION

                                       on

                                    S. 2778

    AN ACT MAKING APPROPRIATIONS FOR THE DEPARTMENTS OF COMMERCE, JUSTICE,
      AND STATE, THE JUDICIARY, AND RELATED AGENCIES FOR THE FISCAL YEAR
               ENDING SEPTEMBER 30, 2003, AND FOR OTHER PURPOSES

                                   __________

                             Part 1 (Pages 1-811)

                            Department of Commerce
                             Department of Justice
                              Department of State
                       Federal Communications Commission
                            Federal Trade Commission
                           Nondepartmental witnesses
                       Securities and Exchange Commission
                                 The judiciary
                                       deg.

                                   __________

             Printed for the use of the Committee on Appropriations

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

                                     ______

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                          COMMITTEE ON APPROPRIATIONS

                    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
    TIM JOHNSON, South Dakota            LARRY CRAIG, Idaho
    MARY L. LANDRIEU, Louisiana          KAY BAILEY HUTCHISON, Texas
    JACK REED, Rhode Island              MIKE DeWINE, Ohio
                      Terrence E. Sauvain, Staff Director
                     Charles Kieffer, Deputy Staff Director
                   Steven J. Cortese, Minority Staff Director
                Lisa Sutherland, Minority Deputy Staff Director
                                     ------

       Subcommittee on Commerce, Justice, and State, the Judiciary, and
                                Related Agencies

                       ERNEST F. HOLLINGS, South Carolina
    DANIEL K. INOUYE, Hawaii             JUDD GREGG, New Hampshire
    BARBARA A. MIKULSKI, Maryland        TED STEVENS, Alaska
    PATRICK J. LEAHY, Vermont            PETE V. DOMENICI, New Mexico
    HERB KOHL, Wisconsin                 MITCH McCONNELL, Kentucky
    PATTY MURRAY, Washington             KAY BAILEY HUTCHISON, Texas
    JACK REED, Rhode Island              BEN NIGHTHORSE CAMPBELL, Colorado
    ROBERT C. BYRD, West Virginia
      (ex officio)
                               Professional Staff
                                   Lila Helms
                               Jill Shapiro Long
                                  Luke Nachbar
                                   Dereck Orr
                             Jim Morhard (Minority)
                            Kevin Linskey (Minority)
                         Katherine Hennessey (Minority)

                             Administrative Support

                                 Nancy Olkewicz

                                C O N T E N T S

                                  ----------

                           Tuesday, February 26, 2002

                                                                       Page
    Department of Justice: Office of the Attorney General............     1

                             Tuesday, March 5, 2002

    The judiciary:
        Supreme Court of the United States...........................   131
        Federal judiciary............................................   143

                            Thursday, March 7, 2002

    Federal Communications Commission................................   183
    Securities and Exchange Commission...............................   225

                            Tuesday, March 12, 2002

    Department of State: Office of the Secretary.....................   237

                           Wednesday, March 13, 2002

    Department of Commerce: Office of the Secretary..................   307

                            Tuesday, March 19, 2002

    Department of Commerce: National Oceanic and Atmospheric
      Administra-
      tion...........................................................   365
    Federal Trade Commission.........................................   405

                           Nondepartmental Witnesses

    Department of Commerce...........................................   429
    Department of Justice............................................   455
    Department of State..............................................   467
    Related agencies.................................................   472

    DEPARTMENTS OF COMMERCE, JUSTICE, AND STATE, THE JUDICIARY, AND RELATED
                  AGENCIES APPROPRIATIONS FOR FISCAL YEAR 2003

                                  ----------

                           TUESDAY, FEBRUARY 26, 2002

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 10:01 a.m., in room SD-138, Dirksen
    Senate Office Building, Hon. Ernest F. Hollings (chairman)
    presiding.
        Present: Senators Hollings, Mikulski, Leahy, Kohl, Murray,
    Reed, Gregg, and Domenici.

                             DEPARTMENT OF JUSTICE

                         Office of the Attorney General

    STATEMENT OF JOHN ASHCROFT, ATTORNEY GENERAL

                 opening remarks of senator ernest f. hollings

        Senator Hollings. General Ashcroft, they have a vote on and
    maybe it would be better for your presentation if we run to get
    that vote and come back quickly.
        Attorney General Ashcroft. Sure.
        Senator Hollings. Let me then call the committee to order.
    There are two votes. We will at least let you present your
    statement here. It will be included in its entirety. We welcome
    you to the committee and you can highlight your statement as
    you wish or deliver it in full. I think that would be the
    better way, since we have two votes.

                       attorney general opening statement

        Attorney General Ashcroft. Mr. Chairman and members of the
    subcommittee, I am honored again to appear before this
    subcommittee to present the President's budget request for the
    Department of Justice.
        First, an overriding priority of this Department of Justice
    and of this budget is to protect America against acts of
    terrorism and to bring terrorists to justice. Since my last
    appearance before you, America and the world have been awakened
    to a new threat from an old evil, terrorism.
        I appear before you today acknowledging that September 11
    alerted us to a danger that a number of you on this
    subcommittee have labored long and hard to mitigate and to
    prevent. To the degree that we find ourselves in a position to
    respond effectively to the challenges posed by terrorism, it is
    because of your foresight.
        I appreciate the leadership of the members of this
    subcommittee in providing to the Department of Justice the
    necessary resources to meet the terrorist threat and to improve
    the Nation's border security. Your direction to develop an
    interagency counterterrorism plan, conduct preparedness
    exercises, to train and equip the Nation's first responders,
    maintain a counterterrorism fund for emergency circumstances,
    all of these things have made this a safer Nation.
        The fiscal year 2003 budget request that I present to you
    today builds upon your support and seeks to enhance further the
    Department's ability to prevent and combat terrorism, and even
    as the men and women of the Department of Justice go about the
    urgent task of protecting America from terrorism, we do so
    within a framework of justice that upholds other goals, as
    well. Indeed, our dedication to identifying, disrupting, and
    dismantling terrorist networks will help ensure the fair and
    vigorous enforcement of the law in other areas. We remain
    committed to reducing the demand and supply of illegal guns,
    enforcing the gun laws, and protecting civil rights. We
    recognize, however, the need to prioritize our commitments and
    to husband our resources. Today, more than ever, lives depend
    on the careful understanding of our responsibilities and the
    exemplary performance of our duties.
        For fiscal year 2003, the President's budget requests $30.2
    billion for the Department of Justice, $23.1 billion in
    discretionary funding and $7.1 billion for the Department's
    mandatory and fee-funded accounts. Federal law enforcement
    programs increase by 13 percent over funding enacted in the
    fiscal year 2002 Department of Justice Appropriations Act.

                        counterterrorism budget request

        The Department's fiscal year 2003 budget seeks $2 billion
    for program improvements and for ongoing activities funded in
    the fiscal year 2002 counterterrorism supplemental. Resources
    are also requested for improving immigration enforcement and
    services, enhancing Federal detention and incarceration
    capacity, reducing the availability of illegal drugs, and
    supporting proven programs aimed at reducing drug use,
    providing services for the Nation's crime victims, protecting
    civil rights, ending trafficking in human beings, providing
    streamlined resources to support State and local law
    enforcement, and defending the interests of the United States
    in legal matters.
        To help secure our Nation's borders, we are proposing
    program improvements totaling $856 million, including $59.1
    million from fee-funding for the Immigration and Naturalization
    Service. Of this amount, $734 million is dedicated to improving
    border security. We are requesting $362 million to begin a
    multi-year effort to provide a comprehensive land, sea, and air
    entry-exit system for the United States and $372 million to
    hire 570 new Border Patrol agents and additional immigration
    inspectors to improve air, sea, and land ports-of-entry
    inspections.
        As a result of the attacks of September 11, the FBI, with
    the cooperation of other Federal, State, local, and
    international law enforcement, is conducting the largest
    criminal investigation in history. In the 2002 counterterrorism
    supplemental, this subcommittee led Congress in providing much-
    needed assistance to the FBI in responding to and investigating
    the terrorist attacks, and we are deeply grateful for your
    leadership in this respect. Our 2003 budget builds on this
    assistance with a request of $411.6 million, including funding
    for 263 new FBI special agents; $223 million for increased
    intelligence, surveillance, and response capabilities; $109
    million for information technology projects; and $78 million
    for enhanced personnel and information security.
        The establishment of the Joint Terrorism Task Force program
    has enhanced the FBI's ability to promote coordinated terrorism
    investigations among FBI field offices and their respective
    counterparts in Federal, State, and local law enforcement
    agencies. Our budget seeks $15.7 million to support a total of
    56 Joint Terrorism Task Forces throughout the country. That is
    one in each FBI field office.
        As accused terrorists are brought to justice in the Federal
    court system, there is an increased need for enhanced security
    measures. To support the heightened security required by the
    United States Marshals Service at the Federal courthouses, our
    budget seeks $34.7 million to close security gaps at courthouse
    facilities, with the greatest physical security deficiencies
    being addressed. Also, it seeks the resource to purchase new
    security equipment for new courthouses and for those undergoing
    significant renovation. It seeks those resources to provide
    additional security personnel for terrorist-related court
    proceedings and to provide security staffing to keep pace with
    the opening of new courthouses and the creation of new
    judgeships.
        Another critical element in our battle against the
    terrorist threat is working to develop and enhance
    interoperable databases and telecommunications systems for the
    Department's law enforcement activities. Our budget seeks $60
    million to continue narrowband investment in radio
    infrastructure for key areas such as New York and along the
    northern and southwestern borders.

                              drugs budget request

        As I mentioned earlier, our efforts to combat terrorism
    enhance enforcement of the law across the board. The heightened
    vigilance of law enforcement and the increased awareness and
    sense of responsibility of citizens spills over into more
    effective enforcement of the law in all areas and we are
    working to reduce both the demand for and the availability of
    illegal drugs. Drugs not only weaken the fabric of our society,
    but also threaten our national security.
        The Organized Crime Drug Enforcement Task Force program is
    the centerpiece of the Department of Justice's drug strategy to
    reduce the availability of drugs. That task force, OCDETF,
    combines the talent of experienced Federal agents and
    prosecutors with support from State and local law enforcement,
    thereby uniquely positioning OCDETF to conduct multiple
    coordinated investigations across the country to root out and
    eliminate all pieces of a drug organization.
        For fiscal year 2003, our budget seeks $14.8 million
    through OCDETF to provide field support for DEA's Special
    Operations Division coordinated investigations. The
    Department's fiscal year 2003 budget also seeks $13 million for
    drug abuse and crime prevention programs under the Office of
    Justice Programs. Our budget includes $52 million for the drug
    courts program, $77 million for the residential substance abuse
    treatment program, and that is a 10-percent increase in funding
    over fiscal year 2002.

                      voting and civil rights enforcement

        Essential to this republic is the freedom and privilege of
    every citizen to vote. The Federal Government has become an
    active participant in establishing rules for the conduct of
    elections on matters ranging from voter registration to
    protection against discrimination. In fiscal year 2003, the
    Department requests $400 million for a new 3-year program, and
    in the 3 years that would total $1.2 billion, for States to
    improve State and local jurisdictions' voting technologies and
    administration, including voting machines, registration
    systems, voter education, and poll worker training. This new
    program will provide States with matching grants for election
    reform, so the $1.2 billion should have the impact of a $2.4
    billion investment.
        The Department of Justice is charged with protecting the
    civil rights of all Americans. Our fiscal year 2003 budget
    seeks $3 million for the Office of the Inspector General to
    address a statutory requirement of the USA PATRIOT Act for the
    review of complaints alleging abuses of civil rights and
    liberties and to provide audit oversight of the Department's
    counterterrorism programs. Further, we request $2.8 million to
    promote effective investigation, prosecution, and response to
    hate crimes.
        Senator Hollings. General, if you could hold on there, we
    have only 2 minutes to vote.
        Attorney General Ashcroft. I understand. Thank you.
        Senator Hollings. We will be right back. The committee will
    be in recess.
        The committee will come to order. I apologize, Mr. Attorney
    General, but you are used to this. Have you completed your
    statement?
        Attorney General Ashcroft. I would like to continue with my
    statement, if I may.
        Senator Hollings. Please do.

                       other justice department requests

        Attorney General Ashcroft. Thank you, Mr. Chairman, members
    of the committee. We at the Department of Justice are committed
    to building and strengthening an immigration services system
    that is effective, that ensures integrity, and promotes a
    culture of respect. We are making good progress toward
    achieving President Bush's goal of a 6-month average processing
    time for all applications. To help ensure additional progress,
    our budget request seeks $40 million to begin implementation of
    the administration's comprehensive restructuring of the
    Immigration and Naturalization Service.
        The Department of Justice is charged with safe, secure, and
    humane confinement of detained persons awaiting trial,
    sentencing, or awaiting immigration proceedings. The need for
    Federal detention bed space has more than doubled in the last 5
    years, from 32,000 detainees in 1996 to 67,000 detainees in the
    year 2001.
        To enhance coordination, to manage the rising detainee
    population, and exercise financial control of Federal detention
    operations, which are currently the responsibility of the INS,
    the Marshals Service, and the Bureau of Prisons, the Office of
    Detention Trustee was created by Congress last year. That was a
    wise decision. As you recommended in the fiscal year 2002
    conference report, our budget proposes to consolidate the $1.4
    billion under the detention trustee to provide bed space for
    the anticipated detainee population in the custody of the
    Marshals Service and the INS.
        For the Bureau of Prisons, our fiscal year 2003 budget
    seeks $348.3 million for additional prison activations and for
    the completion of construction previously authorized by
    Congress.
        Finally, following the September 11 terrorist attacks,
    Congress passed and the President signed into law legislation
    establishing the September 11 Victims Compensation Fund of
    2001. The value of approved claims through the fund is
    estimated at $5.4 billion through 2004. Our fiscal year 2003
    budget reflects $2.7 billion in estimated victim compensation
    payments. In addition, the Department's budget includes a total
    of $41 million for the administrative costs of the fund's
    special master.
        Mr. Chairman, as you well know, September 11, 2001, changed
    our Nation, redefined the mission of the Department of Justice.
    Defending our Nation and its citizens against terrorism is our
    top priority. To fulfill this mission, we are devoting all
    resources necessary to eliminate terrorist networks, prevent
    terrorist attacks, bring to justice those who kill Americans in
    the name of murderous ideologies.
        Chairman Hollings, Senator Gregg, members of the
    subcommittee, what I have outlined for you is the principal
    focus of President Bush's fiscal year 2003 budget request for
    the Department of Justice. Our request builds upon the firm
    foundation laid by Congress in the days and weeks following
    September 11, a foundation of resolve backed by resources and
    American strength married to American purpose.
        I want to thank you for your leadership and for the
    leadership of this subcommittee both in providing the
    Department critical additional funds in the wake of the
    terrorist attacks and in supporting the work that lies ahead.
        And if I may, I would like to thank the members of your
    staff, those for whom we so rarely pause to offer public
    expressions of our gratitude, Lila Helms, Jill Shapiro Long,
    Dereck Orr of the majority staff, Jim Morhard, Kevin Linskey,
    and Katherine Hennessey of the minority staff. They all work on
    an ongoing basis with Justice officials and our staff at the
    Justice Department to enhance the safety and security of the
    Nation.

                               prepared statement

        I thank you for your facilitation of this hearing and for
    your service to the American people and I want to thank them in
    the same way. I look forward to working with you on this
    project proposal and other issues, and Mr. Chairman, I thank
    you for allowing me to make this statement.
        [The statement follows:]
                      Prepared Statement of John Ashcroft
        Mr. Chairman and Members of the Subcommittee: I am both honored and
    pleased to once again appear before the members of this Subcommittee to
    present the President's budget request for the Department of Justice.
    For fiscal year 2003, the President's budget requests $30.2 billion for
    the Department of Justice, including $23.1 billion in discretionary
    funding and $7.1 billion for the Department's mandatory and fee-funded
    accounts. Included in the total amount requested is $548 million for
    Civil Service Retirement System and Federal Employees Health Benefits
    Program costs which are currently funded centrally through the U.S.
    Office of Personnel Management. The first and overriding priority of
    this budget supports the top priority of the department: to protect
    America against acts of terrorism and to bring terrorists to justice.
    The challenges we face are complex and unprecedented.
        The Department's fiscal year 2003 budget seeks $2 billion for
    program improvements and ongoing activities funded in the fiscal year
    2002 Counterterrorism Supplemental to support our number one priority.
    Resources are also requested to address several of the Department's
    other priorities, including: improving management of immigration
    services and enforcement; enhancing federal detention and incarceration
    capacity; reducing the availability of illegal drugs and supporting
    proven programs aimed at reducing drug use; providing services for the
    Nation's crime victims; addressing civil rights; providing streamlined
    resources to support state and local law enforcement; and legal
    representation and defense of U.S. interests.
      preventing and combating terrorism, including securing the nation's
                                     border
        In response to the heinous attacks on September 11, 2001, the full
    resources of the Department of Justice, including the Federal Bureau of
    Investigation, the Immigration and Naturalization Service, the U.S.
    Attorneys offices, the U.S. Marshals Service, the Bureau of Prisons,
    the Drug Enforcement Administration and the Office of Justice Programs,
    were deployed to investigate these crimes and to assist survivors and
    victim families. In addition, to combat the threat of terrorism, I have
    directed the Department of Justice, including all 94 U.S. Attorneys'
    offices and 56 FBI field offices, to begin implementing the USA PATRIOT
    Act that was passed overwhelmingly by Congress and signed by President
    Bush. This offensive against terrorism will enable law enforcement to
    make use of new powers in intelligence gathering, criminal procedure
    and immigration violations. With these new provisions, the fight
    against terrorism will have the full force of the law while protecting
    Constitutional civil liberties.
        The world has changed dramatically since my last appearance before
    this Subcommittee. You have been instrumental in making sure that our
    government is poised both to respond to and prevent future terrorist
    attacks. I appreciate the support of this Subcommittee and that of the
    Congress in providing the necessary resources required by the
    Department of Justice to meet the challenges presented by terrorism and
    to improve the Nation's border security. The Counterterrorism
    Supplemental appropriation passed this fiscal year provided much needed
    resources to enable the Department to both prevent future attacks and
    investigate the terrorist attacks on our country. The fiscal year 2003
    budget request that I present to you today builds upon this support and
    seeks to further enhance the Department's ability to prevent and combat
    terrorism.
    Border Security
        Illegal overstays of visitors and others coming temporarily into
    the United States pose a potential risk to homeland security. Overstays
    result in approximately 40 percent of individuals remaining in this
    country illegally. Currently, our Nation does not have a reliable
    system to track the entry and exit of these individuals in order to
    determine who may have overstayed. In addition, we do not have
    sufficient ability to detect, identify and locate short-term visitors
    who may pose a security risk to the United States. In the wake of
    September 11, 2001, the need is more urgent than ever to secure the
    safety of our citizens and our homeland. To secure gaps in our Nation's
    borders, we are proposing program improvements totaling $856 million
    and $187 million for ongoing activities funded in the fiscal year 2002
    Counterterrorism Supplemental appropriation.
        In addition, this budget will support an increase of over 2,200 new
    positions for INS. This request will enable the INS to deploy
    additional enforcement personnel together with advanced, state-of-the
    art technology and systems to better prevent illegal entry into the
    country, target individuals who threaten our safety, and thereby
    undermine the security of our Nation, and assist with non-citizens
    entering and exiting the United States. Components of the Border
    Security initiative include implementing a comprehensive Entry/Exit
    system, deploying force multiplying equipment, and integrating separate
    information systems to ensure timely, accurate, and complete
    enforcement data.
        Our fiscal year 2003 budget includes a total of $380 million, of
    which $362 million is new funding, to provide initial funds for a
    multi-year effort to develop a comprehensive land, sea, and air Entry/
    Exit system for the United States. The new Entry/Exit system will
    provide enhanced information technology and upgraded facilities along
    our Nation's borders. This budget also increases personnel for INS to
    carry out its enforcement mission. For fiscal year 2003, we are seeking
    $141.3 million to hire 570 new Border Patrol agents and for other
    border security related increases; which would complete the addition of
    the 5,000 agents authorized by the Illegal Immigration Reform and
    Immigrant Responsibility Act of 1996 by the end of fiscal year 2003.
    This will increase the number of Border Patrol agents to a record level
    of more than 11,000 agents, more than double the level in 1993.
    Specifically, this request includes $76.3 million to hire, train, and
    deploy an additional 570 Border Patrol agents, $25 million to re-deploy
    approximately 285 Border Patrol agents to the Northern Border, $10
    million for twin engine helicopters, $2 million for a comprehensive
    study of INS law enforcement compensation, and $28 million to enhance
    INS' ENFORCE database and processing system and add biometric
    equipment.
        INS must balance its resources between its dual responsibilities of
    facilitating legal travel across our borders--tens of millions of
    people a year cross our borders--and detecting those who should not be
    allowed to enter the United States. To facilitate achievement of these
    goals in the post-September 11th world, our budget requests $85.9
    million to enhance air, sea and land ports-of-entry inspections. These
    additional resources will enable the INS to hire, train, and deploy 700
    additional inspectors to enhance security at air and sea ports-of-entry
    and 460 inspectors to enhance border security at land ports-of-entry.
        The INS Intelligence program provides strategic and tactical
    intelligence support to INS offices enforcing the provisions of the
    Immigration and Nationality Act, and assists other federal agencies in
    addressing national security issues. INS intelligence efforts also
    support coordination of anti-smuggling/terrorism strategies with the
    FBI; completion of a U.S.-Canada bilateral common threat assessment
    among all concerned agencies on border zones' vulnerabilities; and
    increased automation in the intelligence collection and analysis
    process. The fiscal year 2003 budget includes an enhancement of 78
    positions and $10 million to expand the INS intelligence program.
        In the days following the September 11th terrorist attacks on
    America, homeland security received a new and urgent emphasis within
    the law enforcement community, including the INS. To provide the INS
    with adequate resources to meet this challenge, our budget requests $6
    million to enhance INS' participation in Joint Terrorism Task Forces
    (JTTF). JTTFs are a critical component of our coordinated law
    enforcement strategy. This funding will enable INS to enhance its
    support of the FBI's investigation into the September 11th terrorist
    attacks. These task forces conduct investigations of other foreign
    threats to national security and work cooperatively with other federal
    law enforcement and intelligence agencies, placing particular emphasis
    on disrupting and dismantling terrorist cells and supporters in the
    United States by using criminal and administrative tools.
        Our budget also seeks resources for additional legal positions to
    litigate special interest cases involving issues of terrorism, foreign
    counterintelligence, national security and other sensitive matters,
    such as cases involving human rights abuses. Special interest cases
    require multiple levels of coordination throughout the government, and
    attorneys must frequently work with other law enforcement and
    intelligence agencies both inside and outside the United States.
        To effectively combat the terrorist threat that faces our Nation,
    the INS must have a sufficient physical and information technology
    infrastructure to support and protect its employees. To support our
    facility and security needs, the fiscal year 2003 budget includes an
    increase of $145 million for construction and an additional $13 million
    and 172 positions for security upgrades. The Department's construction
    request for INS will provide for the planning, design, and construction
    of INS facilities along the border. Many of the Border Patrol and
    Inspection facilities were built prior to the 1970's and cannot
    accommodate the tremendous growth in the number of agents. The
    requested resources for physical security enhancements will allow INS
    to implement security improvements at 157 locations nationwide based on
    vulnerability to terrorist attacks and general security requirements.
        Our fiscal year 2003 budget also seeks $83.4 million and 15
    positions to expand and upgrade INS computer systems, including desktop
    computers, network servers, re-engineered data communications and
    enhanced computer security. INS data communications technology has not
    kept pace with increased demand. These resources are required to
    design, build and sustain an information technology infrastructure that
    can accommodate INS' steadily increasing workload and rapidly growing
    workforce. An additional $3.7 million is requested to fund training
    needs to expand fraudulent document training, curriculum development,
    materials and incidental expenses related to the Trafficking Victims
    Protection Act of 2000.
    Enhancing the FBI's Counterterrorism Capabilities
        As a result of the events of September 11, 2001, the FBI, with the
    cooperation of other Federal, state, local and international law
    enforcement, is currently conducting one of the largest criminal
    investigations in the history of the United States. Because of the
    support of this Subcommittee and that of Congress, the FBI was provided
    $745 million in the fiscal year 2002 Counterterrorism Supplemental
    appropriation for costs to respond to and investigate the September
    11th terrorist attacks, including additional resources for Trilogy (the
    FBI's information technology upgrade program), the National
    Infrastructure Protection Center, Computer Analysis Response Teams,
    intelligence production, technical programs, and other programs. Given
    that Congress must consider myriad funding priorities, Director Mueller
    and I are very grateful for these additional resources provided to the
    Bureau. The men and women of the FBI continue to be on the front line
    of our Nation's efforts against terrorism, working in concert with
    other Federal, state and local agencies to prevent additional terrorist
    attacks and to bring to justice those who commit crimes against our
    citizens and our interests. The work of the FBI is critical to winning
    this war.
        Timely and useful intelligence is key to preventing terrorist
    attacks. The FBI's efforts to identify and neutralize terrorist
    activities require a comprehensive understanding of current and
    projected terrorist threats. In order to enhance the FBI's
    counterterrorism programs, our budget seeks $411.6 million in program
    improvements, including additional resources to enhance information
    technology projects, surveillance, intelligence, investigative and
    response capabilities, the aviation program, and security. Our budget
    also reflects $238 million in funding for ongoing activities funded in
    the fiscal year 2002 Counterterrorism Supplemental appropriation.
        For information technology critical to the FBI's efforts to combat
    the threat of terrorism, our total budget request for the FBI includes
    an increase of $109.4 million to support several new and ongoing
    projects. These resources will support projects such as the FBI's
    efforts to scan and digitally store 5 million documents related to
    terrorist groups and organizations, data management and warehousing,
    collaborative capabilities, information technology support for Legal
    Attaches, continuity of operations for FBI Headquarters and offsite
    facilities, state-of-the-art video teleconferencing capabilities and
    increased staffing and funding to support FBI mainframe data center
    upgrades. Funding is also sought to perform necessary maintenance on
    enterprise-wide legacy systems, applications and the Trilogy network.
        The FBI's Information Assurance initiative will unite security
    policies, procedures, technologies, enforcement, administration, and
    training into a comprehensive proactive program. Maintaining adequate
    system security safeguards is critical. Our budget includes $48.2
    million in additional funding for this program. Our budget also seeks
    an additional $29.9 million to enhance other security programs at the
    FBI, including funds for headquarters and field personnel, security
    training and background investigations of personnel who are granted
    access to FBI information or facilities, guard services and other
    items.
        The Department's fiscal year 2003 budget requests $61.8 million in
    additional funding to enhance the FBI's surveillance capability to
    collect evidence and intelligence. These resources will enhance both
    physical and electronic surveillance capabilities and enable automated
    sharing of information collected as electronic surveillance
    intelligence and/or evidentiary material.
        Our budget also seeks $46.1 million for the FBI's aviation program
    to fund personnel, aviation assets and operational support. Resources
    are also sought to expand several critical components of the FBI's
    overall counterterrorism program, including $31.6 million to expand the
    FBI's response capabilities, $32.3 million to provide enhanced
    technical program support, $21 million to enhance the National
    Infrastructure Protection and Computer Intrusion Program's ability to
    respond to computer intrusions and threats, $7.7 million for additional
    analytical capacity throughout the FBI, and $6.4 million for the FBI's
    Strategic Information and Operations Center and the New York field
    office's operation center.
        The establishment of the Joint Terrorism Task Force (JTTF) program
    has enhanced the FBI's ability to promote a coordinated effort among
    FBI field offices and their respective counterparts in Federal, state
    and local law enforcement agencies in connection with terrorism
    investigations. Our budget seeks $15.7 million to support a total of 56
    JTTFs throughout the country. Additional resources will fund rental
    space and renovation of offsite facilities, as well as operational
    expenses, such as state and local overtime and supplies. To continue
    support for the FBI's toll-free line for collecting tips from the
    public on suspected terrorist activities, an additional $1.5 million is
    included in our budget request.
    Additional Enhancements To Counterterrorism Infrastructure
        As accused terrorists are brought to justice in the Federal Court
    system, there will be a need for enhanced security measures. The United
    States Marshals Service protects the Federal Courts and ensures the
    effective operation of the judicial system. To support the heightened
    security measures at federal courthouses as a result of the September
    11th attacks, our budget seeks $34.7 million to: (1) close security
    gaps at courthouse facilities which have the greatest physical security
    deficiencies; (2) provide security equipment for new courthouses and
    those undergoing significant renovation; (3) provide additional
    security personnel for terrorist-related court proceedings; and (4)
    provide security staffing to keep pace with the opening of new
    courthouses and the creation of new judgeships. To enhance the ability
    of the U.S. Marshals Service to participate in the FBI's Joint
    Terrorism Task Force program, we are seeking $2.4 million in fiscal
    year 2003. Nine million in additional funding also is being requested
    to provide increased security and detainee staffing along the Southwest
    Border.
        Another critical element in our battle plan against the terrorist
    threat is working to develop and enhance interoperable databases and
    telecommunications systems for the Department's law enforcement
    activities. The pooling of information resources capabilities can
    greatly increase efficiency and decrease the time involved in cases.
    For these efforts, our budget seeks $60 million to continue narrowband
    investment in radio infrastructure for key areas such as New York and
    along the Northern and Southwest borders. An increase of $23 million is
    also requested to continue the development and deployment of the Joint
    Automated Booking System and a joint fingerprinting system, that
    integrates INS' IDENT fingerprinting system with the FBI's IAFIS
    system. To support additional information and anti-terrorism physical
    security measures at the Drug Enforcement Administration, we are
    requesting $24.7 million.
        The fiscal year 2003 budget request for the Department seeks $35
    million in the Attorney General's Counterterrorism Fund to reimburse
    DEA's Special Operations Division for the cost of providing
    intelligence support to the FBI and other agencies conducting
    counterterrorism activities. This funding will complement the FBI's own
    intelligence capacity by providing additional collection and analysis
    capabilities to fight terrorists. For the Department's Office of
    Intelligence Policy and Review, $2 million is requested to address an
    anticipated increase in Foreign Intelligence Surveillance Act requests.
    The Department's budget request also includes $3 million to assess the
    vulnerability of chemical facilities.
    Counterterrorism Coordination in the Department of Justice
        Consistent with Section 612 of the Department's fiscal year 2002
    Appropriations Act, the President's Budget includes a proposal to
    enhance coordination of the Department's counterterrorism efforts. Our
    proposal will consolidate this coordination effort in the Office of the
    Deputy Attorney General. The budget includes a total of $2 million to
    fund a permanent cadre of well-qualified staff to support the Deputy
    Attorney General in coordinating all Department of Justice efforts to
    protect the United States against the threat of terrorism. Under the
    proposal, I have directed the Deputy Attorney General to be the
    individual responsible for coordinating all functions of the Department
    of Justice relating to national security, particularly the Department's
    efforts to combat terrorism directed against the United States. To
    assist the Deputy Attorney General in this effort, I am also
    establishing the National Security Coordination Council (NSCC) of the
    Department of Justice, which will be directed by the Deputy Attorney
    General. The NSCC will coordinate policy, resource allocation,
    operations, long-term planning and information sharing. The NSCC will
    also be a repository of expertise and a forum through which the Deputy
    Attorney General will be prepared to represent the Department in
    interagency forums. Mr. Chairman, we are committed to working with you,
    Senator Gregg and members of the Subcommittee to strengthen the
    Department's counterterrorism programs.
                          supporting victims of crime
        The World Trade Center, Pentagon, and Pennsylvania tragedies were
    moments of indefinable horror and grief for this Nation. Although no
    amount of assistance can ever begin to compensate the surviving victims
    of the September 11th tragedies or the families and loved ones, the
    Department is committed to using the resources available to help
    victims and families of those who were physically injured or killed as
    a result of the terrorist attacks on September 11th. While we can never
    undo the damage that has been done, this fund will assist thousands of
    individuals and families in rebuilding lives that were shattered by the
    indiscriminate evil of terrorism.
        Following the September 11th terrorist attacks, Congress passed and
    the President signed into law the Air Transportation Safety and System
    Stabilization Act (Act). The Act established the September 11th Victim
    Compensation Fund of 2001 (Fund) to provide a permanent and indefinite
    appropriation for making payments on approved claims to personal
    representatives of deceased individuals and those physically injured as
    a result of the terrorist-related aircraft crashes that day. The value
    of approved claims, through 2004, is estimated at $5.4 billion. Our
    fiscal year 2003 budget reflects the $2.7 billion in estimated payments
    for Victim Compensation payments. In addition, the Department's budget
    includes a total of $41 million for the administrative costs of the
    Fund's Special Master.
        For the Department's Crime Victims Fund, we are seeking $50 million
    to fully fund the Emergency Terrorism Reserve and to provide $25
    million in additional assistance for the states. The Emergency
    Terrorism Reserve may be used by the Department to respond to incidents
    of terrorism and mass violence by providing supplemental grants to
    states for victim compensation and victim assistance and by providing
    direct compensation to victims of international terrorism occurring
    abroad.
          improving management of immigration services and enforcement
        The Administration is committed to building and strengthening an
    immigration services system that ensures integrity, provides services
    accurately and efficiently, and emphasizes a culture of respect. The
    INS is tasked with upholding this commitment and ensuring that
    resources are used effectively to manage and deliver immigration
    services. Our restructuring plan for INS will create the organizational
    structure to support the President's goal of achieving a 6-month
    average processing time for all applications. Mr. Chairman, I am
    personally committed to working with you and the Members of the
    Subcommittee on the INS restructuring proposal so that we may improve
    benefits processing and strengthen enforcement of our immigration laws.
    For fiscal year 2003, our budget request seeks $40 million to begin
    implementation of the Administration's comprehensive restructuring of
    the INS. To attain the President's goal of a six-month processing time
    for all applications, we are also seeking an additional $50.5 million
    from fee collections. An additional $1.5 million is sought to enhance
    the statistical capabilities of INS' Office of Policy and Planning and
    to expand the successful Alternatives to Detention program.
        For the Executive Office of Immigration Review, the fiscal year
    2003 budget seeks an additional $10 million, including $800,000 in
    redirected resources, to coordinate with INS initiatives, which are
    anticipated to increase the Immigration Judge caseload and the Board of
    Immigration Appeals caseload by 27,800 cases.
        managing increased federal detention and incarceration capacity
        The Department of Justice is charged with the safe, secure, and
    humane confinement of detained persons awaiting trial, sentencing,
    immigration proceedings or removal from the United States. The need for
    federal detention bed space has more than doubled in the last five
    years, from 32,000 detainees in 1996 to 67,000 detainees in 2001. This
    dramatic increase has resulted in greater dependence on state and local
    governments and private contractors to provide bed space for federal
    detainees. Currently, the INS, U.S. Marshals Service and the Bureau of
    Prisons are responsible for detaining prisoners. To enhance
    coordination, manage the rising detainee population, and exercise
    financial control and efficiency in federal detention operations, the
    Office of the Detention Trustee was created in the Department of
    Justice. For fiscal year 2003, our budget proposes to consolidate $1.4
    billion under the Detention Trustee to provide bed space for the
    anticipated detainee population in the custody of the U.S. Marshals
    Service and the INS. Our budget seeks an increase of $95.6 million for
    the Department's detention programs. Total funding includes resources
    to accommodate detention space for housing INS detainees, to house U.S.
    Marshal detainees, and to fund the increase in the oversight
    capabilities of the Office of the Detention Trustee.
        For the Bureau of Prisons, our fiscal year 2003 budget seeks $348.3
    million for additional prison activation and completion of previously
    authorized construction projects. Specifically, $206 million is
    included to continue construction of a medium security facility, a
    secure female facility, and to expand three other facilities. For
    additional prison activations and an institutional population
    adjustment, $142.3 million is included in our fiscal year 2003 budget.
    This additional funding will provide resources to activate four new
    facilities, including Federal Correctional Institution (FCI)--
    Glenville, West Virginia, United States Penitentiary (USP)--Big Sandy,
    Kentucky, USP-McCreary County, Kentucky, and USP-Victorville,
    California, and to expand USP Marion, Illinois and FCI Safford,
    Arizona. These facilities will add over 5,000 critically needed beds to
    reduce overcrowding.
       reducing the availability of illegal drugs and supporting proven
                      programs aimed at reducing drug use
        Today, more than ever, drug enforcement can play a critical role in
    protecting our national security by starving the financial base of
    criminal organizations and depriving them of the drug proceeds that may
    be used to fund terrorist activities. Drugs not only weaken the fabric
    of our society, but also threaten our national security. The recent
    attacks perpetrated on our Nation illustrate the connection between
    drug trafficking and terrorist attacks. In Afghanistan, the Taliban,
    which controlled opium production and directly taxed the drug trade,
    opened its doors to Osama Bin Laden and the al Qaeda organization. Drug
    trafficking provides terrorists a steady source of resources to finance
    their operations. Our budget includes a $17.4 million resource
    reprogramming proposal, utilizing prior year resources available to
    DEA, to implement an Afghanistan Initiative, Operation Containment,
    that will employ a multi-faceted approach to identify, target,
    investigate, disrupt and dismantle transnational heroin trafficking
    organizations in Central Asia. The established link between the
    proceeds generated from the sale of Afghan heroin and terrorist
    activities makes combating heroin production in Central Asia critical
    to the security of the United States.
        The Organized Crime Drug Enforcement Task Force (OCDETF) program is
    the centerpiece of the Department's drug strategy to reduce the
    availability of drugs. OCDETF combines the talent of experienced
    federal agents and prosecutors with support from state and local law
    enforcement, thereby uniquely positioning OCDETF to conduct multiple
    coordinated investigations across the country to root out and eliminate
    all pieces of major drug organizations. For fiscal year 2003, our
    budget seeks an increase of $14.8 million through OCDETF to provide
    field support for DEA's Special Operations Division coordinated
    investigations. This funding will enhance OCDETF's ability to conduct
    complex, multi-district investigations developed from Special
    Operations Division intelligence and coordination. These resources will
    be used by DEA and the Department's Criminal Division; and will also be
    used to fund state and local overtime.
        DEA conducts financial investigations to detect and disrupt the
    international and domestic flow of illicit money. To support these
    financial investigations and enhance regulatory and cooperative and
    public-private efforts to prevent money laundering, our fiscal year
    2003 budget proposes a program improvement of $4.1 million. For fiscal
    year 2003, we are also seeking $24.6 million for DEA's Diversion
    Control program. These resources will be used to strengthen DEA's
    enforcement capabilities to prevent, detect, and investigate the
    diversion of controlled substances, particularly OxyContin.
    Increasing abuse of OxyContin has led to an increase of
    associated criminal activity.
        The Department's fiscal year 2003 budget also seeks $13 million for
    drug abuse and crime programs under the Office of Justice Programs.
    Specifically, we are seeking $4 million to expand the Arrestee Drug
    Abuse Monitoring (ADAM) program to 10 additional sites. The ADAM
    program is the only federally funded drug use prevalence program that
    directly addresses the relationship between illicit drug use and
    criminal behavior. ADAM data assist practitioners and policy makers in
    understanding, anticipating and responding to their community's
    changing drug problems. Our budget also includes $52 million for the
    Drug Courts Program, a $2 million increase, and $77 million in funding
    for the Residential Substance Abuse Treatment Program, a 10 percent
    increase in funding over fiscal year 2002.
                             advancing civil rights
        Essential to our republic is the right of every citizen, from every
    walk of life, to be treated equally under the law. This includes every
    citizen's right to vote. The Federal Government has become an active
    participant in establishing rules for the conduct of elections on
    matters ranging from voter registration to protection against
    discrimination.
        In fiscal year 2003, the Department requests $400 million for a new
    three-year program (totaling $1.2 billion) to improve state and local
    jurisdiction's voting technologies and administration, including voting
    machines, registration systems, voter education, and poll worker
    training. This new program will provide states with matching grants for
    election reform. This proposal is consistent with the recommendations
    of the National Commission on Federal Electoral Reform headed by former
    Presidents Ford and Carter. The Office of Justice Programs (OJP) will
    have primary responsibility for administering the program, in
    consultation with the Department of Commerce's National Institute of
    Standards and Technology, which will provide expertise on voluntary
    technical standards.
        Our budget seeks $2.8 million to promote effective investigation,
    prosecution, and response to hate crimes. This amount includes $1.5
    million to study the effect of hate crime legislation by examining 6
    sites that have hate crime laws and 8 with little or no such
    legislation; and $1.3 million to develop and provide hate crimes
    awareness training and technical assistance, and to disseminate
    successful program strategies. Our fiscal year 2003 budget also seeks
    $3 million for the Office of the Inspector General to address a
    statutory requirement in the USA PATRIOT Act requiring the review of
    complaints alleging abuses of civil rights and liberties, and to
    provide audit oversight for the Department's counterterrorism programs.
                  enhancing the department's legal activities
        The Department of Justice is often described as the largest law
    office in the Nation. We serve as counsel for the citizens of this
    Nation and represent them in enforcing the law in the public interest.
    For fiscal year 2003, our budget seeks $32.5 million for the Civil
    Division to increase its use of automated litigation support (ALS)
    services to successfully resolve extraordinarily large and document-
    intensive cases. ALS is an indispensable method of managing millions of
    pages of documents, performing electronic discovery, executing court-
    ordered trial presentation systems, and generating real-time
    transcripts. In addition, to address the burgeoning defensive docket in
    United States Attorneys Offices, our budget seeks an additional $2
    million. These resources are necessary to adequately defend the
    government from unwarranted claims and to fairly resolve meritorious
    claims. Our budget requests an additional $11 million to complete the
    third and final phase of the overall telecommunications convergence
    initiative in United States Attorneys Offices throughout the Nation:
    implementing Internet Protocol telephony. This convergence will enable
    the U.S. Attorneys to encrypt all transmissions, share resources and
    use telecommunications bandwidth more effectively, and reduce overall
    operating and maintenance by establishing a common, standardized
    telecommunications infrastructure.
        For the United States Trustee Program (USTP), we are proposing an
    additional $6.3 million from fee collections. Specifically, our budget
    requests $5.8 million to enable USTP to develop systems to more
    effectively uncover material misstatements in bankruptcy schedules and
    statements of financial affairs. An increase of $500,000 is requested
    to establish a pilot program and curriculum to provide personal
    financial management instructions.
      streamlining assistance available to state and local law enforcement
        The fiscal year 2003 budget proposes a refocusing of spending
    directed toward state and local assistance. This budget refocuses and
    redirects funding toward core Federal counterterrorism prevention and
    investigations. Between last year's appropriation and next year's
    budget proposal, discretionary spending on Federal law enforcement
    grows almost 19 percent. Meanwhile, the Administration also refocuses
    and redirects state and local assistance; although funding through the
    Department of Justice decreases, the President's budget includes new
    funding for first responder preparedness through the Federal Emergency
    Management Agency.
        For fiscal year 2003, we propose a new $800 million program, the
    Justice Assistance Grants Program (JAGP), that consolidates the Local
    Law Enforcement Block Grant (LLEBG) and the Byrne Formula Grant Program
    into a single grant program under the Community Oriented Policing
    Services (COPS) program. Consequently, we are proposing to eliminate
    the LLEBG and Byrne Programs in their current form. The consolidation
    of these two programs should result in a simplified application process
    for participating state and local governments, and greater flexibility
    for local law enforcement agencies in the use of block grant funds.
    States may use these resources for statewide initiatives, technical
    assistance and training, and support for rural jurisdictions in the
    areas of enforcement, prosecution and court programs, prevention
    programs, corrections programs and treatment programs. Local funding
    may also be used for these purposes and can be combined with funding
    from other jurisdictions to form regional projects. This program also
    includes $15 million to facilitate the USA Freedom Corps by encouraging
    citizen participation in law enforcement, community safety and
    terrorism preparedness; and $60 million for the Boys and Girls Clubs.
        Also, within COPSs, we are seeking $65.6 million in targeted
    assistance to police departments. This amount includes an increase of
    $15.6 million for the Police Corps, a scholarship and training program
    designed to improve local police response to violent crime by
    increasing the number of officers on the beat with advanced education
    and training. It also includes a total of $50 million for COPS
    Technology Grants. To improve the mechanisms for ensuring state court-
    based data are properly transferred to the criminal record, we are
    seeking an additional $25 million. These resources will enhance the
    capability of the FBI's National Instant Check System to provide
    immediate feedback. Our budget also seeks an increase of $6.1 million
    to expand the Internet Crimes Against Children Task Force Program by
    establishing a regional task force in at least 40 states and expanding
    capacity-building activities through research, training and technical
    assistance.
        The fiscal year 2003 budget provides over $3.2 billion for state
    and local law enforcement grant programs. However, it also prioritizes
    scarce federal resources and includes proposed reductions and
    eliminations of some of the current grant programs. Reductions are made
    primarily in the following areas: (1) Byrne Discretionary and Formula
    grants; (2) Local Law Enforcement Block Grant; and (3) State Criminal
    Alien Assistance Program.
                           other important activities
        Our budget seeks $48.5 million to enhance several items of critical
    importance to the Department. Specifically, we are seeking $36.5
    million to enhance various FBI data management and warehousing
    techniques and to provide new administrative support and financial
    systems. Additionally, $10 million is sought to begin planning and
    initial deployment of a new Departmental Financial Management System.
    This funding will provide much needed resources to address financial
    system material weaknesses cited by the Department's auditors. For the
    FBI, our budget also seeks $867,000 for the Federal Convicted Offender
    Program to manage and type federal convicted offender DNA samples,
    purchase equipment, and fund miscellaneous expenses related to this
    effort. The DNA Analysis Backlog Elimination Act of 2000 authorizes the
    FBI to collect DNA samples from individuals convicted of qualifying
    offenses. The USA PATRIOT Act of 2001 expands the list of qualifying
    offenses to include terrorism-related offenses and other crimes of
    violence.
                                   conclusion
        Chairman Hollings, Senator Gregg, Members of the Subcommittee, I
    have outlined for you today the principal focus of President Bush's
    fiscal year 2003 budget request for the Department of Justice. I look
    forward to working with you on this budget proposal and other issues.
        Thank you. I would be pleased to answer any questions you might
    have.

        Senator Hollings. I thank you, General Ashcroft, for the
    outstanding work you have been doing on counterterrorism. I
    think the committee will want to help you continue your
    progress. I want to get into a couple of things there.
        I think being hardfast on law enforcement is not
    inappropriate when the enemy has infiltrated you, you do not
    know who they are and everything else like that. You have got
    to be on the side of extreme care.

                     NEED FOR SPECIAL COUNSEL IN ENRON CASE

        Let me ask about the Enron matter now. I commend you. You
    have recused yourself, not that there is a conflict of interest
    but there could be a conflict of interest, and I understand the
    same with your chief of staff and even the U.S. Attorney's
    Office for the Southern District down there in Texas. They have
    had to set themselves aside due to all kinds of contacts.
        Now the case is in the hands of our friend Larry Thompson.
    On that score, I am worried about it for the simple reason that
    he has been deputized and continues to be the Deputy Attorney
    General in charge of counterterrorism in the Department of
    Justice, which is a full-time job. Credit goes to our
    distinguished ranking member who was there and chairman this
    time last year for having the first real full hearing of the
    entire Cabinet on counterterrorism. The fact was, on September
    11, that is what we were debating, this subcommittee's
    appropriations on counterterrorism.
        But right to the point, you do not want the Department of
    Justice to go all the way through with this case, whatever the
    result is and say, well, wait a minute, the fellow that was in
    charge, he was for 20 years working with the law office that
    represented Enron and Arthur Andersen, so he does not have a
    conflict of interest but the appearance of a conflict of
    interest is still there, just like with yourself.
        I do not see how these are not extraordinary
    circumstances--you have got chief executives committing
    suicide, you have got all the evidence being shredded over 1\1/
    2\ months and everything else of that kind, all of them taking
    the Fifth Amendment and what have you. You do have
    extraordinary circumstances so you have got to use the highest
    care to make sure of the impartiality. And like I said, there
    is no use to come to the end of the investigation and then say,
    well, wait a minute, this is a gentleman who worked in that law
    office, as you well know, for some 20 years.
        There should not be the least appearance of a conflict. It
    ought to be Archibald Cox or some individual of your own
    choosing, and under the law, you can appoint a Special Counsel
    and that would end any misgiving that anybody could have about
    the final report. What is your comment?
        Attorney General Ashcroft. When presented with these
    issues, I have given my duty to carry out the responsibilities
    that have been entrusted to me very careful consideration. I
    have had a very, very careful awareness of and adherence to the
    Government-wide regulations and rules regarding conflicts of
    interest and these rules set forth various relevant factors,
    including financial and personal relationships, and any
    decision on these matters, obviously, is very fact-specific.
        Based on the careful review of the applicable laws and
    regulations that apply to all Government workers and in light
    of the totality of all the circumstances, I believe that it was
    my responsibility to recuse myself.
        Senator Hollings. Right.
        Attorney General Ashcroft. Once I recuse myself, I do not
    make further judgments about the case. I do not involve myself
    in the case.
        Senator Hollings. No, but you know your Deputy Attorney
    General intimately and you work closely together. You still do,
    I take it, I hope so, on counterterrorism. You have testified
    very strongly here this morning about the efforts made in the
    Department of Justice on counterterrorism and the officer in
    charge under the law right now is that same Larry Thompson. So,
    I mean, you recused yourself, but you are working with him
    closely.
        If you had an outside individual like an Archibald Cox that
    would be at your selection, then there would be no question. I
    just hate to see all this good work done and then an accusation
    of a conflict come at the end of the road. This thing is going
    to live with us for a long time, apparently, from the effect it
    has had on the market and you can see all the different
    happenings in different committees.
        Senator Stevens and I actually recommended a select
    committee, rather than have all this duplication. Right now,
    for example, at my Commerce Committee, we are having Mr.
    Skilling and Ms. Watkins up for the second time and they will
    probably appear four more times at least on the Senate side and
    five or six more times over on the House side.
        So I think to really get to the bottom of everything and
    save time and what have you, and on behalf of the Department of
    Justice's best interests and you, the Attorney General, I
    understand that you have recused yourself, but why do you not
    recuse Thompson?
        Attorney General Ashcroft. Further judgments about this
    matter regarding other people or myself are inappropriate once
    recused. I have recused myself and withdrawn myself from this
    matter. It is my responsibility under the Government-wide
    regulations and rules and guidance to make that judgment. Once
    I have done that, I do not deal with the matter further.
        Senator Hollings. Then we can bring up Mr. Thompson. You
    are saying that he has to deal with it, is that right? You have
    given over the Attorney General's job to Larry Thompson? You
    have still got the authority under the law.
        Attorney General Ashcroft. My responsibility----
        Senator Hollings. I hear your statement, but, I mean, you
    have still got the responsibility under the law.
        Attorney General Ashcroft. I have the responsibility in
    accordance with the Government-wide rules and regulations in
    settings where I believe the totality of the circumstances
    might provide a basis for an appearance or an actual conflict
    of interest to withdraw myself, and I have done so, and having
    withdrawn myself, I will not have further involvement in this
    matter.
        Senator Hollings. We asked that Larry Thompson appear with
    you. Why did he not?
        Attorney General Ashcroft. I am not able to answer that,
    sir. I will urge Mr. Thompson, when inquired of by the
    committee, to make himself available to the committee. We want
    to work with this committee.
        Senator Hollings. I appreciate it. Let me just get into one
    other matter, then, because I hope on the first round--I am
    delighted to see the attendance that we have--to hold ourselves
    probably to 10 minutes at the most on the first go-around.

                   ANTITRUST ENFORCEMENT CLEARANCE AGREEMENT

        With respect to the Department of Justice's memorandum of
    understanding with the Federal Trade Commission that came to
    our attention last month here in January, that, in essence, as
    I see it, would change jurisdiction from the FTC to the
    Antitrust Division the media mergers and the matters of
    antitrust and Federal Trade Commission conflicts of interest
    and everything else of that kind, the public interest
    particularly. The Federal Trade Commission has a broad
    jurisdiction, intentionally so, a concurrent jurisdiction in a
    sense with the antitrust laws, but it has got a broader charge
    than the Antitrust Division in respect to the public interest
    and it can head off antitrust violations and it does not get
    into the technicality, it can get into intent and everything
    else of that kind, and has worked extremely well. Why? Why is
    that being done?
        Attorney General Ashcroft. As you have appropriately
    stated, there is concurrent jurisdiction in the Federal Trade
    Commission and the Antitrust Division of the Department of
    Justice in regard to Hart-Scott-Rodino notifications of
    proposed mergers. To negotiate on each case when it comes
    before on an ad hoc basis provides a delay in the context of a
    statute, which requires rather prompt action or else there is a
    presumption that the merger is to go forward.
        We believe that the antitrust laws and the antitrust
    enforcement are very important. Let me just say that
    competition is the basis for American productivity and success
    and we think it is an arena that needs to be safeguarded and
    the allocation and decisions made here should be merit-based
    and not driven by other considerations.
        In conferring with past leaders of the Departments, both
    the Department of Justice and the Federal Trade Commission, we
    have a letter signed by seven of them that states that it would
    be helpful to allocate these resources and to make an agreement
    to allocate these resources rather than to wait for each case
    to come up, basically, to recognize the expertise that is being
    developed in working on these cases. You mentioned, I think,
    the telecommunications and media arena.
        Senator Hollings. Right.
        Attorney General Ashcroft. Over the past 5 years, for
    example, there have been 45 such cases. They have all been
    handled by the Department of Justice and there is an expertise
    there that has been assembled in the Department of Justice to
    handle these cases. Over the course of the past 10 years, I
    think the numerics are something like 154 cases handled by the
    Department of Justice with about 22 cases handled by the FTC,
    although the FTC handled small cable merger cases in local
    areas rather than the large cases.
        It seemed to make sense that these agencies get together
    and agree that where there is an expertise that has been
    developed, we could have a kind of allocation, which is
    understood and roughly divides the work, but focuses on and
    capitalizes on the capacity and expertise of these agencies in
    resolving these issues in favor of preserving and protecting
    the competitive marketplace.
        I think that that is an important aspect of making sure
    that we have vigorous and effective antitrust enforcement, and
    it is with that in mind that this idea took shape. I think I
    have answered your specific question. I do not know that I
    should go further in explaining the concept.
        Senator Hollings. I am back to the expertise within the
    intent of Congress. You are right in what you say, but the
    intent of Congress was that they have concurrent jurisdiction
    because the Federal Trade Commission does not have to prove a
    criminal act and they have broader authority. You can have a
    monopoly and not use the monopoly to thwart or damage trade,
    for example, or competition, but you could have that monopoly
    not being exercised in the public interest and that is why the
    Federal Trade Commission looks at these things.
        We in the Congress have been working with this jurisdiction
    issue. There is the intent of Congress and now you are going to
    start legislating. You are going to take it away. Under the
    proposed memorandum of agreement, there are not going to be any
    more media cases before the Federal Trade Commission. I am
    chairman of the Commerce, Space, Science, and Transportation
    Committee. We have authorizing responsibility for the Federal
    Trade Commission and they did not come running and say, wait a
    minute, they did not ask us. They did not ask anybody in
    Congress. The consumer groups come running and tell me, they
    say, they did not ask us, and when we look into it, Mr. James
    asked Mr. Simms, his law partner, whom I take it he is going
    back to practice with when he gets through with you. That does
    not look like it is up to snuff.
        Attorney General Ashcroft. May I comment on that?
        Senator Hollings. Yes, sir, please do.
        Attorney General Ashcroft. Both the leadership of the FTC
    and the leadership of the Antitrust Division initially
    conferred with past chairmen of or past directors of their
    divisions, both Republican and Democrat, to help develop this
    list as a working arrangement to, in some ways, formalize what
    has been an informalized agreement. As you mentioned,
    telecommunications and media over the last 5 years, it is 46
    major cases at the Justice Department, none at the Federal
    Trade Commission. So this is not changing things substantially,
    it is providing a framework in which these things are done more
    promptly so that the work does.
        Now, I just wanted to indicate that the conferring was
    bipartisan and with individuals who were experienced in this
    process by both the--it is my understanding, this is what I
    have been told, I was not at any of these meetings--by both the
    Chairman of the Federal Trade Commission and his predecessors,
    both Republican and Democrat, and in the predecessors to Mr.
    James in the Antitrust Division, both Republican and Democrat,
    and seven of the previous leaders in this arena have indicated
    in a letter that they believe a concept of providing this kind
    of framework, certainly not something that would make it
    impossible to adjust. As a matter of fact, it should be a
    flexible framework.
        But this framework would help expedite our capacity to work
    in these matters and to do the work that the Congress has
    assigned, and that is the spirit in which that agreement was
    developed and I think it has the potential of being helpful
    rather than--in the 30-day clock that begins running when the
    filing is initially made, sometimes over half that time period
    has been lost because a decision has not been made which agency
    is going to pursue the matter. That makes it rather short, the
    2-week interval during which a request for documentation and
    information would be generated, and I think the idea that is
    commended by the past chairmen and directors of these
    departments and is commended by this kind of framework is that
    you get better opportunity to work immediately during the 30
    days without losing time.
        Senator Hollings. As you say, we look at the people who
    really have a direct interest and who enacted the law. I have
    been with it 35 years and with that authorizing committee,
    Federal Trade Commission, I cannot find anybody in the Congress
    that says that is a good idea. I will ask that the
    distinguished Attorney General review that very closely for us.
        Senator Gregg.

                           ATTORNEY GENERAL RECUSALS

        Senator Gregg. Thank you, Mr. Chairman.
        General Ashcroft, it was not going to be the line of
    questioning I was going to pursue, but I was interested in the
    questions that the chairman asked you regarding recusal. He may
    have a valid point. I am not familiar with Mr. Thompson or his
    background involvement here, but he may have a very legitimate
    point here.
        I am wondering, I presume that when you made your decision
    to recuse yourself, it was based on the fact that when you were
    involved in Government in another role, specifically as United
    States Senator, you may have received contributions from Enron
    or you may have voted on issues which had a direct impact on
    Enron, such as issues involving the marketability of power, is
    that correct?
        Attorney General Ashcroft. I think it is clear to say that
    the totality of circumstances surrounding my responsibilities
    and my history led me to believe that in accordance with the
    guidelines in a matter as sensitive as this matter, where there
    could be criminal prosecutions that I should----
        Senator Gregg. I think your decision was a correct one. I
    would just note that I suspect if you were to apply the
    standard you applied to yourself to the Congress, we would have
    to recuse the majority of Members of Congress.
        Attorney General Ashcroft. I have thought about that, and
    without trying to give legal advice to the Congress----
        Senator Gregg. Do not.
        Attorney General Ashcroft [continuing]. I do note that----
        Senator Gregg. It is a comment. It does not need a
    reaction.
        Attorney General Ashcroft. I just would note that I have a
    unique responsibility as Attorney General to oversee criminal
    investigations, which may, in the eyes of some and certainly in
    the calculations of others, make a difference.
        Senator Gregg. I understand the difference there.
        I wanted to follow up, though, on one of the issues
    involving terrorism, and I appreciate the courtesy you showed
    this committee in acknowledging our efforts in this area under
    the chairman's and my efforts. Other members of this committee
    have been extremely involved. Senator Mikulski has been
    extraordinarily involved in this issue.

                        TRANSFER OF NDPO AND ODP TO FEMA

        We have tried to develop a variety of different efforts to
    support the fight against terrorism and most of it was done
    before 9/11. One of the decisions we made early on was that we
    needed one-stop shopping for local and State officials to be
    able to come to the Federal Government and find out where to
    go, what to do, and how to get information and how to get
    support for their people, and we started something called the
    NDPO, which unfortunately withered on the vine at FBI because I
    do not think the FBI wanted to do it. Then the responsibility
    of NDPO was taken over by OJP.
        The question I have for you is, when a crisis occurs, and I
    asked you this question when we had our joint hearing back a
    few months ago, back 1 year ago----
        Attorney General Ashcroft. I hope I can remember my answer.
        Senator Gregg. I remember your answer, and I am sure it
    will be the same today.
        Attorney General Ashcroft. I am afraid you do.
        Senator Gregg. When a crisis occurs, who is responsible at
    the site, at the event?
        Attorney General Ashcroft. It is our understanding, and we
    believe it is the case that the FBI is responsible for crisis
    management.
        Senator Gregg. That is correct.
        Attorney General Ashcroft. For consequence management,
    which is once the site has been secured and for things like the
    investigative purposes, consequence management moves to other
    individuals.
        Senator Gregg. I guess the follow-up to that question is
    this. If the FBI is going to be on site and is under--as you
    know, this committee directed that every State develop a
    statewide domestic preparedness plan. I think we have received
    almost every State in now with a----
        Attorney General Ashcroft. We have about 46 States that
    have submitted their plans.
        Senator Gregg. And that was as a result of an initiative
    out of this committee. One of the things we wanted in that plan
    was coordination with the Federal Government, and I believe
    this is primarily accomplished through the FBI. If the FBI is
    on site, in charge, and is going to be in a command position
    over the resources that arrive once the disaster has exceeded
    local capabilities recognizing that the first group on the
    ground is going to be the first responders--the local police,
    fire, and medical--should these people not have gone through
    the Department of Justice training programs or a process which
    gave them entree into the Department of Justice versus some
    other agency?
        Attorney General Ashcroft. Well, that is--we certainly
    believe that the Department of Justice will continue to do a
    lot to train and we would expect that the nexus between our FBI
    presence in crisis management and those who are at the scene
    would be a well-developed relationship. I believe you may be
    headed toward a question about focusing some of these resources
    in another agency, and the President has made the decision that
    integrating some of those resources in FEMA would provide the
    right kind of cooperating continuity of people who work with
    first responders. There are different views on that.
        Senator Gregg. I said OJP before. I meant ODP. But the
    issue is, what is the role here of FEMA? What is the role of
    ODP? What is the role of FBI in the first responder training
    initiatives? To step back even further, again at the initiative
    of this committee, we set up five training sites, which have
    turned out to be superb. I think they are doing a superb job.
    Eighty thousand people have gone through those, first
    responders. These training centers have all been under the
    direction of ODP. How long did it take us to get those sites up
    and running and get ODP orchestrated in a way that it was able
    to effectively run people through those different training
    exercises? You were not there then, so you may not recall.
        Attorney General Ashcroft. It took some time, and I think
    that there has been great value in the training and that value
    has been understood and is appreciated. So while I support the
    administration's position of moving this matter to FEMA, I do
    not have to repudiate the fact that much of what you have done
    and what these hard-working individuals have done has been a
    great success. I think you are correct in characterizing the
    training as having been very valuable and the development of
    the plans by the States as being very constructive. So much
    work has been done that has been successful.
        Senator Gregg. I think it almost took us 2 years to get
    this thing up and running, and I am just wondering if, when we
    transfer it over to FEMA, we are going to see a significant
    disruption in their program. FEMA is not a grants organization.
    It is a response organization. It has never handled grants and
    it has never handled the management of this type of a grant
    structure. I am just wondering if you or anybody in your office
    has made an evaluation as to how much time it is going to take
    to reorganize this thing at FEMA period and what are we talking
    about in terms of a gap as a result of this transfer?
        Attorney General Ashcroft. I know that there are transition
    plans in terms of transferring the responsibilities in funding
    and it is thought that there would be a lot of transition of
    personnel and I think it is----
        Senator Gregg. They have already sent letters to people at
    Justice asking them what they are doing and when they are
    coming to FEMA, have they not?
        Attorney General Ashcroft. I have not seen such letters,
    but I understand that there is an expectation that people will
    move and that would minimize any kind of disruption. But I do
    not know of any study that has evaluated the transfer for
    purposes of finding out what kind of gaps would be developed.

                           DECISION ON FEMA TRANSFERS

        Senator Gregg. My time is about up, but let me ask you one
    last question on this because we worked very hard to get this
    working right and we have got it working right and now we are
    taking the chairs and we are moving them around the deck. Maybe
    it is going to work better as a result of it. But I have not
    necessarily been convinced of this, although I give the benefit
    of the doubt to the administration because you have got the
    final call on these and this is an issue of such significance.
        But can you give us a little background as to what
    Justice's position was in the debates leading up to this
    decision? Did you agree with the FEMA decision?
        Attorney General Ashcroft. You know, when the President
    asked me to be the Attorney General of the United States he
    asked that I advise him, but he asked that I advise him
    privately and I think it would be inappropriate for me to start
    down the road----
        Senator Gregg. Well, what advice did you give to FEMA?
        Attorney General Ashcroft. Pardon?
        Senator Gregg. What advice did you give to FEMA? I do not
    ask you for the advice you gave the President. I know that that
    is----
        Attorney General Ashcroft. In handling these issues, do the
    very best you can. This is very important.
        And now that people are focused on it--as you well know,
    very few people had your sensitivity to this issue of
    terrorism, and prior to September 11, I think we only had four
    States that had submitted plans and we had asked for plans but
    States had not made this a priority. There are others,
    obviously, now. I think the rest of the country has arrived
    where you have been for some time in understanding the urgency
    of this. So we have made a lot of progress recently and will
    continue to make progress and some of the grants are now being
    made, which I would expect to continue to be made.
        Senator Gregg. I appreciate those gracious remarks and with
    those I will certainly stop asking you questions.
        Senator Hollings. Senator Mikulski.

                            FIRST RESPONDERS FUNDING

        Senator Mikulski. Thank you very much, Mr. Chairman and
    Senator Gregg and, of course, the Attorney General.
        Senator Gregg and Mr. Chairman, as you know, I chair the
    subcommittee that funds FEMA. I, too, want to very much support
    the administration in its efforts on homeland security. I met
    with Governor Tom Ridge and Joe Allbaugh from FEMA exactly on
    this transfer. It is my position that I do not want to poach on
    this subcommittee or on the Justice Department but would hope
    there could be some type of discussion on this.
        Tomorrow, I will be holding a hearing on FEMA and its
    preparedness for the future and also this particular matter,
    because I want to be sure that FEMA is prepared, just generally
    in its consequence management responsibility, that we do the
    best job for the first responders, who are police and fire, and
    at the same time that we do not raid the money in our COPS
    program to fund the Office of Domestic Preparedness.
        Colleagues, I invite you to come to the hearing tomorrow,
    whether you are on the subcommittee or not, because, one, I
    value you, and also, Senator Gregg, when you chaired this
    committee, your leadership was really commendable on the
    counterterrorism. You did get momentum, organization, and
    money, I believe, into the ODP. So I think there is a lot of
    conversation that needs to go on with Governor Tom Ridge, with
    us, with other representatives in the administration.
        Again, my concern is, what is the best support that we can
    give to the first responders? What is the best way to do that?
    And at the same time--those are organizational issues--I am
    deeply troubled that in looking at the COPS on the beat--I will
    call it the COPS on the beat--program that there have been
    reductions in universal hiring, the schools program, the COPS
    technology, and others to move it over to ODP.
        Mr. Attorney General, am I right in that assessment? Let us
    join together here, because I am not into--before I get it, I
    think we have got a lot of talking to do, or if I get it at
    all. I am not interested in what subcommittee or in what
    agency. What I am interested in is the empowerment of the first
    responders.
        But Mr. Attorney General, in all of this talk of
    reorganization and consolidation, are we cutting the COPS
    program to fund ODP and move it over as there is a possibility
    of transition to FEMA, or have I misread the appropriations?
        Attorney General Ashcroft. I think it would be unfair to
    say that the transfer, the administration's transfer of ODP to
    FEMA is based on a cut in the COPS program. First of all, let
    me say how much I appreciate your goal-oriented approach to the
    ODP matter. Frankly, I support the administration's move and I
    think it is clear that we need to find the way that would best
    serve those first responders. You have characterized that
    wonderfully.
        Now, the COPS program has been a miraculous success. It is
    one of those things that Congress hopes will happen when it
    sets up a program. It was designed to provide funding for
    100,000 new police officers. I think funding was eventually
    provided for up to 111,000 new police officers. The police
    officers were to be funded for a period of time during which a
    local agency would have the option of understanding how
    valuable the additional police presence would be. My staff
    tells me that at the end of these police exposures as a result
    of Federal funding, 92 percent of the police forces then
    continue these officers because they have understood the value
    demonstrated by the presence of these officers in the
    community.
        Now, what is happening is that this program has succeeded--
    --

                           REDUCTION OF COPS PROGRAM

        Senator Mikulski. Mr. Attorney General, I do not mean to
    interrupt you. I am not trying to be brusque. According to the
    analysis that I got, COPS is cut by almost 80 percent, ending
    the police hiring program, the COPS in school program, cutting
    the COPS technology program by two-thirds. Are those factual
    statements or has my briefing material been incorrect?
        Attorney General Ashcroft. I think what we have
    demonstrated here is that the program has succeeded in getting
    the number of cops that were anticipated and it will continue
    to pay those who have been hired until their term is finished,
    but the objective of the program having been met, there is no
    further funding for additional hirings beyond 100,000 in this
    area.

                           ROLES IN CRISIS MANAGEMENT

        Senator Mikulski. I see. I would like to switch gears now
    to an issue raised by Senator Gregg, the whole issue of who is
    in charge. In our marathon hearings of over 3 days of hearings
    in terms of our preparedness on the issue of counterterrorism,
    the issue of who is in charge came up. I think we really need
    to clarify that, Mr. Attorney General, because it is true FBI
    is crisis and FEMA is consequence, but at a local response, it
    is often the mayor and his or her local police chief or fire
    chief that are in charge at the scene. When the FBI arrives, it
    is not to manage the crisis nor the coordination of the
    agencies for evacuation, medical treatment, et cetera, it is to
    treat it as a crime scene, and that has also resulted, it
    seemed in both--well, certainly in the anthrax situation--a lot
    of bumping into each other over what was the primary
    responsibility, the management of the public health incident or
    treating it as a crime scene.
        Could you tell me, what is the FBI's role in crisis
    management or is it really to be law enforcement and to treat
    it as a crime scene, looking for evidence for future
    prosecution against these thugs, and we feel both very
    passionate about these despicable attacks, but do you see where
    I am? The mayor thinks he is in charge.
        Attorney General Ashcroft. First of all, we want to work
    cooperatively with everyone regardless of who is in charge, but
    I think it is important. You raise a very important issue, and
    I would indicate to you that perhaps of greatest importance is
    that the first thing we want to do when the FBI has a
    responsibility for crisis management is to prevent the next
    attack. Prevention is our first priority. It misstates or
    misunderstands our priority to think that prosecution is our
    first priority.
        Very frequently, events that are terrorist-related are not
    isolated. We learned that painfully in the September 11
    disaster, when, as a matter of fact, some American citizens who
    were flying on the last plane, which landed on Pennsylvania
    soil instead of Pennsylvania Avenue, they took the matter into
    their own hands.
        The first responsibility of the FBI is to learn what can be
    learned and try to determine whether there is some other part
    of this----
        Senator Mikulski. If I have got some time here, let us take
    the anthrax situation. Let us take, whether it was at Brentwood
    or whether it was here with us, the FBI arrives on the scene.
    The CDC arrives on the scene. The Capitol Police arrive on the
    scene. We are leaving the scene. A lot is going on here.
        Now, when the FBI arrived, did they evaluate, in looking at
    their situation, did they say, our job then is to prevent the
    next anthrax attack? What did the FBI do there and what did the
    FBI do in New York? Was it looking to prevention? I am sure
    there was an international alert and all of those things, but
    do you see my point? What do they do when they arrive at the
    scene?
        Attorney General Ashcroft. Well, they try to secure the
    scene and part of that securing the scene is to try and make
    sure that we do not have additional people put in jeopardy, to
    try and learn if there is additional explosives to go off,
    whether there are charges placed or other things----
        Senator Mikulski. Oh, you are in charge of the scene?
        Attorney General Ashcroft. The FBI has a crisis management
    responsibility. Until the scene is secured in that respect, the
    FBI has that responsibility.
        Senator Mikulski. Does it override a mayor and the police
    and fire chief?
        Attorney General Ashcroft. We believe that the FBI manages
    the scene during the time of crisis, and we do not override but
    we work with and help coordinate these efforts.
        Senator Mikulski. Do you see my point?
        Senator Hollings. I understand it.
        Senator Mikulski. I appreciate the Attorney General, but I
    think the FBI has a very mixed role here, and an honorable
    role, so we are not disputing that. I do believe that
    prevention, the FBI's role in prevention is absolutely
    critical. I believe its expertise in explosives and other
    things are absolutely crucial. Its international networks, et
    cetera, are crucial. But it is also my observation that it is
    the local executive and their first responders that are really
    the initial being in charge. So we need a lot to talk about,
    and Mr. Attorney General, we also look forward to talking with
    you about the FBI, its preparedness in order to protect us.
        I think my time is expired, but I really would like to
    thank my colleagues. Our hearing tomorrow is in the morning and
    we would invite you to be as vigorous as you want in the FEMA
    questioning.
        Senator Hollings. We thank you, Senator, for your
    leadership and understanding of the duplicity here.
        Senator Reed.

                      LIBERIAN DEFERRED ENFORCED DEPARTURE

        Senator Reed. Thank you very much, Mr. Chairman. Thank you,
    Mr. Attorney General.
        Let me first thank you and commend you for your treatment
    of the Liberian community in the United States. Last September,
    at the direction of the President, you extended DED, deferred
    enforced departure, for these people. We have a large
    population of Liberians in Rhode Island, and as you well know,
    for 10 years now, they have been in limbo. They came here with
    temporary protective status. That has been revoked. Now you
    have allowed them to stay. And as you are aware, I am sure, the
    last 2 weeks have seen another turn for the worse in Liberia
    with attacks on the capital and chaos.
        I would like to work for a longer-term solution so that
    every year, these people do not wait until the last hour and
    you and the President have to step in and defer their
    departure. I hope I could work with you on that, Mr. Attorney
    General, and I wonder if you might give us some comments on
    your perspective at the moment on the Liberian situation.
        Attorney General Ashcroft. First of all, let me commend you
    for your sensitivity to this problem. The compounding
    difficulties, which are a result of recent developments do not
    make the situation any easier. The current designation of the
    Liberian deferred enforced departure designation expires on
    September 29 of this year, and prior to that date, the
    Immigration and Naturalization Service must coordinate with our
    Department of Justice, with the Attorney General's office, with
    the National Security Council and the Department of State to
    determine whether or not we should further extend. I can
    imagine that it is very difficult for individuals to look down
    into the future and not know whether there is going to be an
    extension or not.
        I would be very happy to confer with you about any attempt
    that you wanted to make, and I understand that you have filed
    bills to help resolve this. I guess that another bill has been
    filed in the House. Has Congressman Kennedy done so?
        Senator Reed. That is right.
        Attorney General Ashcroft. I would be happy to confer with
    you about those measures. The situation obviously is chronic.
    It is not something that just has arisen and has gone away. It
    is a long-term situation and it is one which, if something is
    not done on the long term, we are going to have to keep dealing
    with it on an interim and short-term basis.

                            NICS--GUN SHOW LOOPHOLES

        Senator Reed. Thank you, Mr. Attorney General. Let me turn
    now to another issue with respect to the war on terrorism.
    After September 11, you sent to the Hill numerous pieces of
    legislation designed to give you the full panoply of authority
    to preempt and prevent terrorist attacks. But from my
    standpoint, there was one glaring omission and that was the
    failure to recommend the closing of the gun show loophole.
        As you well know, in many parts of this country, unless the
    State has a background check law, a private seller at a gun
    show is not forced or required to conduct any type of
    background check on a potential purchaser, and this is not just
    an academic situation. In September of last year in Detroit,
    Ali Boumelhem was convicted of illegally obtaining weapons
    which he shipped to Lebanon, apparently for the benefit of the
    Hezbollah. He was using his brother to buy weapons from a
    licensed dealer because he was a felon and could not survive a
    thorough background check. It turns out that prior to 1998, he
    would buy the weapons himself, simply lie about his felony, and
    since there was not a NICS check, he got away with it.
        In addition to that, there have been reports that last
    November, Conor Claxton, a man accused of being a member of the
    Irish Republican Army, testified in Federal court in Fort
    Lauderdale that he and his associates had gone to south Florida
    gun shows to buy thousands of dollars worth of handguns,
    rifles, and high-powered ammunition to smuggle to Northern
    Island.
        On October 30 in Texas, Mohammad Navid Asrar, a Pakistani,
    pleaded guilty to immigration charges and illegal possession of
    ammunition and authorities said that in the last 7 years, Mr.
    Asrar had bought several weapons at gun shows, including
    handguns and rifles. I do not know if he bought them from a
    licensed dealer or a private dealer to be exact. He is
    suspected to have links to al Qaeda.
        So this is not an academic exercise. As you well know, too,
    we have found in the safe houses in Afghanistan manuals that
    instruct terrorists to exploit our lax gun laws, and so I would
    hope that we could deal with this issue promptly as we have
    dealt with so many others by closing the gun show loophole in a
    comprehensive way and I wonder if you could give me your
    thoughts on that.
        Attorney General Ashcroft. First of all, I agree with you
    that we need to make sure that we keep the guns out of the
    hands of these individuals who would terrorize and disrupt our
    freedom. In the event that the Congress makes changes in that
    respect, I will enforce those changes substantially.
        I have taken steps on my own to direct better enforcement
    of our laws which prohibit the acquisition of guns by illegal
    aliens. I have directed in the NICS system that the immediate
    determination rate be improved so that we will improve our
    accuracy to ensure that prohibited persons, including
    prohibited aliens, do not receive firearms in violation of the
    law. I requested that the FBI send all non-citizen firearm
    purchase requests to the INS Law Enforcement Support Center to
    check against INS databases. The FBI expects this process to be
    fully automated by late fiscal year 2002, so sometime close to
    fall. All non-citizen checks will be delayed until all the INS
    systems are queried and the responses evaluated by the FBI so
    that we do not have people falling through the cracks. The FBI
    estimates that approximately 3 percent of the incoming call
    volume will be sent through this procedure of special checks
    with the INS. Only NICS checks for non-citizens will be
    affected by this process, not other NICS checks.
        In addition, I would cite two improvements that are made,
    not to say that others could not be made, but on June 28, I
    directed the FBI to increase to the fullest extent practicable
    the percentage of NICS checks resulting in an immediate
    response of ``proceed'' or ``deny,'' because if there is too
    much lag, it is just a ``proceed'' that comes as a result of no
    action.
        In September, the FBI implemented an enhancement to the
    NICS system, a logarithm that filters out false positive hits
    and records erroneously matched records, pardon me, erroneously
    matched to descriptive data of the purchaser against the NICS
    database. As a result, the NICS immediate determination rate
    has increased by 5 percent so that we do not have an absence of
    determination, which results in an inappropriate authorization.
        So I think this is a challenge and one that we need to work
    on and I am doing administratively what I believe we can do to
    keep the guns out of the hands of those prohibited aliens.
        Senator Reed. Mr. Attorney General, if I understand the
    system, if one was a non-citizen, approached a private seller
    at a gun show in a State without a background check, none of
    these provisions would be triggered at all?
        Attorney General Ashcroft. If the person is not a federally
    licensed vendor, you are correct.
        Senator Reed. And that is the whole purpose of the gun show
    loophole bill, to apply to these non-federally licensed
    vendors, so----
        Attorney General Ashcroft. Licensed vendors at gun shows
    are already covered.
        Senator Reed. I commend you for your enhancement of the
    licensed dealers. The hole, the vulnerability, the gap which
    this very, very astute and ruthless terrorist organization
    looked to and tried to exploit is the non-licensed dealers.
        Attorney General Ashcroft. The President supports closing,
    I believe, the gun show loophole as you describe it.
        Senator Reed. So you would support legislation that would
    close the gun show loophole?
        Attorney General Ashcroft. This administration does support
    closing the gun show loophole.
        Senator Reed. Would you send a proposal up here? I already
    have a very good proposal, but you might consider looking at
    it.
        Attorney General Ashcroft. Thank you.
        Senator Reed. Thank you, Mr. Attorney General. One more
    issue with respect to this whole area, because I believe it is
    an important one. I believe you, from your response, obviously
    understand how important it is.

                                 NICS CHECKLIST

        After September 11, I met with some officials from the
    Department of Justice and the Bureau of Alcohol, Tobacco and
    Firearms. They indicated to me that immediately after September
    11, the audit log of approved gun sales was checked under the
    NICS system with the Government's terrorist watch list. That
    also was reported in the New York Times. And so it was clear
    that in the wake of the tremendous crisis, in the wake of
    looking everywhere for possible terrorists and terrorist
    attacks, these NICS records were deemed to be vitally important
    to be looked at.
        But you intervened shortly thereafter to prohibit any type
    of comparison of terrorist watch lists and NICS records. You
    indicated your interpretation of the law that such a comparison
    was not appropriate. I will disagree on that issue, but it
    raises a fundamental question.
        Again, in the space of all of these proposals to
    aggressively attack terrorism, you did not send a proposal up
    here to ask Congress to clarify the use of the NICS list in
    comparison with the terrorist watch list. Would you be in favor
    of doing that? I know Senator Schumer and I are sponsoring
    legislation to affect that or clarify the situation.
        Attorney General Ashcroft. May I just clarify a moment what
    I believe happened?
        Senator Reed. Yes, please.
        Attorney General Ashcroft. At the request of the Bureau of
    Alcohol, Tobacco and Firearms, ATF, about 180-some names were
    checked against the NICS audit log, which includes information
    about approved gun transfers. The counsel at the FBI developed
    reservations about that in light of his belief, which I believe
    to be appropriate, that the law prohibits the use of NICS
    records for anything other than auditing the NICS system with
    one exception. If in auditing the NICS system you detect a
    violation of the law, that can be referred for prosecution.
        If that law is to be changed, I believe that it will have
    to be changed statutorily. And in the event that it is changed
    statutorily, we would have continued--were it to be changed, we
    would continue on a course that had originally been started but
    was withdrawn when counsel for the FBI decided that it had not
    proceeded appropriately.
        It is my understanding that I intervened in that setting.
    It is my understanding that counsel for the FBI said, wait a
    second, we are outside the limits of our authority and we are
    in a prohibited area in accordance with the law which was
    enacted relating to NICS.
        Senator Reed. Thank you, General, for clarifying the
    situation, but as I understand the situation now, the operative
    rule is that these lists cannot be compared--the NICS list
    cannot be compared with a terror watch list. Is that the
    operative rule today, the law?
        Attorney General Ashcroft. When the NICS process is made,
    checking whether or not to issue a gun, the NICS system can
    inventory databases to find out if the individuals are
    ineligible. But any NICS record that is maintained is not
    eligible after that point for subsequent cross-reference to
    other investigative efforts.
        Senator Reed. Just a final point to clarify my
    understanding. You said in your response that the ATF had
    requested access to the NICS list to check some type of watch
    list, that you did not intervene, but that the counsel for the
    FBI intervened and stopped that process so there was no cross-
    checking of lists. Am I led to believe that if----
        Attorney General Ashcroft. I think there may have been some
    cross-checking done----
        Senator Reed. Right, but it was terminated----
        Attorney General Ashcroft. It was terminated----
        Senator Reed [continuing]. Before it was complete.
        Attorney General Ashcroft. That is correct, and I would be
    corrected if my staff were to tell me that I had intervened,
    but I thought that the FBI counsel----
        Senator Reed. No. No. Mr. Attorney General, I do not want
    to leave that suggestion if it is not supported by the facts.
    The point I want to establish, I want to understand what the
    law is today because you seemed to imply in your response that
    except for the inhibitions of the FBI general counsel, this
    process would have continued, and then I thought I heard you
    say----
        Attorney General Ashcroft. No. No. I agreed with his
    judgment on the statute.
        Senator Reed. Okay.
        Attorney General Ashcroft. I need to clarify one other
    thing----
        Senator Reed. Yes, Mr. Attorney General?
        Attorney General Ashcroft [continuing]. Which my staff is
    helping me on this detail. Denials in the NICS system are
    available for----
        Senator Reed. These are the approved purchases we are
    talking about?
        Attorney General Ashcroft. It is approved purchases, and
    persons who are denied and subject to prosecution for
    attempting to purchase a gun illegally.
        Senator Reed. Again, I think our exchange at least suggests
    an ambiguity in this issue which might require legislative
    correction, and again, your support for such would be
    appreciated.
        Attorney General Ashcroft. Thank you.
        Senator Reed. Thank you very much, General.
        Senator Hollings. I am delighted to recognize our former
    chairman, Senator Domenici.

                       COUNTERTERRORISM RESPONSIBILITIES

        Senator Domenici. Thank you very much, Mr. Chairman.
        First, I want to say to the Attorney General, in this new
    war we have, the war on terrorism, you have a very big job and
    the Justice Department has a lot of responsibility. I commend
    you for the way you have handled the job so far and, hopefully,
    you will remain vigilant and things will continue to break our
    way under your leadership.
        This subcommittee has a lot to do with the success of your
    office in the war on terrorism. People talk about how we are
    going to engage America in this war, and right here at this
    table in this subcommittee, when we finally write up this
    appropriation bill, we will have a lot to do with how we are
    going to engage ourselves in this war.
        While that is going on, there are a lot of programs that
    are part of the great American ongoing scene that you have to
    fund and operate. I have at least 8 or 10 that intrigue me and
    that I am interested in, some of them having New Mexico
    impacts. I am not sure I will get them all asked. If I do not,
    I will bundle them up and submit them to you and would ask that
    you submit your answers to the committee in whatever the
    chairman says, 10 days, 2 weeks, whatever is his requirement.
        Attorney General Ashcroft. We will try and be very prompt.

                              MENTAL HEALTH COURTS

        Senator Domenici. I want to quickly cover mental health
    courts and just say to you that we are experimenting across the
    land with a very small program, $4 million, to set up mental
    health courts. It is only for misdemeanors, but I think people
    would be shocked in this country if they knew that the jails of
    our cities and counties house more mentally ill people than do
    our hospitals or institutions that we have set up in an effort
    to help the mentally ill. There are more of them in our jails,
    in our county jails, in particular, than there are in our
    hospitals, which is a rather frightening approach indicating
    that America has got some resources that it ought to put in the
    right places.
        We started with mental health courts and I would like to
    ask you if you would have your staff give you a quick briefing
    on the mental health courts and ask if you could see your way
    clear to support them. They are new. They will handle
    misdemeanor cases. What happens is the entire framework of this
    small court system, of this new mental health court program,
    gears itself to the problems of misdemeanors of mentally ill
    people. There is a special way to treat them, a certain kind of
    help that is available. I think it is a very small amount of
    funding to put up, even though you are burdened with many
    programs, to see if we cannot do better in this area. Would you
    comment on that, please?
        Attorney General Ashcroft. First of all, I am very pleased
    to ask my staff for an additional briefing on this matter. One
    of the things that is a responsibility of our judicial system
    is to try not just to punish the offender, but to prevent
    future difficulties. In remediating offenses of those who are
    mentally ill, sometimes the close supervision that comes in a
    so-called mental health court setting can be valuable. I
    appreciate your mentioning it to me and will ask for additional
    information in accordance with your request from those who are
    responsible in the Department for these issues.

                                VAWA--NEW MEXICO

        Senator Domenici. I thank you very much. Now on behalf of
    the State of New Mexico, I want to ask you--I will submit this
    narrative also so I will not have to use the time of the
    subcommittee, but New Mexico has been denied funding in its
    efforts with reference to violence against women. We have an
    office, like most States do, with reference to violence against
    women. It turns out that New Mexico's statute, which is
    supposed to enable us to receive the money, is not written
    exactly as your lawyers think it should be written. Therefore,
    New Mexico is being denied its grant because we have not met
    the statute properly and have not passed legislation that puts
    us in a position to qualify.
        I think the denial under those circumstances, especially
    since the grant was given heretofore with the same facts, it is
    more than we ought to take as a State. I would ask you if you
    would consider it a good faith effort, and if you would, give
    New Mexico a 1-year waiver so they might proceed and not lose
    the money while they get together with the State legislature
    and attempt to rectify the statutory shortcoming.
        Attorney General Ashcroft. I am aware of this unfortunate
    situation. It is my understanding that the State legislature
    recently passed domestic violence legislation necessary to
    comply, and if they have not, that is another situation. But it
    would be very pleasing to be able to rectify this, and absent
    their having done so, I will consider your request.
        Senator Domenici. I believe you will find that they have
    not rectified it.
        Attorney General Ashcroft. They have not.
        Senator Domenici. They are out of session. They do not come
    back in until a call and there will not be a call this year. I
    think we really ought not be left without the money, and if you
    would take a look into this situation, we would appreciate it.
        Attorney General Ashcroft. Thank you.

                    RADIATION EXPOSURE COMPENSATION PROGRAM

        Senator Domenici. Thank you very much. You also have
    another area, just to recognize the diversity of what you do, a
    radiation exposure compensation program.
        Attorney General Ashcroft. Yes.
        Senator Domenici. Now, this is a very serious program.
    Nobody wanted it at the beginning because it cost so much money
    that subcommittees asked why they should be charged with those
    large amounts of money when the budgeteers are not giving us
    enough, nor are the appropriations chairmen giving us enough
    money. But we have, one way or another, finally set this
    program where it is sailing along. We had a very disgraceful
    situation, as you probably know, where certain recipients,
    entitlees, were walking around with IOUs in today's world,
    literally an IOU from the Federal Government saying, we ran out
    of money but we owe you as compensation under these particular
    radiation exposure statutes.
        I have a series of questions, following our attempt to set
    this program straight with an amendment that I was privileged
    to offer. I would ask you, if you can, for the record, to
    submit to us information on whether all the IOUs have been
    paid, for instance. Would you break down a category on the
    number of claims paid State by State? There are about eight or
    nine questions so that we will know that you are focusing on
    the program, and you are getting on with spending the money
    that is there.
        You should know and the Senators should know, that after
    all of this effort, we do have plenty of money because we have
    open-ended it out of frustration. Since we do not know what the
    amount is, we have said, as much money as you need to pay IOUs.
    Do you have any observations regarding the program? In any
    event, will you answer our questions so we will know the status
    of the program?
        Attorney General Ashcroft. I will answer your questions,
    Senator, and my observation is that IOUs are a one-way street.
    I do not think the Federal Government, when it comes time April
    15, likes to get an IOU from you, so when we have to pay our
    bills, we ought to give.
        I would add that the enactment of the National Defense
    Authorization Act for Fiscal Year 2002 ensures that funding
    will be available to pay the claims----
        Senator Domenici. That is right.
        Attorney General Ashcroft [continuing]. Including $172
    million in fiscal year 2002 and $143 million in fiscal year
    2003. Our estimates, we believe that these amounts will be
    sufficient to ensure that the Government actually pays the
    meritorious claims of Americans who lost their health, and in
    some cases, whose lives were lost.
        I will be happy to receive the list of specific questions
    and to make written responses to them. I think we are making
    great progress, not as a result of any great work by the
    Department, but the Congress stepped up to the plate here and
    provided a basis for us to do this in a far better way.
        Senator Domenici. I thank you very much, and I thank the
    Senators here who helped when that amendment was offered on the
    defense authorization bill and everybody supported getting the
    IOUs paid. It seemed to be a situation you would not like to go
    home and answer to your constituents. I told them I would never
    come back to their area until it was fixed. It was fixed, and I
    went back to see them.

                           SANTA TERESA PORT OF ENTRY

        IOUs have left the scene.
        I have two other questions with reference to ports of entry
    in New Mexico that I will just raise briefly with you. We have
    a little port of entry called Columbus. It desperately needs to
    be open all day and all night because it is the only port in
    that area that can handle that kind of a commercial load. We
    need somebody to look at when you are going to be able to
    provide the additional personnel needed for this port to do its
    job.
        We have a brand new port called Santa Teresa, which I am
    stating so that your staff will know of my concerns. It has a
    similar problem. It is underfunded and they have to cut back on
    their services because we do not have enough staff to keep it
    open.
        I might say to my fellow Senators, when the United States
    of America declares that we are going on alert, we all wonder,
    what does that mean? I can tell you, with reference to ports of
    entry, it means that they clamp down tremendously on those
    going through. As a result, if you do not give them more
    personnel, the lines get enormous and the backlogs get extreme
    because we are on alert and we are checking the cars and trucks
    more carefully than we would otherwise.
        But nobody recognizes the problem they have with money, and
    I am asking in this regard that you take a look. These ports
    are really doing their job with way too little money in terms
    of the personnel they need. Do you have an observation or
    comment regarding either of these two ports?
        Attorney General Ashcroft. Well, I spent some time on the
    Southwest border, particularly in the El Paso sector and over
    to Santa Teresa, which is--and we are pleased that we have that
    facility there and it is an exemplary facility and there are
    hard-working people there, but there is no question that it is
    stressed. Inspectors from the El Paso point of entry have been
    detailed to assist so that we could get to a 24-hour, 7-days-a-
    week basis there at Santa Teresa. The two new positions are to
    be deployed to Santa Teresa in this fiscal year, so we hope to
    be making progress.
        You are correct that when we go on high alert, it stresses
    us and it stresses the country commercially. We came close to
    having some of our manufacturing concerns in America be
    incapable of continuing manufacturing because the part streams
    that came from Canada and Mexico to these manufacturers were
    curtailed. In a system of just-in-time inventory, you threaten
    to be unable to continue.
        So we will address these issues regarding Santa Teresa and
    Columbus, did you say?
        Senator Domenici. Columbus, yes.
        Attorney General Ashcroft. I do not remember having been to
    Columbus, and I hope that means I have not been there----
        Senator Domenici. I do not think you would have. It is a
    very small port, and if you went to the El Paso region, it is
    quite a distance, about 1 hour and 15 minutes' ride.
        Attorney General Ashcroft. I think we went to Santa Teresa,
    which has got some new facilities there----
        Senator Domenici. Brand new.
        Attorney General Ashcroft [continuing]. Very nice
    facilities. But we will work in this respect.
        Senator Domenici. Thank you very much. Thank you, Mr.
    Chairman.
        Senator Hollings. Senator Murray.
        Senator Murray. Thank you very much, Senator Hollings, for
    having this committee hearing. I really appreciate the
    opportunity to ask some important questions from the Attorney
    General. Welcome to you for being here today.
        Attorney General Ashcroft. Thank you.

                 DOD PARTICIPATION IN NORTHERN BORDER SECURITY

        Senator Murray. Mr. Attorney General, last December, you
    announced that the administration would send the National Guard
    personnel to the northern border to help with border security
    issues. This is an extremely important issue to my State.
    People's lives have been impacted. The economy has been
    impacted. We have a tremendous amount of traffic going back and
    forth across the border that since September 11 has really
    halted and slowed and caused tremendous distress to those
    communities. So your announcement was extremely important and I
    really appreciate the fact that some relief is on the way. But
    more than 2 months have passed since that announcement and not
    a single Guardsman has yet been deployed to the border.
        Now, I have been working closely with Governor Ridge, the
    Department of Defense, and the Washington National Guard.
    Governor Ridge has been really good to work with. In the last
    week, he has gotten personally involved in this and I really do
    appreciate it. But it is kind of astounding to me, when our
    borders are so important, and we all understand that now, why
    it has taken 2 months for the northern border to get help and I
    wish you could explain that to us on this committee.
        Attorney General Ashcroft. Well, first of all, let me agree
    with you that we need to have the right kind of inspecting
    capacity and deployed resource on the northern border. We have
    about 5,500 miles of border with Canada and we have had fewer
    than 400 people staffing, manning that border, as opposed to
    the Southwest border, which has about 2,000 miles and we have
    had 9,000 people on the Southwest border.
        Senator Murray. We are acutely aware of that in my State.
        Attorney General Ashcroft. So we, in the midst of the
    situation, and we have had some threats regarding even
    terrorism. As you know, one individual, the millennium bomber,
    came across the northern border in your area, and fortunately,
    our sensitivity to terrorism and its potential allowed us to
    intercept that situation.
        But we were able to iron out the funding and other resource
    allocation matters with the Department of Defense and the
    memorandum of agreement, or MOA, was signed on February 15.
    About 700 Department of Defense personnel will assist and we
    should have those moving very quickly, now that the agreement
    has been signed. But the Department of Defense, obviously, is
    engaged in other very serious responsibilities and these--I
    wish we had been able at an earlier time to reach the kind of
    understandings about the deployment. We have been keenly aware
    of both threats to our security that could exist and the
    impairment to commerce that comes when you have to have a
    setting where you do not have adequate personnel.
        So we are going to have those individuals. They will be
    assisting in physical inspection of vehicles----
        Senator Murray. Do you know when they will be actually on
    the ground in our States?
        Attorney General Ashcroft. Senator, I think I have to--I
    hear that the DOD personnel are expected to be in place in 2
    weeks. I do not know if that means in Washington. I will be
    happy to try and learn specifically when we can expect that to
    happen.
        [The information follows:]

                           National Guard Deployment

        The Immigration and Naturalization Service (INS) signed a
    Memorandum of Agreement (MOA) with the Department of Defense
    (DOD) on February 15, 2002. Under this MOA, DOD will provide
    port-of-entry security, perform physical examination of
    vehicles, and manage traffic flow as well as provide limited
    air and intelligence support to assist in monitoring potential
    illegal activity along the northern border. All DOD personnel
    providing support to the Border Patrol under the MOA were on
    duty on the northern border by March 18, 2002. The support
    consists of a total of 6 aircraft with 63 pilots and crewmen.
    In addition, there are a total of 16 DOD personnel to support
    the Sector Intelligence Centers (SIC).
        One aircraft with 11 pilots and crewmen and 5 support
    personnel for the SIC are assigned for duty in Washington
    state. Mobilization of 29 DOD personnel to Washington state
    ports-of-entry (POEs) to assist Immigration Inspectors began on
    March 15, 2002. As of March 19, 2002, all 29 DOD personnel were
    on duty at POEs.

                       LIMITATIONS ON AGREEMENT WITH DOD

        Senator Murray. We would really appreciate knowing that.
    One of my concerns is that the MOAs are only for 179 days. Do
    you think that is an adequate amount of time?
        Attorney General Ashcroft. Well, we have asked for the kind
    of long-term commitment to the northern border in this budget
    request that we believe we can hire long-term professionals as
    part of INS, the Border Patrol, to undertake these
    responsibilities. We believe that is an attainable and
    achievable matter with what we believe will be the appropriate
    resourcing.
        Senator Murray. I agree with you, what we really need to do
    is to get the Customs/INS/Border Patrol agents in place and not
    just rely on the Guard, but I am concerned that 179 days will
    not be long enough, particularly when budgets here take quite a
    bit of time to get through and people need to be hired and
    trained. Will you support us on an extension of that if 179
    days proves to not----
        Attorney General Ashcroft. I will do everything I can to
    make sure that we secure the border properly, and I would be
    willing to make a request for additional help.
        Senator Murray. I appreciate that response.
        Senator Hollings. You have actually got $25 million in here
    for 285 Border Patrol agents to be transferred from the
    Southwest border to the Northwest border. I just visited the
    Border Patrol school down in----
        Senator Murray. Last year's budget did make increases. We
    need to make further increases in the budget today, but it is
    going to take a while.
        Let me ask you one other question on this. It is my
    understanding that the deployment order for the National Guard
    to the border will be conducted in accordance with Title X and
    that the Guardsmen will be deployed without any weapons. Now,
    my concern is that deploying these soldiers unarmed really
    severely limits their ability to guard the border because it
    will now fall upon the INS and the Customs Service agents to
    protect the soldiers in addition to securing the border. Is
    that how we envision the National Guard helping us and do you
    support the decision to deploy the Guard under Title X?
        Attorney General Ashcroft. Senator, the Guard is going to
    provide assistance to the immigration inspectors, examiners,
    and Border Patrol. We believe that that assistance is going to
    be very valuable in helping us carry over until we can put our
    own people there.
        I am not in a position--I do not know. I will have to just
    say, I am not sure what would be the need for or benefit to
    asking the Guard to be armed. There is a little sensitivity
    here that I think is important for us to note. The border
    between the United States and Canada is not a militarized
    border and we do not want to signal that it is and our friends
    in Canada are sensitive appropriately that we do not signal
    that we are somehow arming the border.
        So one of the reasons we want to use conventional resources
    promptly and Border Patrol and INS resources is that that,
    again, puts us back in the sense of regularity about the way we
    would enforce the border. It may be with that in mind that this
    determination has been made, but the best part of my answer was
    when I said I do not know, and I will have to try and get back
    to you.
        Senator Murray. I do appreciate that, but I think you
    should know there is a concern that we are deploying a number
    of people unarmed and it is not easy to be out there on a
    border patrol, as I think you well understand, and I think
    there is a concern that because this is under Title X that
    unarmed personnel on the border will just mean that our Border
    Patrol will have more people to protect. I would appreciate
    hearing back from you when you know that.
        Attorney General Ashcroft. Thank you.
        [The information follows:]
                           Arming the National Guard
        The position of the Department is that the National Guard personnel
    activated by the Department of Defense (DOD) to provide support to the
    Immigration and Naturalization Service (INS) on the northern border not
    be armed. The reasons for this are:
      --The DOD personnel assigned to provide aviation support to the
            Border Patrol remain subject to DOD rules for the use of force,
            which states that the soldiers will not be armed.
      --DOD personnel assigned to support INS will not participate in the
            pursuit, surveillance, search, seizure, apprehension, arrest,
            investigation, interrogation or detention of any individual; or
            any other form of law enforcement activity.
      --DOD personnel will not be placed in a position or be required to
            perform a task that calls for the use of force, lethal or non-
            lethal.
      --No DOD aircraft or aircrew will be required to land or conduct
            operations in a ``hot'' zone.
      --An armed INS Border Patrol agent will be transported aboard each
            flight of DOD aircraft.
      --An Immigration Inspector will directly supervise DOD personnel
            while on duty at the port.
      --The 16 DOD personnel supporting the Border Patrol Sector
            Intelligence Centers will be working in an office environment.

                         REDUCTION OF THE COPS PROGRAM

        Senator Murray. Mr. Chairman, I do not have much time yet
    and I know Senator Mikulski asked about the COPS program. Let
    me just reiterate my concern about that, as well, and the
    program cuts to that.
        We are asking a lot of our local law enforcement since
    September 11. I have received dozens and dozens of letters from
    our local law enforcement officers from all over our
    communities who are deeply concerned that they are getting a
    real double standard here, where we are asking a lot of them to
    protect citizens in situations none of them envisioned a year
    ago, and cutting the COPS program says to them that we are not
    going to stand behind our commitment to help them. So I hope
    that we can reinstate this program in our budget and that we
    can do the right thing to support the cops that are working so
    hard to protect our citizens today.
        Attorney General Ashcroft. Thank you.
        Senator Hollings. Very good. Senator Kohl.
        Senator Kohl. Thank you very much, Senator Hollings.
        Mr. Attorney General, good to see you.
        Attorney General Ashcroft. It is a pleasure to see you.

                               PROJECT CHILD SAFE

        Senator Kohl. Mr. Attorney General, in last year's CJS
    bill, we included a provision calling for the Justice
    Department to develop a safety standard for child safety locks
    and to report to Congress by January 15. This standard has not
    yet been developed, and until it is, no Federal funds can be
    spent for the distribution of safety locks. We included this
    language after the Consumer Product Safety Commission released
    a study which found that 30 of the 32 safety locks then
    available on the market could not pass the most basic safety
    tests.
        While we continue to believe that the purchase of a safety
    lock should be mandatory, we also strongly believe that the
    locks, obviously, must work. Can you tell us which experts the
    Justice Department is working with to write the report and can
    you tell us when it will be completed?
        Attorney General Ashcroft. First of all, I thank the
    Senator for this inquiry. The Office of Justice Programs has
    been working with the Consumer Product Safety Commission and
    with a group known as the American Society of Testing and
    Materials to develop the national standards for gun safety
    locks. I have been told that those standards should be
    available in the next 60 days, sometime during April of this
    year, and I would hope that that is an accurate forecast. I
    know that it was mandated by January, but they are obviously
    not here.
        Senator Kohl. So are you saying that----
        Attorney General Ashcroft. April is the projected date, and
    we are working with the Consumer Product Safety Commission and
    the American Society of Testing and Materials in the
    development of the standards.

                              SAFE EXPLOSIVES ACT

        Senator Kohl. All right. Thank you so much.
        Mr. Attorney General, as you know, Senator Hatch and I have
    introduced legislation that creates uniform Federal regulations
    for the sale or purchase and the possession of explosive
    materials. In some States today, it is easier to get enough
    explosives to take down a house than it is to buy a gun, to get
    a driver's license, or even to obtain a fishing license. The
    Safe Explosives Act that he and I authored would extend the
    same requirements currently in place for interstate purchases
    of explosives to intrastate purchases.
        Mr. Attorney General, can you tell us whether the Justice
    Department supports this legislation?
        Attorney General Ashcroft. First of all, we are in the
    process of reviewing the legislation, which I think, if I am
    not mistaken, that is the measure you submitted on February 14
    with Senator Hatch and Senator Cantwell and maybe Senator
    Schumer, I think were the parties. This certainly seems like
    the kind of objective that we ought to be able to support and I
    cannot announce a final conclusion on a study of the
    legislation at this time, but we will continue to review it and
    look forward to working with you on it. It is the kind of
    objective that we ought to be able to work together on to
    support.

                         REDUCTION OF THE COPS PROGRAM

        Senator Kohl. I know that Senator Mikulski talked about the
    COPS program and Senator Murray mentioned it herself. I do not
    want to belabor it unless there is something that you have not
    said yet with respect to that. All the indications are that the
    COPS program has been successful. As you know, it is a way in
    which we at the Federal level help to support the hiring and
    deployment of officers, which is clearly a good thing, or at
    least we all think it is a good thing. The 80 percent cut in
    funding would indicate that you all do not think it is such a
    good thing. Correct that misinterpretation if that is what it
    is that I have.
        Attorney General Ashcroft. Let me just say to you that I
    think it is a good thing. I think it has worked very well. The
    objective of the legislation was to make it possible for the
    law enforcement community in America to understand and develop
    100,000 new officers on the street. I do not know of a Federal
    program that has been more successful in that respect.
        Funding was, I think, for 111,000 eventually, and the most
    important part about that was that as the funding expired, in
    something like 92 percent of all the cases, the local law
    enforcement officials said this was a good idea. The purpose of
    the statute was to introduce us to the value of these
    additional law enforcement officers, and we are going to pick
    up that cost and continue with those officers.
        So there are two groups of people that say that this has
    been successful. One group says this has been successful. This
    is a program that worked, that achieved its objective. Now we
    can do some other things. Another group says, this is a program
    that worked. It is successful. We ought to do more of this.
        So, frankly, I think that is where we are. Certainly, the
    Department of Justice is gratified by the success of this
    program and I wish all of our programs had the 92 percent sort
    of endorsement ratio of after having been in place, that they
    were so successful that the local authorities thought they were
    willing to put up the money to continue them. That is a
    wonderful endorsement.
        The decision on the part of the administration to do some
    other things that relate to the Federal Government's
    responsibilities with the resources is not a repudiation of the
    success or value of the program, which I think everyone agrees
    is one of the most successful programs we have ever had.
        Senator Kohl. I do not know what to take of your answer, so
    I am just going to sort of leave it there. I think you are
    saying it is a great program, it has been a great success, and
    we are moving in another direction, which is okay. I mean, I
    appreciate that.
        Attorney General Ashcroft. I think that is a fair
    characterization, Senator. It accomplished its purpose. It said
    to local law enforcement, try some of these people for a period
    of time, see if they are worth it. They concluded that they
    were. It demonstrated the fact that hiring more people makes a
    difference in the quality of life and the level of crime and I
    think----
        Senator Kohl. Does it say that, in your honest judgment, we
    have reached the limit of----
        Attorney General Ashcroft. No, I think it says that----
        Senator Kohl [continuing]. The limit of what success there
    is in hiring additional law enforcement?
        Attorney General Ashcroft. I think it says that it has
    demonstrated very clearly that if you put additional resources
    into the law enforcement mix, you can improve the quality of
    life for people. That having been demonstrated, for local
    decision makers, they need to decide whether they want to put
    more resources into law enforcement or whether they feel that
    they are at the right level. The program initially was designed
    to demonstrate that concept.
        I think it is clearly and overwhelmingly understood. A 92
    percent endorsement rate backed by funding at the local level
    indicates that the law enforcement officials know and local
    decision makers know that if they want to devote additional
    resources, they can probably expect to see additional return in
    public safety.
        Senator Kohl. I thank you. I thank you, Mr. Chairman.
        Senator Hollings. I thank you.
        Senator Leahy, the chairman of our Judiciary Committee as
    well as a distinguished member of our Appropriations Committee.
        Senator Leahy. Thank you.
        Senator Hollings. Like Kato's famous couplets, you can make
    your own little laws and sit attentive to your own applause.
        Senator Leahy. I am impressed, Mr. Chairman. I really am. I
    will wait for the full translation of that. We Northerners have
    to work on that accent just a bit.
        Senator Hollings. Oh, yes. That is all right.
        Senator Leahy. I actually served with the distinguished
    Senator from South Carolina for over a quarter of a century on
    this committee.
        Attorney General Ashcroft, I apologize for not being here
    earlier. I am also the chairman of the subcommittee that
    handles foreign aid and the administration was testifying on
    the foreign aid budget and I was at that.

                               POSTCONVICTION DNA

        I will put my full statement in the record. I do appreciate
    these hearings, Mr. Chairman. I have written a number of
    letters over the past several months to the Department of
    Justice and I realize we have had some difficulty with the
    mail, but almost miraculously, within hours of this hearing,
    all these--I have been waiting for answers for several months--
    they suddenly got answered.
        In fact, I received one letter I sent 6 weeks ago
    concerning the Department's decision to set aside its plans to
    offer $750,000 in grant money for postconviction DNA review
    programs. I just want to make sure I understand the answer. I
    had asked the question, does the Department intend to use
    alternative funds for postconviction testing grants? The
    response said you have asked NIJ to look into DNA initiatives.
    Is this a way of just saying we are not going to spend a dime
    on postconviction DNA testing? I realize out of a $30 billion
    budget it is $750,000, but insofar as that was specifically in
    legislation, what is going to happen?
        Attorney General Ashcroft. First of all, I agree with you
    that these hearings are valuable and they do provide a basis
    for a better service through the mail.
        My staff indicates to me that a number of your letters were
    answered very recently, and that is appropriate.
        Senator Leahy. It focuses one's attention.
        Attorney General Ashcroft. Thank you. Just to give you an
    idea, in terms of what we requested for DNA work in the next
    year's budget----
        Senator Leahy. No. No. What about the $750,000 that is
    there now?
        Attorney General Ashcroft. The $750,000, I believe, is the
    money that was allocated to assist New York in identifying
    victims that died in the World Trade Center----
        Senator Leahy. We voted tens of billions of dollars to make
    available for New York and elsewhere in post-September 11. Out
    of those billions of dollars, there was not money for that DNA
    testing, or the $20 billion that the President reassured New
    York they were getting, there was not money for that? We had to
    take it out of the postconviction DNA program? Is this just a
    nice way of saying, hey, we do not like that program, so let
    us----
        Attorney General Ashcroft. I think it is----
        Senator Leahy [continuing]. Cloak it in terrorism and say
    we are going to give it somewhere else?
        Attorney General Ashcroft. No, I do not think that is an
    accurate characterization.
        Senator Leahy. I am just asking. I am just a lawyer from a
    small town in Vermont and I do not understand how you figure it
    in the big city, but it just seems to me that out of the
    billions of dollars for post-September 11 terrorism things that
    we could have found the money there and not had to take it out
    of this program, which had been specifically authorized.
        Attorney General Ashcroft. I have asked about this and the
    answer that I have been given is this, and I believe it is the
    appropriate answer, that the Director of the National Institute
    of Justice had some concerns about the $750,000 project, about
    the methodology and the usefulness of the eventual findings
    from the proposed research project, which would have provided
    almost no funding for the actual testing of convicted offenders
    for DNA.
        Moving this resource to provide and meet these other needs,
    I think, reflects not a repudiation of the value of
    postconviction DNA studies, but it reflects the fact that this
    did not appear to be a study which was going to return the kind
    of value on postconviction DNA that was appropriate and,
    therefore, was seen as an opportunity to support the effort to
    assist the identification in the World Trade Center.
        Senator Leahy. Are we ever going to have money for
    postconviction DNA testing?
        Attorney General Ashcroft. In our proposal for this year,
    next year, pardon me, fiscal year 2003, the DNA breakout is
    convicted offender backlog reduction, which is a postconviction
    sort of thing, $15 million requested; DNA no-suspect backlog
    reduction, that is where you have DNA from the crime scene, at
    $25 million; a DNA lab improvement program, $35 million is
    requested; and DNA research and development, $5 million is
    requested. Now, all of those----
        Senator Leahy. But there is no money in between now and
    then?
        Attorney General Ashcroft. Okay, yes.
        Senator Leahy. It is a heck of a note if you are on death
    row and it comes up prior to----
        Attorney General Ashcroft. Let me go over this year's
    resources. The convicted offender backlog reduction component
    is $26 million that is available this year. The DNA no-suspect
    backlog reduction amount this year is $35 million. The DNA lab
    improvement is $35 million. And the DNA research and
    development fund is at $5 million again for this year.
        Senator Leahy. All right. Let me ask you an area where I am
    not sure I fully understand your answer, Attorney General, but
    let me do a follow-up question and hope I get the answer prior
    to our next budget hearing, or maybe we will have an
    authorizing committee hearing.

                            NORTHERN BORDER SECURITY

        I know Senator Murray asked about the northern border and
    the Justice Department budget calls for substantial increases
    in funding for border security. That is something I have called
    for for years, certainly especially since September 11. In
    fact, I included language in the PATRIOT Act authorizing
    tripling the number of Border Patrol agents, INS inspectors,
    Customs Service officers. The President's budget builds on what
    we did in the appropriations bill last year, Mr. Chairman, and
    I think that is on the right track.
        I note your budget calls for half of the new Border Patrol
    positions to be on the northern border. It is silent about the
    percentage of new INS inspector positions to be assigned to the
    northern border. Why not a similar earmark for inspectors? Are
    they needed?
        Attorney General Ashcroft. Well, let me say this, that I
    believe inspectors are needed on the northern border. We are,
    as I mentioned to Senator Murray, eager to have the assistance
    of the National Guard troops to assist us with inspections and
    other processing at the borders. We need for those borders to
    be open and working and regular and free-flowing and secure all
    at the same time.
        I have visited the northern border with that in mind and I
    was distressed in my recent visit to see people reassigned from
    the rest of the country there. So I know that filling in there
    has made it difficult across the board now.
        Senator Leahy. But General, I live an hour's drive from
    that same northern border and you could send up National Guard.
    They are not trained the way Border Patrol are. They are
    certainly not trained the way INS inspectors are. I can tell
    you right now, not from any expertise but just going to that
    border, we need INS inspectors, we need Border Patrol, both,
    not just from a security point of view but from a very
    significant economic point of view.
        Canada is our largest trading partner. Talk with your
    fellow Cabinet member, Secretary Abraham, and ask him what
    happens with Michigan, for example, if you cannot move things,
    a free-flow through. That is going to affect all the way down
    into your State of Missouri. It is not just security. We want
    people to move back and forth, plus the fact that we have a
    wonderful advantage of having a country as friendly as Canada
    next to us.
        We authorized, for example, $50 million for INS to improve
    technology for monitoring that northern border and to purchase
    additional equipment. Does your budget request money under that
    authorization? These are the things I would think we need.
        Attorney General Ashcroft. The President's budget on the
    northern border would reflect about a 148-percent increase over
    the authorized individuals from the year 2001. In particular,
    in the next year's budget, we are seeking an enhancement of 150
    individuals in inspectors on the northern border. We are----
        Senator Leahy. Are those INS?
        Attorney General Ashcroft. Yes, sir. The use of the
    National Guard is not to suggest that we think the National
    Guard has the capacity to do this with the expertise of the
    INS. It is designed to be a fill-in measure to try and help us
    in a stopgap way pending the development of the additional INS
    resources and the training and the hiring which is obviously a
    challenge.
        Senator Leahy. I would ask that you look very closely at
    that, because you and I are in agreement. It should not be the
    job of the National Guard. I have great admiration for the
    National Guard. I am the co-chairman of the Guard Caucus. But I
    want them for the things they are trained to do. They have
    helped out since September 11. Within a matter of hours, the
    Vermont National Guard was flying patrols around the clock over
    New York City, our F-16s based out of Burlington, Vermont,
    armed with sidewinders. They did that for a very long time. The
    Guard in your State of Missouri has been one that has responded
    very well. They all do.
        But we need INS inspectors, we need Customs agents, we need
    those who are trained for this very specialized thing. Just as
    we could not ask them to go out and do some of the things the
    Guard does, it is not good to have the Guard be asked to do
    that when we can put these personnel along our northern border.

                       STATE AND LOCAL ASSISTANCE GRANTS

        The administration is going to repackage a number of
    Justice Department grant programs, cutting their funding.
    Programs targeted for elimination include the State and local
    law enforcement block grants, they got $400 million, I believe
    this year; Byrne law enforcement block grants for efforts to
    improve our State and local courts, and they got, what was it,
    about $500 million this year. The plan would cut more than $1.6
    billion from the $2.5 billion appropriated this year for State
    and local law enforcement grants put into a new $800 million
    justice assistance program.
        It would be very serious, coming from a rural State. We
    rely, a lot of rural States, a lot of rural areas of large
    States rely on these grants to combat crime. They have proved
    very, very effective for State and local law enforcement
    agencies. How does this new justice assistance program, which
    results after you cut $1.6 billion out of the money we give to
    local and State law enforcement now, how does this really help?
        Attorney General Ashcroft. Well, we believe the program
    will be an effective program of assistance with the kind of
    flexibility and capacity of the recipient governments to
    enhance security. There is obviously a need for us to do some
    things federally that we have not done, and as we seek to find
    ways to have the resources to do federally, it is not as
    possible for us to be as generous as we might otherwise be with
    funding in providing assistance at the State and local level.
        Senator Leahy. But you were a Governor and you were an
    attorney general of your State. I was a State prosecutor. We
    both know that in law enforcement, most law enforcement is done
    at the State and local level and done best and our people want
    it done that way. I mean, you like to know that you can call
    your local police department or you can have your local
    district attorney respond or your sheriff or State police or
    whatever else.
        I think you may very well want to look at that, because I
    know that the Congress is going to look at the fact that do we
    really improve the safety in the small towns of Missouri or
    Vermont or South Carolina or anywhere else if we are cutting
    back on the, whether it is the Byrne grants or anything else
    that have gone to those small communities or to the States.
        I would suggest you look very closely at that because I am
    not convinced that that is going to improve law enforcement. I
    mean, we have seen crime come down every year for 8 years, but
    part of that has been because of our dramatic increase in money
    to the COPS program and other things over those 8 years to
    help.

                                    TRILOGY

        One other area I would ask you to look at is an FBI
    initiative, I think it is an extremely important one, the
    Trilogy program to upgrade their information technology. The
    counterterrorism supplemental for 2002 included almost $250
    million for advanced computer equipment and software. The FBI
    has requested another $109 million in fiscal year 2003. But the
    law requires--as important as this is, the law requires you,
    that is, as head of the Justice Department, and the FBI to
    submit quarterly status reports on Trilogy. That is in the
    fiscal year 2001 law. That has not been done. Will you be able
    to start providing a current status report on Trilogy?
        Attorney General Ashcroft. Senator, I will have to get back
    to you on what the situation there is. I can----
        Senator Leahy. I know you want to follow the law. We just
    want----
        Attorney General Ashcroft. I do want to follow the law. It
    is my responsibility to enforce the law. Frankly, I want to be
    very responsive to you and to members of this committee and to
    the United States Congress. I have a great respect for the law.
    The delivery of Trilogy software has not been delayed. The
    expedited network and desktop rollout will help the FBI. Let me
    make an inquiry about the appropriate reports and let me make a
    report as promptly as I can. I will be happy to do that.
        [The information follows:]

                            Status Report on Trilogy

        The Department of Justice (DOJ) appreciates the support
    that Congress has given its Trilogy information technology
    upgrade project, and understands the oversight role that
    Congress plays in ensuring that the large amount of funding
    that it has provided is used appropriately. Indeed, Trilogy is
    one of the FBI's top priorities, and it must be managed and
    executed properly.
        The fiscal year 2001 Appropriations Act directed the FBI to
    submit quarterly status reports on the implementation of the
    Trilogy plan to the Appropriations Committees. The DOJ and FBI
    take this reporting requirement seriously and have worked
    diligently with each other and with the Office of Management
    and Budget over the last year to comply fully with this
    requirement and expedite the review process so that timely
    reports can be transmitted to Congress.
        The first quarterly report was transmitted to Congress on
    June 29, 2001. The second and third quarterly reports were
    jointly transmitted to Congress on February 26, 2002.
        The fourth report was prepared by the FBI but did not
    include the most recent information on accelerated Trilogy
    implementation. Therefore, the FBI decided to submit it with
    the fifth report to provide a more updated and accurate
    description of the Trilogy program as it currently stands. The
    fifth report reflects recent developments regarding Trilogy
    acceleration and fully explains how the program has been
    accelerated and improved to reflect the FBI's response to the
    terrorist attacks. The fourth and fifth quarterly reports were
    jointly transmitted to Congress on March 19, 2002.
        In summary, DOJ and FBI take reporting requirement
    responsibilities very seriously and remain committed to keeping
    Congress informed on the progress of the Trilogy program. At
    this time, DOJ has transmitted the first five quarterly status
    reports to Congress. The FBI is currently working on the sixth
    report.

        Attorney General Ashcroft. May I just--I may have created a
    wrong impression in response to one of the questions about
    local law enforcement in saying that, in some instances, we
    have had to allocate our resources to Federal responsibilities.
    I think, overall in the President's budget, assistance to local
    and State agencies will have a substantial increase. But as it
    related to the programs you mentioned, some of them are less
    than they were previously.
        But I would be happy to present you and I will provide an
    accounting of that, but I think it is between $1.8 and $2
    billion of overall increase for State and local law enforcement
    in the budget request this year in recognition of the point you
    are making, that law enforcement at the local and State level
    is very important to national security.
        [The information follows:]

                            State and Local Funding

        While there is a reduction and consolidation of DOJ state
    and local grant programs, the Administration proposes an
    overall increase in federal resources in fiscal year 2003 that
    are targeted to support the state and local emergency first
    responders. These federal funds are consolidated within the
    Federal Emergency Management Agency's $3.5 billion request.

                               TOBACCO LITIGATION

        Senator Leahy. How much total funding do we need to
    continue the tobacco litigation?
        Attorney General Ashcroft. We have asked in this budget for
    about $25 million----
        Senator Leahy. Is that going to be enough?
        Attorney General Ashcroft [continuing]. For this year's
    expenditures. That would be combined with perhaps other
    resources to assemble the kind of database, evidentiary
    database and the organization of the hundreds of thousands of
    documents that are necessary. We believe that is an amount that
    is appropriate to and will provide a basis for us to sustain
    the lawsuit in this year, to continue the lawsuit and to
    continue to prosecute the lawsuit vigorously.
        Senator Leahy. If it is not enough, do you have other
    sources where you can get money?
        Attorney General Ashcroft. We have sources that have been
    used previously that relate to the health care fraud and abuse
    fund. I believe that is one of the sources that have been
    tapped from other agencies that have provided available
    resources to help sustain the cost of developing the
    evidentiary basis for the trial.
        Senator Leahy. Mr. Chairman, I will put my other questions
    in the record, but I wonder if I might have the indulgence of
    the Chair to ask one more question.
        Senator Hollings. Sure, all you want. Go ahead.

                         CIVIL RIGHTS OF ARAB AMERICANS

        Senator Leahy. How about Federal civil rights enforcement?
    There were a rash of crimes against Arab and Muslim Americans
    after September 11. Some were shocking. One, a man who shot, as
    I recall, one person who was not a Muslim but he just shot him
    dead. He was a Sikh. When asked why, he said, ``Because I am an
    American.'' Well, that shames all Americans and I know you
    share my views on that and I thought President Bush's
    statements, strong statements against that kind of
    discrimination against fellow Americans was very, very good and
    I publicly praised the President for that and the Department of
    Justice for speaking out on it, too.
        Now, when you came before the Senate Judiciary Committee in
    December, you said the FBI has commenced approximately 300
    Federal criminal investigations involving post-September 11
    attacks on Arab or Muslim Americans or others based on their
    ethnicity, their actual ethnicity, or in some cases, of course,
    their perceived ethnicity.
        But you say that, to date, there have been only eight
    Federal cases resulting from approximately 300 investigations,
    so in about 97 percent, there were none. Even if you count all
    the State prosecutions, there appear to be about 60 total cases
    out of 300 investigations. Is that because there was nothing
    there or is this because of a policy determination on such hate
    crimes?
        Attorney General Ashcroft. This Justice Department and this
    administration will prosecute hate crimes vigorously whenever
    the evidence provides a basis for that kind of prosecution. I
    thank you for commending the President. His leadership was
    immediate after September 11 in visiting mosques and convening
    leaders of the Muslim faith. I personally visited mosques
    myself and----
        Senator Leahy. And I commend you for that, too.
        Attorney General Ashcroft. We have worked with local
    prosecutors in developing cases wherever that was appropriate
    and wherever that was the right course of action. The
    deplorable settings where individuals struck out, injured,
    killed individuals based on ethnic differences is intolerable.
    We have made every resource that we could possibly make
    available to help in this respect devoted to it.
        If you look carefully at the incidents, the graph of the
    incidents was that early on, there was a higher, very high--
    pardon me, let me be careful about this--the incidence of
    offense was high at the early stages and went down dramatically
    as we worked in the enforcement area. We will continue to work
    with local authorities and with Ralph Boyd, the Assistant
    Attorney General for Civil Rights and the Criminal Division of
    the U.S. Attorney General's Office as well as the Criminal
    Division of the Civil Rights Division of the U.S. Attorney's
    office.
        Senator Leahy. Would you ask them, then, to give me updated
    figures on the number of complaints made, the number of
    investigations made, but then the number of prosecutions that
    resulted?
        Attorney General Ashcroft. I will be very happy to provide
    you with complete data.
        [The information follows:]

                             Hate Crimes Since 9/11

        The Federal Bureau of Investigation (FBI) initiates hate
    crime investigations based upon receipt of sufficient
    information from a source known to be reliable. Federal hate
    crime statutes require a crime to be motivated by bias and
    specify that the criminal behavior interferes with a
    ``Federally protected activity.'' The ``Federally protected
    activities'' are specified in the statutes and must be present
    for a federal prosecution. Additionally, some matters labeled
    by the victims as a ``hate crime,'' are in fact ``hate
    incidents'' that do not rise to the level of a criminal act
    which fall within the FBI's civil rights jurisdiction.
    Therefore, investigations are initiated only when, after
    reviewing a complaint, it is determined that there is
    sufficient information to establish that a crime was likely
    committed and that potential federal jurisdiction exists.
        The FBI has initiated 332 hate crime investigations
    involving Arab/Muslim/Sikh-American victim individuals/
    institutions since September 11, 2001. Since March 14, 2001, of
    the 332 investigations, 167 cases are ongoing and 165 have been
    closed. Additionally, approximately 85 individuals have been
    charged with state or local crimes in connection with the
    aforementioned 332 hate crime investigations.
        The United States Attorneys' Offices do not track the
    number of Arab-American victims. However, a new criminal
    program category called Hate Crimes Arising Out of Terrorist
    Attacks on the United States was created post September 11,
    2001. From its inception through March 14th, 56 criminal
    referrals have been received and 9 federal cases have been
    filed under this new category.

                            HATE CRIMES LEGISLATION

        Senator Leahy. Have you taken a position on S. 625, the
    hate crimes legislation introduced by Senator Kennedy that was
    reported out of the Judiciary Committee and was sent to the
    full Senate?
        Attorney General Ashcroft. No, we have not.
        Senator Leahy. Will you be?
        Attorney General Ashcroft. I do not know. I have not seen
    the legislation.
        Senator Leahy. We wrote to you about it. I got an answer
    back that expressed support for another bill that was
    introduced in a prior Congress. Would you be able to get me the
    Department's position on S. 625?
        Attorney General Ashcroft. We will be happy to receive your
    request and respond to it.
        [The information follows:]

                            Hate Crimes Legislation

        The Department's position on the pending hate crimes
    legislation is informed by our recent experience in responding
    to bias-motivated crimes which have unfortunately arisen in the
    wake of the tragic events of September 11. Since that date, the
    Civil Rights Division, which prosecutes bias-motivated crimes
    under several existing federal statutes, has investigated over
    300 cases of alleged discriminatory backlash against
    individuals perceived to be of Middle-Eastern origin, including
    Arab Americans, Muslim Americans, Sikh Americans, and South-
    Asian Americans.
        Additionally, the Department recently indicted Darrell
    David Rice for the 1996 murder of Julianne Marie Williams and
    Laura ``Lollie'' S. Winans in the Shenandoah National Park. The
    four-count murder indictment specifically invokes a federal
    sentencing enhancement that was enacted to insure justice for
    victims of hate crimes. In this case, the federal sentencing
    enhancement provides for increased punishment if the fact
    finder at trial or, in the case of a plea of guilty or nolo
    contendere, the court at sentencing determines beyond a
    reasonable doubt that Rice intentionally selected either victim
    as the object of the offence because of the victim's actual or
    perceived gender or sexual orientation. If convicted of any of
    the charges in the indictment, Rice could face the death
    penalty.
        The Department of Justice appreciates the leadership
    Senators Kennedy and Hatch, as well as other members of
    Congress, have shown on the important issue of hate crimes.
    Your leadership is reflected in the fact that the Senate
    Judiciary Committee has now voted to send S. 625 to the full
    Senate. As your question notes, in my previous responses to the
    Committee I observed that then-Governor Bush indicated during
    the Presidential campaign that he supported Senator Hatch's
    proposed hate crimes legislation, which was introduced during
    the 106th Congress and which shares several features with S.
    625. As I explained in my earlier response, these common
    features include provision by the Attorney General of
    assistance in the investigation or prosecution of any violent
    crime that constitutes a felony and is motivated by animus
    against the victim by reason of the membership of the victim in
    a particular class or group; grants by the Attorney General to
    state and local entities to assist in the investigation and
    prosecution of such crimes; and the appropriation of $5,000,000
    for the next two fiscal years to carry out the grant program.
        As you know, S. 625 is an important proposal which would
    amend the federal criminal code in numerous significant
    respects. The Department of Justice continues to review and
    evaluate the constitutional and policy issues raised by the
    proposed amendments to the federal criminal code in S. 625. At
    the same time, we are continuing to fulfill our important
    mission of enforcing the existing laws relating to bias-
    motivated crimes that fall within federal jurisdiction.

        Senator Leahy. Mr. Chairman, I appreciate this very much.
    The hate crime things worry me very much as an American. I know
    they do you. My maternal grandparents came to this country not
    speaking a word of English and I know that they faced a lot of
    prejudice because of that. Both my grandfathers were
    stonecutters in Vermont. My paternal grandfather died when my
    father was barely into his teens.
        At that time, Vermont was a far different place. My father
    used to, in looking for work, the signs were either no Irish
    need apply or no Catholics need apply. The Italian side of my
    family, again, the very same thing. I know from your own deep
    faith how abhorrent you find those days, as I do.
        But we want to make sure, all of us, whether in the
    Department of Justice, the administration, or the Congress,
    that we do not find ourselves going back to that kind of a dark
    time in our country. We have gone way beyond that in Vermont,
    fortunately. But the ability to judge people based on their
    race or religion always lurks beneath the surface and we all
    have a responsibility to make sure that this country, which is
    founded on ideals that go way beyond that, stick to those
    ideals.
        Thank you. Thank you, Mr. Chairman.
        Senator Hollings. Thank you, Senator.
        [The statement follows:]
                 Prepared Statement of Senator Patrick J. Leahy
        Mr. Chairman, I join you in welcoming Attorney General Ashcroft to
    the Subcommittee today. During the past year the Justice Department has
    confronted the unprecedented and daunting challenge of protecting the
    United States against international terrorism in the wake of the
    attacks of September 11, 2001, and the subsequent anthrax attacks. The
    Justice Department, under the leadership of the Attorney General,
    deserves credit for sustaining the confidence of the American people in
    the government's ability to assure their safety.
        I want to congratulate the Attorney General and the vast array of
    law enforcement and other officials, for the completion of a peaceful
    and secure Winter Olympics. I know that the Attorney General was
    personally involved in making sure that security was strengthened for
    public events away from the Olympics facilities.
        While the Attorney General and I have not always agreed on
    particular actions, I respect the strength of his commitment. We worked
    together on the USA PATRIOT Act last year and demonstrated that the
    Congress and the Executive Branch can work together to combat terrorism
    and protect individual rights.
        Today the Attorney General seeks to describe and justify a $30.2
    billion budget request for the Department of Justice in fiscal year
    2003, which includes $539.2 million to continue on-going initiatives
    funded in the fiscal year 2002 Counterterrorism Supplemental. I support
    the Administration's decision to give high priority to combating
    terrorism, including border security. We have a duty, however, to take
    a closer look at details that may not have been considered when the
    Supplemental was adopted last year.
        In addition, just in the last day, I have received seven responses
    from the Department to outstanding requests for information about the
    activities of various Department components. These hearings are very
    useful in prompting responses, and I thank the Chairman for convening
    the hearing and the Attorney General for his attention to my questions.
                                border security
        The Justice Department's budget calls for increased spending on
    border security, and that proposal is a step in the right direction. I
    am confident that the Congress will continue on its path toward
    fulfilling the goal that we included in the USA PATRIOT Act of tripling
    the number of Border Patrol agents, INS Inspectors, and Customs Service
    officers, and I am grateful that the Administration appears supportive
    of that goal. The security of our borders is not and should not be a
    partisan issue. We must all recognize that our northern border needs to
    be made dramatically more secure, and we must be willing to provide the
    necessary funding. This budget is a good start, and I hope we do more
    to make sure that the Northern Border gets the additional personnel and
    equipment it needs.
        The Northern Border provisions added to the anti-terrorism bill,
    enacted last October, authorize a tripling of border security on the
    U.S.-Canada boundary. Efforts since then to begin implementing the
    Northern Border provisions have originated in Congress and have met
    resistance from the White House. The President's new budget plan is the
    first movement by the Administration toward those goals. The budget
    calls for a $1.2 billion increase for INS law enforcement efforts, from
    $4.1 billion in 2002 to $5.3 billion in 2003. That increase would more
    than double the number of Border Patrol agents and INS inspectors. In
    his budget, the President has also said that new hiring should focus
    particularly on the Northern Border.
        The President also proposes a $300 million increase in the Customs
    budget for staffing and technology. The President's focus on Northern
    Border needs applies here as well and this subcommittee may want to
    provide more direction to the Customs Service on where to display new
    staff.
                        federal bureau of investigation
        The Justice Department component with plans to grow most sharply is
    the Federal Bureau of Investigation. Over a two-year period the FBI
    budget will increase from $3.25 billion in fiscal year 2001 to $4.32
    billion in fiscal year 2003. The Judiciary Committee held FBI oversight
    hearings last year at which some members raised the questions about
    whether the FBI needed more money or just better management.
        Director Robert Mueller is making management reforms. He announced
    the first phase of his FBI reorganization in December. I praised his
    action as responding to the need to strengthen FBI intelligence,
    security, and information management. He and Deputy Attorney General
    Thompson are now taking a wider look at ways to streamline the FBI
    responsibilities to enable greater focus on detecting prevention and
    the investigation of terrorists. This may require a shift of certain
    types of criminals to be handled by other federal agencies and state
    law enforcement. The Judiciary Committee will hear from Mr. Mueller and
    Mr. Thomson on their plans and the realignment of criminal law
    enforcement tasks.
        One of the most important FBI initiatives is the TRILOGY program
    for upgrading the Bureau's information technology. The Counterterrorism
    Supplemental for fiscal year 2002 included $237 million for advanced
    computer equipment and software under the TRILOGY program, and the FBI
    requests another $109.4 million in fiscal year 2003 for information
    technology projects including TRILOGY. I support these investments.
    From an oversight perspective, however, I am disappointed that the
    Justice Department and the FBI have failed to submit quarterly status
    reports on TRILOGY as required in the Appropriations Act for fiscal
    year 2001. Such reports are especially important to monitor the
    effectiveness of planning and testing for new software. I urge the
    Attorney General to provide a current status report on TRILOGY to the
    Congress as soon as possible.
        Over the past seven years, the growth of the FBI's Joint Terrorism
    Task Forces (JTTF) has strengthened national counterterrorism efforts
    with full-time participation by other federal agencies and state and
    local police personnel, co-located at dedicated facilities with support
    funding in 36 FBI field offices. Director Mueller plans an increase in
    these task forces to all 56 offices, and I support this plan. After the
    September 11th attacks, you formed separate Anti-Terrorism Task Forces
    were established by the Attorney General in each U.S. Attorney's
    office. Former FBI executives have publicly raised serious concern that
    the new Task Forces would ``undermine the capabilities of the nation's
    primary agency responsible for the prevention and investigation of
    terrorist activity.'' Although a memorandum from Deputy Attorney
    General Thompson, dated October 25, 2001, indicates that FBI JTTFs
    retain primary authority for operational and investigative matters not
    related to prosecutions, the concern expressed by these former FBI
    executives about the divided responsibility for investigations through
    duplicative task forces should be addressed.
        For example, the U.S. Attorneys' Anti-Terrorism Task Forces are
    coordinating the current program for interviews of 5,000 nonresident
    aliens using state and local law enforcement personnel. The results are
    to be compiled in a new database for U.S. Attorneys being designed by
    the Justice Management Division. The development of a new database
    suggests a long-term investigative role for the U.S. Attorneys-led Task
    Forces using state and local law enforcement personnel. The potential
    for divided leadership and accountability is troubling. Moreover, it is
    not clear whether the Attorney General's Guidelines for FBI
    investigations would apply to the investigative activities of the U.S.
    Attorneys' Anti-Terrorism Task Forces. These are all questions which I
    look forward to discussing with the Attorney General.
                   improving state and local law enforcement
        The Community Oriented Policing Services (``COPS'') Program has
    been a resounding success since its inception in 1994, the COPS Program
    has awarded over $7 billion in grants to law enforcement agencies,
    putting more than 114,000 new law enforcement officers on the street,
    and is credited for reducing the crime rate and getting more police
    officers on the street. I support the full funding of the program to
    keep COPS on course to fund an additional 36,000 law enforcement
    officers by the end of 2005 to help maintain communities and reduce
    crime.
        The Administration's fiscal year 2003 budget cuts COPS by almost
    $500 million. Congress appropriated $1,050,440,000 for the COPS program
    for fiscal year 2002. Enactment of this budget would mean an end to
    police hiring grants and school resource officers; and drastic
    reductions in technology, equipment, and support staff grants on which
    State and Local law enforcement agencies heavily rely. The request
    proposes to cut the Universal Hiring Program by 100 percent, cut the
    COPS in Schools program by 100 percent, and cut the COPS technology
    program by 67 percent.
        The overall budget for COPS does not increase, as the
    Administration claims. It proposes to cut more than $1.6 billion from
    the $2.5 billion appropriated for fiscal year 2002 for state and local
    law enforcement grants, and, in an accounting shift, combines what is
    left into a new $800 million Justice Assistance Grant program. The
    budget request places that new grant under the COPS account, making it
    appear as if overall COPS funds increase, when, in fact, they do not.
    The Administration merely repackages many of DOJ grant programs, and
    then cuts their funding.
        Grant programs targeted for elimination include the State and Local
    Law Enforcement Block Grants (LLEBG), which received $400 million this
    year; Byrne law enforcement block grants for efforts to improve state
    and local courts, which received $500 million for fiscal year 2002; and
    aid for states incarcerating illegal aliens, which got $565 million
    this year.
        I also support full funding of the Edward Byrne Memorial State and
    Local Law Enforcement Assistance Program to make grants to states, for
    use by states and local units of government, to improve the functioning
    of the criminal justice system, with emphasis on violent crimes and
    serious offenders, and to enforce state and local laws that establish
    offenses similar to those in the Federal Controlled Substances Act. It
    has proven to be a highly effective and widely praised grant program to
    state and local law enforcement agencies. For fiscal year 2002,
    Congress authorized $594,489,000 for the Edward Byrne Memorial State
    and Local Law Enforcement Assistance Program, of which $94,489,000 was
    for discretionary grants and $500,000,000 was for formula grants under
    this program.
        The Bureau of Justice Assistance (BJA) makes Byrne Program funds
    available through two types of grant programs: discretionary and
    formula. Discretionary funds are awarded directly to public and private
    agencies and private nonprofit organizations; formula funds are awarded
    to the states, which then make subawards to state and local units of
    government. I support maintaining the discretionary grant component of
    the program.
        The President's budget proposes to level-fund the Bulletproof Vest
    Partnership (BVP) Grant Program at $25.4 million, even though, through
    the Bulletproof Vest Partnership Grant Act of 2000, Congress authorized
    $50 million for fiscal year 2003 for the successful program that
    protects the lives of local and state law enforcement officers.
        To better protect our nation's law enforcement officers, Senator
    Campbell and I introduced the Bulletproof Vest Partnership Grant Act
    which became law in 1998. That law created a $25 million, 50 percent
    matching grant program within the Department of Justice to help state
    and local law enforcement agencies purchase body armor for fiscal years
    1999-2001. Senator Campbell and I sponsored the Bulletproof Vest
    Partnership Grant Act of 2000 to build upon the success of this program
    by doubling the annual funding to $50 million for fiscal years 2002-
    2004. It improves the program by guaranteeing jurisdictions with fewer
    than 100,000 residents receive the full 50-50 matching funds because of
    the tight budgets of these smaller communities. For larger
    jurisdictions with populations at or over 100,000, the program pays up
    to 50 percent of each applicant's total vest costs, based upon any
    remaining funds. Specific funding levels for larger jurisdictions are
    determined once all applications have been submitted. Given the
    projected number of eligible jurisdictions and the limited funds
    available, the BVP already may not have sufficient funds to provide 50
    percent for applications from larger jurisdictions. The law also allows
    for the purchase of stab-proof vests to protect corrections officers
    and sheriffs who face violent criminals in close quarters in local and
    county jails. I support for the full funding of $50 million for the
    Bulletproof Vest Partnership Grant Program for fiscal year 2003.
                            protecting civil rights
        In contrast to the President's proposed budget, I support an
    increase in funding for our nation's essential civil rights enforcement
    agencies. This funding would allow the Department of Justice Civil
    Rights Division to add positions to prosecute hate crimes, deter the
    victimization of migrant workers, combat police misconduct, fight
    housing discrimination, eliminate discrimination against persons with
    disabilities, and protect fundamental opportunities. I am also
    disturbed by what could be interpreted as a shift in focus away from
    effective civil rights enforcement. Immediately after the September 11
    terrorist attacks, the President addressed the nation and reminded us
    all that racially, ethnically, and religiously motivated violence would
    not be tolerated. I commend the President for his public words on this
    critical issue. It is important that the President and Department of
    Justice match this admirable rhetoric with real enforcement and
    maintain the Department's longstanding leadership role in national
    civil rights enforcement during these difficult and eventful times.
        The President's proposed budget appears to fall short of the
    rhetoric. While that budget calls for increased funding for many
    components of the Department of Justice, these increases do not reach
    the Civil Rights Division, the chief federal body charged with actually
    enforcing U.S. civil rights laws. While I support efforts to fund
    election reform in the states and provide education on hate crimes
    enforcement to state and local authorities, these efforts are simply no
    substitute for maintaining a vibrant federal enforcement role in
    securing our most basic civil rights. These rights, all protected by
    the enforcement efforts of the Civil Rights Division, include voting,
    employment, housing, and disability rights as well as the rights of
    institutionalized persons, protection against police abuse and
    corruption, protection for victims of trafficking, and hate crimes
    enforcement.
        As one example, the problems of racial, ethnic, gender, sexual
    orientation, and religious discrimination and violence, unfortunately,
    stubbornly persist within our borders. We were reminded of these
    problems by the rash of crimes against Arab and Muslim Americans after
    the September 11 attacks. These acts, and indeed all acts of
    discrimination, cut at the very heart of what the terrorists hope to
    destroy in the United States our tolerance and our diversity. In recent
    answers to questions which you provided based upon you December 6,
    2001, appearance at the Senate Judiciary Committee, you note that the
    FBI has commenced approximately 300 federal criminal investigations
    involving post-September 11 attacks on Arab or Muslim Americans, or
    others, based upon their actual or perceived ethnicity. You indicate,
    however, that to date there have only been eight federal cases
    resulting from these approximately 300 investigations. In short, there
    has been no federal prosecution in over 97 percent of these
    investigations. I would be remiss if I did not point out this
    significant gap between the President's admirable rhetoric and the
    enforcement actions of the Justice Department since September 11 and
    ask why is it that the Department is prosecuting so few of these
    violent crimes?
        A second example where rhetoric has outstripped enforcement
    involves the protection of voting rights. During your confirmation
    hearing, you recognized that ``[v]oting is a fundamental civil right''
    and pledged if confirmed that you would ``work aggressively and
    vigilantly to enforce federal voting rights laws.'' You assured this
    Committee that ``[i]t will be a top priority of a Bush Department of
    Justice, part of what I hope would be its legacy.'' Unfortunately, the
    President's budget request did not call for any additional resources
    for the Department's Voting Rights Section, even though there have been
    recent press reports critical of the Department's role in delaying a
    redistricting plan for congressional seats in Mississippi are
    disturbing.
                              combating cybercrime
        Technology has ushered in a new age filled with unlimited potential
    for commerce and communications. But the Internet age has also ushered
    in new challenges for federal, State and local law enforcement
    officials. These challenges were clearly evident as our nation's law
    enforcement officials investigated the recent cyber hacker attacks.
    Congress and the Administration need to work together to meet these new
    challenges while preserving the benefits of our new era.
        The Leahy-Dewine Computer Crime Enforcement Act, which authorized a
    $25 million Department of Justice grant program to help States prevent
    and prosecute computer crime, is intended to help States and local
    agencies in fighting computer crime. Grants under the bipartisan law
    may be used to provide education, training, and enforcement programs
    for local law enforcement officers and prosecutors in the rapidly
    growing field of computer criminal justice. All 50 States have now
    enacted tough computer crime control laws. They establish a firm
    groundwork for electronic commerce, and protecting this part of our
    critical infrastructure. Unfortunately, too many State and local law
    enforcement agencies are struggling to afford the high cost of training
    and forensic work needed to realize the potential of State computer
    crime statutes. I support funding for these important initiatives.
                       curbing drug trafficking and abuse
        Drug use and abuse is a contributing factor to spousal and child
    abuse, property and violent crime, the spread of AIDS, workplace and
    motor vehicle accidents, and absenteeism in the workforce. The Senate
    has already passed a version of S. 304, the Hatch-Leahy Drug Abuse
    Education, Prevention, and Treatment Act to aid States and local
    communities in their efforts to prevent and treat drug abuse. It
    establishes drug treatment grants for rural States and authorizes money
    for residential treatment centers for mothers addicted to heroin,
    methamphetamines, or other drugs. This legislation also will help
    States and communities reduce drug use in prisons through testing and
    treatment. It will fund programs designed to reduce recidivism through
    drug treatment and other services for former prisoners after release.
    In addition, this bill will reauthorize drug courts and authorize
    juvenile drug courts. Finally, the bill directs the Sentencing
    Commission to review and amend penalties for a number of drug crimes
    involving children. The bill will authorize $1.4 billion in
    appropriations over four years. I hope that the Congress will send this
    bill to the President soon and that the Justice Department will work
    with us for full funding of the programs it authorizes.
        improving forensic science services and reducing the dna backlog
        Forensic science is widely accepted as a key to effective
    administration of justice, but State crime laboratories are now
    seriously bottlenecked. Backlogs in many laboratories have impeded the
    use of new technologies, such as DNA testing, in solving cases without
    suspects and reexamining cases in which there are strong claims of
    innocence as laboratories are required to give priority status to those
    cases in which a suspect is known. Timeliness and quality concerns in
    the forensic science services threaten the administration of justice in
    the United States. Two years ago, Congress passed the Paul Coverdell
    National Forensic Sciences Improvement Act, which authorizes the
    appropriation of $134.7 million for fiscal year 2003 to improve State
    forensic science services for criminal justice purposes. Congress also
    passed the DNA Analysis Backlog Elimination Act of 2000, which
    authorizes the appropriation of $40 million for fiscal year 2003 to
    reduce the backlog of untested DNA samples in our nation's crime labs.
    I support full funding of each of these programs.

                                 ENRON RECUSAL

        Senator Hollings. General Ashcroft, with respect to closure
    here on this Enron matter, you recused yourself not because you
    had a conflict of interest but there could be an appearance.
    Similarly, your chief of staff could be an appearance. All the
    U.S. Attorneys down in the Southwest District of Texas have set
    themselves aside so there could not be any appearance of a
    conflict there. Yet you try to isolate yourself from reality
    and give it to the Deputy Attorney General who has got an
    appearance of a conflict in that he is coming from the firm
    that represented both Enron and Arthur Andersen. You do not
    want to leave all that work done and still have an appearance
    of impropriety, I would think, is that not the case?
        Attorney General Ashcroft. Sir, I am from this matter
    recused, but it is my understanding that the career ethics
    officials at the Department have indicated that this is not a
    matter which would trigger additional activity. It is not a
    matter for me to handle since I am recused from this issue.
        Senator Hollings. No, you designated him. You did not
    recuse yourself from that responsibility. You designated the
    Deputy Attorney General and the law says under extraordinary
    circumstances--you can go back. We had extraordinary
    circumstances with Waco and that was all settled when the
    Attorney General then appointed our friend, Senator Danforth
    from Missouri, and he made his investigation and that ended all
    the controversy about it.
        Now you have got it all boiling up with respect to how
    powers are going to be and who has got a conflict of interest
    and everything else, so we could bring Mr. Thompson up. I am
    confident that he is an honorable individual. I know he is from
    an outstanding law firm. I think our friend General Griffin
    Bell, the former Attorney General, heads up the firm, so I have
    got no question about it. But to have him come and say, well,
    only 2 percent of the work, or only 1 percent of the work, or I
    never did any of that work, that was up on the 10th floor or
    whatever it is, does not satisfy the public feeling in
    response, because I am feeling it. I am trying to sort of
    testify before you, giving you a chance.
        We can haul him up. There is no reason to try to embarrass
    him or drive home the point. You can clear it up immediately by
    picking out an Archibald Cox or someone like that and then
    there is no more question. That is what you intended to do when
    you recused yourself. It was not to give it to somebody else
    who needed to be recused, is that not the case?
        Attorney General Ashcroft. I recused myself after carefully
    reviewing the guidelines that are provided in the Government,
    with the advice of the ethics professionals in the office, that
    for me to persist would be inappropriate. I did so without
    making any specific judgments about other individuals that
    might have the same responsibility to make evaluations,
    cooperating with the career ethics officers at the Department.
    I did not make decisions for the other individuals who recused
    themselves and obviously have not tried to make decisions for
    those to supercede the judgment of the Career Ethics Office or
    to interfere with the decision making in a matter about which I
    am recused because I do not want to be involved in a matter
    where it has been determined that I should not be involved.
        Senator Hollings. And you determined that you should not be
    involved on account of--you did not have a conflict of interest
    with Enron. It could have been an appearance due to the
    contribution they made in one of your campaigns, I think, is
    that not the case?
        Attorney General Ashcroft. Considering the totality of the
    circumstances, we decided in conjunction with the ethics
    officers that it was appropriate for me to recuse myself.
        Senator Hollings. That almost sounds like the Fifth
    Amendment these fellows are taking.
        Let us go right to the job. You have got a full-time job
    and Larry Thompson is the Deputy Attorney General in charge of
    counterterrorism. He ought not to have any other thing on his
    mind. And you are still the Attorney General. You cannot recuse
    yourself from reality. You have got to get with the program and
    make a decision. Now, if the decision is that that you have
    made and it is going to stand, so be it.

                                 FEMA TRANSFERS

        Let me move to another thing that you and I are totally
    familiar with, and that is, having been Governor, we have dealt
    with disasters. Last year, I think FEMA had, of the 45
    disasters, whether they were earthquakes or hurricanes or
    tornadoes or what have you, forest fires, there was only 1 with
    respect to terrorism, or the 2 at the Pentagon and in New York
    on 9/11. We know that FEMA is now doing a heck of a good job
    from what I can understand.
        I remember way back with Hurricane Hugo, we had to sneak in
    the marines from Parris Island to help us because they could
    not come unless they were ordered to by FEMA, and similarly
    with Hurricane Andrew. I will never forget, I was on the phone
    with Governor Lawton Chiles at the time down in Florida saying,
    hurry up, they are ready to go. They are right at Fort Bragg.
    They are ready to fly in with tents, stoves, everything else,
    set up a little city down there at Homestead, and it took him 4
    or 5 days to get it through with FEMA, but we are doing a way
    better job now. We have got it straightened out and there is
    more or less a process developed for hurricanes and other
    natural disasters.
        Incidentally, since I mentioned Homestead, the first police
    that you saw on TV that night after the weather had cleared
    were police officers, 42 Spanish-speaking police officers from
    the city of Charleston with generators, water supply, and
    everything else. The police force of Homestead had been wiped
    out. Their homes had washed away and they were trying to care
    for their families. So they have helped us and we helped them
    and a culture of cooperation has developed with that regard.
        This particular subcommittee was asked to consider giving
    State and local counterterrorism programs to FEMA by Vice
    President Cheney and we considered it. However, we kept it
    under the Attorney General's Office per the PATRIOT Act, that
    was only signed on October 26, less than 4 months ago. The
    Attorney General shall make grants described in subsections (b)
    and (c) to States and units of local government to improve the
    ability of State and local law enforcement, fire department,
    and first responders to respond to and prevent acts of
    terrorism. That is the first paragraph of the PATRIOT Act on
    first responders.
        Yet the President has submitted a budget that decimates
    local law enforcement, decimates the cops on the beat,
    decimates the school resource officers, and the first
    responders. The Office of Domestic Preparedness (ODP) got $650
    million in this particular budget, 2002's budget, but for next
    year they get zero. It is my understanding that the response
    that you have received of disapproval has been bipartisan and
    unanimous from what I can learn. I have not heard anybody in
    the Congress say this is a good idea, or in law enforcement.
        We just had a hearing last week on security, seaport
    security to be exact. We had the Commissioner of Customs. We
    had the Commandant of the Coast Guard. I had two mayors of the
    two biggest cities practically in the State of South Carolina,
    and one Democratic and one Republican, and just out of
    curiosity, I said, let me ask you a question about the Office
    of Domestic Preparedness (ODP). Do you think it ought to stay
    where it is or be transferred to FEMA where ODP has developed,
    as Senator Gregg has just pointed out, a training consortium at
    Fort McClelland, Nevada, New Mexico, Texas, Louisiana, and now
    first responders across the country are getting the training
    they need. We have gotten, like you have testified, 46 plans,
    like you testified, a miraculous success.
        And you and I have been in politics a long time. We do not
    mess with something that is working just to give it to Joe
    Allbaugh who does not know anything about domestic
    preparedness. He has never been associated with it in his life,
    or anybody at FEMA. That is a non-starter as far as this
    subcommittee is concerned.
        We had not been consulted about moving ODP other than the
    testimony we had back in May, and at that time, our Republican
    chairman, Senator Gregg, was in charge and he communicated that
    with the administration. Yet you come with next year's budget
    and decimate the local law enforcement programs and transfer
    ODP.
        Incidentally, let me commend you on the new FBI Director.
    He has been working with local law enforcement. In fact, the
    first thing he said at the chiefs' conference and so forth, I
    think it was up in New York, that he was going to start working
    with them and they gave him a standing ovation. Mueller is on
    the right track and everybody prides themselves on you and the
    Attorney General and the Justice Department.
        In fact, the Republicans said, wait a minute, on this
    airline security. We want it under the Department of Justice.
    When it passed the Senate, we had passed it out of our
    committee with the Department of Transportation. They said, no
    way. We want it with the Department of Justice, and we got a
    unanimous vote, all Republicans and all Democrats. But in order
    to get stuff moving in that conference, I went back to the
    Department of Transportation.
        With ODP, within the Department of Justice, you have got
    the confidence. You have got the abilities. You have got the
    training. You have got the culture developed. You have got the
    money. We cannot say we are fighting counterterrorism when we
    are mixing up everybody in new assignments and everything else
    of that kind. In this committee's opinion, and you can see on
    both sides, there is no support whatsoever for transferring
    ODP. You are the best witness we have got that this should not
    be transferred. You testified positively about how ODP is
    working in your Department.
        I yield to you, and I want to thank you for your appearance
    here today, but I want to yield to you if you have got any
    comment.
        Attorney General Ashcroft. I am grateful for the work that
    has been done. I would again reiterate the fact that had it not
    been for this committee and the membership of this committee
    that understands the threat of terrorism, we would have been
    far less prepared and far less capable of handling this matter
    in the way that it has been handled. The chairman and Senator
    Gregg have both had an ability to foresee these needs. That is
    commendable.
        I want to thank the members of our Department that have
    done a good job. I believe they have done a good job in moving
    in this direction. But this administration has made the
    decision, and I support that decision, and I believe that we
    can make a change which will provide for excellent service. As
    Attorney General, that is my responsibility and I will do what
    I can to pursue it if that is the final outcome of this debate.

                         ADDITIONAL COMMITTEE QUESTIONS

        Senator Hollings. The committee is indebted to you for your
    appearance here today. It will stay open with respect to
    questions to be submitted by the members here and give you a
    reasonable time to respond.
        [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 Ernest F. Hollings
                               antitrust division
        Question. General Ashcroft, could you provide the Committee the
    number of workyears, number of FTE's, and funding levels for media
    antitrust cases handled by the Antitrust Division for each of the last
    10 years. Can you provide that same information for telecommunications
    cases?
        Answer. The requested information for media matters is provided in
    Attachment 1. The information for telecommunications cases is in
    Attachment 2.

                                                                            ATTACHMENT 1.--ANTITRUST DIVISION--MEDIA MATTERS
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                     1992        1993        1994        1995        1996        1997        1998        1999        2000        2001      2002 \1\
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    Salary......................................................    $298,889    $159,730    $346,326    $169,344    $496,152  $1,167,189  $1,685,266  $1,350,313  $1,765,304  $1,211,448    $767,062
    Benefits....................................................      46,328      25,557      61,300      24,894      84,842     191,419     283,125     232,254     284,214     212,003     141,139
    Travel......................................................      12,963       8,663      18,502      12,611      41,681      93,684      62,002      14,628      13,157      10,576      13,586
    Rent/Comm/Util \2\..........................................  ..........  ..........  ..........  ..........  ..........  ..........  ..........  ..........  ..........  ..........          14
    Printing....................................................  ..........         363         689  ..........       6,635       7,332      31,344      10,201  ..........       8,858         468
    Services....................................................      11,876       8,987      15,059      18,833      75,881      90,869     225,002      19,026     232,348      34,845      12,686
    Supplies \2\................................................  ..........  ..........  ..........  ..........  ..........       4,843  ..........  ..........  ..........  ..........          11
    Equipment \2\...............................................  ..........  ..........  ..........  ..........  ..........  ..........  ..........  ..........  ..........  ..........  ..........
                                                                 -----------------------------------------------------------------------------------------------------------------------------------
          Subtotal \3\..........................................     370,056     203,300     441,876     225,682     705,191   1,555,336   2,286,739   1,626,422   2,295,023   1,477,730     934,966
    Expert Witness \4\..........................................  ..........       6,091       3,181       1,723     117,809     216,784     474,542      47,143     397,961     175,743       7,271
                                                                 -----------------------------------------------------------------------------------------------------------------------------------
          Total.................................................     370,056     209,391     445,057     227,405     823,000   1,772,120   2,761,281   1,673,565   2,692,984   1,653,473     942,237
                                                                 ===================================================================================================================================
    FTE.........................................................         5.3         2.7         5.9         2.9         9.1        20.5        25.3        19.8        26.1        18.6        12.5
    Number of Staff.............................................          58          27          47          22          63         114         127         140         161         118          95
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    \1\ As of February 28, 2002.
    \2\ Expenditures for Rent, Communication and Utilities, and Supplies and Equipment were allocated from general Division accounts not identified by matter and used for multiple Division matters
      irrespective of commodity area.
    \3\ Antitrust Division appropriation funding.
    \4\ Department of Justice Fees and Expenses of Witness Account.

    Notes:
    Consistent with information previously provided to the Senate Appropriations Subcommittee by the Federal Trade Commission, ``Media Matters'' includes enforcement actions and substantial
      investigations in the general media, Multichannel Video Programming Distribution (MVPD), radio and television sectors.
    Financial, FTE and staff data is not available by commodity area for quick look preliminary investigations prior to issuance of a case number. In addition, due to incomplete time reporting by
      commodity area, employee salary and benefit values for 1996 and prior years may not be fully reflective of total effort.

                                                                      ATTACHMENT 2.--ANTITRUST DIVISION--TELECOMMUNICATIONS MATTERS
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                     1992        1993        1994        1995        1996        1997        1998        1999        2000        2001      2002 \1\
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    Salary......................................................    $163,001    $296,328    $984,682    $420,947    $305,432  $1,383,073    $977,535  $1,268,149  $1,778,268    $558,690    $130,348
    Benefits....................................................      25,265      47,412     174,289      61,879      52,229     226,824     164,226     218,122     286,301      97,771      23,984
    Travel......................................................       2,584       8,234      30,079      61,570       8,646      57,676      30,018       8,704      13,098       3,012  ..........
    Rent/Comm/Util \2\..........................................  ..........  ..........  ..........  ..........       6,251  ..........  ..........  ..........  ..........  ..........  ..........
    Printing....................................................         317  ..........         310       1,286         990  ..........         383      16,374      12,626       2,443  ..........
    Services....................................................       1,619      12,828     492,965      83,084      67,518     156,770       7,373      86,447     835,199       1,302  ..........
    Supplies \2\................................................  ..........          57  ..........  ..........  ..........  ..........  ..........  ..........  ..........  ..........  ..........
    Equipment \2\...............................................  ..........  ..........  ..........  ..........  ..........       3,400  ..........  ..........  ..........  ..........  ..........
                                                                 -----------------------------------------------------------------------------------------------------------------------------------
          Subtotal \3\..........................................     192,786     364,859   1,682,325     628,766     441,066   1,827,743   1,179,535   1,597,796   2,925,492     663,218     154,332
    Expert Witness \4\..........................................      11,696       8,100      51,813      27,605     256,635      18,444      48,969     144,350   1,549,848      11,400  ..........
                                                                 -----------------------------------------------------------------------------------------------------------------------------------
          Total.................................................     204,482     372,959   1,734,138     656,371     697,701   1,846,187   1,228,504   1,742,146   4,475,340     674,618     154,332
                                                                 ===================================================================================================================================
    FTE.........................................................         3.4         5.7        18.1         7.2         4.9        22.1        15.7        21.8        28.1         8.6         1.7
    Number of Staff.............................................          31          45          80          43          64         102          76          89         113          78          30
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    \1\ As of February 28, 2002.
    \2\ Expenditures for Rent, Communication and Utilities, and Supplies and Equipment were allocated from general Division accounts not identified by matter and used for multiple Division matters
      irrespective of commodity area.
    \3\ Antitrust Division appropriation funding.
    \4\ Department of Justice Fees and Expenses of Witness Account.

    Note:
    Financial, FTE and staff data is not available by commodity area for quick look preliminary investigations prior to issuance of a case number. In addition, due to incomplete time reporting by
      commodity area, employee salary and benefit values for 1996 and prior years may not be fully reflective of total effort.

                         coordination between agencies
        Question. Department of Transportation officials have been quoted
    in recent press articles saying that the United States-Mexico border
    could be open to long-haul Mexican trucking operations by June of this
    year. As you know, last year the Congress required additional safety
    measures be implemented both at the border and by the Department of
    Transportation before the Administration could open the border to long-
    distance Mexican-domiciled trucks operating beyond the current
    commercial zones.
        What level of coordination has there been between the Department of
    Transportation and your agencies on establishing or increasing
    operations at the border in anticipation of this influx of Mexican
    trucks? Please describe.
        Answer. The Department of Transportation's (DOT) NAFTA Land
    Transportation Implementation Working Group includes representatives
    from the Immigration and Naturalization Service, the U.S. Customs
    Service, the Internal Revenue Service, the Department of Commerce, and
    the Department of Justice's Environment and Natural Resources Division.
    The working group has met twice to make plans for a Land Transportation
    Conference to provide information to the United States, Canadian and
    Mexican carriers. The conference will be held May 28 through 31, 2002.
        The DOT Land Transportation Standards Sub-committee (LTSS) met with
    Canadian and Mexican delegations in October 2001, to discuss issues
    relating to cross border operations including plans for an outreach
    program.
                               background checks
        Question. The United States is required by the USA PATRIOT Act to
    begin conducting criminal background checks on drivers of commercial
    motor vehicles that haul hazardous materials, yet there is no agreement
    for doing criminal background checks on Canadian and Mexican drivers
    that haul similar hazardous materials.
        Answer. The DOT Federal Motor Carrier Safety Administration (FMCSA)
    is the regulating authority for motor carriers. The FMCSA has published
    regulations in the Federal Register. Mexico-domiciled motor carriers,
    their vehicles and their drivers operating in the United States are
    subject to all of FMCSA's safety requirements. Section 350 of the DOT
    Appropriations Act prohibits Mexico-domiciled motor carriers from
    transporting hazardous materials in a placardable quantity beyond the
    border zones until the United States has completed an agreement with
    the Government of Mexico ensuring that drivers of such placardable
    quantities of hazardous materials meet substantially the same
    requirements as United States drivers carrying such materials.
        Question. Given the security concerns associated with our borders
    since September 11th, how can we justify letting these drivers into the
    United States without holding them to the same standard that United
    States drivers will be held to?
        Answer. Drivers must meet the DOT FMCSA standards. All aliens
    admitted to the United States must establish admissibility under the
    Immigration and Nationality Act (INA), and Mexican and Canadian drivers
    who are inadmissible under the grounds of inadmissibility contained in
    section 212(a) of the INA are not eligible to enter the United States,
    unless they have obtained a waiver of inadmissibility. However, there
    is no specific ground of inadmissibility under the INA prohibiting the
    entry of drivers who have not complied with FMCSA standards. A Mexican
    driver must also apply to the Department of State and be approved for a
    B-1 (visitor for business) visa to enter the United States.
        Question. What confidence do we have in the ability of the Canadian
    or Mexican governments to perform background checks on their drivers
    who haul hazardous materials on our roads? Will these background checks
    be performed to the same standards as the checks conducted on United
    States drivers?
        Answer. The Canadian government has a comprehensive criminal
    database. We are not aware of what information is available to the
    Mexican government.
                                     ______

                Questions Submitted by Senator Daniel K. Inouye
                                methamphetamine
        Question. Background: The State of Hawaii, and in particular, the
    county of Hawaii, has a large and substantial problem with crystal
    methamphetamines (ice, meth, or crystal meth). As this drug spread
    across Asia, it first found a foothold in Hawaii, and then crossed the
    rest of the way, where it has quickly spread across the rest of the
    nation.
        The crystal meth problem in Hawaii has reached crisis proportions
    not only because of the inordinately high incidence of meth abuse, but
    because of the many negative ``side effects'' that arise from the
    widespread production and use of the drug. The manufacture of ice in
    both urban and rural meth labs, of course, churns out the drug itself,
    but also pollutes the environment with toxic chemical byproducts. The
    drug itself creates dangerous behaviors during and immediately after
    use, as addicts plummet from their high into depression and desperate
    craving for more of the drug. The long-term health consequences of meth
    addiction are only just beginning to be understood.
        Additionally, meth is extremely addictive, and has permeated all
    levels of society to the extent that cultures of family-based drug use
    have begun to manifest. Treatment of addiction, therefore, becomes even
    more problematic as traditional support networks, such as family and
    friends, are eroded as the high prevalence threat to the State of
    Hawaii spreads.
        With this background in mind, I would like to ask you several
    specific questions about Department of Justice (DOJ) resources
    available to combat this pernicious threat to the State of Hawaii.
        What DOJ resources are available to help in the detection and
    eradication of meth labs--particularly meth labs in remote and
    inaccessible rural areas such as those that abound in the county of
    Hawaii?
        Answer. The Drug Enforcement Administration's (DEA) methamphetamine
    strategy addresses the diversion of precursor chemicals from legitimate
    commerce into this criminal activity. DEA has vigorously pursued those
    individuals and firms, both domestic and international, which have
    supplied clandestine methamphetamine laboratories. DEA has seized tons
    of pseudoephedrine destined for methamphetamine laboratories and will
    continue to do so as part of an overall strategy.
        In 2002, approximately $70,473,000 was appropriated within the
    Office of Community Oriented Policing Services (COPS) account for state
    and local law enforcement programs to combat methamphetamine
    production, to target drug hot spots, and to remove and dispose of
    hazardous materials at clandestine methamphetamine labs. COPS
    administers these funds. Within the amount provided, the conferees
    included $20,000,000 to be reimbursed to DEA for assistance to state
    and local law enforcement for proper removal and disposal of hazardous
    materials at clandestine methamphetamine laboratories. The President
    has included $20 million to continue these efforts in fiscal year 2003.
        The Office of Justice Programs Bureau of Justice Assistance (BJA)
    also provides funding to the State of Hawaii under its Byrne Formula
    Grant Program and to the state and its counties under its Local Law
    Enforcement Block Grant (LLEBG) program. Byrne Formula awards are made
    to the State Administering Agency, the Hawaii Department of the
    Attorney General, for distribution to the 4 counties (Hawaii, Maui,
    Kauai, and Honolulu city/county). The Attorney General's Office
    advertises the availability of the funds and receives proposals from
    the police department and the four prosecutor offices. Since fiscal
    year 1999, the State Attorney General has made subgrants of:
      --$555,611 to the Kauai Police Department, the Maui Police
            Department, the Hawaii County Police Department, the Department
            of Land and Natural Resources, and the Honolulu Police
            Department for the statewide narcotics task force. This funding
            has been applied to multi-jurisdictional task force programs
            that integrate federal, state, and local drug law enforcement
            agencies and prosecutors for the purpose of enhancing
            interagency coordination, exchanging intelligence, and
            facilitating multi-jurisdictional investigations.
      --$599,738 to the Kauai Police Department, the Maui Police
            Department, the Hawaii County Police Department, and the
            Honolulu Police Department for programs to target the domestic
            sources of controlled and illegal substances, such as precursor
            chemicals, diverted pharmaceuticals, clandestine laboratories,
            and cannabis cultivation.
        Under the Local Law Enforcement Block Grant Program:
      --$963,172 has been awarded to Honolulu, Hawaii to support community
            prosecution and a drug court initiative, and $32,000 has been
            awarded for the detection of clandestine labs.
      --Approximately $5,000 was provided to Maui County for a drug-court
            initiative.
        While the Byrne Formula and LLEBG programs are not requested in the
    2003 President's budget, purposes funded therein remain eligible for
    funding under the new $800 million Justice Assistance Grant program,
    which provides grantees with a single-source funding mechanism. Byrne
    Discretionary funds are also authorized to be used for this purpose.
        Question. What DOJ resources are available for the environmental
    clean up of meth lab sites?
        Answer. Funding for the environmental clean up of meth lab sites is
    primarily available through funds made available to DEA by Congress
    through the COPS methamphetamine initiative although several
    jurisdictions are using part of their congressional earmark funds to
    accomplish this. In 2002, Congress has provided $20 million to DEA for
    such purposes. While funds may be used for these purposes under the
    Byrne Formula and LLEBG programs, this is a decision made by each state
    or local jurisdiction.
        With regard to resources for the environmental cleanup of
    clandestine drug laboratories, DEA does not currently have a contractor
    in Hawaii to perform these services. No qualified contractor(s)
    submitted a proposal when DEA requested proposals in 1997. However, DEA
    did fund one cleanup each in fiscal years 1998 and 2000. As long as
    funding is available, DEA will fund cleanups (i.e., the removal of
    chemicals and contaminated apparatus) for both DEA and state/local
    seizures of clandestine drug laboratories in Hawaii through purchase
    orders.
        Question. What DOJ resources are available for enhancing efforts to
    stop the sale of crystal meth?
        Answer. In addition to the regular staffing levels and their
    cooperation with other federal and state and local agencies, DEA has
    made four successful deployments of one of its Mobile Enforcement Teams
    (MET) to Hawaii since September 2000. As their name implies, MET teams
    are deployed to provide help in those investigations where their
    assistance will be most effective.
        Question. What DOJ resources are available for treating addiction
    to crystal meth?
        Answer. Most DOJ drug resources are focused on investigation and
    prosecution of drug violations. Federal Government resources for drug
    abuse treatment are administered by the Department of Health and Human
    Services' Substance Abuse and Mental Health Services Administration.
    Within the Department of Justice, DEA has no resources for drug
    treatment, though DEA's Demand Reduction Coordinators (DRC) and
    headquarters staff inform communities about effective treatment when
    conducting demand reduction training. In upcoming community
    mobilization training, a treatment component is included as part of the
    training.
        Within the Office of Justice Programs, Byrne Formula Grant Program
    funds may be used to develop programs to identify and meet the
    treatment needs of adult and juvenile drug and alcohol dependent
    offenders and to develop programs to demonstrate innovative approaches
    to enforcement, prosecution, and adjudication of drug offenses and
    other serious crimes. Funding may also be available through OJP's
    Residential Substance Abuse Treatment (RSAT) program for state and
    local jails, the Drug Courts program, and the Indian Alcohol and
    Substance Abuse Program, all of which provide treatment services. These
    programs primarily target populations that have been incarcerated, are
    on probation or parole, or are facing adjudication.
        Question. What DOJ resources are available to develop and implement
    innovative responses, such as the drug court program, to the crystal
    meth problem that break away from the traditional model of arrest,
    incarceration and treatment, parole, and release?
        Answer. OJP's Drug Courts Program Office is available for this
    purpose. The State of Hawaii currently has two adult drug courts in
    operation, one on the island of Oahu and the other on the island of
    Maui. The Hawaii Drug Court Program also has a Family Court component
    that works with Child Protective Services parents. The Oahu drug court
    received its first clients in January of 1996. Since that time, the
    program has admitted approximately 500 individuals, graduating nearly
    50 percent.
        Despite the fact that 90 percent of clients in the Hawaii Drug
    Court program are methamphetamine dependent, grant applications from
    Hawaii's Drug Court Program do not specifically target methamphetamine
    treatment as there is currently no single proven methodology with
    methamphetamine abusers. The Hawaii Drug Court Program uses principles
    applicable to any dependency and applies techniques and components,
    such as careful assessments, which have been demonstrated as effective
    with meth users to provide the best individualized care within the
    restrictions of its resources. The program use a comprehensive approach
    in treating drug court clients as opposed to a more targeted approach.
        DEA's demand reduction program recognizes the value of drug courts
    in helping communities deal with their drug abuse problem. DEA's new
    Integrated Drug Enforcement Assistance initiative, unveiled by DEA
    Administrator Asa Hutchinson in December 2001, will promote the
    implementation of drug courts in communities as an effective tool in
    dealing with the drug abuse issue.
        Funding under the Byrne Formula Grant Program and the Local Law
    Enforcement Grant Program is available to state and local agencies for
    innovative program responses. Between fiscal year 1999 and fiscal year
    2002, BJA provided approximately $12.34 million to the state of Hawaii
    under the Byrne Formula program. The state has elected to use $859,204
    for programs to improve operational effectiveness of courts by
    expanding prosecutorial, defender, and judicial resources, and
    implementing court delay-reduction programs.
        The RSAT Formula Grant Program assists states and units of local
    government in developing and implementing residential substance abuse
    treatment programs within state and local correctional and detention
    facilities in which prisoners are incarcerated for a period of time
    sufficient to permit substance abuse treatment. This program addresses
    the issue of substance abuse dependence and the direct link to public
    safety, crime, and victimization by providing treatment and services
    both within the institution and in the community after release. In
    2003, $77 million is requested under the President's budget, a $7
    million increase over the previous level. Since 1999, over $1.1 million
    has been provided to the State of Hawaii under this program.
        The Indian Alcohol and Substance Abuse Program targets the link
    between alcohol and substance abuse and crime in Indian Country by
    funding tribal detention and probation-based demonstration projects
    that provide services such as placing arrestees and offenders in
    detoxification centers, halfway houses, in-patient treatment
    facilities, and home detention. In 2003, $4.989 million is requested
    under the President's budget.
        Question. What DOJ resources are available for education and
    outreach programs to prevent the recruitment of new users?
        Answer. DEA's demand reduction program uses full-time DEA special
    agents as Demand Reduction Coordinators (DRCs) that work with
    communities to implement and promote drug prevention programs in a
    variety of venues. These DRCs work with community coalitions and others
    to educate community leaders, adults, youth, and businesses about the
    dangers of drug abuse. DRCs are available to communities throughout the
    United States, including Hawaii, to put on drug education programs.
        The Office of Juvenile Justice and Delinquency Prevention (OJJDP)
    administers the Drug-Free Communities Support Program through an
    interagency agreement with the Office of National Drug Control Policy
    (ONDCP). The Drug-Free Communities Support Program is designed to
    strengthen community anti-drug coalitions and reduce substance abuse
    among youth. The program seeks to enhance collaboration, cooperation,
    and coordination among all sectors and organizations within communities
    that demonstrate a long-term commitment to reducing substance abuse
    among youth. Community coalitions that receive funding through the
    Drug-Free Communities Support Program focus on a combination of drugs
    and use a multi-sector, multi-strategy approach to reducing substance
    abuse among youth. Among the strategies employed to reduce substance
    abuse among youth are information dissemination, media campaigns,
    community events, community education through a sports certification
    program, and training for youth. Currently, 463 community anti-drug
    coalitions receive Drug-Free Communities Support Program funding.
    Grantee coalitions are located in all 50 states, the District of
    Columbia, Puerto Rico, and the U.S. Virgin Islands.
        Under a BJA grant to the National Crime Prevention Council (NCPC),
    funding has been applied to education and outreach related to meth
    abuse. Through the NCPC's rapid response training and technical
    assistance unit and with DEA collaboration, BJA offers a comprehensive
    planning, training and technical assistance program covering
    enforcement, treatment, prevention, and continuing care. The states and
    local jurisdictions may also elect to use their Byrne Formula funds and
    LLEBG funds for this purpose.
        Question. What DOJ resources are available for the pre-arrest
    intervention and treatment of meth addicts?
        Answer. DEA has no resources for these activities but recognizes
    their value in dealing with the drug abuse problem. However, as stated
    previously, DEA's DRC and headquarters staff inform communities about
    effective treatment.
        Under a BJA grant to the NCPC, funding has been applied to
    education and outreach related to meth abuse. Through the NCPC's rapid
    response training and technical assistance unit and with DEA
    collaboration, BJA offers a comprehensive planning, training and
    technical assistance program covering enforcement, treatment,
    prevention, and continuing care. The states and local jurisdictions may
    also elect to use their Byrne Formula funds and LLEBG funds for this
    purpose.
        Question. What DOJ resources are available for addressing the
    crystal meth problem among juveniles and adolescents?
        Answer. As stated earlier, the vast majority of federal drug
    prevention funding is administered by HHS; the Safe Schools initiative
    within the Department of Education; and the ONDCP's national anti-drug
    media campaign.
        Within DOJ, the demand reduction program enlists full-time DRCs and
    other DEA special agents to present anti-drug abuse programs to a
    variety of audiences including youth. These might take place at schools
    or other locations such as Boys and Girls Clubs. DRCs also work closely
    with education professionals to provide training to teachers, School
    Resource Officers, etc. on drug abuse among the youth of their
    community. Presently, Hawaii is serviced by the DRC in the DEA Los
    Angeles Field Division. DEA Administrator Hutchinson's goal is to
    double the number of field special agents in the Demand Reduction
    Program and to ultimately place a DRC in every state by the end of
    fiscal year 2003.
        Funding is available for addressing the crystal meth problem among
    juveniles and adolescents through the Byrne Formula and Discretionary
    Grant Programs and through congressional earmarks for methamphetamine
    funding initiatives. State and local jurisdictions may also use LLEBG
    funding to address drug problems among the target populations listed.
    However, the bulk of OJP's available funding for addressing crystal
    meth problems among juveniles and adolescents is housed within the
    OJJDP in OJP.
        OJJDP administers the Drug-Free Communities Support Program through
    an interagency agreement with ONDCP. The Drug-Free Communities Act of
    1997 (Public Law 105-20) created the Drug-Free Communities Support
    Program. On December 14, 2001, Public Law 107-82 reauthorized the
    program through fiscal year 2007. The Drug-Free Communities Support
    Program is designed to strengthen community anti-drug coalitions and
    reduce substance abuse among youth. The program seeks to enhance
    collaboration, cooperation, and coordination among all sectors and
    organizations within communities that demonstrate a long-term
    commitment to reducing substance abuse among youth. Community
    coalitions that receive funding through the Drug-Free Communities
    Support Program focus on a combination of drugs and use a multi-sector,
    multi-strategy approach to reducing substance abuse among youth.
    Currently, 463 community anti-drug coalitions receive Drug-Free
    Communities Support Program funding. Grantee coalitions are located in
    all 50 states, the District of Columbia, Puerto Rico, and the U.S.
    Virgin Islands.
        Two grantee coalitions are located in Hawaii. The Kawaihau
    Community Leadership Coalition, with the County of Kauai as its fiscal
    agent, has received funding through the Drug-Free Communities Support
    Program since October 1, 1998. Coalition goals are to reduce substance
    abuse in the Kawaihau District and to build a community coalition
    through the objectives of increasing community information, developing
    awareness of the effects that drugs have on the community, and
    providing education to strengthen family resiliency skills. The
    coalition uses multiple approaches to reduce substance abuse among
    youth, including information dissemination, a media campaign, community
    events, community education through a sports certification program, and
    training for youth. The Ewa Beach Coalition, with the Coalition for a
    Drug-Free Hawaii as its fiscal agent, was awarded a Drug-Free Community
    Support Program grant beginning October 1, 2001. The coalition is
    focusing on decreasing risk factors (e.g., poor academic performance,
    family conflict, early initiation of problem behaviors) and increasing
    protective factors (e.g., family attachment) to reduce substance abuse
    among youth. Coalition initiatives include school-based programming,
    family strengthening and parent involvement initiatives, substance
    abuse intervention and outreach, community events, and media
    initiatives.
        OJJDP also administers the Drug Prevention Demonstration Program,
    which is funded under Title V of the Juvenile Justice and Delinquency
    Prevention Act of 1974, and which was appropriated $10.976 million in
    fiscal year 2002. This program awards discretionary grant funds to
    grantees to develop, demonstrate, and test programs to increase
    perceptions among children and youth about the unappealing aspects and
    danger of drug use. OJJDP uses these funds to demonstrate, test, and
    evaluate promising programs that address the reduction of risk factors
    and the enhancement of protective factors that affect the use of drugs
    among children and youth. Building on its work replicating the Life
    Skills Training (LST) Initiative, the program will continue to fund LST
    projects but also will be expanded to support other drug prevention
    programs that are promising for students at all grade levels. OJJDP
    also uses these funds to provide training and technical assistance to
    jurisdictions to support replication efforts. Technical assistance
    activities include conducting project readiness and needs assessments,
    developing training materials, and monitoring program implementation
    and evaluation efforts. Funding provided under OJJDP's Drug Prevention
    Demonstration Program is available for programs that address the
    crystal meth problem among juveniles and adolescents.
        OJJDP also administers the Juvenile Accountability Block Grant
    (JAIBG) Program. This program encourages accountability-based reforms
    of juvenile justice systems in states and local jurisdictions. JAIBG
    funds can be used for 12 purpose areas, including building juvenile
    detention facilities, hiring prosecutors, establishing gun and drug
    courts, improving juvenile probation programs and testing youth in the
    juvenile justice system for controlled substances such as crystal meth.
                                     ______

                Questions Submitted by Senator Patrick J. Leahy
                    september 11th victim compensation fund
        Question. In the Justice Department's fiscal year 2003 Budget
    Request Highlights, the cost for the Special Master to administer the
    September 11th Victim Compensation Fund is listed as $10 million. In
    your opening statement in the Commerce, Justice, State subcommittee
    hearing on the Justice Department's fiscal year 2003 budget requests,
    however, you stated that the Department's budget includes a total of
    $41 million for the administrative costs of the Fund's Special Master.
    Please account for the discrepancies in these numbers.
        On January 17, 2002, I was joined by Senators Kennedy, Schumer and
    Clinton in writing to Special Master Kenneth Feinberg on the Interim
    Final Regulations governing the Fund. Please tell me when you expect
    these regulations to be finalized and released to the public.
        Answer. As you know, Special Master Kenneth R. Feinberg announced
    the Final Rule for the September 11 Victim Compensation Fund on March
    7, after numerous meetings with family members and other interested
    groups, along with the review of thousands of public comments over the
    past few months. A copy of the Final Rule is available at the
    Department of Justice website at ``http://www.usdoj.gov/
    victimcompensation.'' MACROBUTTON HtmlResAnchor http://www.usdoj.gov/
    victimcompensation.
        As for the apparent discrepancy in budget requests, $41 million is
    indeed the request for administrative costs the $10 million referred to
    in the Budget Request Highlights is the increase over the $31 million
    current services level. The $41 million will fund: additional claims
    examiners, additional Justice Department attorneys and support, the
    walk-in facilities, the hotline, hearing officers, and hearing process
    support including paralegals and space to hold hearings in locations
    where victims live.
        The claims, although smaller in number than previously anticipated,
    will be incredibly complex and require a much higher level of
    individual scrutiny. We therefore project that an increase of $10
    million beyond the annualization of $31 million will be necessary to
    meet the surge of labor-intensive claims.
                       northern border inspector earmark
        Question. I included language in the USA PATRIOT Act authorizing
    tripling the number of Border Patrol agents, the Immigration and
    Naturalization Service (INS) inspectors and Customs Service officers.
    The President's budget builds on what we did through the appropriations
    process last year, and I believe we are on the right path.
        The budget request calls for half of the new Border Patrol
    positions to be on the northern border, but is silent about the
    percentage of new INS Inspector positions to be assigned to the
    northern border. Why not include a similar northern border earmark for
    inspectors?
        Answer. The northern border has been the focus in the deployment of
    new 2002 positions. In fact, 625 (74 percent) of the 848 new 2002 land
    border inspectors have been approved for deployment to the northern
    border. In 2003, INS will deploy additional positions to the northern
    border as appropriate. The focus, however, in fiscal year 2003 will be
    to ensure that the security and integrity of the small southern border
    ports are met as well as addressing traffic management challenges.
    Additional resources will also be dedicated to address the needs for
    Dedicated Commuter Lane processing and Enrollment Centers. INS has,
    therefore, not earmarked positions for one border over another until
    deployment is imminent so that all of the operational field
    requirements can be weighed and prioritized.
              technology funding request under the usa patriot act
        Question. The USA PATRIOT Act authorized $50 million for the INS to
    improve technology for monitoring the northern border and purchase
    additional equipment for use at the border. Have you requested any
    funding in your budget under that authorization? If so, what funding
    requests fall under that authorization? If not, why not?
        Answer. The INS has requested the following technology/equipment
    under this authorization for the northern border and received the funds
    appropriated as part of the fiscal year 2002 Counterterrorism
    supplemental budget for the northern border.

                            [In millions of dollars]
    ------------------------------------------------------------------------
     Technology/Equipment Requested for Northern
                    Border Sectors                  Requested   Appropriated
    ------------------------------------------------------------------------
    Integrated surveillance Intelligence system
     (ISIS):
        Installation of 57 sites at northern              23.6          23.6
         border sectors..........................
        Sensors..................................          8.0           8.0
        Remote video surveillance operations.....          6.0           6.0
                                                  --------------------------
          ISIS Subtotal..........................         37.6          37.6
                                                  ==========================
    Infrared night-vision scopes.................          1.0           1.0
    Single-engine helicopters....................          6.0           6.0
                                                  ==========================
          Total Northern Border Technology/               44.6          44.6
           Equipment Requested...................
    ------------------------------------------------------------------------

        In addition, the President's fiscal year 2003 budget includes our
    further requests for technology and related equipment for the northern
    border.
      --$10 million for two twin-engine helicopters to improve border
            access along the northern border and other critical areas where
            high mountains, extreme weather conditions and over-water
            operations are regularly encountered.
      --$28 million, of which approximately $5 million would be for the
            northern border for 10-print fingerprint machines for the
            Border Patrol and Joint Terrorism Task Force (JTTF) sites to
            provide electronic access via livescan devices to the Federal
            Bureau of Investigation's (FBI) IAFIS and other automated
            databases; to integrate the 10-print livescan machines with
            ENFORCE; to complete deployment of the ENFORCE intelligence
            module; to increase ENFORCE external interfaces; and to provide
            associated system training and maintenance. The northern border
            portion of this request is not a standalone request, and could
            not be accomplished separately from approval of the entire
            request.
                    northern border recruiting and retention
        Question. What steps is the Justice Department taking to fill
    quickly the additional Border Patrol and INS inspector positions for
    which Congress has already appropriated funds? Do you need additional
    funding for recruiting and retention? Have you found increased
    attrition among northern border personnel, who are often receiving only
    one day off a month since the terrorist attacks?
        Answer. The INS is taking a number of aggressive actions to quickly
    fill the additional Border Patrol and inspector positions appropriated
    in fiscal year 2002. These actions are coupled with actions to decrease
    the losses in the Border Patrol agent and immigration inspector
    occupations. Decreasing our losses is key to achieving our fiscal year
    2002 hiring goals.
        We are currently taking the following actions to fill the Border
    Patrol and immigration inspector positions quickly:
      --We have about 300 Border Patrol agents dedicated to the recruiting
            mission.
      --Recruitment efforts are ongoing at colleges and universities.
      --INS has placed advertising in more than 300 newspapers, magazines
            and Internet sites. In addition, INS is working on a number of
            initiatives in support of marketing and ``branding'' (enhancing
            the image of INS as an employer and promoting INS career
            opportunities), as well as developing new recruitment
            pamphlets, recruitment displays, and a television commercial
            and movie trailers. INS is sponsoring radio traffic reports in
            five markets, including Washington, D.C.
      --The recruitment announcements for both Border Patrol agents and
            inspectors have been extended several times.
      --The INS hired 551 new Border Patrol agents by the end of February
            2002. To hire the remaining 1,956 agents, we currently have
            43,000 applicants (who have taken or are scheduled to take the
            written examination) and expect to receive a total of 70,000
            applications by the end of fiscal year 2002. We currently have
            8,000 selectees in our hiring queue. These selectees are
            undergoing background investigations, medical examinations and
            drug tests.
      --The INS hired 285 new immigration inspectors by the end of February
            2002. To hire the remaining 1,690 inspectors, we have
            centralized the selection process at the National Hiring Center
            in order to streamline the process as much as possible. As a
            result, we currently have 49,600 applicants (who have taken or
            are scheduled to take the written examination) and 4,700
            selectees (who are currently undergoing background
            investigations, medical examinations and drug tests) in the
            hiring queue. About half of these selectees are from the
            centralized selection process begun February 1.
                           postconviction dna review
        Question. The Department sent a response on February 25, 2002, to a
    letter that I sent over 6 weeks ago concerning the Department's
    decision to set aside its plans to offer $750,000 in grant money for
    post-conviction DNA review programs. In response to the simple
    question: ``Does the Department intend to use alternate funds for post-
    conviction testing grants?'', the Department response said that the
    National Institute of Justice has been asked to look into DNA
    initiatives.
        Does this mean ``no?'' How is it that the Department cannot find
    $750,000 in a $30.2 billion budget to use for this important program?
        Answer. The Department is working to assist states in improving
    their overall forensic capabilities, as well as the general state of
    information and technology available to the field. In fiscal year 2002,
    the Department's National Institute of Justice (NIJ) will target $66
    million for research to make DNA identification technology more
    portable and inexpensive, enabling law enforcement in the field to
    access it more quickly and easily. Additionally, easier and quicker
    access will enable states to work more effectively in reducing the
    immense DNA sample backlog still existing across the nation. Finally,
    the availability of this new technology will make it possible for
    states to afford to conduct any post-conviction DNA testing they deem
    likely to be of significance in reviewing a conviction. However, the
    Department does not plan to undertake a national effort to promote and
    fund post-conviction DNA.
                         shift in fbi responsibilities
        Question. Director Mueller announced the first phase of his FBI
    reorganization in December, and I praised his action to strengthen FBI
    intelligence, security, and information management. He and Deputy
    Attorney General Thompson are now taking a wider look at ways to
    streamline the FBI responsibilities. This may require a shift in some
    responsibilities from the FBI to other federal and local law
    enforcement agencies in order to focus the FBI on detection, prevention
    and investigation of terrorists. In what areas do you foresee a shift
    in FBI responsibilities?
        Answer. The Director and his management team are now developing a
    comprehensive strategy to permanently shift resources to prevent and
    fight against terrorism. The FBI plans to present this strategy to the
    Department, Administration, and the Congress soon, but is still working
    to identify areas where it can redirect resources without compromising
    investigative priorities or partnerships with law enforcement and other
    government agencies. Given the elevated condition of the current
    terrorist threat to the United States, the FBI must make hard decisions
    to focus its energy and available resources on preventing additional
    terrorist acts and protecting our nation's security. At the same time,
    the FBI will continue to pursue and combat international and national
    organized crime groups and enterprises, civil rights violations, major
    white-collar crime, and serious violent crime; but at a level of effort
    consistent with resources available to support the capabilities of our
    federal, state, and local partners.
                                    trilogy
        Question. One of the most important FBI initiatives is the Trilogy
    program for upgrading the Bureau's information technology. The
    Counterterrorism Supplemental for fiscal year 2002 included $237
    million for advanced computer equipment and software under the Trilogy
    program, and the FBI requests another $109.4 million in fiscal year
    2003 for information technology projects including Trilogy. These are
    important investments. From an oversight perspective, however, I am
    disappointed that the Justice Department and the FBI have failed to
    submit quarterly status reports on Trilogy as required in the
    Appropriations Act for fiscal year 2001. Such reports are especially
    important to monitor the effectiveness of planning and testing for new
    software. Will you provide a current status report on Trilogy to the
    Congress as soon as possible?
        Answer. The Department of Justice (DOJ) appreciates the support
    that Congress has given its Trilogy information technology upgrade
    project, and understands the oversight role that Congress plays in
    ensuring that the large amount of funding that it has provided is used
    appropriately. Indeed, Trilogy is one of the FBI's top priorities and
    it must be managed and executed properly.
        The fiscal year 2001 Appropriations Act directed the FBI to submit
    quarterly status reports on the implementation of the Trilogy plan to
    the Appropriations Committees. The DOJ and FBI take this reporting
    requirement seriously and have worked diligently with each other and
    with the Office of Management and Budget over the last year to comply
    with this requirement fully and expedite the review process so that
    timely reports can be transmitted to Congress.
        The first quarterly report was transmitted to Congress on June 29,
    2001. The second and third quarterly reports were jointly transmitted
    to Congress on February 26, 2002.
        The fourth report was prepared by the FBI but it did not include
    the most recent information on accelerated Trilogy implementation.
    Therefore, the FBI decided to submit it with the fifth report to
    provide a more updated and accurate description of the Trilogy program
    as it currently stands. The fifth report reflects recent developments
    regarding Trilogy acceleration and fully explains how the program has
    been accelerated and improved to reflect the FBI's response to the
    terrorist attacks. The fourth and fifth quarterly reports were jointly
    transmitted to Congress on March 19, 2002.
        In summary, DOJ and FBI take reporting requirement responsibilities
    very seriously and remain committed to keeping Congress informed on the
    progress of the Trilogy program. At this time, DOJ has transmitted the
    first five quarterly status reports to Congress. The FBI is currently
    working on the sixth report.
           joint terrorism task forces and anti-terrorism task forces
        Question. On February 26, 2002, the Department responded to my
    December 20, 2001, letter with questions about the FBI and Justice
    Department Terrorism Task Force structures. Over the past 7 years, the
    FBI's Joint Terrorism Task Forces have strengthened counterterrorism
    efforts with full-time participation by other federal agencies and
    state and local police personnel. Director Mueller plans an increase in
    these task forces to all 56 offices, and I support this plan. After the
    September 11th attacks, the Attorney General formed separate Anti-
    Terrorism Task Forces in each U.S. Attorney's Office. Former FBI
    executives have publicly raised concerns that the new Task Forces would
    ``undermine the capabilities of the nation's primary agency responsible
    for the prevention and investigation of terrorist activity.'' Why does
    the Department need duplicative Task Forces in the U.S. Attorneys'
    Offices?
        Answer. The Joint Terrorism Task Force (JTTF) Program and the Anti-
    Terrorism Task Force (ATTF) Program are the mechanisms through which
    the Department of Justice coordinates its anti-terrorism activities.
    JTTFs are focused on investigating terrorism, while the ATTFs are
    responsible for ensuring communication and coordination at more and
    higher levels of government. The missions of these two entities are not
    duplicative.
        JTTFs are established through FBI field offices, and are designed
    for coordinated, operational investigation of terrorist activities. The
    JTTFs are composed of FBI agents and other investigators in federal,
    state, and local law enforcement agencies. All JTTF members must have
    top secret clearances, which grant them access to information that is
    developed throughout the course of an investigation.
        In response to the events of September 11, 2001, the Attorney
    General directed each United States Attorneys Office to establish an
    ATTF for broader coordination of our anti-terrorism efforts across the
    country. The ATTF's three main purposes include: (1) facilitation of
    information sharing between federal and state authorities in order to
    detect and prevent terrorist attacks; (2) coordination of local anti-
    terrorism efforts within each district; and (3) serving as a standing
    organizational structure for a coordinated response to any terrorist
    incidents that might occur in the district. The membership of the ATTFs
    include federal, state, and local agencies that can contribute to local
    anti-terrorism efforts, even if they are not directly involved in
    criminal law enforcement. At present, ATTF participants need not have
    security clearances.
        Because the state and local membership of the ATTFs exceed the
    state and local departments represented on JTTFs, the ATTFs also
    provide a force-multiplier when we engage in manpower intensive
    operations. For example, we enlisted the ATTF members to search for and
    locate several thousand non-immigrant aliens in just over 30 days
    without diverting resources necessary for ongoing JTTF investigations.
        The ATTFs include the JTTFs in the federal districts where JTTFs
    exist. In those districts where a JTTF exists, the FBI retains and
    exercises primary operational authority, in coordination and
    consultation with the ATTF and the United States Attorneys Anti-
    Terrorism Coordinator, over all JTTF investigative activities that are
    not related to an ongoing prosecution.
                     foreign terrorist tracking task force
        Question. The interagency Foreign Terrorist Tracking Task Force
    (FTTTF) was created in October 2001 to enhance U.S. efforts to prevent
    terrorist activity by ensuring that federal agencies coordinate their
    efforts to bar terrorists and their supporters from entering the United
    States. Please provide the charter for the Task Force and describe its
    specific functions and responsibilities. What is the level of Resources
    and funding provided by the Department to this Task Force in fiscal
    year 2002 and requested for fiscal year 2003?
        Answer. The FTTTF was created by the Attorney General pursuant to
    Homeland Security Presidential Directive-2 (HSPD-2), issued on October
    29, 2001. A copy of this document is attached (Attachment 1). HSPD-2
    directed that the FTTTF ensure that, ``to the maximum extent permitted
    by law, federal agencies coordinate programs to accomplish the
    following: (1) deny entry into the United States of aliens associated
    with, suspected of being engaged in, or supporting terrorist activity;
    and (2) locate, detain, prosecute, or deport any such aliens already
    present in the United States.''
        Since November 1, 2001, government agencies have begun designating
    personnel resources to the FTTTF. Currently, personnel are committed to
    the FTTTF from: DOJ, including FBI, INS, and the Drug Enforcement
    Administration (DEA); the Treasury Department, including the U.S.
    Customs Services; the Department of Health and Human Services,
    including the Social Security Administration; and components of the
    Department of Defense (DOD) and other members of the Intelligence
    Community. Plans are underway for additional agencies to detail
    personnel.
        The FTTTF has identified a number of specific projects which it can
    coordinate or run to fill gaps in existing government efforts relating
    to prevention of terrorist activities. For example, the FTTTF is
    pursuing projects to: (1) create a unified, cohesive lookout list; (2)
    identify foreign terrorists and their supporters who have entered or
    seek to enter the United States or its territories; and (3) detect such
    factors as violations of criminal or immigration law which would permit
    exclusion, detention or deportation of such individuals.
        In addition, the FTTTF is in the process of identifying other
    intelligence-related projects that it can support through its
    collaborative capability to co-locate data from multiple agency
    sources. In this respect, the FTTTF will not duplicate any existing
    governmental activity, but shall supplement and support existing
    functions to promote the interests of national security through
    improved information sharing.
        The Department of Justice has identified for fiscal year 2002 a
    requirement of approximately $20 million in partial year costs to
    support the FTTTF. It is anticipated that in fiscal year 2003, the
    FTTTF will require full year funding to continue operations, as well as
    some additional costs currently being supported by the DOD.
                           anti-terrorism task forces
        Question. If the U.S. Attorneys' Anti-Terrorism Task Forces request
    state or local law enforcement agencies to conduct investigative
    activities for the Justice Department, will those state or local
    investigative activities be coordinated by the FBI and subject to the
    Attorney General's guidelines for FBI investigations?
        Answer. In those districts where an FBI Joint Terrorism Task Force
    (JTTF) exists, the FBI will retain and exercise primary operational
    authority over all JTTF investigative activities. As a result, these
    investigative activities will be coordinated by the FBI and subject to
    the Attorney General's Guidelines. JTTFs are currently authorized in 47
    of the FBI's 56 field offices, and the FBI is seeking to expand the
    program to the remaining 9 field offices.
        In those instances in which there is no JTTF in a district and the
    Anti-Terrorism Task Force (ATTF) requests state or local law
    enforcement agencies to conduct investigative activities, there will be
    some coordination with the FBI in all instances, because the FBI is an
    important participant in each ATTF. The extent and nature of
    coordination with the FBI may vary with the request. For example, in
    the effort to interview non-immigrant aliens, the United States
    Attorneys were specifically directed to coordinate the assignment of
    interviews and the conducting of interviews with the FBI Special Agents
    in Charge in each district. Likewise, the extent to which state and
    local investigative activities are subject to the Attorney's General
    Guidelines may vary. If state and local agencies undertake
    investigative activities with no involvement from the FBI, the
    Guidelines will ordinarily not apply. There may be instances in which
    state and local law enforcement agencies have entered into memorandums
    of understanding with the FBI requiring that the agencies adhere to the
    Guidelines in the course of joint investigations. In such instances,
    the agencies' activities will be subject to the Guidelines.
                  professional security officer career program
        Question. The FBI budget includes additional funding of $48.2
    million for Information Assurance and $29.9 million for other security
    programs. How much of these funds will be allocated to the development
    of a career security officer program? What additional funds, if any,
    would be needed to implement a robust security career program including
    security career program boards, identification of career development
    paths, ensuring opportunities for non-special agent personnel,
    providing appropriate security performance appraisals, establishing
    training and experience requirements for security management positions,
    and implementing an education and training program for FBI security
    personnel?
        Answer. The FBI's fiscal year 2003 budget request does not include
    any resources for the development of a professional security officer
    career track. The request does, however, include $2,425,000 to educate
    employees, including security officers, about security policies,
    procedures and methods. Moreover, the FBI anticipates that a workforce
    study being conducted by Resource Consultants Incorporated will assist
    in identifying the knowledge, skills, and abilities required by
    professional Security Officers and will assist in the development of a
    program outline the FBI plans to complete by the end of calendar year
    2002.
        The FBI's recently created Security Division will work with human
    resources personnel during fiscal year 2003 to expand the program
    outline into a career security program, including establishment of
    career security program review boards; identification of career
    development paths; development of critical elements for security
    performance appraisals; establishment of training and experience
    requirements for security management positions; and implementation of a
    comprehensive education and training program for all FBI security
    personnel. The FBI will be in a better position to determine what
    additional resources, if any, will be needed upon completion of program
    development.
     internet-based regional information sharing system and internet-based
                         law enforcement online program
        Question. The Attorney General's prepared statement says that a
    ``critical element in our battle plan against the terrorist threat is
    working to develop and enhance interoperable databases and
    telecommunications systems for the Department's law enforcement
    activities.'' The USA PATRIOT Act authorized the expansion of the
    Internet-based Regional Information Sharing System (RISS) funded by the
    Bureau of Justice Assistance to enhance the investigation and
    prosecution abilities of participating enforcement agencies in
    addressing multi-jurisdictional terrorist conspiracies and activities.
    The FBI has a complementary Internet-based Law Enforcement Online (LEO)
    program that provides public and private controlled multi-level access
    areas for specialized public safety organizations and disciplines. Both
    programs enable state and local governments to collaborate with federal
    agencies and with each other on counterterrorism, homeland security,
    infrastructure protection, and other law enforcement matters. Such
    Internet-based collaboration could include organizations with
    significant roles in homeland security and infrastructure protection.
    Please provide a plan with associated funding requirements for a
    unified Internet-based information architecture including RISS and LEO
    that meets the Department's needs to serve all organizations tasks that
    are necessary for coherent homeland security, infrastructure
    protection, and law enforcement efforts.
        Answer. As reflected in the Attorney General's statement on the
    subject, DOJ regards the interoperability of databases and
    telecommunications systems as a crucial aspect in thwarting terrorism.
    The Department believes that a system combining the strengths of both
    the BJA's Regional Information Sharing System (RISS) and the FBI's Law
    Enforcement Online (LEO) may provide the most effective means of
    achieving this interoperability. Such a system could provide federal
    and non-federal law enforcement agencies varying levels of access to
    information they need to perform their missions more effectively. DOJ
    is continuing study to determine the most feasible manner of combining
    the two systems. The Department is near closure on the issue and will
    be able to provide a plan soon.
        Question. The Attorney General's prepared statement says that he
    aims to establish a National Security Coordination Council (NSCC) of
    the Department of Justice. Please provide the charter for the NSCC.
    What are the specific functions of the NSCC, including its detailed
    responsibilities for policy coordination, resource allocation,
    operations, long-term planning and information sharing? What will be
    its role in foreign counterintelligence and espionage matters, in
    foreign intelligence matters beyond counterterrorism, and in matters
    handled by the Office of Intelligence Policy and Review and the Joint
    Foreign Terrorism Tracking Task Force.
        Answer. The Attorney General's memorandum dated, March 5, 2002,
    entitled, ``Establishment of the National Security Coordination
    Council'' responds to this question.
                                Office of the Attorney General,
                                         Washington, DC, March 5, 2002.
    MEMORANDUM FOR HEADS OF DEPARTMENT COMPONENTS
    FROM: THE ATTORNEY GENERAL
    SUBJECT: Establishment of the National Security Coordination Council

        Nearly five months after the devastating terrorist attacks of
    September 11, 2001, the Department of Justice stands at the forefront
    of President Bush's efforts to secure the American homeland. Throughout
    the Department, we have made great strides toward fully deploying the
    arsenal of justice to combat terrorism, and we have done so without
    compromising our commitment to the rule of law. But there is much work
    to be done.
        The assaults on America that occurred on September 11, and the
    supreme imperative to prevent further terrorist attacks, mandate a more
    coordinated effort to combat terrorism and address other national
    security challenges, both within the Department of Justice, and in the
    Department's interaction with other law enforcement and intelligence
    agencies.
        Therefore, effective immediately, I hereby establish the National
    Security Coordination Council (NSCC) of the Department of Justice,
    which shall be chaired by the Deputy Attorney General. It shall be the
    principal mission of the NSCC to ensure a more seamless coordination of
    all functions of the Department relating to national security,
    particularly the Department's efforts to combat terrorism directed
    against the United States.
        Under the Deputy Attorney General's leadership, the Council will:
      --(1) Centralize and coordinate policy, resource allocation,
            operations, and long-term planning of DOJ components regarding
            counter-terrorism, counter-espionage, and other major national
            security issues;
      --(2) Monitor the implementation of Department policy to ensure that
            components are taking all necessary and appropriate actions to
            prevent and disrupt the occurrence of terrorist attacks in the
            United States;
      --(3) Provide an institutionalized Department forum for crisis
            management;
      --(4) Promote coordination and information-sharing within the
            Department, between DOJ and other federal agencies and
            interagency bodies, and between DOJ and state and local law
            enforcement authorities, to prevent, prepare for, and respond
            to terrorist attacks within the United States;
      --(5) Frame national security issues for resolution by the Deputy
            Attorney General or the Attorney General; and
      --(6) Ensure that positions advanced by the Deputy Attorney General
            on behalf of DOJ at interagency meetings of the National
            Security Council, the Homeland Security Council, and other
            interagency forums reflect input from DOJ national security
            components.
        In addition to the Deputy Attorney General, the NSCC's members will
    include the following Department officials with responsibility for
    national security matters: Chief of Staff to the Attorney General; FBI
    Director (with appropriate participation by the Executive Assistant
    Director for Counter-Terrorism/Counter-Intelligence); Assistant
    Attorney General, Criminal Division (with appropriate participation by
    the Terrorism and Violent Crime Section, the Office of International
    Affairs, and other Division components); Commissioner of the
    Immigration and Naturalization Service; Assistant Attorney General,
    Office of Justice Programs; and Counsel, Office of Intelligence Policy
    and Review.
        The NSCC will meet on a bi-weekly basis or more frequently as
    needed. In addition to the Deputy Attorney General and the permanent
    members listed above, other senior Department officials as well as
    senior officials from the Central Intelligence Agency and other
    government agencies--will be invited to attend NSCC meetings when
    appropriate. The NSCC will receive staff support from attorneys in the
    Office of the Deputy Attorney General with expertise in national
    security matters, and from ODAG administrative personnel. The functions
    and personnel of the Executive Office of National Security will
    henceforth be incorporated into the NSCC's operations.
        The establishment of the NSCC marks a new chapter in the Department
    of Justice's commitment to protecting the safety and well-being of the
    American people. I call upon all Department officials and employees to
    dedicate themselves to the success of this vital effort.
                          tobacco litigation resources
        Question. The President's budget seeks $25.2 million for litigation
    support in continuing the Justice Department's lawsuit against the
    tobacco industry. Department officials, however, claim that they will
    need up to $45 million in order to comply with fact and expert
    discovery requirements established by the court, and for the litigation
    team to prepare for trial, scheduled to begin in July 2003.
        What is the total funding needed to continue the tobacco
    litigation?
        If the $25 million requested in the President's budget is not
    sufficient to cover all those expenses, where are you getting the rest
    of the money? In other words, what other departments or sources will
    contribute to the costs of the tobacco litigation?
        Answer. During fiscal year 2002, current funding of $38,200,000 is
    sufficient to meet anticipated costs through September 30, 2002.
    Although most of these funds come from the Health Care Fraud and Abuse
    Control account (HCFAC), the Department will cover the $3,000,000 for
    costs of experts that are likely to testify, as well as $1,800,000 for
    a portion of the tobacco team's salaries and benefits.
        With respect to fiscal year 2003, the team will need an estimated
    $44,400,000. The funds will be needed to prepare for and undertake a
    July trial. We anticipate that fiscal year 2003 funding will likely
    come from a combination of sources, as in the past: (1) we have asked
    Congress to approve the $25,200,000 program increase sought in the
    President's budget for litigation support services that the team will
    need to build the factual support for the government; (2) we will
    continue to cover a portion of the salaries and benefits out of our
    base funds of $1,800,000, and we will continue to cover the $3,000,000
    for our testifying experts; and (3) the Department will likely seek to
    use its own HCFAC funding to meet the balance of the estimated tobacco
    litigation expenditures.
        Fiscal year 2003 will continue to be a costly year for the
    litigation. However, some costs are likely to be incurred in fiscal
    year 2004, and perhaps beyond, depending on the outcome of the trial
    and subsequent appeal decisions. Accordingly, we do not have cost
    estimates beyond fiscal year 2003.
                   improving state and local law enforcement
        Question. The Administration aims to repackage a number of Justice
    Department grant programs and cut their funding. Grant programs
    targeted for elimination include the State and Local Law Enforcement
    Block Grants, which received $400 million this year; and Byrne law
    enforcement block grants for efforts to improve state and local courts,
    which received $500 million this year. The plan would cut more than
    $1.6 billion from the $2.5 billion appropriated this year for state and
    local law enforcement grants, and would combine what is left into a new
    $800 million Justice Assistance Program. Please explain how the new
    Justice Assistance Program would work, and why state and local law
    enforcement agencies would lose $1.6 billion in the repackaging
    process.
        Answer. The first and overriding priority for the Department is
    counterterrorism. This is reflected throughout our budget, which
    refocuses our resources in support of our top priority. As part of this
    refocusing, the Administration proposes reducing or eliminating several
    grant programs. This redirection within the Justice budget enables our
    law enforcement efforts to increase by 13 percent to address the threat
    posed by terrorism.
        The Justice Assistance Grants (JAG) Program is a formula grant
    program that will provide assistance to states and local governments to
    support a broad range of activities to prevent and control crime and
    improve the criminal justice system. It would replace the Edward Byrne
    Memorial Formula Grant Program and the Local Law Enforcement Block
    Grant (LLEBG) Program with a single funding mechanism that will allow
    easier administration by both grantees and the Bureau of Justice
    Assistance (BJA). The President's budget for fiscal year 2003 proposes
    this new program, funded under the Community Oriented Policing Service
    (COPS) appropriation account, at the $800 million level. This
    represents a reduction of only $195 million from the combined Byrne and
    LLEBG funding enacted in last year's CJS appropriations bill. This does
    not include the one-time, supplemental appropriation to the Byrne
    program for counterterrorism grants.
        Activities funded under the current Byrne Formula Program or LLEBG
    program would continue to be eligible for funding. Funds provided to
    states may be used for statewide initiatives, technical assistance and
    training, and support for local jurisdictions. Local jurisdictions can
    work together with other local jurisdictions to develop regional
    projects supported by their JAG funds.
        There are several advantages to the new program:
      --Simplifies and Streamlines Policies, Practices, and Procedures.--
            Along with combining funding streams for programs of similar
            purposes, the JAG streamlines reporting requirements and
            reduces general administrative tasks at federal, state and
            local levels.
      --Enhances State and Local Control.--Grantees will have greater
            flexibility to use funds, enhancing their ability to address
            community problems with a wider variety of solutions.
      --Supports Collaboration and Communication.--The consolidation
            encourages greater sharing of information and coordination
            between state and local governments.
      --Promotes Best Practices.--The consolidation will enhance the
            ability of federal, state, and local governments to exchange
            new and successful practices.
        As reflected throughout the fiscal year 2003 President's budget,
    the primary and overarching priority for the Department is to bolster
    resources to respond more effectively to the threat of terrorism. As a
    result, the Department had to redirect existing resources from other
    program areas. Overall, the Office of Justice Programs is requesting a
    decrease of $1.651 billion from the 2002 enacted level for the State
    and Local Law Enforcement Assistance appropriation account. This
    decrease includes the proposed elimination of the Byrne formula and the
    LLEBG programs ($900 million), largely offset by the $800 million
    requested under the COPS appropriation account for the JAG.
        Other decreases requested include the proposed reduction to the
    Juvenile Accountability Incentives Block Grant program of $34.45
    million and the proposed elimination of the State Criminal Assistance
    Alien Assistance ($565 million), Tribal Prison Construction ($35.191
    million), Missing Alzheimers ($.898 million), Edward Byrne
    Discretionary Grants ($94.489 million), Cooperative Agreement ($20
    million), Victims of Trafficking ($10 million), and Motor Vehicle Theft
    Prevention programs ($1.298 million). Increases are proposed for RSAT
    (+$7 million), Drug courts (+$2 million), and technical assistance on
    hate crimes prevention (+$1.3 million). While assistance to state and
    local jurisdictions is reduced in the Department's budget, significant
    new resources are requested for state and local jurisdictions in the
    Federal Emergency Management Agency's budget of $3.5 billion.
                          civil rights and hate crimes
        Question. In connection with the Judiciary Committee's December 6,
    2001 oversight hearing and again at the February 26, 2002 Commerce,
    Justice, State Appropriations Subcommittee hearing, you were asked for
    the Department of Justice's position on S. 625, hate crimes legislation
    that was reported by the Judiciary Committee to the full Senate on July
    26, 2001. Your written response to the Judiciary Committee's prior
    questions indicated support for more limited legislation previously
    sponsored by Senator Hatch and not even introduced in this Congress,
    without expressing any views on S. 625, the pending legislation and the
    focus of the question. Again, at you more recent appearance on February
    26, 2002, you did not give a firm position on S. 625. Given your
    willingness to express a specific view on other legislation from prior
    Congresses, and the fact that S. 625 is the bill that has actually been
    reported to the full Senate, we again ask that you please provide the
    Department's views on S. 625.
        Answer. The Department's position on the pending hate crimes
    legislation is informed by our recent experience in responding to bias-
    motivated crimes which have unfortunately arisen in the wake of the
    tragic events of September 11. Since that date, the Civil Rights
    Division, which prosecutes bias-motivated crimes under several existing
    federal statutes, has investigated 350 cases of alleged discriminatory
    backlash against individuals perceived to be of Middle-Eastern origin,
    including Arab Americans, Muslim Americans, Sikh Americans, and South-
    Asian Americans. These cases are more specifically described in the
    next answer.
        Additionally, the Department recently indicted Darrell David Rice
    for the 1996 murder of Julianne Marie Williams and Laura ``Lollie'' S.
    Winans in the Shenandoah National Park. The four-count murder
    indictment specifically invokes a federal sentencing enhancement that
    was enacted to insure justice for victims of hate crimes. In this case,
    the federal sentencing enhancement provides for increased punishment if
    the fact finder at trial or, in the case of a plea of guilty or nolo
    contendere, the court at sentencing determines beyond a reasonable
    doubt that Rice intentionally selected either victim as the object of
    the offence because of the victim's actual or perceived gender or
    sexual orientation. If convicted of any of the charges in the
    indictment, Rice could face the death penalty.
        The Department of Justice appreciates the leadership Senators
    Kennedy and Hatch, as well as other members of Congress, have shown on
    the vital issue of hate crimes. Your leadership is reflected in the
    fact that the Senate Judiciary Committee has now voted to send S. 625
    to the full Senate. As your question notes, in my previous responses to
    the Committee I observed that then-Governor Bush indicated during the
    Presidential campaign that he supported Senator Hatch's proposed hate
    crimes legislation, which was introduced during the 106th Congress and
    which shares several features with S. 625. As I explained in my earlier
    response, these common features include provision by the Attorney
    General of assistance in the investigation or prosecution of any
    violent crime that constitutes a felony and is motivated by animus
    against the victim by reason of the membership of the victim in a
    particular class or group; grants by the Attorney General to state and
    local entities to assist in the investigation and prosecution of such
    crimes; and the appropriation of $5,000,000 for the next 2 fiscal years
    to carry out the grant program.
        As you know, S. 625 is an important proposal which would amend the
    federal criminal code in numerous significant respects. The Department
    of Justice continues to review and evaluate the constitutional and
    policy issues raised by the proposed amendments to the federal criminal
    code in S. 625. At the same time, we are continuing to fulfill our
    important mission of enforcing the existing laws relating to bias-
    motivated crimes that fall within federal jurisdiction under existing
    law.
        Question. S. 625 is particularly critical now since that
    legislation would both broaden federal hate crimes jurisdiction and
    provide support for state prosecutions. You noted in your written
    responses based on your December 6, 2002 testimony and it was brought
    up again at the February 25 hearing that the FBI has commenced
    approximately 300 federal criminal investigations involving post-
    September 11 attacks on Arab or Muslim Americans, or others, based upon
    their actual or perceived ethnicity. You indicate, however, that to
    date there have only been 8 federal cases resulting from these
    approximately 300 investigations. In short, there has been no federal
    prosecution in over 97 percent of these investigations. Please advise
    how many of these investigations: (a) have been closed, (b) have been
    referred to state authorities, or (c) are still being actively
    investigated by federal authorities? What criteria or factors are used
    to determine whether a case will be referred to a state or local law
    enforcement agency to handle and what, if any, is the federal role
    after such a referral?
        Answer. Since September 11, the Civil Rights Division (CRT), FBI,
    and United States Attorneys' offices have investigated over 300 alleged
    incidents involving violence or threats against individuals perceived
    to be of Middle-Eastern origin, including Arab Americans, Muslim
    Americans, Sikh Americans, and South-Asian Americans.
        Of the over 300 federal investigations that have been initiated
    since September 11, 75 of the investigations have been closed and 274
    investigations remain open. Sixty-five of the federal investigations
    have been or are being prosecuted by state and local prosecutors
    following coordination and cooperation with federal investigators and
    federal prosecutors. Although the Department of Justice does not have
    knowledge of every state and local case prosecuted since September 11,
    we have information indicating that state and local authorities are
    actively pursuing additional cases. The CRT and the United States
    Attorney's offices continue to coordinate with local prosecutors in
    instances where cases are being prosecuted locally and where there are
    also potential federal crimes that have not been charged to consider
    whether plea bargains can resolve both local and federal criminal
    liability.
        To date, federal charges have been brought in 10 cases, and the CRT
    and United States Attorneys' offices are working together to prosecute
    those cases. In those cases, the Department of Justice believed that
    there was an overriding federal interest in prosecuting an alleged
    backlash crime that could otherwise be prosecuted locally. The factors
    the Justice Department takes into account in making this determination
    are: (1) the resources of the local law enforcement agency, both legal
    and financial; (2) whether the local prosecution, if completed,
    achieved a fair and just result; (3) the potential national deterrent
    value of a federal prosecution in a given instance; and (4) whether
    other federal interests are implicated, such as the protection of
    federal government officials. After the Department has determined in a
    case of dual jurisdiction to allow state and local authorities to
    prosecute in the first instance, the Department closely monitors the
    course of the local prosecution.
                         crimes against arab americans
        Question. Immediately after the September 11 terrorist attacks, we
    were reminded of the importance of federal civil rights enforcement by
    the rash of crimes against Arab and Muslim Americans after the
    September 11 attacks. These acts, and indeed all acts of
    discrimination, cut at the very heart of what the terrorists hope to
    destroy in the United States our tolerance and our diversity. The
    budget request does not appear to match the rhetoric with the resources
    needed to maintain the Department's longstanding leadership role in
    national civil rights enforcement during these difficult times.
        In recent answers to questions which you provided based upon your
    December 6, 2001 appearance at the Senate Judiciary Committee, you note
    that the FBI has commenced approximately 300 federal criminal
    investigations involving post-September 11 attacks on Arab or Muslim
    Americans, or others, based upon their actual or perceived ethnicity.
    You indicate, however, that to date there have only been eight federal
    cases resulting from these approximately 300 investigations. In short,
    there has been no federal prosecution in over 97 percent of these
    investigations. Why is it that the Department is prosecuting so few of
    these violent crimes?
        Answer. The Department of Justice is committed to prosecuting
    vigorously the laws of the United States. Since September 11, CRT, FBI,
    and United States Attorneys' offices have investigated over 300 alleged
    incidents involving violence or threats against individuals perceived
    to be of Middle-Eastern origin, including Arab Americans, Muslim
    Americans, Sikh Americans, and South-Asian Americans.
        Of the over 300 federal investigations that have been initiated
    since September 11, 75 of the investigations have been closed and 274
    investigations remain open. Sixty-five of the federal investigations
    have been or are being prosecuted by state and local prosecutors
    following coordination and cooperation with federal investigators and
    federal prosecutors. Although the Department of Justice does not have
    knowledge of every state and local case prosecuted since September 11,
    we have information indicating that state and local authorities are
    actively pursuing additional cases. The CRT and the United States
    Attorney's offices continue to coordinate with local prosecutors in
    instances where cases are being prosecuted locally and where there are
    also potential federal crimes that have not been charged to consider
    whether plea bargains can resolve both local and federal criminal
    liability.
        To date, federal charges have been brought in 10 cases, and the CRT
    and United States Attorneys' offices are working together to prosecute
    those cases. In those cases, the Department of Justice believed that
    there was an overriding federal interest in prosecuting an alleged hate
    crime that could otherwise be prosecuted locally. The factors the
    Justice Department takes into account in making this determination are:
    (1) the resources of the local law enforcement agency, both legal and
    financial; (2) whether the local prosecution, if completed, achieved a
    fair and just result; (3) the potential national deterrent value of a
    federal prosecution in a given instance; and (4) whether other federal
    interests are implicated, such as the protection of federal government
    officials. After the Department has determined in a case of dual
    jurisdiction to allow state and local authorities to prosecute in the
    first instance, the Department closely monitors the course of the local
    prosecution.
        We are pleased to note that cooperation between federal agents and
    local law enforcement officers and between Justice Department
    prosecutors and local prosecutors has been outstanding. This is a
    testament to local law enforcement nationwide, which has shown the
    willingness to, and which has largely been given the legal and
    financial resources to, investigate and prosecute vigorously alleged
    bias-motivated crimes against individuals perceived to be of Middle-
    Eastern origin, including Arab Americans, Muslim Americans, Sikh
    Americans, and South-Asian Americans. The Department is aware that, in
    rare instances, local authorities may not have the tools or the will to
    prosecute a particular bias-motivated crime fully. In those rare
    instances, the Department will be prepared to initiate federal
    proceedings, if appropriate.
        America is well-served by our partners in state and local law
    enforcement. If the post-September 11 alleged incidents of violence
    were a test of local efforts to prosecute bias-motivated crimes, local
    law enforcement passed with flying colors.
        Question. Even counting all state prosecutions, no matter how
    minor, you stated that there are less than 60 total cases out of 300
    investigations. Why is it that in 80 percent of these violent cases no
    one at all has been prosecuted in any way? How is the decision made
    whether a case will be federally prosecuted or referred to the state
    and what is the federal role after such a referral?
        Answer. The Department of Justice is committed to prosecuting
    vigorously the laws of the United States. Since September 11, CRT, FBI,
    and United States Attorneys' offices have investigated over 300 alleged
    incidents involving violence or threats against individuals perceived
    to be of Middle-Eastern origin, including Arab Americans, Muslim
    Americans, Sikh Americans, and South-Asian Americans.
        Of the over 300 federal investigations that have been initiated
    since September 11, 75 of the investigations have been closed and 274
    investigations remain open. Sixty-five of the federal investigations
    have been or are being prosecuted by state and local prosecutors
    following coordination and cooperation with federal investigators and
    federal prosecutors. Although the Department of Justice does not have
    knowledge of every state and local case prosecuted since September 11,
    we have information indicating that state and local authorities are
    actively pursuing additional cases. The CRT and the United States
    Attorney's offices continue to coordinate with local prosecutors in
    instances where cases are being prosecuted locally and where there are
    also potential federal crimes that have not been charged to consider
    whether plea bargains can resolve both local and federal criminal
    liability.
        To date, federal charges have been brought in 10 cases, and the CRT
    and United States Attorneys' offices are working together to prosecute
    those cases. In those cases, the Department of Justice believed that
    there was an overriding federal interest in prosecuting an alleged hate
    crime that could otherwise be prosecuted locally. The factors the
    Justice Department takes into account in making this determination are:
    (1) the resources of the local law enforcement agency, both legal and
    financial; (2) whether the local prosecution, if completed, achieved a
    fair and just result; (3) the potential national deterrent value of a
    federal prosecution in a given instance; and (4) whether other federal
    interests are implicated, such as the protection of Federal Government
    officials. After the Department has determined in a case of dual
    jurisdiction to allow state and local authorities to prosecute in the
    first instance, the Department closely monitors the course of the local
    prosecution.
        Many of the alleged incidents that have been investigated by the
    Department of Justice have been closed, the alleged incidents are still
    being actively investigated, the Department is coordinating with local
    prosecutors to consider whether plea bargains can resolve both local
    and federal criminal liability, or the Department has determined in
    cases of dual jurisdiction to allow state and local authorities to
    prosecute in the first instance. The Department of Justice closes
    investigations when the facts indicate that there is no prosecutable
    federal crime or when a companion state or local prosecution has
    achieved a fair and just result that requires no subsequent federal
    prosecution.
        Question. You also noted in your prior written responses to
    questions that there have been approximately 50 state or local cases
    involving hate crimes after the September 11 attacks. Are these 50
    cases included in the same 300 investigations you set forth above?
    Please provide the following information regarding each of the state
    cases to which you refer: (a) identify the state or jurisdiction in
    which each case is pending, (b) indicate whether each state charge was
    a felony or misdemeanor, and (c) provide any available information
    regarding the dispositions and the punishments received, if any.
        Answer. Of the over 300 federal investigations that have been
    initiated since September 11, 75 of the investigations have been closed
    and 274 investigations remain open. Sixty-five of the federal
    investigations have been or are being prosecuted by state and local
    prosecutors following coordination and cooperation with federal
    investigators and federal prosecutors.
        Please see Attachment 2 for the information about state and local
    prosecutions of which the Department of Justice is aware. Where the
    Department is not aware of certain requested facts pertaining to these
    state and local prosecutions, the entry is left blank.
        Question. What criteria are being employed to determine whether a
    hate crime case will be prosecuted in federal or state court? In how
    many of these state prosecutions was federal prosecution legally
    possible, but forgone in lieu of a state case?
        Answer. Since September 11, CRT, FBI, and United States Attorneys'
    offices have investigated over 300 alleged incidents involving violence
    or threats against individuals perceived to be of Middle-Eastern
    origin, including Arab Americans, Muslim Americans, Sikh Americans, and
    South-Asian Americans.
        Of the over 300 federal investigations that have been initiated
    since September 11, 75 of the investigations have been closed and 274
    investigations remain open. Sixty-five of the federal investigations
    have been or are being prosecuted by state and local prosecutors
    following coordination and cooperation with federal investigators and
    federal prosecutors. Although the Department of Justice does not have
    knowledge of every state and local case prosecuted since September 11,
    we have information indicating that state and local authorities are
    actively pursuing additional cases. The CRT and the United States
    Attorney's offices continue to coordinate with local prosecutors in
    instances where cases are being prosecuted locally and where there are
    also potential federal crimes that have not been charged to consider
    whether plea bargains can resolve both local and federal criminal
    liability.
        To date, federal charges have been brought in 10 cases, and the CRT
    and United States Attorneys' offices are working together to prosecute
    those cases. In those cases, the Department of Justice believed that
    there was an overriding federal interest in prosecuting an alleged hate
    crime that could otherwise be prosecuted locally. The factors the
    Justice Department takes into account in making this determination are:
    (1) the resources of the local law enforcement agency, both legal and
    financial; (2) whether the local prosecution, if completed, achieved a
    fair and just result; (3) the potential national deterrent value of a
    federal prosecution in a given instance; and (4) whether other federal
    interests are implicated, such as the protection of federal government
    officials. After the Department has determined in a case of dual
    jurisdiction to allow state and local authorities to prosecute in the
    first instance, the Department closely monitors the course of the local
    prosecution.
        Many of the alleged incidents that have been investigated by the
    Department of Justice have been closed, the alleged incidents are still
    being actively investigated, the Department is coordinating with local
    prosecutors to consider whether plea bargains can resolve both local
    and federal criminal liability, or the Department has determined in
    cases of dual jurisdiction to allow state and local authorities to
    prosecute in the first instance. The Department of Justice closes
    investigations when the facts indicate that there is no prosecutable
    federal crime or when a companion state or local prosecution has
    achieved a fair and just result that requires no subsequent federal
    prosecution.
        Question. The Judiciary Committee has asked the Attorney General in
    written questions for information about the process used for reviewing
    potential hate crimes cases within the Department of Justice, including
    which officials were involved and to what extent the process differs
    from the review to which other cases are subjected. Your reply simply
    provided the name of the top official with final certification
    authority in hate crimes prosecutions. In order for Congress, in both
    its oversight and legislative roles, to evaluate whether the extremely
    low federal hate crime prosecution rate is due to the narrow scope of
    the current law, policy based decisions of the Department of Justice to
    forgo federal prosecution in these cases, inadequate resources devoted
    to this problem or some other reason, a more thorough response
    describing how the review process in these cases differs from other
    criminal cases would be helpful. For this reason, please provide a more
    complete response to this question. Specifically, please advise what
    guidelines or policies, if any, are in place to ensure that these cases
    are handled appropriately? Please explain why fewer than 3 percent of
    these allegations have resulted in federal prosecution at a time when
    the President is publicly condemning such violent acts?
        Answer. The process of determining whether to initiate a
    prosecution pursuant to 18 Sec. 245 begins after FBI has investigated
    the alleged crime in coordination with CRT and United States Attorneys'
    offices. After the investigation is completed, attorneys in the
    Criminal Section of CRT deliberate with Assistant Attorney General
    Ralph F. Boyd, Jr. and other attorneys within the Office of the
    Assistant Attorney General. Per section 245(a)(1), no prosecution can
    be undertaken except upon the certification of the Attorney General,
    the Deputy Attorney General, the Associate Attorney General, or any
    Assistant Attorney General specially designated by the Attorney
    General. The Attorney General has specially designated Assistant
    Attorney General Boyd as the person who must certify that a prosecution
    under section 245 may go forward.
        With respect to the absolute number of federal prosecutions, the
    Department credits the outstanding cooperation between federal agents
    and local law enforcement officers and between Justice Department
    prosecutors and local prosecutors. This is a testament to local law
    enforcement nationwide, which has shown the willingness to, and which
    has largely been given the legal and financial resources to, vigorously
    investigate and prosecute alleged bias-motivated crimes against
    individuals perceived to be of Middle-Eastern origin, including Arab
    Americans, Muslim Americans, Sikh Americans, and South-Asian Americans.
    The Department is aware that, in rare instances, local authorities may
    not have the tools or the will to prosecute a given bias-motivated
    crime fully. In those rare instances, the Department will be prepared
    to initiate federal proceedings, if appropriate.
                         mississippi redistricting plan
        Question. The President's budget request did not call for any
    additional resources for the Department's Voting Rights Section, even
    though the recent press reports about the Department's role in blocking
    a redistricting plan for congressional seats in Mississippi are
    disturbing. During your confirmation hearing, you recognized that
    ``[v]oting is a fundamental civil right'' and pledged if confirmed that
    you would ``work aggressively and vigilantly to enforce federal voting
    rights laws.'' You assured this Committee that ``[i]t will be a top
    priority of a Bush Department of Justice, part of what I hope would be
    its legacy.'' In addition, in your testimony today, you reemphasized
    the importance of the right to vote in the context of implementing
    election reform.
        Nevertheless, according to recent reports, the Department's belated
    request for additional information regarding the Mississippi
    redistricting plan proposed by elected Mississippi state legislators
    and approved by a state judge put that plan at risk of being supplanted
    by an alternative plan that is ``favorable to Republican candidates,''
    and was ordered by what is described as ``a panel of white Republican-
    appointed federal judges.'' The alternative plan may be imposed based
    not upon that plan's merits but rather based upon scheduling concerns
    stemming from the Department's foot-dragging in the matter. These
    allegations are serious and necessitate prompt responses explaining the
    Department's actions.
        Answer. The Department's request for additional information was
    sent to the Mississippi Attorney General on February 14, 2002, well
    within the statutorily-imposed 60-day deadline for making
    determinations under section 5 of the Voting Rights Act of 1965.
    Subsequently, in light of the ruling of the three-judge federal court
    that the state's plan is unconstitutional, the Department sent a
    routine ``no determination'' letter to the Mississippi Attorney General
    informing him that the Department would take no further action at this
    time. The Department of Justice has never failed to meet its
    obligations under section 5 of the Voting Rights Act of 1965 within the
    prescribed statutory time frames. In the past year, the Department has
    received over 5,000 section 5 submissions encompassing more than 15,000
    voting changes, and has never missed a deadline.
        Question. When did the Department first receive the redistricting
    plan?
        Answer. On December 26, 2001, the Mississippi Attorney General
    submitted three voting changes, including the congressional
    redistricting plan adopted by the Chancery Court for the First Judicial
    District of Hinds County, Mississippi, to the Department. The other two
    voting changes submitted for approval involved the creation of a state
    legislative committee to address redistricting and a state supreme
    court decision, on writ of mandamus, allowing a chancery court to draw
    a congressional redistricting plan.
        Question. Who within the Department was assigned the task of
    reviewing the plan, and how long did that review take?
        Answer. The Voting Section of the Civil Rights Division reviewed
    the voting changes submitted by the Mississippi Attorney General in
    accordance with its usual procedures for reviewing submissions to the
    Department pursuant to section 5 of the Voting Rights Act of 1965. On
    February 14, 2002, the Department asked the Mississippi Attorney
    General for more information concerning certain changes and advised him
    of legal concerns regarding whether the submission was final. Also on
    February 14, 2002, in an attempt to expedite the Department's decision-
    making process, Assistant Attorney General Ralph F. Boyd, Jr. sent a
    letter to the Supreme Court of Mississippi, respectfully requesting the
    expedited consideration of the state court appeal. On February 19-20,
    2002, the Department received additional information from the
    Mississippi Attorney General, but the Department never received a
    response from the Supreme Court of Mississippi.
        Question. Were any memoranda or recommendations prepared by the
    Voting Rights Section in connection with the initial review of the
    redistricting plan and, if so, please provide for each memoranda: the
    date, the author, the recipients and a description of the document?
        Answer. Attorneys in the Voting Section prepared memoranda
    regarding the redistricting plan, in accordance with their usual
    procedures regarding pre-clearance matters submitted to the Department
    pursuant to section 5 of the Voting Rights Act of 1965. The Department
    has substantial confidentiality interests in such memoranda because of
    concerns that their disclosure would chill the candid internal exchange
    of information about particular law enforcement decisions. We believe
    that this confidentiality is important to ensuring the robust
    deliberations within the Department and the integrity of our decision-
    making process.
        Question. On what date did career trial attorneys in the Voting
    Rights Section make any recommendations about the redistricting plan,
    and to whom did they make those recommendations?
        Answer. We appreciate your interest in the Mississippi
    redistricting plan and hope that you will appreciate the Department's
    substantial confidentiality interests in the internal deliberations
    within CRT relative to this law enforcement matter. Department
    decision-makers have long been concerned that disclosure of information
    about internal deliberations regarding particular matters would make it
    more difficult for them to obtain the candid advice and recommendations
    of their subordinates. We would like to explore other alternatives for
    accommodating your oversight interests such as through a briefing by
    Assistant Attorney General Boyd about the decisions that he made in
    this matter, as suggested in his letter of March 19, 2002.
        Question. Who reviewed the recommendations of the Voting Rights
    Section about the Mississippi redistricting plan?
        Answer. The Mississippi redistricting plan was reviewed in
    accordance with CRT's usual procedures regarding section 5 submissions
    and Assistant Attorney General Ralph F. Boyd, Jr. decided to send the
    letters, dated February 14, 2002, which requested additional
    information from the Mississippi Attorney General and sought expedited
    consideration from the Mississippi Supreme Court.
        Question. How much time passed after the career employees in the
    Voting Rights Section made initial recommendations on the Mississippi
    plan to the office of the Assistant Attorney General, Civil Rights
    Division, and the Department's questions to the State of Mississippi?
        Were any changes made in the recommendations of the Voting Rights
    Section referred to above and, if so, what were those changes?
        Did the Department take the actions initially recommended by the
    career trial attorneys in the Voting Rights Section and, if not, please
    explain how any actions taken by the Department differed from those
    initial recommendations?
        Answer. With regard to these questions, as indicated above, the
    Department has substantial confidentiality interests in its internal
    deliberations regarding law enforcement matters, because we want to
    protect the candid exchange of views, including advice and
    recommendations, that we believe is essential to the integrity of our
    decision-making processes. We would like to accommodate your oversight
    interests in the Department's decisions regarding the Mississippi
    redistricting plan in a manner that avoids these concerns. As indicated
    in his letter, March 19, 2002. Assistant Attorney General Boyd would be
    pleased to brief you at your earliest convenience about his decisions
    in this matter.
        Question. When does the Department expect make a final preclearance
    decision on the Mississippi redistricting plan now that the state's
    Attorney General has submitted answers to the Department's belated
    questions?
        Answer. On February 26, 2002, a three-judge panel sitting in the
    United States District Court for the Southern District of Mississippi
    held that the adoption of the chancery court's plan violated Article I,
    Section 4 of the United States Constitution and was, therefore,
    unconstitutional and a nullity. Requests for a stay of the District
    Court's order were denied by the United States Supreme Court. The
    Supreme Court is not expected to determine fully whether the plan is
    constitutional until its next term. In light of the District Court's
    action, the Department has not taken further action, and on April 1,
    2002 the Department sent a ``no determination'' letter to Mississippi
    notifying it of the Department's position. We will closely monitor the
    appeal in this case.
        Question. Do you believe that the Voting Rights Section is able to
    perform its statutory duties, including completion of preclearance
    reviews in a timely fashion? If so, please explain why?
        Answer. The Voting Section has sufficient resources to fulfill its
    obligations. The Section has successfully shifted some resources
    internally to accommodate the numerous voting changes enacted as a
    result of the 2000 Census. The Department of Justice has never failed
    to meet its obligations under section 5 of the Voting Rights Act of
    1965 within the prescribed statutory time frames. In the past year, the
    Department has received over 5,000 section 5 submissions, encompassing
    more than 15,000 voting changes, and has never missed a deadline.
                             civil rights division
        Question. The President's budget for the rest of the Civil Rights
    Division did not propose any of the increases recommended for the
    Department's other components. Your assurances about the Department's
    continued commitment to strong civil rights enforcement and, in
    particular, your responses to the following questions would be
    appreciated.
        Have the Department's internal priorities in civil rights
    enforcement changed in the last year?
        Answer. The Department's current civil-rights priorities include
    (in no particular order): (1) the enforcement of the Americans with
    Disabilities Act of 1990 and the implementation of the Olmstead v. L.C.
    decision; (2) the enforcement of statutes prohibiting migrant smuggling
    and human trafficking, including the Trafficking Victims Protection Act
    of 2000; (3) the investigation and prosecution of alleged incidents
    involving violence or threats against individuals perceived to be of
    Middle-Eastern origin, including Arab Americans, Muslim Americans, Sikh
    Americans, and South-Asian Americans, and the coordination of outreach
    efforts to individuals and organizations from those communities to
    provide information about government services; and (4) the enforcement
    of voting rights and the provision of resources to state and local
    governments on voting reform.
        Question. Please provide the Committee with any documents
    reflecting enforcement policies, priorities or directions to the U.S.
    Attorneys' Offices or to the Civil Rights Division.
        Answer. Please see documents in Attachment 3.
        Question. Please provide the Committee with any documents
    reflecting an evaluation over the last year of the propriety or
    correctness of any legal arguments which the Department of Justice has
    made in previous civil rights enforcement actions.
        Answer. The Department constantly evaluates the propriety and
    correctness of its legal arguments in light of evolving judicial
    precedence and the evidentiary records in particular matters. Its
    briefs and other statements of legal positions filed in law enforcement
    related litigation reflect these continuing developments. As indicated
    above, the Department has substantial confidentiality interests in
    internal documents reflecting its deliberations regarding legal
    positions in individual matters.
         tax division and environmental and natural resources division
        Question. The President's budget also calls for cuts in the
    Environmental and Natural Resources Division and the Tax Division.
    These are the Department's components responsible for enforcing the
    environmental laws and bringing cases against tax evaders. Given the
    recent tax cuts and changes over the last year in the nation's
    environmental regulatory scheme, aggressive enforcement of the
    remaining tax and environmental laws should be a priority. Please
    explain in detail how the Department plans to implement these cuts in
    the Tax Division and the ENRD?
        Answer. The request for the Tax Division includes a decrease of
    $1.1 million in salaries and expenses below the current services level,
    which equates to a reduction in 10 positions.
        The Tax Division is fully committed to the fair, vigorous, and
    uniform enforcement of the tax laws, and will continue to prosecute tax
    crimes and defend and pursue civil claims. We expect to absorb the
    requested budget decrease in part by streamlining processes, increasing
    productivity, resolving cases in a more cost-effective manner, and
    devoting more resources earlier to precedent-setting cases.
        Additionally, the President's budget includes a proposal to move
    certain tax collection due process proceedings from the United States
    District Courts to the United States Tax Court, which will relieve the
    Tax Division of the burden of handling those cases.
        Tax Division's budget for fiscal year 2000 through 2003:

                                                                     Million

    Fiscal year 2000 appropriation.................................... $67.2
    Fiscal year 2001 appropriation....................................  70.8
    Fiscal year 2002 enacted..........................................  73.8
    Fiscal year 2003 President's budget...............................  75.5

        The Environment and Natural Resources Division will be able to
    absorb the fiscal year 2003 cut of $1,085,000 and 8 positions in the
    Environmental Enforcement Section through attrition. In the past 5
    years, the Environmental Enforcement Section has had annual turnover of
    25-35 people each year. We plan to absorb this cut reduce staff by
    replacing 8 fewer staff.
        The Environment and Natural Resources Division will continue to
    bring cases to address pollution problems in the United States. The
    proposed reduction in the number of staff who handle civil enforcement
    cases is necessary so that resources can be focused on counterterrorism
    efforts.
    Attachment 1.--Homeland Security Presidential Directive-2--October 29,
                                      2001
                                 Office of the Press Secretary,
                                                      October 30, 2001.
    SUBJECT: Combating Terrorism Through Immigration Policies
    A. National Policy
        The United States has a long and valued tradition of welcoming
    immigrants and visitors. But the attacks of September 11, 2001, showed
    that some come to the United States to commit terrorist acts, to raise
    funds for illegal terrorist activities, or to provide other support for
    terrorist operations, here and abroad. It is the policy of the United
    States to work aggressively to prevent aliens who engage in or support
    terrorist activity from entering the United States and to detain,
    prosecute, or deport any such aliens who are within the United States.
                1. Foreign Terrorist Tracking Task Force
        By November 1, 2001, the Attorney General shall create the Foreign
    Terrorist Tracking Task Force (Task Force), with assistance from the
    Secretary of State, the Director of Central Intelligence and other
    officers of the government, as appropriate. The Task Force shall ensure
    that, to the maximum extent permitted by law, Federal agencies
    coordinate programs to accomplish the following: (1) deny entry into
    the United States of aliens associated with, suspected of being engaged
    in, or supporting terrorist activity; and (2) locate, detain,
    prosecute, or deport any such aliens already present in the United
    States.
        The Attorney General shall appoint a senior official as the full-
    time Director of the Task Force. The Director shall report to the
    Deputy Attorney General, serve as a Senior Advisor to the Assistant to
    the President for Homeland Security, and maintain direct liaison with
    the Commissioner of the Immigration and Naturalization Service (INS) on
    issues related to immigration and the foreign terrorist presence in the
    United States. The Director shall also consult with the Assistant
    Secretary of State for Consular Affairs on issues related to visa
    matters.
        The Task Force shall be staffed by expert personnel from the
    Department of State, the INS, the Federal Bureau of Investigation, the
    Secret Service, the Customs Service, the Intelligence Community,
    military support components, and other federal agencies as appropriate
    to accomplish the Task Force's mission.
        The Attorney General and the Director of Central Intelligence shall
    ensure, to the maximum extent permitted by law, that the Task Force has
    access to all available information necessary to perform its mission,
    and they shall request information from State and local governments,
    where appropriate.
        With the concurrence of the Attorney General and the Director of
    Central Intelligence, foreign liaison officers from cooperating
    countries shall be invited to serve as liaisons to the Task Force,
    where appropriate, to expedite investigation and data sharing.
        Other federal entities, such as the Migrant Smuggling and
    Trafficking in Persons Coordination Center and the Foreign Leads
    Development Activity, shall provide the Task Force with any relevant
    information they possess concerning aliens suspected of engaging in or
    supporting terrorist activity.
                2. Enhanced INS and Customs Enforcement Capability
        The Attorney General and the Secretary of the Treasury, assisted by
    the Director of Central Intelligence, shall immediately develop and
    implement multi-year plans to enhance the investigative and
    intelligence analysis capabilities of the INS and the Customs Service.
    The goal of this enhancement is to increase significantly efforts to
    identify, locate, detain, prosecute or deport aliens associated with,
    suspected of being engaged in, or supporting terrorist activity within
    the United States.
        The new multi-year plans should significantly increase the number
    of Customs and INS special agents assigned to Joint Terrorism Task
    Forces, as deemed appropriate by the Attorney General and the Secretary
    of the Treasury. These officers shall constitute new positions over and
    above the existing on-duty special agent forces of the two agencies.
                3. Abuse of International Student Status
        The United States benefits greatly from international students who
    study in our country. The United States government shall continue to
    foster and support international students.
        The government shall implement measures to end the abuse of student
    visas and prohibit certain international students from receiving
    education and training in sensitive areas, including areas of study
    with direct application to the development and use of weapons of mass
    destruction. The government shall also prohibit the education and
    training of foreign nationals who would use such training to harm the
    United States or its allies.
        The Secretary of State and the Attorney General, working in
    conjunction with the Secretary of Education, the Director of the Office
    of Science and Technology Policy, the Secretary of Defense, the
    Secretary of Energy, and any other departments or entities they deem
    necessary, shall develop a program to accomplish this goal. The program
    shall identify sensitive courses of study, and shall include measures
    whereby the Department of State, the Department of Justice, and United
    States academic institutions, working together, can identify
    problematic applicants for student visas and deny their applications.
    The program shall provide for tracking the status of a foreign student
    who receives a visa (to include the proposed major course of study, the
    status of the individual as a full-time student, the classes in which
    the student enrolls, and the source of the funds supporting the
    student's education). The program shall develop guidelines that may
    include control mechanisms, such as limited duration student
    immigration status, and may implement strict criteria for renewing such
    student immigration status. The program shall include guidelines for
    exempting students from countries or groups of countries from this set
    of requirements.
        In developing this new program of control, the Secretary of State,
    the Attorney General, and the Secretary of Education shall consult with
    the academic community and other interested parties. This new program
    shall be presented through the Homeland Security Council to the
    President within 60 days.
        The INS, in consultation with the Department of Education, shall
    conduct periodic reviews of all institutions certified to receive
    nonimmigrant students and exchange visitor program students. These
    reviews shall include checks for compliance with record keeping and
    reporting requirements. Failure of institutions to comply may result in
    the termination of the institution's approval to receive such students.
                4. North American Complementary Immigration Policies
        The Secretary of State, in coordination with the Secretary of the
    Treasury and the Attorney General, shall promptly initiate negotiations
    with Canada and Mexico to assure maximum possible compatibility of
    immigration, customs, and visa policies. The goal of the negotiations
    shall be to provide all involved countries the highest possible level
    of assurance that only individuals seeking entry for legitimate
    purposes enter any of the countries, while at the same time minimizing
    border restrictions that hinder legitimate trans-border commerce.
        As part of this effort, the Secretaries of State and the Treasury
    and the Attorney General shall seek to substantially increase sharing
    of immigration and customs information. They shall also seek to
    establish a shared immigration and customs control data-base with both
    countries. The Secretary of State, the Secretary of the Treasury, and
    the Attorney General shall explore existing mechanisms to accomplish
    this goal and, to the maximum extent possible, develop new methods to
    achieve optimal effectiveness and relative transparency. To the extent
    statutory provisions prevent such information sharing, the Attorney
    General and the Secretaries of State and the Treasury shall submit to
    the Director of the Office of Management and Budget proposed remedial
    legislation.
                5. Use of Advanced Technologies for Data Sharing and
                        Enforcement Efforts
        The Director of the OSTP, in conjunction with the Attorney General
    and the Director of Central Intelligence, shall make recommendations
    about the use of advanced technology to help enforce United States
    immigration laws, to implement United States immigration programs, to
    facilitate the rapid identification of aliens who are suspected of
    engaging in or supporting terrorist activity, to deny them access to
    the United States, and to recommend ways in which existing government
    databases can be best utilized to maximize the ability of the
    government to detect, identify, locate, and apprehend potential
    terrorists in the United States. Databases from all appropriate Federal
    agencies, state and local governments, and commercial databases should
    be included in this review. The utility of advanced data mining
    software should also be addressed. To the extent that there may be
    legal barriers to such data sharing, the Director of the OSTP shall
    submit to the Director of the Office of Management and Budget proposed
    legislative remedies. The study also should make recommendations,
    propose timelines, and project budgetary requirements.
        The Director of the OSTP shall make these recommendations to the
    President through the Homeland Security Council within 60 days.
                6. Budgetary Support
        The Office of Management and Budget shall work closely with the
    Attorney General, the Secretaries of State and of the Treasury, the
    Assistant to the President for Homeland Security, and all other
    appropriate agencies to review the budgetary support and identify
    changes in legislation necessary for the implementation of this
    directive and recommend appropriate support for a multi-year program to
    provide the United States a robust capability to prevent aliens who
    engage in or support terrorist activity from entering or remaining in
    the United States or the smuggling of implements of terrorism into the
    United States. The Director of the Office of Management and Budget
    shall make an interim report through the Homeland Security Council to
    the President on the recommended program within 30 days, and shall make
    a final report through the Homeland Security Council to the President
    on the recommended program within 60 days.

                                                        George W. Bush.
       Attachment 2.--State and Local Backlash Prosecutions of Which the
                         Department of Justice is Aware
        Location: DeQueen, Arkansas
        Charge: Criminal mischief
        Felony/Misdemeanor: Juvenile charge
        Disposition/Sentence: Conviction. Sentencing pending.

        Location: Mesa, Arizona
        Charge: Capital Murder
        Felony/Misdemeanor: Felony
        Disposition/Sentence: Pending

        Location: San Diego, California
        Charge: Assault
        Felony/Misdemeanor: Misdemeanor
        Disposition/Sentence: Conviction. Sentenced to 3 years probation,
    $1,000 restitution.

        Location: San Diego, California
        Charge: Threats and arson
        Felony/Misdemeanor:
        Disposition/Sentence: Dismissed

        Location: Lancaster, California
        Charge: Assault
        Felony/Misdemeanor: Felony
        Disposition/Sentence: Conviction. Sentenced to 4 years
    incarceration.

        Location: Los Angeles, California
        Charge: Threats
        Felony/Misdemeanor:
        Disposition/Sentence: Dismissed

        Location: Moreno Valley, California
        Charge: Threats
        Felony/Misdemeanor:
        Disposition/Sentence: Conviction. Sentenced to 120 days
    incarceration.

        Location: Bellflower, California
        Charge: Threat
        Felony/Misdemeanor: Misdemeanor
        Disposition/Sentence: Conviction

        Location: Los Angeles, California
        Charge: Threats, civil rights, and weapons charges
        Felony/Misdemeanor:
        Disposition/Sentence: Pending

        Location: Lawndale, California
        Charge: Threats
        Felony/Misdemeanor: Misdemeanor
        Disposition/Sentence: Conviction. Sentenced to 21 days
    incarceration and 3 years probation.

        Location: Sacramento, California
        Charge: Trespass
        Felony/Misdemeanor:
        Disposition/Sentence: Conviction. Sentenced to 3 years
    incarceration

        Location: Frostproof, Florida
        Charge: Criminal mischief, throwing deadly missile into bldg.
        Felony/Misdemeanor:
        Disposition/Sentence: Prosecution terminated

        Location: Kissimmee, Florida
        Charge: Attempted arson and threats
        Felony/Misdemeanor:
        Disposition/Sentence: Dismissed

        Location: Chicago, Illinois
        Charge: Hate crime
        Felony/Misdemeanor: Felony
        Disposition/Sentence: Conviction. Sentenced to 2 years mental
    health probation, 200 hours community service.

        Location: Palos Heights, Illinois
        Charge: Aggravated battery, use of unlawful weapon.
        Felony/Misdemeanor:
        Disposition/Sentence: Pending

        Location: Evansville, Indiana
        Charge: Criminal mischief, DUI
        Felony/Misdemeanor: Felony
        Disposition/Sentence: Conviction

        Location: Indianapolis, Indiana
        Charge: Battery
        Felony/Misdemeanor:
        Disposition/Sentence: Conviction. Sentenced to 65 days, 61
    suspended, 40 hours community service, $500 fine and $976 restitution.

        Location: Laurel, Maryland
        Charge: Malicious vandalism
        Felony/Misdemeanor: Misdemeanor
        Disposition/Sentence: Conviction

        Location: Boston, Massachusetts
        Charge: Assault and battery with dangerous weapon
        Felony/Misdemeanor:
        Disposition/Sentence: Pending

        Location: Fairhaven, Massachusetts
        Charge: Assault and battery
        Felony/Misdemeanor:
        Disposition/Sentence: Pending

        Location: Sommerset, Massachusetts
        Charge: Assault and explosive device
        Felony/Misdemeanor: Felony
        Disposition/Sentence: Pending against 2 defendants, conviction of
    one defendant, sentenced to 1 year probation with a suspended sentence

        Location: Lincoln Park, Michigan
        Charge: First degree murder
        Felony/Misdemeanor: Felony
        Disposition/Sentence: Pending

        Location: Minneapolis, Minnesota
        Charge: Assault and disorderly conduct
        Felony/Misdemeanor:
        Disposition/Sentence: Conviction. Sentenced to 12 to 20 days
    incarceration, $1000 fine

        Location: St. Louis, Missouri
        Charge: Assault
        Felony/Misdemeanor:
        Disposition/Sentence: Conviction. Sentenced to 2 years probation,
    40 hours community service.

        Location: St. Louis, Missouri
        Charge: Assault and ethnic intimidation
        Felony/Misdemeanor: Felony
        Disposition/Sentence: Pending

        Location: Manchester, New Hampshire
        Charge: Assault motivated by hate
        Felony/Misdemeanor: Felony
        Disposition/Sentence: Pending

        Location: Clifton, New Jersey
        Charge: Bias crime
        Felony/Misdemeanor:
        Disposition/Sentence: Pending

        Location: Hammonton, New Jersey
        Charge: Harassment
        Felony/Misdemeanor:
        Disposition/Sentence: Conviction. Sentenced to 30 days
    incarceration, suspended sentence, $100 fine

        Location: Lower Township, New Jersey
        Charge: Criminal mischief and harassment
        Felony/Misdemeanor:
        Disposition/Sentence: Conviction

        Location: Mantau Township, New Jersey
        Charge: Ethnic intimidation
        Felony/Misdemeanor:
        Disposition/Sentence: Pending

        Location: West Deptford Township, New Jersey
        Charge: Assault
        Felony/Misdemeanor:
        Disposition/Sentence: Dismissed

        Location: Atlantic City, New Jersey
        Charge: Terrorist threats and harassment
        Felony/Misdemeanor
        Disposition/Sentence Pending

        Location: Huntington, New York
        Charge: Reckless endangerment and DWI
        Felony/Misdemeanor:
        Disposition/Sentence: Conviction. Sentenced to 3 years probation

        Location: Ronkonkoma, New York
        Charge: Second degree menacing
        Felony/Misdemeanor:
        Disposition/Sentence: Conviction. Sentenced to 30 days
    incarceration, 3 years probation

        Location: Queens, New York
        Charge: Assault and criminal mischief
        Felony/Misdemeanor:
        Disposition/Sentence: Pending against one defendant and one
    juvenile. Conviction of one defendant of harassment, sentenced to 100
    hours community service

        Location: Palermo, New York
        Charge: Arson and vandalism
        Felony/Misdemeanor: Felony
        Disposition/Sentence: Pending

        Location: Bellerose, New York
        Charge: Trespass
        Felony/Misdemeanor:
        Disposition/Sentence: Pending

        Location: Grand Forks, North Dakota
        Charge: Aggravated assault
        Felony/Misdemeanor: Felony
        Disposition/Sentence: Conviction. 90 days incarceration.

        Location: Parma, Ohio
        Charge: Burglary, ethnic intimidation, DUI, and vandalism
        Felony/Misdemeanor: Felony
        Disposition/Sentence: Conviction. Sentenced to 5 years
    incarceration.

        Location: Cleveland, Ohio
        Charge: Discharging firearm
        Felony/Misdemeanor:
        Disposition/Sentence: Dismissed in connection w/plea to federal
    drug charges

        Location: Tulsa, Oklahoma
        Charge: Aggravated assault and malicious intimidation
        Felony/Misdemeanor:
        Disposition/Sentence: Pending

        Location: Norman, Oklahoma
        Charge: Assault
        Felony/Misdemeanor:
        Disposition/Sentence: Pending

        Location: Eugene, Oregon
        Charge: Harassment and intimidation
        Felony/Misdemeanor:
        Disposition/Sentence: Conviction. Sentenced to 30 days
    incarceration, 60 months probation.

        Location: Meadville Pennsylvania
        Charge: Aggravated assault with dangerous weapon, ethnic
    intimidation
        Felony/Misdemeanor: Felony
        Disposition/Sentence: Pending

        Location: Lower Marion, Pennsylvania
        Charge: Simple assault
        Felony/Misdemeanor:
        Disposition/Sentence: Pending

        Location: Philadelphia, Pennsylvania
        Charge: Attempted arson and risking catastrophe
        Felony/Misdemeanor:
        Disposition/Sentence: Pending

        Location: Pittsburgh, Pennsylvania
        Charge: Simple assault and ethnic intimidation
        Felony/Misdemeanor:
        Disposition/Sentence: Pending

        Location: Mesquite, Texas
        Charge: Capital murder
        Felony/Misdemeanor: Felony
        Disposition/Sentence: Pending

        Location: Dallas, Texas
        Charge: Murder
        Felony/Misdemeanor: Felony
        Disposition/Sentence: Pending

        Location: Dallas, Texas
        Charge: Robbery and assault with dangerous weapon
        Felony/Misdemeanor: Felony
        Disposition/Sentence: Pending

        Location: North Richland Hills, Texas
        Charge: Terrorist threats
        Felony/Misdemeanor:
        Disposition/Sentence: Pending

        Location: Fannett, Texas
        Charge: Felony criminal mischief
        Felony/Misdemeanor: Felony
        Disposition/Sentence: Pending

        Location: Alexandria, Virginia
        Charge: Assault and battery
        Felony/Misdemeanor:
        Disposition/Sentence: Conviction. Sentenced to 60 days
    incarceration.

        Location: Alexandria, Virginia
        Charge: Unlawful wounding
        Felony/Misdemeanor:
        Disposition/Sentence: Pending

        Location: Dumfries, Virginia
        Charge: Assault
        Felony/Misdemeanor:
        Disposition/Sentence: Conviction. 1 defendant sentenced to 60 days
    incarceration; 1 defendant sentenced to 1 year incarceration (both
    sentences suspended).

        Location: Hampton, Virginia
        Charge: Terrorist threats
        Felony/Misdemeanor:
        Disposition/Sentence: Diversion. To be dismissed after 100 hours
    community service.

        Location: Fairfax, Virginia
        Charge: Assault and battery
        Felony/Misdemeanor: Felony
        Disposition/Sentence: Pending

        Location: Sterling, Virginia
        Charge: Threats
        Felony/Misdemeanor:
        Disposition/Sentence: Not guilty verdict

        Location: Mountainlake Terrace, Washington
        Charge: Malicious harassment
        Felony/Misdemeanor: Felony
        Disposition/Sentence: Conviction. 1 defendant sentenced to 9 months
    incarceration; 2 juveniles detained.

        Location: Everett, Washington
        Charge: Harassment
        Felony/Misdemeanor: Misdemeanor
        Disposition/Sentence: Conviction. Sentenced to 18 days
    incarceration

        Location: Seattle, Washington
        Charge: Malicious harassment
        Felony/Misdemeanor:
        Disposition/Sentence: Pending

        Location: Seattle, Washington
        Charge: Malicious harassment
        Felony/Misdemeanor: Misdemeanor
        Disposition/Sentence: Conviction. Sentenced to 2 years probation

        Location: Seatack, Washington
        Charge: Assault
        Felony/Misdemeanor:
        Disposition/Sentence: Pending

        Location: Milwaukee, Wisconsin
        Charge: Disorderly conduct
        Felony/Misdemeanor: Misdemeanor
        Disposition/Sentence: Dismissed

        Location: Milwaukee, Wisconsin
        Charge: Disorderly conduct
        Felony/Misdemeanor: Misdemeanor
        Disposition/Sentence: Conviction. Sentenced to 10 days
    incarceration, 18 months probation, $1,000 fine.
              Attachment 3.--New Freedom Initiative--February 2001
                      foreword by president george w. bush
        My Administration is committed to tearing down the barriers to
    equality that face many of the 54 million Americans with disabilities.
        Eleven years ago the Americans with Disabilities Act (ADA) made it
    a violation of federal law to discriminate against a person with a
    disability.
        But there is much more to do. Though progress has been made in the
    last decade, too many Americans with disabilities remain trapped in
    bureaucracies of dependence, denied the tools they need to fully access
    their communities.
        The unemployment rate for Americans with disabilities hovers at 70
    percent. Home ownership rates are in the single digits. And Internet
    access for Americans with disabilities is half that of people without
    disabilities.
        I am committed to tearing down the remaining barriers to equality
    that face Americans with disabilities today. My New Freedom Initiative
    will help Americans with disabilities by increasing access to assistive
    technologies, expanding educational opportunities, increasing the
    ability of Americans with disabilities to integrate into the workforce,
    and promoting increased access into daily community life.
        I look forward to working with Congress to see these proposals
    become law.
                               executive summary
          fulfilling america's promise to americans with disabilities
        Disability is not the experience of a minority of Americans.
    Rather, it is an experience that will touch most Americans at some
    point during their lives.
        Today, there are over 54 million Americans with disabilities, a
    full 20 percent of the U.S. population. Almost half of these
    individuals have a severe disability, affecting their ability to see,
    hear, walk, or perform other basic functions of life. In addition,
    there are over 25 million family caregivers and millions more who
    provide aid and assistance to people with disabilities.
        Eleven years ago, Congress passed and President George Bush signed
    one of the most significant civil rights laws since the Civil Rights
    Act of 1964--the Americans with Disabilities Act (ADA). In doing so,
    America opened its door to a new age for people with disabilities. Two
    and a half years ago, amendments to Section 508 of the Rehabilitation
    Act of 1973 were enacted ensuring that the Federal Government would
    purchase electronic and information technology which is open and
    accessible for people with disabilities.
        Although progress has been made over the years to improve access to
    employment, public accommodations, commercial facilities, information
    technology, telecommunications services, housing, schools, and polling
    places, significant challenges remain for Americans with disabilities
    in realizing the dream of equal access to full participation in
    American society. Indeed, the Harris surveys by the National
    Organization on Disability and numerous other studies have highlighted
    these persistent obstacles.
        Americans with disabilities have a lower level of educational
    attainment than those without disabilities:
      --One out of five adults with disabilities has not graduated from
            high school, compared to less than one of ten adults without
            disabilities.
      --National graduation rates for students who receive special
            education and related services have stagnated at 27 percent for
            the past three years, while rates are 75 percent for students
            who do not rely on special education.
        Americans with disabilities are poorer and more likely to be
    unemployed than those without disabilities:
      --In 1997, over 33 percent of adults with disabilities lived in a
            household with an annual income of less than $15,000, compared
            to only 12 percent of those without disabilities.
      --Unemployment rates for working-age adults with disabilities have
            hovered at the 70 percent level for at least the past 12 years,
            while rates are significantly lower for working-age adults
            without disabilities.
        Too many Americans with disabilities remain outside the economic
    and social mainstream of American life:
      --71 percent of people without disabilities own homes, but fewer than
            10 percent of those with disabilities do.
      --Computer usage and Internet access for people with disabilities is
            half that of people without disabilities.
      --People with disabilities vote at a rate that is 20 percent below
            voters without disabilities. In local areas, disability issues
            seldom surface in election campaigns, and inaccessible polling
            places often discourage citizens with disabilities from voting.
        People with disabilities want to be employed, educated, and
    participating, citizens living in the community. In today's global new
    economy, America must be able to draw on the talents and creativity of
    all its citizens.
        The Administration will work to ensure that all Americans have the
    opportunity to learn and develop skills, engage in productive work,
    choose where to live and participate in community life. The President's
    ``New Freedom Initiative'' represents an important step in achieving
    these goals. It will expand research in and access to assistive and
    universally designed technologies, further integrate Americans with
    disabilities into the workforce and help remove barriers to
    participation in community life.
                                   the policy
        The ``New Freedom Initiative'' is composed of the following key
    components:
    Increasing Access to Assistive and Universally Designed Technologies:
        Federal Investment in Assistive Technology Research and
    Development.--The Administration will provide a major increase in the
    Rehabilitative Engineering Research Centers' budget for assistive
    technologies, create a new fund to help bring assistive technologies to
    market, and better coordinate the Federal effort in prioritizing
    immediate assistive and universally designed technology needs in the
    disability community.
        Access to Assistive Technology.--Assistive technology is often
    prohibitively expensive. In order to increase access, funding for low-
    interest loan programs to purchase assistive technologies will increase
    significantly.
    Expanding Educational Opportunities for Americans with Disabilities:
        Increase Funding for the Individuals with Disabilities Education
    Act (IDEA).--In return for participating in a new system of flexibility
    and accountability in the use of Federal education funds, states will
    receive an increase in IDEA funds for education at the local level and
    help in meeting the special needs of students with disabilities.
        Focus on Reading in Early Grades.--States that establish a
    comprehensive reading program for students, including those with
    disabilities, from preschool through second grade will be eligible for
    grants under President Bush's Reading First and Early Reading First
    Initiatives.
    Integrating Americans with Disabilities into the Workforce:
        Expanding Telecommuting.--The Administration will provide Federal
    matching funds to states to guarantee low-interest loans for
    individuals with disabilities to purchase computers and other equipment
    necessary to telework from home. In addition, legislation will be
    proposed to make a company's contribution of computer and Internet
    access for home use by employees with disabilities a tax-free benefit.
        Swift Implementation of ``Ticket to Work''.--President Bush has
    committed to sign an order that directs the federal agency to swiftly
    implement the law giving Americans with disabilities the ability to
    choose their own support services and maintain their health benefits
    when they return to work.
        Full Enforcement of the Americans with Disabilities Act (ADA).--
    Technical assistance will be provided to promote ADA compliance and to
    help small businesses hire more people with disabilities. The
    Administration will also promote the Disabled Access Credit, an
    incentive program created in 1990 to assist small businesses comply
    with the Act.
        Innovative Transportation Solutions.--Accessible transportation can
    be a particularly difficult barrier for Americans with disabilities
    entering the workforce. Funding will be provided for 10 pilot programs
    that use innovative approaches to developing transportation plans that
    serve people with disabilities. The Administration will also establish
    a competitive matching grant program to promote access to alternative
    methods of transportation through community-based and other providers.
    Promoting Full Access to Community Life:
        Promote Homeownership for People with Disabilities.--Congress
    recently passed the ``American Homeownership and Economic Opportunity
    Act of 2000,'' which will permit recipients with disabilities to use up
    to a year's worth of vouchers to finance the down payment on a home.
    The Administration will work to swiftly implement the recently enacted
    law.
        Swift Implementation of the Olmstead Decision.--President Bush has
    committed to sign an order supporting the most integrated community-
    based settings for individuals with disabilities, in accordance with
    the Olmstead decision.
        National Commission on Mental Health.--President Bush has committed
    to create a National Commission on Mental Health, which will study and
    make recommendations for improving America's mental health service
    delivery system, including making recommendations on the availability
    and delivery of new treatments and technologies for individuals with
    severe mental illness.
        Improving Access.--Federal matching funds will be provided annually
    to increase the accessibility of organizations that are currently
    exempt from Title III of the ADA, such as churches, mosques,
    synagogues, and civic organizations. The Administration also supports
    improving access to polling places and ballot secrecy for people with
    disabilities.
     increasing access to assistive and universally designed technologies--
                                   (title i)
                                    overview
        The Administration's commitment to increase access to assistive and
    universally designed technologies is based upon the principle that
    every American must have the opportunity to participate fully in
    society. In the global new economy, America must draw on the talents
    and creativity of all its citizens.
        Assistive and universally designed technologies can be a powerful
    tool for millions of Americans with disabilities, dramatically
    improving one's quality of life and ability to engage in productive
    work. New technologies are opening opportunities for even those with
    the most severe disabilities. For example, some individuals with
    quadriplegia can now operate computers by the glance of an eye. As the
    National Council on Disability (NCD) has stated, ``for Americans
    without disabilities, technology makes things easier. For Americans
    with disabilities, technology makes things possible.''
        Unfortunately, assistive and universally designed technologies are
    often prohibitively expensive. In addition, innovation is being
    hampered by insufficient Federal funding for and coordination of
    assistive technology research and development programs.
        The New Freedom Initiative will help ensure that Americans with
    disabilities can access the best technologies of today and that even
    better technologies will be available in the future. At the core of
    this effort are proposals that reinvigorate the Federal investment in
    assistive technologies; improve Federal collaboration and promote
    private-public partnerships; and increase access to this technology for
    people with disabilities.
                              summary of proposals
    Increases Federal Investment in Assistive Technology Research and
            Development:
        Rehabilitative Engineering Research Centers (RERCs) are recognized
    as conducting some of the most innovative and high impact assistive
    technology research in the Federal Government. The 15 RERCs are housed
    in universities and other non-profit institutions around the country
    and focus on a specific area of research--for example, information
    technology access, prosthetics and orthotics, and technology for
    children with orthopedic disabilities. To advance research specifically
    targeted to the disabilities community, the Administration will
    significantly increase funding for the RERCs.
    Improves Coordination of the Federal Assistive Technology Research and
            Development Program:
        There is no effective coordinating body for assistive technology
    research and development within the Federal Government. While the
    Interagency Committee on Disabilities Research (ICDR) was designed to
    coordinate the Federal effort, it has no real authority and has no
    budget. The Administration will provide new funding to the ICDR so that
    it can prioritize the immediate assistive and universally designed
    technology needs in the disability community, as well as foster
    collaborative projects between the Federal laboratories and the private
    sector.
    Promotes Private-Public Partnerships:
        There are nearly 2,500 companies working to bring new assistive
    technologies to market. Many small businesses, however, cannot make the
    necessary capital investments until they have information concerning
    the market for a particular assistive technology. To help these
    businesses bring assistive technologies to market, the Administration
    will establish an ``Assistive Technology Development Fund.'' Housed
    under the ICDR, the fund will help underwrite technology demonstration,
    testing, validation and market assessment to meet specific needs of
    small businesses so that they can better serve the needs of people with
    disabilities.
    Increases Access to Assistive Technology:
        Assistive technology is often prohibitively expensive. For example,
    personal computers configured with assistive technology can cost
    anywhere from $2,000 to $20,000. The Administration will significantly
    increase Federal funding for low-interest loans to purchase assistive
    technology. These grants will go to a state agency in collaboration
    with banks or non-profit groups to guarantee loans and lower interest
    rates.
     expanding educational opportunities for americans with disabilities--
                                   (title ii)
                                    overview
        Education is the key to independent living and a high quality of
    life. Unfortunately, one in five adults with disabilities has not
    graduated from high school, compared to less than one of ten adults
    without disabilities. The Administration will expand access to quality
    education for Americans with disabilities.
        Originally passed by Congress in 1975, the Individuals with
    Disabilities Act, or IDEA, ensures that children with disabilities
    would have a free public education that would meet their unique needs.
        The Administration will increase educational opportunity for
    children with disabilities by working with Congress to give states
    increased IDEA funds. This will help meet the needs of students with
    disabilities and free up additional resources for education at the
    local level.
                              summary of proposals
        Increases Funding for Special Education.--In return for
    participating in a new system of flexibility and accountability in the
    use of Federal education funds, states will receive an increase in IDEA
    funds for education at the local level and help in meeting the special
    needs of students with disabilities.
        Establishes the ``Reading First'' Program.--President Bush will
    increase Federal funding to students, including those with
    disabilities, by creating an incentive fund for states to teach every
    child to read by third grade. States that choose to draw from this fund
    will be required to initiate, among other requirements: a reading
    diagnostic test for students in K-2 to determine where students need
    help; a research-based reading curriculum; training for K-2 teachers in
    reading preparation; and intervention for students who are not reading
    at grade level in K-2.
        Supplements Reading First with an Early Childhood Reading
    Initiative.--States participating in the Reading First program will
    have the option to receive ``Early Reading First'' funding to implement
    research-based reading programs in existing pre-school programs and
    Head Start programs that feed into participating elementary schools.
    The purpose of this program is to illustrate on a larger scale recent
    research findings that children taught pre-reading and math skills in
    pre-school enter school ready to learn reading and mathematics.
      promoting homeownership for americans with disabilities--(title iii)
                                    overview
        Homeownership has always been at the heart of the ``American
    dream.'' This past year, Congress passed the ``American Homeownership
    and Economic Opportunity Act of 2000,'' which reforms Federal rental
    assistance to give individuals who qualify the opportunity to purchase
    a home.
        Rental assistance for low-income Americans, including those with
    disabilities, is provided by a program known as Section 8 of the
    Housing Act of 1937, administered by the U.S. Department of Housing and
    Urban Development (HUD). Residents are provided Section 8 vouchers so
    that they can afford rental payments for public housing. And many of
    those Section 8 vouchers go to individuals with disabilities.
        In addition to increasing independence, homeownership also promotes
    savings. Mortgage payments, unlike rental payments, help build net
    worth because a portion of the payment goes toward building equity. In
    turn, as one's home equity increases, it becomes easier to finance
    other purchases such as a computer or further education.
                               summary of action
    Implementation of the Section 8 Program to Allow Recipients to Apply
            Their Rental Vouchers to Homeownership:
        The Administration will implement Public Law 106-569, which allows
    local Public Housing Authorities to provide recipients of Section 8
    vouchers who have disabilities with up to a year's worth of vouchers in
    a lump-sum payment to finance the down payment on a home.
     integrating americans with disabilities into the workforce--title iv
                          (part a: promoting telework)
                                    overview
        Americans with disabilities should have every freedom to pursue
    careers, integrate into the workforce, and participate as full members
    in the economic marketplace.
        The New Freedom Initiative will help tear down barriers to the
    workplace, and help promote full access and integration.
        Computer technology and the Internet have tremendous potential to
    broaden the lives and increase the independence of people with
    disabilities. Nearly half of people with disabilities say the Internet
    has significantly improved their quality of life, compared to 27
    percent of people without disabilities.
        The computer and Internet revolution has not reached as many people
    with disabilities as the population without disabilities. Only 25
    percent of people with disabilities own a computer, compared with 66
    percent of U.S. adults. And only 20 percent of people with disabilities
    have access to the Internet, compared to over 40 percent of U.S.
    adults.
        The primary barrier to wider access is cost. Computers with
    adaptive technology can cost as much as $20,000, which is prohibitively
    expensive for many individuals. And the median income of Americans with
    disabilities is far below the national average.
        The New Freedom Initiative will expand the avenue of teleworking,
    so that individuals with mobility impairments can work from their homes
    if they choose.
                              summary of proposals
        Creates the ``Access to Telework'' Fund.--Federal matching funds
    will be provided annually to states to guarantee low-income loans for
    people with disabilities to purchase equipment to telecommute from
    home.
        Makes a Company's Contribution of Computer and Internet Access for
    Home Use by Employees with Disabilities a Tax-Free Benefit.--The
    Administration will encourage businesses to give computers and Internet
    access to employees with disabilities by making it explicit that this
    provision is a tax-free benefit. By making this benefit tax free to
    employees, the proposal will encourage more employers to provide
    computer equipment and Internet access, and employees will have greater
    options to take advantage of this flexibility for teleworking. For
    individuals with disabilities, this flexibility will expand the
    universe of potential and accessible employment.
        Prohibits OSHA from Regulating ``Home Office'' Standards.--In
    November 1999, the U.S. Department of Labor's Occupational Safety and
    Health Administration (OSHA) issued an 8-page response to an employer
    inquiry asserting that it had the power to regulate home office
    standards and hold employers responsible if those standards were not
    met. This proposal would have had a chilling effect on teleworking, as
    employers would seek to avoid potential liabilities. Although OSHA has
    since withdrawn the response, it has not yet foreclosed future action.
    The proposal will amend the Occupational Safety and Health Act of 1970
    to prohibit OSHA from being applied to the home worksites of employees
    who work at home through the use of ``telephone, computer or electronic
    device.''
     integrating americans with disabilities into the workforce--(part b:
                                ticket-to-work)
                                    overview
        In 1999, Congress passed the ``Ticket-to-Work and Work Incentives
    Improvement Act,'' which will give Americans with disabilities both the
    incentive and the means to seek employment.
        As part of the New Freedom Initiative, the Administration will
    ensure the Act's swift implementation.
        Today, there are more than 7.5 million Americans with disabilities
    receiving benefits under Federal disability programs. According to a
    recent Harris Survey, conducted by the National Organization of
    Disability, 72 percent of the Americans with disabilities want to work.
    However, in part because of disincentives in Federal law, less than 1
    percent of those receiving disability benefits fully enter the
    workforce.
        Prior to the ``Ticket to Work'' law, in order to continue to
    receive disability payments and health coverage, recipients could not
    engage in any substantial work. The Ticket to Work law, however,
    provides incentives for people with disabilities to return to work by:
      --Providing Americans with disabilities with a voucher-like
            ``ticket'' that allows them to choose their own support
            services, including vocational education programs and
            rehabilitation services.
      --Extending Medicare coverage for SSDI beneficiaries so they can
            return to work without the fear of losing health benefits.
      --Expanding Medicaid eligibility categories for certain working
            people with severe disabilities so that they can continue to
            receive benefits after their income or condition improves.
                               summary of action
        President Bush Has Committed to Sign an Order to Support Effective
    and Swift Implementation of ``Ticket to Work''.--The order will direct
    the federal agency to continue to swiftly implement the law giving
    Americans with disabilities the ability to choose their own support
    services and to maintain their health benefits when they return to
    work.
     integrating americans with disabilities into the workforce--(part c:
                compliance with americans with disabilities act)
                                    overview
        When the Americans with Disabilities Act (ADA) was signed into law
    on July 26, 1990, it was the most far reaching law advancing access of
    individuals with disabilities, workforce integration, and independence.
    The law, signed by President George Bush, gives civil rights
    protections to individuals with disabilities that are like those
    provided to individuals on the basis of race, sex, national origin, and
    religion.
        In the eleven years since it was signed, the ADA has worked to
    guarantee equal opportunity for individuals with disabilities in
    employment, public accommodations, transportation, State and local
    government services, and telecommunications. The law has been
    especially helpful in providing access to jobs, especially in the small
    business sector, which has created two-thirds of all net new jobs since
    the early 1970s.
        To encourage small businesses to comply with the ADA, legislation
    was signed into law in 1990 to provide a credit for 50 percent of
    eligible expenses up to $5,000 a year. Such eligible expenses include
    assistive technologies. Unfortunately, many small businesses are not
    aware of this credit.
        President George W. Bush believes that the Americans with
    Disabilities Act has been an integral component of the movement toward
    full integration of individuals with disabilities but recognizes that
    there is still much more to be done. He also recognizes that to further
    integrate individuals with disabilities into the workforce, more needs
    to be done to promote ADA compliance.
                              summary of proposals
        Supports the ADA and Provides Technical Assistance to Small
    Businesses.--The President and the Attorney General will ensure full
    enforcement of the Americans with Disabilities Act by the Civil Rights
    Division of the Department of Justice. In addition, the New Freedom
    Initiative will provide resources annually for technical assistance to
    help small businesses comply with the Act, serve customers, and hire
    more people with disabilities.
        Promotes the Awareness and Utilization of Disabled Access Credit
    (DAC).--The DAC, created in 1990, is an incentive program to assist
    small businesses in complying with the ADA. DAC provides a credit for
    50 percent of eligible expenses up to $5,000 a year, including expenses
    associated with making their facilities accessible and with purchasing
    assistive technologies. Utilization of the credit has been limited
    because small businesses are often not aware of it.
                  expanding transportation options--(title v)
                                    overview
        Every American should have the opportunity to participate fully in
    society and engage in productive work. Unfortunately, millions of
    Americans with disabilities are locked out of the workplace because
    they are denied the tools and access necessary for success.
        Transportation can be a particularly difficult barrier to work for
    Americans with disabilities. In 1997, the Director of Project Action
    stated that ``access to transportation is often the critical factor in
    obtaining employment for the nation's 25 million transit dependent
    people with disabilities.'' Today, the lack of adequate transportation
    remains a primary barrier to work for people with disabilities: one-
    third of people with disabilities report that inadequate transportation
    is a significant problem.
        Through formula grant programs and the enforcement of the ADA, the
    Federal Government has helped make our mass transit systems more
    accessible. More must be done, however, to test new transportation
    ideas and to increase access to alternate means of transportation, such
    as vans with specialty lifts, modified automobiles, and ride-share
    programs for those who cannot get to buses or other forms of mass
    transit.
        On a daily basis, many non-profit groups and businesses are working
    hard to help people with disabilities live and work independently.
    These organizations often lack the funds to get people with
    disabilities to job interviews, to job training, and to work.
        The Federal Government should support the development of innovative
    transportation initiatives and partner with local organizations to
    promote access to alternate methods of transportation.
                              summary of proposals
        Promotes innovative transportation solutions for people with
    disabilities by funding pilot programs.--The proposal provides funding
    for 10 pilot programs run by state or local governments in regional,
    urban, and rural areas. Pilot programs will be selected on the basis of
    the use of innovative approaches to developing transportation plans
    that serve people with disabilities. The Administration will work with
    Congress to evaluate the effectiveness of these pilot programs and
    encourage the expansion of successful initiatives.
        Helps create a network of alternate transportation through
    community-based and other providers.--The proposal will establish a
    competitive matching grant program to promote access to alternative
    methods of transportation. This dollar-for-dollar matching program will
    be open to community-based organizations that seek to integrate
    Americans with disabilities into the workforce. The funds will go
    toward the purchase and operation of specialty vans, assisting people
    with down payments or costs associated with accessible vehicles, and
    extending the use of existing transportation resources.
     promoting full access to community life--title vi (part a: commitment
                            to community-based care)
                                    overview
        On June 22, 1999, the Supreme Court decided Olmstead v. L.C.,
    ruling that, in appropriate circumstances, the ADA requires the
    placement of persons with disabilities in a community-integrated
    setting whenever possible. The Court concluded that ``unjustified
    isolation,'' e.g., institutionalization when a doctor deems community
    treatment equally beneficial, ``is properly regarded as discrimination
    based on disability.''
        Olmstead has yet to be fully implemented. President Bush believes
    that community-based care is critically important to promoting maximum
    independence and to integrating individuals with disabilities into
    community life.
                              summary of proposals
        President Bush has Committed to Sign an Order Supporting Swift
    Implementation of the Olmstead Decision.--The order will support the
    most integrated community-based settings for individuals with
    disabilities, in accordance with the Olmstead decision. The
    Administration will pursue swift implementation in a manner that
    respects the proper roles of the Federal Government and the several
    states.
     promoting full access to community life--(part b: better coordination
            of federal resources to address mental health problems)
                                    overview
        Currently, there are numerous Federal agencies that oversee mental
    health policies, funding, laws and programs including: the Substance
    Abuse and Mental Health Services Administration, the National
    Institutes of Health, the Health Care Financing Administration, the
    Office of Personnel Management, the Social Security Administration, the
    Health Resources and Services Administration, the Department of Housing
    and Urban Development, the Department of Education, the Department of
    Justice, and the Department of Labor.
        These Federal agencies are doing valuable work, but they would be
    much more effective, efficient, and less duplicative if they were
    better coordinated.
        With coordination, the competitive advantage of each agency could
    be leveraged to provide the most needed and suitable service in the
    framework of federal efforts to address mental health.
                              summary of proposals
        President Bush Has Committed to Create a National Commission on
    Mental Health.--The National Commission will study and make
    recommendations for improving America's mental health service delivery
    system, including making recommendations on the availability and
    delivery of new treatments and technologies for individuals with severe
    mental illness.
        promoting full access to community life--(part c: access to the
                               political process)
                                    overview
        There are over 35 million voting-age persons with disabilities, but
    currently people with disabilities register to vote at a rate that is
    16 percentage points less than the rest of the population and vote at a
    rate that is 20 percent voters who have no disabilities.
        According to the National Organization on Disability, low voter
    turnout among people who are disabled is due to both accessibility
    problems at voting locations and the lack of secrecy and independence
    when voting. The most recent Federal Election Commission (FEC) report
    states that at least 20,000 of the Nation's more than 120,000 polling
    places are inaccessible to people with disabilities.
        President Bush recognizes that full integration into society must
    include access to and participation in the political process.
                              summary of proposals
        Supports Improving Accessibility to Voting for Americans with
    Disabilities.--President Bush will support improved access to polling
    places and ballot secrecy. He will work with Congress to address the
    barriers to voting for Americans with disabilities and to expanding
    suffrage for all Americans.
    promoting full access to community life--(part d: access to ada-exempt
                                 organizations)
                                    overview
        Title III of the Americans with Disabilities Act of 1990 opened
    countless businesses and public accommodations to people with
    disabilities by mandating that they be made accessible. For
    constitutional and other concerns, however, Title III exempts many
    civic organizations (such as Rotary and Lions Clubs) and religious
    organizations from its requirements of full access.
        Americans with disabilities should be fully integrated into their
    communities, and civic and religious organizations are vital parts of
    those communities. Too many private clubs, churches, synagogues, and
    mosques are inaccessible or unwelcoming to people with disabilities. As
    a result, people with disabilities are often unable to participate as
    fully in community or religious events.
        The National Organization on Disability has led a national effort
    to make places of worship accessible and welcoming to all Americans.
    Many organizations and congregations want to be open to all but have
    limited resources to ensure accessibility.
        Every effort should be made to ensure that Americans with
    disabilities have the opportunity to be integrated into their
    communities and welcomed into communities of faith.
                              summary of proposals
        Establishes a National Fund to Provide Matching Grants for
    Accessibility Renovations for ADA-Exempt Organizations.--To assist
    private clubs and religious organizations in making sure that their
    facilities are fully accessible and to expand access for all, the
    proposal provides annual Federal matching grants to ADA-exempt
    organizations making renovations or accommodations to improve
    accessibility. Because all ADA-exempt organizations will be eligible
    for the grants, irrespective of whether they are religious or secular,
    they would comport with the Supreme Court's test for constitutional
    neutrality.

       [From the Federal Register, June 21, 2001 (Volume 66, Number 120)]

                             Title 3--The President
                     executive order 13217 of june 18, 2001
         community-based alternatives for individuals with disabilities
        By the authority vested in me as President by the Constitution and
    the laws of the United States of America, and in order to place
    qualified individuals with disabilities in community settings whenever
    appropriate, it is hereby ordered as follows:
        Section 1. Policy. This order is issued consistent with the
    following findings and principles:
        (a) The United States is committed to community-based alternatives
    for individuals with disabilities and recognizes that such services
    advance the best interests of Americans.
        (b) The United States seeks to ensure that America's community-
    based programs effectively foster independence and participation in the
    community for Americans with disabilities.
        (c) Unjustified isolation or segregation of qualified individuals
    with disabilities through institutionalization is a form of disability-
    based discrimination prohibited by Title II of the Americans With
    Disabilities Act of 1990 (ADA), 42 U.S.C. 12101 et. seq. States must
    avoid disability-based discrimination unless doing so would
    fundamentally alter the nature of the service, program, or activity
    provided by the State.
        (d) In Olmstead v. L.C., 527 U.S. 581 (1999) (the ``Olmstead
    decision''), the Supreme Court construed Title II of the ADA to require
    States to place qualified individuals with mental disabilities in
    community settings, rather than in institutions, whenever treatment
    professionals determine that such placement is appropriate, the
    affected persons do not oppose such placement, and the State can
    reasonably accommodate the placement, taking into account the resources
    available to the State and the needs of others with disabilities.
        (e) The Federal Government must assist States and localities to
    implement swiftly the Olmstead decision, so as to help ensure that all
    Americans have the opportunity to live close to their families and
    friends, to live more independently, to engage in productive
    employment, and to participate in community life.
        Sec. 2. Swift Implementation of the Olmstead Decision: Agency
    Responsibilities. (a) The Attorney General, the Secretaries of Health
    and Human Services, Education, Labor, and Housing and Urban
    Development, and the Commissioner of the Social Security Administration
    shall work cooperatively to ensure that the Olmstead decision is
    implemented in a timely manner. Specifically, the designated agencies
    should work with States to help them assess their compliance with the
    Olmstead decision and the ADA in providing services to qualified
    individuals with disabilities in community-based settings, as long as
    such services are appropriate to the needs of those individuals. These
    agencies should provide technical guidance and work cooperatively with
    States to achieve the goals of Title II of the ADA, particularly where
    States have chosen to develop comprehensive, effectively working plans
    to provide services to qualified individuals with disabilities in the
    most integrated settings. These agencies should also ensure that
    existing Federal resources are used in the most effective manner to
    support the goals of the ADA. The Secretary of Health and Human
    Services shall take the lead in coordinating these efforts.
        (b) The Attorney General, the Secretaries of Health and Human
    Services, Education, Labor, and Housing and Urban Development, and the
    Commissioner of the Social Security Administration shall evaluate the
    policies, programs, statutes, and regulations of their respective
    agencies to determine whether any should be revised or modified to
    improve the availability of community-based services for qualified
    individuals with disabilities. The review shall focus on identifying
    affected populations, improving the flow of information about supports
    in the community, and removing barriers that impede opportunities for
    community placement. The review should ensure the involvement of
    consumers, advocacy organizations, providers, and relevant agency
    representatives. Each agency head should report to the President,
    through the Secretary of Health and Human Services, with the results of
    their evaluation within 120 days.
        (c) The Attorney General and the Secretary of Health and Human
    Services shall fully enforce Title II of the ADA, including
    investigating and resolving complaints filed on behalf of individuals
    who allege that they have been the victims of unjustified
    institutionalization. Whenever possible, the Department of Justice and
    the Department of Health and Human Services should work cooperatively
    with States to resolve these complaints, and should use alternative
    dispute resolution to bring these complaints to a quick and
    constructive resolution.
        (d) The agency actions directed by this order shall be done
    consistent with this Administration's budget.
        Sec. 3. Judicial Review. Nothing in this order shall affect any
    otherwise available judicial review of agency action. This order is
    intended only to improve the internal management of the Federal
    Government and does not create any right or benefit, substantive or
    procedural, enforceable at law or equity by a party against the United
    States, its agencies or instrumentalities, its officers or employees,
    or any other person.

                                                           George Bush.
    THE WHITE HOUSE,
    June 18, 2001.
                                   Memorandum
                            U.S. Department of Justice,
                  Executive Office for United States Attorneys,
                                      Washington, D.C., March 28, 2001.
    TO: ALL UNITED STATES ATTORNEYS
     ALL FIRST ASSISTANT UNITED STATES ATTORNEYS
     ALL CRIMINAL CHIEFS
    FROM: Mark T. Calloway, Director
    SUBJECT: Guidance on New Law Concerning Trafficking in Persons
    ACTION REQUIRED: Please distribute the attached prosecution guidance
            memorandum as appropriate to your attorney staff, including
            your Worker Exploitation Task Force Point of Contact.
    DUE DATE: None. For information and distribution.
    RESPOND TO: Albert N. Moskowitz
     Criminal Section Chief
     Civil Rights Division
     Telephone: (202) 514-3204

     Lou de Baca
     Involuntary Servitude and Slavery Case Coordinator
     Civil Rights Division
     Telephone: (202) 514-3204

     Thomas Burrows
     Child Exploitation and Obscenity Section Chief
     Criminal Division
     Telephone: (202) 514-5780

     Richard C. Smith
     Counsel to the Director
     Executive Office for United States Attorneys
     Telephone: (202) 514-1023
    CONTACT PERSONS: Same as above.
        Yesterday, the Attorney General announced that the United States
    Department of Justice (the Department) will focus its efforts on three
    major areas to implement the newly-enacted Trafficking Victims
    Protection Act of 2000, Public Law 106-386. Those three areas are
    outreach, cooperation, and prosecution. For your review and reference,
    I am forwarding to you under cover of this memorandum a transcript of
    the Attorney General's press conference of March 27, 2001, at which he
    announced his plans to implement the new law.
        To ensure that all federal prosecutors are aware of the various
    aspects of the Trafficking Victims Protection Act of 2000, the Attorney
    General has directed that the attached memorandum, authored by the
    Civil Rights Division and the Criminal Division of the Department, be
    distributed to all United States Attorneys' Offices. The memorandum
    provides important information and guidance on the investigation and
    prosecution of criminal cases under the new law.
        I ask that you distribute copies of this memorandum to those
    Assistant United States Attorneys in your offices to whom you have
    given prosecution responsibility for these kinds of criminal cases,
    including your previously-designated Worker Exploitation Task Force
    Point of Contact. In addition, I encourage you to contact the Civil
    Rights Division, the Criminal Division, or the Executive Office for
    United States Attorneys, through the persons identified above, if you
    have any questions or comments about this important prosecution work.

    Attachments as noted
    cc: All United States Attorneys' Secretaries
                        Attorney General News Conference
                      worker exploitation--march 27, 2001
        ATTY GEN. ASHCROFT: Good afternoon. Thank you very much for coming.
    Nice to see you.
        This past Friday Mr. Kil-Soo Lee was arrested in American Samoa on
    a two-count federal complaint charging violations of the Trafficking
    Victims Protection Act of the year 2000. These charges are based on
    allegations that Mr. Lee held mostly female workers recruited from
    Vietnam in involuntary servitude in his garment factory by using or
    threatening force to obtain the labor or services of his victims over a
    period of nearly two years. That period of time extended from February
    1999 until December of the year 2000.
        One of my last acts as a United States Senator was to vote for a
    law which would curtail this kind of activity. That law was signed on
    October the 28th of the year 2000. This law increases the terms of
    incarceration for those involved in human trafficking crimes and
    broadens the definition of ``trafficking offenses'' to reach the subtle
    means of coercion, the techniques of holding workers in against the
    will. It's hard to believe that these crimes exist in the United States
    of America, but they do. And let me just give you some additional
    examples.
        On March the 7th a large landlord in Berkeley, California pled
    guilty to trafficking women and girls into the United States to place
    them in sexual servitude.
        On February 15th a defendant pled guilty to using cocaine, threats
    and beatings to force homeless African American men to work his
    agricultural fields in Florida. Sentencing is still pending.
        On February the 2nd a defendant was incarcerated for nine years for
    kidnapping a young woman from her family, smuggling her to the United
    States of America, and holding her and causing her to engage in sex
    acts.
        In spring of the year 2000 a defendant was incarcerated eight years
    for forcing several Thai women to work as domestic servants in Los
    Angeles.
        In spring of 1999 six defendants were incarcerated for using
    beatings, rapes and threats to force dozens of Mexican women and girls,
    some as young as 14 years old, to work in brothels in Florida and in
    the Carolinas.
        According to the congressional findings, thousands of persons,
    primarily women and children, are trafficked into the United States
    each year. Many of these women and girls are trafficked into the sex
    trade in this country. But these crimes are not limited to the sex
    industry. Victims are often forced into labor conditions in illegal
    sweatshops, in the agricultural industry and in domestic servitude.
        Our greatest challenges in identifying victims of worker
    exploitation are victims of trafficking are typically held in fear. We
    need to somehow communicate to these individuals that they can avoid
    this sense of fear, and they have an opportunity for redress. They
    rarely know how to report their crimes. And that's why I'm making the
    following announcements today, and frankly using the bully pulpit today
    to raise awareness and to let victims know how to report these crimes.
        There are three major areas where the department will focus its
    efforts to implement enforcement of this law.
        First, outreach. We must make the public aware of this problem and
    how to report it. A hotline was created last year by the National
    Worker Exploitation Task Force, and it was given temporary funding. I
    will permanently fund the hotline so that persons can report these
    crimes. The number of the hotline is 1-888-428-7581. The hotline will
    be staffed by an operator who has access to language-translation
    services, so individuals will be able to access the assistance of the
    hotline even if they are not skilled in the English language.
        In 1999, there were 27 criminal matters opened. But after the
    hotline was started in the year 2000, there were 75 criminal
    investigations opened. We will advertise the hotline using public
    service announcements, and we will distribute information on worker
    exploitation to immigrant and other communities by our involvement in
    those communities to signal to them the availability of this redress.
        I'm also initiating a community outreach program to work with local
    community groups; victims' rights organizations; immigrants' rights
    organizations; shelters and other groups. We want to inform victims of
    the protections and services that are available to them, and to
    encourage victims and others to report suspected trafficking crimes.
        In addition to this outreach effort, we need to indicate that there
    is a reason for us to have a strong effort in prosecution. The second
    step, then, of our program is educating prosecutors and other law
    enforcement officials. Today the Civil Rights Division, along with the
    Criminal Division and the Executive Office of the United States
    Attorneys, will issue the first guidance to all federal prosecutors on
    this issue. This guidance will detail the law enforcement tools
    available under the Trafficking Victims Protection Act.
        Today I am also announcing two new attorney positions in the Civil
    Rights Division, to pursue infractions of this law and these assaults
    upon the rights and dignity of these individuals. These attorneys will
    work on the outreach efforts that I have already mentioned. They will
    also help train local prosecutors and will act as a resource to make
    sure that prosecution efforts undertaken are undertaken with an
    awareness of all the resources available from the federal government.
        Number three, the third step in our strategy is the step of
    cooperation. We need cooperation among law enforcement officials at
    every effort and every level.
        The Federal Bureau of Investigation plays a critical leadership
    role in proactively identifying victims and investigating these crimes,
    and the Immigration and Naturalization Service plays a critical role on
    the front line. I am directing both the Federal Bureau of Investigation
    and the Immigration and Naturalization Service, INS, to work with the
    Civil Rights Division to explore ways to identify victims of
    trafficking and to refer these cases to the division for prosecution.
        This is a matter of serious concern. It is a matter that has been
    of concern to the elected representatives of the people in the
    Congress. They expressed themselves in terms of the need for
    enforcement in this respect in the law enacted late last year, and our
    response to that additional capability and responsibility is to
    implement this program of outreach, of prosecution, and of cooperation
    between the agencies that are required in order for this law and its
    prosecution to affect materially the rights of individuals in this
    area.
        I want to thank you for coming today. I look forward to your
    questions.
        Yes, ma'am?
        Question. Is this a new problem, a growing problem, or is it
    something that we're only just now realizing the magnitude of?
        ATTY GEN. ASHCROFT: This is a substantial problem. The litany of
    circumstances which I read to you today reflects that it is a serious
    problem and it has substantial prevalence. I can't--I don't have data
    to try and say whether or not this is a problem that is bigger now than
    it's ever been before. I just know that it's a serious problem and that
    there are the rights of--important rights of individuals that are
    seriously affected here. And we're going to take action to move against
    the infringement of those rights.
        Yes, Ma'am.
        Question. Could you go into a little more detail about what
    prosecutors need to be educated on with this law?
        ATTY GEN. ASHCROFT: Well, the law does two things, basically--the
    most recent enactment of the Congress, I should say. And I try not to
    be too professorial here, probably because I'm not an expert here, but
    the law expanded the definition of force so that a person could be
    coerced under the definitions provided for in last year's enactment in
    ways that aren't merely physical. Secondly, the penalties under the law
    were enhanced as a result of this most recent enactment. And they
    provide for penalties of up to 20 years in most cases, but in case of a
    death of one of the individuals whose rights were infringed, that could
    be as long as life in prison.
        In providing additional information to prosecutors--and obviously
    we're at a time when there will be some changes made in the prosecution
    leadership in the various U.S. Attorney's offices around the country--
    we want them to be keenly aware of the fact of these expanded
    definitions because they will change the nature of prosecutions, and of
    course of the expanded penalties.
        Yes.
        Question. Can you maybe just tell about what rights people in a
    situation have when they have been brought here by force? Do they have
    the right to stay here?
        ATTY GEN. ASHCROFT: The Victims of Trafficking Act of the year 2000
    provided a special standing for those who report these violations, and
    people who called the hotline would be eligible for this standing. And
    I think it's called a T visa, which is a certain kind of temporary visa
    that provides for their ability to remain, pending the resolution of
    this matter and the potential that they be placed in a stream of
    eligible individuals for naturalization, or for normal processing in
    the course of the INS's normal work.
        It is thought to be very important.
        One of the things that's used to intimidate individuals is the
    suggestion that if you report, you'll automatically be deported. Other
    coercive tactics taken by those who have abused others have been to
    threaten either their families or those remain in other countries. And
    we wanted, by virtue of expanding this definition of the nature of
    coercion, together with the options of helping individuals with the T
    status visas, to make it easier for these violations to be reported and
    to give us the opportunity then with the reporting to have the chance
    to curtail this kind of activity.
        And this effort at enforcement picks up on what the Congress and
    the President did in October of last year to say that we want to move
    forward. We're welcoming additional information on the hotline. We're
    going to try and make sure people know about that with the outreach
    program. We've assigned additional resources for prosecution. And
    we'll, in addition to the additional resources for prosecution, issue
    the guidance protocols which make clear to individuals about this new
    option and opportunity. And, of course last but not least, we want to
    make sure that the coordination that's necessary to effective
    prosecution in this area between the investigative authorities, the
    immigration authorities and the prosecutional authorities is all there.
        Yes, sir?
        Question. I note that on your chart there, you have a Labor
    Department logo. And I also noted in the legislation that the State
    Department seemed to be the leading agency for this. Can you talk about
    how the various government agencies are working together? I guess you
    have a national task force on this now?
        ATTY GEN. ASHCROFT: Well, that would sure be apparent from the
    various--our piece of this, and that's the only thing I'm really
    qualified to talk about, is that we want to send a very clear signal
    that this is intolerable; that involuntary servitude and slavery, the
    illegal sweat shop, is not a part of the United States stands for. It
    demeans the work of those who are involved in it and undercuts the
    working capacity of those who are not involved.
        And it is important, obviously, to the labor community in the
    United Sates of America not to have substandard, illegal sweatshop
    conditions operated here. And the ability to hold people in those
    settings, not to report violations under threat or coercion, and this
    potential threat of exposure as illegal aliens, not having the right
    documentation, has been one of the means whereby there has been a
    restraint on the report of these abuses.
        Yes, Kevin?
        Question. What about the abuses overseas that's of concern to
    senators, that don't involve U.S. citizens, what can you do about that?
        ATTY GEN. ASHCROFT: Well, this is designed to focus on areas where
    we have jurisdiction to act. And I can't answer your question. I wish I
    could tell you that I had a way to make sure that there weren't any
    abuses. When people are solicited to come to the United States--I think
    what you're making reference to is they're told that there are
    opportunities here. I mean, one of the cases I believe relating to
    Alaska was that there was a recruitment of women in Russia to be part
    of what they were told would be a folk dance operation. It turned out
    not to be a folk dancing operation at all; it was something far less
    acceptable. So fraud in those kind of inducement situations I think can
    become a part of the proof of what the situation is here. But we really
    are focused on criminal activity that is involved in coercion and the
    repression of the rights of individuals in illegal settings here.
        Yes, sir?
        Question. How much new money is the Justice Department committing
    to the three steps that you mentioned?
        ATTY GEN. ASHCROFT: We won't be releasing details on our budget
    until April. But I've allocated the two additional attorneys. The
    advertising program, which has been contemplated here, is not a funded
    program on the part of government, it's a public service announcement
    program.
        Yes, sir?
        Question. On another subject, many privacy and civil liberties
    groups have questioned the Justice Department's use of the e-mail
    surveillance system, formerly known as Carnivore, now dubbed DSS-1000.
    Last year the department retained the Institute of Technology at
    Illinois to produce a report on the technological capabilities of this
    system, but there still are questions about its legality.
        I'm wondering what the administration's position on the use of
    Carnivore is, and will you continue to make use of it while this report
    of the Justice Department is still pending?
        ATTY GEN. ASHCROFT: I have not personally--the report, I believe,
    is working its way through the Justice Department at this time. I've
    not personally seen it. I have not altered in any way the ability of
    the administration to pursue its legal objectives in any kind of its
    surveillance activities.
        Yes, Mr. Sawyer?
        Question. General, on affirmative action, the Supreme Court
    yesterday agreed to revisit the Adarand case. And today there's a
    District Court decision out in Michigan on the--ruling unconstitutional
    the Michigan Law School affirmative action program, and there's a
    companion case that ruled constitutional the undergraduate case. Can
    you give us any insight and your thinking on that or where the
    department is likely to be as these cases make their way through?
        ATTY GEN. ASHCROFT: Well, this is a matter of very serious concern.
    You may remember that this came up at my confirmation hearing, and as I
    noted then, when I was a United States Senator I had a responsibility
    to consider legislation and to give my best judgment as to whether the
    legislation was constitutional and prudent.
        I voted against the reauthorization of set-asides that were at
    issue in the Adarand case because the specific language actually came
    back before the Senate, and I sided with what I believe to have been
    the Supreme Court's judgment there.
        However, I emphasized in my hearings that my responsibility as
    Attorney General, on a routine basis, might be different than
    commenting on what I thought the constitutionality of the law would be.
    My responsibility no longer allows me to oppose laws merely because I
    have a personal view that they may be imprudent or even that, in my own
    best judgment, I think they might be unconstitutional. Rather, my
    routine responsibility as Attorney General is to defend acts of
    Congress and federal regulations as long as they are in good faith and
    a good-faith defense is possible. That would be the routine
    responsibility.
        Now, the Supreme Court yesterday granted cert again in the Adarand
    case. Briefs in that case will be due for filing on the 11th day of
    June from the United States government and, as we prepare our positions
    in that case, I will consult with the Department of Transportation and
    the administration prior to fulfilling our legal responsibility in this
    particular matter. The Department of Transportation certainly retains
    the authority to reconsider its regulations, and if the Department of
    Transportation were to reformulate its regulations, that could alter
    the legal landscape significantly.
        Now, the Supreme Court's consideration of this case would provide
    important guidance to the federal government. The case provides the
    court with an opportunity to clarify how the strict scrutiny test
    applies to race-conscious federal programs. If the court strikes down
    the Transportation Department's regulations, it likely would require
    the federal government to reconsider and review or reformulate the
    numerous federal race-conscious programs. But prior to participating
    further by way of filing briefs on the 11th of June, I'll be conferring
    with the Transportation Department and the administration in this
    matter.
        Question. So that when you said earlier this month that you would
    obviously defend the Department of Transportation regulations, you
    didn't mean to imply that there wouldn't be this further discussion
    about--(inaudible)--
        ATTY GEN. ASHCROFT: I can't say that the----
        Question. Regulations?
        ATTY GEN. ASHCROFT: I can't say that the department won't make a
    decision about its regulations in the light of this grant of cert.
        Yes, ma'am.
        Question. Sir, when will the department make a decision concerning
    whether or not to allow closed circuit television for victims of--
    families of the Oklahoma City bombing to watch the execution?
        ATTY GEN. ASHCROFT: The tragedy of Oklahoma City is one which
    continues, and obviously I respect the grief that the families that
    were the subject of that tragedy have endured. I have asked the Federal
    Bureau of Prisons to provide me with a plan for accommodating the needs
    and feelings of those families that would reflect also the interests of
    justice in regard to this execution. Prior to making a final decision,
    I expect to confer with members of that family group and their
    representatives as well as to receive the recommendation of the Federal
    Bureau of Prisons, and will announce our plan for accommodating and
    appropriately respecting the sensitivities of these families and the
    needs of justice.
        Question. Has that meeting been set up yet?
        ATTY GEN. ASHCROFT: I don't believe it's scheduled.
        Question. Mr. Ashcroft?
        Staff: We have time for one or two more questions.
        Question. There was a report this week that the Justice Department
    wants to seek the death penalty against Robert Hanssen; also that the
    U.S. attorney might be opposed to that matter. Has the department made
    a determination about where it intends to go with this prosecution?
        ATTY GEN. ASHCROFT: I really don't want to discuss specific cases.
    I think my predecessor was wise in telling me when she came to visit
    me, don't start discussing specific cases. Let me just say to you that
    as it relates to the death penalty, particularly in cases like national
    security cases that involve the compromise of either systems or
    information relating to the national security of the United States,
    that I believe we have to have an assessment of the national interest
    that relates to whether or not the penalty should be the ultimate
    penalty or not. And let me just clarify that a little bit if you will.
        By the national interest, I mean that there is a national interest
    in making sure that we send a signal, that we take very seriously any
    compromises of the national interest and the national security by
    individuals who would inappropriately leak information or sell
    information. But we would also take very seriously the need or
    opportunity to ascertain things important for us to know about the
    nature of what had happened that might be available to us in the
    context of a plea bargain.
        And ultimately, when we make a decision in matters like this, the
    decision will be made reflecting the national interests of the United
    States, both the national security interests reflected in terms of the
    information that's been compromised and that which hasn't been
    compromised, and the national interests reflected in sending a very
    clear signal that the United States of America does not take lightly,
    does not view without seriousness, compromises in our national security
    and the sale of national secrets.
        Yes, ma'am.
        Question. Sir, in the wake of the Hanssen case, the FBI tomorrow
    will begin an extended polygraph program. There are--some have
    mentioned or there's been a suggestion that FBI agents should also
    undergo psychological evaluations on a regular basis. Is that
    something--is that something that the Justice Department could support?
        ATTY GEN. ASHCROFT: You know, I believe that there is going to be a
    lot of healthy discussion--and I think it will come from a number of
    quarters--about how we can better secure our intelligence effort. And I
    look forward to the inspector general's report from within this
    department. Inspector General Fine is an individual of great talent,
    and I've asked him to look carefully here. I look forward to the
    contribution made by Judge Webster, who has extensive security,
    international and national security interests experience. And I look
    forward to the work of the United States Congress. In particular, I've
    dealt with Senator--the Senators on the Intelligence Committee, and I
    believe that it's--they will be a part of helping develop a strategy.
    I'm grateful for the first steps that are taken in the department, and
    particularly in the Federal Bureau of Investigation, to promote
    security. We have on a(n) interim basis begun to implement audit
    standards so that we can ascertain whether individuals have access to
    information for which they have no real use and whether their accessing
    of that information is justified and appropriate. The implementation of
    some lie detector tests that had not previously been implemented will
    be a valuable tool.
        In no way do I believe that these interim measures should in any
    way curtail the level of the inquiries that are underway in the
    Congress, by Judge Webster, or by the inspector general.
        While we should--if you could allow the analogy--take whatever sort
    of roadside measures are necessary in triage to stop whatever problems
    we might think might exist, we need the full set of x-rays, we need the
    full diagnosis, and to have a commitment to implementing, on a
    continuing basis, anything that will upgrade our capacity. So, we look
    forward to the work of these three agencies: the Congress, the
    inspector general, and Judge Webster.
        And the last thing I would do would maybe quote--oh shoot, I can't
    remember who the philosopher was, but someone said that, ``Eternal
    vigilance is the price of liberty.'' I don't think we should ever
    conclude our evaluation of whether or not there are ways for us to
    secure better what we do. This should be a constant review, especially
    in the area of national security. And so I hope we will always remain
    open to increasing our capacity to reduce and minimize the risk of
    breaches that would threaten the security of this nation.
        I thank you very much. Nice to be with you.
             Guidance on New Law Concerning Trafficking in Persons
        This memorandum provides guidance to U.S. Attorneys considering
    investigation and prosecution under the newly enacted Trafficking
    Victims Protection Act of 2000. See Public Law 106-386. This law
    creates several new crimes and sets forth new benefits, services, and
    protections for victims of severe forms of trafficking in persons. The
    Act defines ``severe forms of trafficking in persons'' as the
    recruitment, harboring, transportation, provision, or obtaining of a
    person: (1) for labor or services, through the use of force, fraud, or
    coercion for the purpose of subjection to involuntary servitude,
    peonage, debt bondage, or slavery, or (2) for the purpose of a
    commercial sex act in which such act is induced by force, fraud, or
    coercion, or in which the person induced to perform such act has not
    attained 18 years of age.
        Under the Act, those convicted of trafficking offenses may be
    imprisoned for up to 20 years and, in some instances, for life. This
    represents a significant increase over preexisting involuntary
    servitude and slavery statutes, which carried a maximum sentence of 10
    years' imprisonment.
        The interagency Worker Exploitation Task Force (WETF), which is co-
    chaired by the Assistant Attorney General for Civil Rights and the
    Solicitor of the U.S. Department of Labor, is helping to coordinate
    enforcement efforts against trafficking and slavery.\1\ Criminal cases
    generally are staffed jointly by the local U.S. Attorney's office and
    the Criminal Section of the Civil Rights Division. The EOUSA point of
    contact for the WETF is Richard Smith, (202) 514-1023. The Civil Rights
    Division points of contact for the WETF are Albert N. Moskowitz, Chief
    of the Criminal Section, and Lou de Baca, the Involuntary Servitude and
    Slavery Case Coordinator, (202) 514-3204. The Criminal Division's WETF
    point of contact is Tom Burrows, Deputy Chief of the Child Exploitation
    and Obscenity Section, (202) 514-5780.
    ---------------------------------------------------------------------------
        \1\ To learn more about the WETF (including fact sheets and an
    outreach poster) and to access a link to the text of the new
    trafficking law, please see: www.usdoj.gov/crt/crim/wetf.htm.
    ---------------------------------------------------------------------------
        To help the Department more effectively coordinate enforcement
    efforts and data collection, U.S. Attorneys' offices should notify the
    Civil Rights Division WETF points of contact about investigations and
    prosecutions involving severe forms of trafficking in persons. In
    addition, we recommend distribution of this memorandum to AUSAs
    handling criminal civil rights, immigration, Mann Act, and OCDTEF/Asian
    Organized Crime matters. We likewise recommend distribution to victim/
    witness and Law Enforcement Coordinating Committee (LECC) coordinators.
    A. New Criminal Statutes
        The new criminal statutes created by the Act are codified in
    Chapter 77 of Title 18, the peonage and slavery chapter. The text of
    the new statutes is attached hereto as Appendix A. The primary
    legislative history for the new law is the Conference Report on H.R.
    3244, Victims of Trafficking and Violence Protection Act of 2000 (H.R.
    Conf. Rep. No. 106-939, 106th Cong., 146 Cong. Rec. H8855 (2000)).
        These new statutes are designed to reach the subtle means of
    coercion that traffickers often use to bind their victims in service.
    Such means include psychological coercion, trickery, and the seizure of
    documents. Preexisting slavery and peonage statutes and case law made
    it very difficult to prosecute such conduct, but the new statutes
    permit federal prosecutors to address this wider range of activities.
        There are four new criminal statutes, Sections 1589-1592. Section
    1589 creates a new crime of ``forced labor,'' which allows prosecutors
    to reach severe forms of worker exploitation that do not rise to the
    level of involuntary servitude. Section 1590 allows the prosecution of
    traffickers as principals rather than as aiders or abettors. Section
    1591 creates a new tool to combat sex trafficking of minors and sex
    trafficking by force, fraud, or coercion. Finally, Section 1592
    criminalizes the use or destruction of immigration or identification
    documents in furtherance of a trafficking scheme.
        In addition, newly-enacted Sections 1593 and 1594, which modify all
    of the Chapter 77 offenses, provide for prosecution of attempts and set
    forth forfeiture provisions and mandatory restitution measures that
    strip traffickers of any profits gained from their victims' forced
    service.
                1. Forced Labor (Section 1589)
        Section 1589 criminalizes labor or services obtained or maintained
    through forms of coercion not actionable under the standard set forth
    in United States v. Kozminski, 487 U.S. 931 (1988). Kozminski limited
    the reach of peonage and slavery statutes, 18 U.S.C. Sec. Sec. 1581-88,
    to cases in which the labor of the victim was obtained or maintained
    through force, threats of force, or threats of legal coercion.
        Section 1589(1) prohibits threats of serious harm to, or physical
    restraint against, the worker or another person. Importantly, Section
    1589(1) does not limit these threats to physical harm. It also reaches
    instances ``where traffickers threaten harm to third persons, restrain
    their victims without physical violence or injury, or threaten dire
    consequences by means other than overt violence.'' 146 Cong. Rec. at
    H8881. The relevant individual circumstances of a victim should be
    considered when determining whether a particular type or degree of harm
    or coercion is sufficient to obtain the victim's labor or services.
        Section 1589(2) prohibits the use of a scheme, plan, or pattern
    intended to cause the victim to believe that he, she or another will
    suffer serious harm or physical restraint unless he or she complies.
    Such schemes might include the use of psychological threats, ostracism,
    isolation, banishment, starvation, or threats against family members or
    property. For example, a trafficker might tell his victim, unfamiliar
    with the English language or U.S. culture, that she will be injured or
    killed if she leaves the trafficker's ``protection.'' For other
    specific examples, see 146 Cong. Rec. at H8881.
        Section 1589(3) prohibits the abuse or threatened abuse of the law
    or the legal process. Under this standard, threats to report a victim
    to the INS may be actionable. This subsection may also provide an
    alternative means of prosecuting loansharking threats that maintain
    forced labor through threats of legal action in a victim's home
    country.
                2. Trafficking with Respect to Peonage, Slavery,
                        Involuntary Servitude, or Forced Labor (Section
                        1590)
        Newly-enacted Section 1590 allows the prosecution as principals
    rather than aiders or abettors of those who recruit, harbor, transport,
    provide, or obtain persons for labor or services under conditions that
    violate any of the Chapter 77 offenses.
                3. Sex Trafficking of Children or by Force, Fraud, or
                        Coercion (Section 1591)
        Section 1591 combats trafficking for sexual exploitation by
    combining features of the Mann Act and involuntary servitude statutes.
    Section 1591 makes it illegal to recruit, move, or harbor a person (or
    to benefit from such activities) knowing that the person will be caused
    to engage in commercial sex acts, where the victim is either under 18
    years of age or is subjected to the commercial sex act by force, fraud,
    or coercion. A ``commercial sex act'' is any sex act for which
    something of value is given or received.
        In light of this new statute, the Mann Act should no longer be the
    primary vehicle for sex trafficking cases. Prosecutors should continue
    to use the Mann Act for criminal sexual activity not involving
    prostitution. Because Section 1591 has not yet been tested, we
    encourage you to contact Tom Burrows in the Child Exploitation and
    Obscenity Section of the Criminal Division, (202) 514-5780, before
    charging under this statute.
                    a. Interstate commerce nexus
        The jurisdictional element requires recruitment, harboring, or
    transporting in or affecting interstate commerce. This requirement
    could be met with proof such as transporting a person across a state
    line for prostitution, as in Mann Act cases. The interstate commerce
    requirement of Section 1591 may be satisfied in other ways as well,
    such as by proving that the victim was harbored in a brothel that
    bought supplies or solicited customers from other states.\2\ Note,
    however, that Section 1591 does not apply if foreign but not interstate
    commerce is involved.
    ---------------------------------------------------------------------------
        \2\ Case law under the federal arson statute, 18 U.S.C.
    Sec. 844(i), may be helpful here to establish the jurisdictional
    element.
    ---------------------------------------------------------------------------
                    b. Coercion and fraud for purposes of Section 1591
        Coercion can be proven by evidence of (1) actual threats of harm,
    (2) a scheme, plan or pattern intended to cause the victim to believe
    that harm would result if the commercial sexual acts were not
    performed, or (3) threats of legal repercussions against the victim
    (e.g. deportation).
        Adult victims can only support a charge under Section 1591 if they
    engaged in the commercial sexual activity through force, fraud, or
    coercion. By including fraud in this section, Congress criminalized a
    broad range of activity. For example, prosecutors may present cases
    under this statute in which a victim is fraudulently tricked into
    sexual activity, such as through a false modeling agency.
                    c. Comparisons with the Mann Act
        The trafficking conduct prohibited under the new statute is in many
    ways similar to that prohibited under the Mann Act. Charging both Mann
    Act and Section 1591 for the same activity thus may raise a
    multiplicity issue. This problem might be avoided by pairing a Mann Act
    charge under Sections 2421 or 2423(a) (which do not require a showing
    of coercion) and a Section 1591 charge alleging fraud, force, or
    coercion. Each fact pattern and charging decision should be reviewed
    individually to avoid potential legal defects in the indictment.
        As to jurisdiction, Section 1591, in contrast to the Mann Act, only
    includes interstate commerce. Section 1591, therefore, should not be
    used for international trafficking unless, after the victim was brought
    to the United States, there was further movement across states in
    furtherance of the trafficking scheme. The jurisdictional element of
    Section 1591 may also be met without the border-crossing travel
    required by the Mann Act if other effects on interstate commerce can be
    proven.
        Attempts are punishable under either statute. The Mann Act
    explicitly covers attempts, while Section 1591 covers attempts by
    virtue of Section 1594(a).
        Finally, if the evidence is sufficient for using either the Mann
    Act or Section 1591, then the prosecutor may consider whether the
    higher maximum sentence under Section 1591 warrants its use.
                4. Document Servitude (Section 1592)
        An increasing number of victims are held in service not by force or
    threats but by the confiscation of (and denial of access to) actual or
    purported identification or immigration documents. Section 1592
    criminalizes the destruction or withholding of a victim's documents for
    the purpose of unlawfully maintaining the victim's labor or services.
    Because this section carries a five-year statutory maximum, it may be
    useful in plea negotiations.
                    a. Direct link to trafficking statutes
        Section 1592(a)(1) prohibits the confiscation of documents in the
    course of a violation of the other trafficking laws. This subsection
    thus does not act as a stand-alone crime, but instead increases the
    overall statutory maximum sentence available to prosecutors.\3\
    ---------------------------------------------------------------------------
        \3\ Under the sentencing guidelines, the requirement that the
    document seizure be in the course of a violation of the more serious
    offenses may subsume the penalty for the Section 1592 violation into
    the more serious crimes.
    ---------------------------------------------------------------------------
        Section 1592(a)(2) prohibits the confiscation of documents with the
    intent to violate other trafficking offenses. This subsection will
    likely be helpful in negotiating plea dispositions, especially with
    cooperating co-defendants. To establish ``intent to violate,'' the
    investigation should explore whether the defendants intended the
    victims to believe that the confiscation of the documents rendered them
    incapable of leaving service. This activity may also support charges
    under Section 1589(2).
                    b. Indirect link to trafficking statutes
        Section 1592(a)(3), which does not incorporate a direct link to the
    other trafficking statutes, prohibits confiscation of a document with
    the intent to prevent or restrict a victim's liberty to move or travel,
    in order to keep the victim in service. Section 1592(a)(3) applies only
    if the person was a victim of a severe form of trafficking.
                5. Miscellaneous Provisions
                    a. Sentencing guidelines
        The Act directs the U.S. Sentencing Commission to consider amending
    the sentencing guidelines for offenses involving trafficking of
    persons. The Commission has already promulgated guideline amendments.
                    b. Mandatory restitution
        Section 1593 provides for special restitution calculations in
    Chapter 77 offenses. Restitution is mandatory in these cases.
        Restitution should be estimated as the greater of either: (1) the
    gross income or value to the defendant of the victim's service or
    labor, or (2) the value of the victim's labor as guaranteed under the
    minimum wage and overtime guarantees of the Fair Labor Standards Act.
    In trafficking cases, restitution should also include costs incurred by
    the victim for: medical services relating to physical, psychiatric, or
    psychological care; physical and occupational therapy or
    rehabilitation; necessary transportation, temporary housing, and child
    care expenses; lost income; attorneys' fees, as well as other costs
    incurred; and any other losses suffered by the victim as a proximate
    result of the offense.
    B. Victim Protections
        The new statute imposes new responsibilities on investigators and
    prosecutors who deal with victims of severe forms of trafficking.
    Detailed regulations and guidelines are forthcoming. In the interim,
    investigators and prosecutors may wish to consult the following
    individuals for assistance with short-term compliance: Camille Bennett,
    EOUSA, (202) 305-2161, or Lorna Grenadier, Victim/Witness Specialist in
    the Criminal Section of the Civil Rights Division, (202) 514-3204.
                1. Access to Benefits and Services
        The Act declares alien victims of severe trafficking eligible for
    many federally-funded victim and witness assistance programs to the
    same extent as aliens admitted to the United States as a refugee under
    Sec. 207 of the Immigration and Nationality Act. As a result, the
    Emergency Witness Assistance Program (EWAP) should not be viewed as the
    central method of securing immediate assistance for trafficking
    witnesses.
        The Department of Justice and the Department of Health and Human
    Services (HHS) are developing a certification process, as required by
    the Act, so that adult victims of severe trafficking can receive public
    assistance, medical care, housing, and other publicly available
    benefits and services, without regard to their immigration status.
    Pending further guidance, prosecutors and victim/witness coordinators
    should contact Camille Bennett, EOUSA, (202) 305-2161, or Lorna
    Grenadier, Victim/Witness Specialist in the Criminal Section of the
    Civil Rights Division, (202) 514-3204, for assistance with the interim
    certification process.
                2. Victim Protection Regulations
        The Act requires by April 26, 2001, the promulgation of regulations
    guaranteeing victims protection while in federal custody and access to
    information about their rights, authorizing victims' continued presence
    in United States, and providing mechanisms for training law enforcement
    personnel on the needs of trafficking victims. See Section 107(c),
    attached as Appendix B. In the interim, prosecutors may contact the
    District INS victim/witness coordinator to arrange for a victim's
    continued presence or for information about victim access to
    information about their rights under the new law.
                3. Visa Issues
        The new law enhances the protection offered to trafficking victims.
    It creates two new nonimmigrant classifications: a ``T'' visa for
    victims of severe forms of trafficking and (within the Violence Against
    Women Act of 2000) a ``U'' visa for an array of crimes including
    trafficking. The T visa is available to individuals who: (1) are a
    victim of a severe form of trafficking, (2) are physically present in
    the United States or a U.S. territory, (3) would suffer extreme
    hardship involving unusual and severe harm upon removal, and (4) either
    are under 15 years of age or have complied with any reasonable request
    to assist a trafficking investigation or prosecution. The parents,
    children, and spouses of victims are also eligible in certain instances
    for T visas.
        The U visa is available to a broader group of crime victims,
    including those who: (1) have suffered substantial physical or mental
    abuse due to having been a victim of trafficking; (2) possess
    information concerning the trafficking; (3) have been helpful, are
    being helpful, or are likely to be helpful to law enforcement; and (4)
    have been the victim of criminal activity.
        The INS is currently developing regulations for the new visas.
                4. Trafficking Versus Alien Smuggling Considerations
        Trafficking cases differ from most alien smuggling cases. In
    smuggling cases, the strongest witnesses are designated as material
    witnesses and the remainder of the smuggled aliens generally are
    deported. In trafficking cases, by contrast, all victims typically
    remain in the United States as potential witnesses. Indeed, some
    federal district courts have ordered that all trafficking victims be
    kept in this country, under the theory that those witnesses who are not
    likely to testify for the prosecution may be induced to become defense
    witnesses under Brady. The Civil Rights Division has developed model
    victim interview questions that help to distinguish trafficking/
    servitude situations from alien smuggling cases.
        Unlike most alien smuggling cases, trafficked persons are victims
    of crime. This is a critical distinction. These victims must be treated
    in a manner consistent with the Attorney General Guidelines for Victim
    and Witness Assistance. Trafficking victims often need medical and
    other services to deal with the trauma associated with having been
    trafficked. The new Act provides immediate protection and lawful status
    as well as potential permanent immigration status to these victims so
    that they may pursue legal remedies against their traffickers while
    receiving needed services. For these reasons, the common practice in
    smuggling cases of designation and deportation is inappropriate in
    trafficking prosecutions.
                         Appendix A--Statutory Language
    Title 18, United States Code, Section 1589 (Forced labor)
        Whoever knowingly provides or obtains the labor or services of a
    person--
                (1) by threats of serious harm to, or physical restraint
            against, that person or another person;
                (2) by means of any scheme, plan, or pattern intended to
            cause the person to believe that, if the person did not perform
            such labor or services, that person or another person would
            suffer serious harm or physical restraint; or
                (3) by means of the abuse or threatened abuse of law or the
            legal process,
    shall be fined under this title or imprisoned not more than 20 years,
    or both. If death results from the violation of this section, or if the
    violation includes kidnapping or an attempt to kidnap, aggravated
    sexual abuse or the attempt to commit aggravated sexual abuse, or an
    attempt to kill, the defendant shall be fined under this title or
    imprisoned for any term of years or life, or both.
    Title 18, United States Code, Section 1590 (Trafficking with respect to
            peonage, slavery, involuntary servitude, or forced labor)
        Whoever knowingly recruits, harbors, transports, provides, or
    obtains by any means, any person for labor or services in violation of
    this chapter shall be fined under this title or imprisoned not more
    than 20 years, or both. If death results from the violation of this
    section, or if the violation includes kidnapping or an attempt to
    kidnap, aggravated sexual abuse, or the attempt to commit aggravated
    sexual abuse, or an attempt to kill, the defendant shall be fined under
    this title or imprisoned for any term of years or life, or both.
    Title 18, United States Code, Section 1591 (Sex trafficking of children
            or by force, fraud or coercion)
        (a) Whoever knowingly--
                (1) in or affecting interstate commerce, recruits, entices,
            harbors, transports, provides, or obtains by any means a
            person; or
                (2) benefits, financially or by receiving anything of
            value, from participation in a venture which has engaged in an
            act described in violation of paragraph (1), knowing that
            force, fraud, or coercion described in subsection (c)(2) will
            be used to cause the person to engage in a commercial sex act,
            or that the person has not attained the age of 18 years and
            will be caused to engage in a commercial sex act, shall be
            punished as provided in subsection (b).
        (b) The punishment for an offense under subsection (a) is--
                (1) if the offense was effected by force, fraud, or
            coercion or if the person transported had not attained the age
            of 14 years at the time of such offense, by a fine under this
            title or imprisonment for any term of years or for life, or
            both; or
                (2) if the offense was not so effected, and the person
            transported had attained the age of 14 years but had not
            attained the age of 18 years at the time of such offense, by a
            fine under this title or imprisonment for not more than 20
            years, or both.
        (c) In this section:
                (1) The term ``commercial sex act'' means any sex act, on
            account of which anything of value is given to or received by
            any person.
                (2) The term ``coercion'' means--
                        (A) threats of serious harm to or physical
                    restraint against any person;
                        (B) any scheme, plan, or pattern intended to cause
                    a person to believe that failure to perform an act
                    would result in serious harm to or physical restraint
                    against any person; or
                        (C) the abuse or threatened abuse of law or the
                    legal process.
                (3) The term ``venture'' means any group of 2 or more
            individuals associated in fact, whether or not a legal entity.
    Title 18, United States Code, Section 1592 (Unlawful conduct with
            respect to documents in furtherance of trafficking, peonage,
            slavery, involuntary servitude, or forced labor)
        (a) Whoever knowingly destroys, conceals, removes, confiscates, or
    possesses any actual or purported passport or other immigration
    document, or any other actual or purported government identification
    document, of another person--
                (1) in the course of a violation of section 1581, 1583,
            1584, 1589, 1590, 1591, or 1594(a);
                (2) with intent to violate section 1581, 1583, 1584, 1589,
            1590, or 1591; or
                (3) to prevent or restrict or to attempt to prevent or
            restrict, without lawful authority, the person's liberty to
            move or travel, in order to maintain the labor or services of
            that person, when the person is or has been a victim of a
            severe form of trafficking in persons, as defined in section
            103 of the Trafficking Victims Protection Act of 2000;
    shall be fined under this title or imprisoned for not more than 5
    years, or both.
        (b) Subsection (a) does not apply to the conduct of a person who is
    or has been a victim of a severe form of trafficking in persons, as
    defined in section 103 of the Trafficking Victims Protection Act of
    2000, if that conduct is caused by, or incident to, that trafficking.
    Section 103 of Public Law 106-386 defines ``severe forms of trafficking
            in persons'' as follows:
                (8) Severe forms of trafficking in persons.--The term
            ``severe forms of trafficking in persons'' means--
                        (A) sex trafficking in which a commercial sex act
                    is induced by force, fraud, or coercion, or in which
                    the person induced to perform such act has not attained
                    18 years of age; or
                        (B) the recruitment, harboring, transportation,
                    provision, or obtaining of a person for labor or
                    services, through the use of force, fraud, or coercion
                    for the purpose of subjection to involuntary servitude,
                    peonage, debt bondage,\4\ or slavery.
    ---------------------------------------------------------------------------
        \4\ Section 103 of Public Law 106-386 states (4) Debt bondage.--The
    term ``debt bondage'' means the status or condition of a debtor arising
    from a pledge by the debtor of his or her personal services or of those
    of a person under his or her control as a security for debt, if the
    value of those services as reasonably assessed is not applied toward
    the liquidation of the debt or the length and nature of those services
    are not respectively limited and defined.
    ---------------------------------------------------------------------------
    Title 18, United States Code, Section 1593 (Mandatory restitution)
        (a) Notwithstanding sections 3663 or 3663A, and in addition to any
    other civil or criminal penalties authorized by law, the court shall
    order restitution for any offense under this chapter.
        (b)(1) The order of restitution under this section shall direct the
    defendant to pay the victim (through the appropriate court mechanism)
    the full amount of the victim's losses, as determined by the court
    under paragraph (3) of this subsection.
        (2) An order of restitution under this section shall be issued and
    enforced in accordance with section 3664 in the same manner as an order
    under section 3663A.
        (3) As used in this subsection, the term ``full amount of the
    victim's losses'' has the same meaning as provided in section
    2259(b)(3) and shall in addition include the greater of the gross
    income or value to the defendant of the victim's services or labor or
    the value of the victim's labor as guaranteed under the minimum wage
    and overtime guarantees of the Fair Labor Standards Act (29 U.S.C. 201,
    et seq.).
        (c) As used in this section, the term ``victim'' means the
    individual harmed as a result of a crime under this chapter, including,
    in the case of a victim who is under 18 years of age, incompetent,
    incapacitated, or deceased, the legal guardian of the victim or a
    representative of the victim's estate, or another family member, or any
    other person appointed as suitable by the court, but in no event shall
    the defendant be named such representative or guardian.
    Title 18, United States Code, Section 1594 (General provisions)
        (a) Whoever attempts to violate section 1581, 1583, 1584, 1589,
    1590, or 1591 shall be punishable in the same manner as a completed
    violation of that section.
        (b) The court, in imposing sentence on any person convicted of a
    violation of this chapter, shall order, in addition to any other
    sentence imposed and irrespective of any provision of State law, that
    such person shall forfeit to the United States--
                (1) such person's interest in any property, real or
            personal, that was used or intended to be used to commit or to
            facilitate the commission of such violation; and
                (2) any property, real or personal, constituting or derived
            from, any proceeds that such person obtained, directly or
            indirectly, as a result of such violation.
        (c)(1) The following shall be subject to forfeiture to the United
    States and no property right shall exist in them:
                (A) Any property, real or personal, used or intended to be
            used to commit or to facilitate the commission of any violation
            of this chapter.
                (B) Any property, real or personal, which constitutes or is
            derived from proceeds traceable to any violation of this
            chapter.
        (2) The provisions of chapter 46 of this title relating to civil
    forfeitures shall extend to any seizure or civil forfeiture under this
    subsection.
        (d) Witness Protection.--Any violation of this chapter shall be
    considered an organized criminal activity or other serious offense for
    the purposes of application of chapter 224 (relating to witness
    protection).
                         Appendix B--Victim Protections
    Section 107(c), Public Law 106-386, Trafficking Victims Protection Act
            of 2000
        Trafficking Victim Regulations.--Not later than 180 days after the
    date of enactment of this Act, the Attorney General and the Secretary
    of State shall promulgate regulations for law enforcement personnel,
    immigration officials, and Department of State officials to implement
    the following:
                (1) Protections while in custody.--Victims of severe forms
            of trafficking, while in the custody of the Federal Government
            and to the extent practicable, shall--
                        (A) not be detained in facilities inappropriate to
                    their status as crime victims;
                        (B) receive necessary medical care and other
                    assistance; and
                        (C) be provided protection if a victim's safety is
                    at risk or if there is danger of additional harm by
                    recapture of the victim by a trafficker, including--
                                (i) taking measures to protect trafficked
                            persons and their family members from
                            intimidation and threats of reprisals and
                            reprisals from traffickers and their
                            associates; and
                                (ii) ensuring that the names and
                            identifying information of trafficked persons
                            and their family members are not disclosed to
                            the public.
                (2) Access to information.--Victims of severe forms of
            trafficking shall have access to information about their rights
            and translation services.
                (3) Authority to permit continued presence in the united
            states.--Federal law enforcement officials may permit an alien
            individual's continued presence in the United States, if after
            an assessment, it is determined that such individual is a
            victim of a severe form of trafficking and a potential witness
            to such trafficking, in order to effectuate prosecution of
            those responsible, and such officials in investigating and
            prosecuting traffickers shall protect the safety of trafficking
            victims, including taking measures to protect trafficked
            persons and their family members from intimidation, threats of
            reprisals, and reprisals from traffickers and their associates.
                (4) Training of government personnel.--Appropriate
            personnel of the Department of State and the Department of
            Justice shall be trained in identifying victims of severe forms
            of trafficking and providing for the protection of such
            victims.
                                   Memorandum
                            U.S. Department of Justice,
                                         Civil Rights Division,
                                      Washington, DC, January 11, 2002.
      memorandum for heads of federal grant agencies general counsels and
                             civil rights directors
    FROM: Ralph F. Boyd, Jr., Assistant Attorney General, Civil Rights
            Division
    SUBJECT: Executive Order 13166 (Improving Access to Services for
            Persons with Limited English Proficiency)

        I am writing to encourage agencies to expedite their work on
    limited English proficiency (LEP) guidance documents in order to be in
    a position to meet the 120-day deadline set forth in my memorandum
    dated October 26, 2001. A copy of that memorandum is attached.
    Background
        On October 26, 2001, I issued a memorandum to clarify policy
    guidance issued by the Department of Justice (DOJ) entitled
    ``Enforcement of Title VI of the Civil Rights Act of 1964--National
    Origin Discrimination Against Persons With Limited English
    Proficiency.'' 65 F.R. 50123 (August 16, 2000) (DOJ LEP Guidance). That
    policy guidance had been issued to set forth general principles for
    agencies to apply in developing guidance on how their recipients can
    provide meaningful access to LEP persons and, therefore, comply with
    the Title VI disparate impact regulations, as required by Executive
    Order 13166.
        The memorandum instructed agencies that had issued LEP guidance for
    their recipients pursuant to Executive Order 13166 and Title VI of the
    Civil Rights Act to notify the Department of Justice, publish a notice
    asking for public comment on the guidance documents they have issued,
    and, if necessary, clarify or modify its existing guidance. Agencies
    that had not yet published guidance documents were to submit agency-
    specific guidance to the Department of Justice. Following review by the
    Department of Justice and before finalizing their guidance, the
    agencies were to obtain public comment on their proposed guidance
    documents.
    Further agency action
        The Department of Justice has learned that some agencies that had
    previously published LEP guidance had obtained significant public
    comment on those materials following the original publication of that
    guidance. The Department therefore believes that it is appropriate for
    these agencies to expedite their review of their existing guidance in
    light of the comment they have already received and the Department's
    October 26 memorandum. These agencies should notify the Department of
    Justice of any need to clarify or modify existing guidance by January
    25, 2002.
        Other agencies, however, have not yet obtained significant public
    comment on their previously published guidance. These agencies should
    immediately publish a request for comment on their existing guidance
    documents. In addition, they should expedite their review of their
    existing guidance in light of the comment they will obtain and notify
    the Department of Justice of any need to clarify or modify existing
    guidance as soon as possible.
        If it is determined that an agency's existing guidance should be
    clarified or modified, that agency should seek public comment on any
    proposed revisions before making them final.
        Finally, for those agencies that have not previously published LEP
    guidance documents, I request them to expedite their drafting of LEP
    guidance documents and to submit them to the Department of Justice as
    soon as possible. Following review by the Department and before
    finalizing its guidance, each of these agencies must then publish its
    agency-specific LEP guidance documents for public comment.
        My October 26 memorandum requested that all new LEP guidance
    documents be published in final form by February 25th, 2002. Because
    many agencies have not yet submitted their guidance documents to the
    Department of Justice for review or taken steps to obtain public
    comment, I am concerned that they may have difficulty meeting this
    deadline. I thus request that all such agencies expedite their
    consideration of this matter and notify the Department regarding the
    status of their progress regarding the development of LEP guidance by
    January 22, 2002.
        The DOTs Civil Rights Division, Coordination and Review Section
    ((202) 307-2222), stands ready to assist agencies in this matter.
                                   Memorandum
                            U.S. Department of Justice,
                                         Civil Rights Division,
                                      Washington, DC, October 26, 2001.
     memorandum for heads of departments and agencies general counsels and
                             civil rights directors
    FROM: Ralph F. Boyd, Jr., Assistant Attorney General, Civil Rights
            Division
    SUBJECT: Executive Order 13166 (Improving Access to Services for
            Persons with Limited English Proficiency)

        Federal agencies have recently raised several questions regarding
    the requirements of Executive Order 13166. This Memorandum responds to
    those questions. As discussed below, in view of the clarifications
    provided in this Memorandum, agencies that have issued Limited English
    Proficiency (``LEP'') guidance for their recipients pursuant to
    Executive Order 13166 and Title VI of the Civil Rights Act should,
    after notifying the Department of Justice (``DOJ''), publish a notice
    asking for public comment on the guidance documents they have issued.
    Based on the public comment it receives and this Memorandum, an agency
    may need to clarify or modify its existing guidance. Agencies that have
    not yet published guidance documents should submit agency-specific
    guidance to the Department of Justice. Following approval by the
    Department of Justice and before finalizing its guidance, each agency
    should obtain public comment on their proposed guidance documents. With
    regard to plans for federally conducted programs and activities,
    agencies should review their plans in light of the clarifications
    provided below.
    Background of Executive Order 13166
        The legal basis for Executive Order 13166 is explained in policy
    guidance issued by the Department of Justice entitled ``Enforcement of
    Title VI of the Civil Rights Act of 1964--National Origin
    Discrimination Against Persons With Limited English Proficiency.'' 65
    F.R. 50123 (August 16, 2000). This ``DOJ LEP Guidance'' was referenced
    in and issued concurrently with the Executive Order.
        As the DOJ LEP Guidance details, Title VI of the Civil Rights Act
    of 1964 prohibits discrimination on the basis of race, color, or
    national origin in any program or activity receiving federal financial
    assistance. Department of Justice regulations enacted to effectuate
    this prohibition bar recipients of federal financial assistance from
    ``utiliz[ing] criteria or methods of administration which have the
    effect of subjecting individuals to discrimination'' because of their
    race, color, or national origin. These regulations thus prohibit
    unjustified disparate impact on the basis of national origin.
        As applied, the regulations have been interpreted to require
    foreign language assistance in certain circumstances. For instance,
    where a San Francisco school district had a large number of non-English
    speaking students of Chinese origin, it was required to take reasonable
    steps to provide them with a meaningful opportunity to participate in
    federally funded educational programs. Lau v. Nichols, 414 U.S. 563
    (1974).\1\
    ---------------------------------------------------------------------------
        \1\ ``It seems obvious that the Chinese-speaking minority receive
    fewer benefits than the English-speaking majority from respondents'
    school system which denies them a meaningful opportunity to participate
    in the education program--all earmarks of the discrimination banned by
    the regulations.'' 414 U.S. at 568.
    ---------------------------------------------------------------------------
        The Supreme Court most recently addressed the scope of the Title VI
    disparate impact regulations in Alexander v. Sandoval, 121 S. Ct. 1511
    (2001). There, the Court held that there is no private right of action
    to enforce these regulations. It ruled that, even if the Alabama
    Department of Public Safety's policy of administering driver's license
    examinations only in English violates the Title VI regulations, a
    private party could not bring a case to enjoin Alabama's policy. Some
    have interpreted Sandoval as impliedly striking down Title VI's
    disparate impact regulations and thus that part of Executive Order
    13166 that applies to federally assisted programs and activities.\2\
    ---------------------------------------------------------------------------
        \2\ See Sandoval, 121 S. Ct. at 1516 n.6 (``[W]e assume for
    purposes of this decision that Sec. 602 confers the authority to
    promulgate disparate-impact regulations; . . . We cannot help
    observing, however, how strange it is to say that disparate-impact
    regulations are `inspired by, at the service of, and inseparably
    intertwined with' Sec. 601 . . . when Sec. 601 permits the very
    behavior that the regulations forbid.'').
    ---------------------------------------------------------------------------
        The Department of Justice disagrees. Sandoval holds principally
    that there is no private right of action to enforce the Title VI
    disparate impact regulations. It did not address the validity of those
    regulations or Executive Order 13166. Because the legal basis for
    Executive Order 13166 is the Title VI disparate impact regulations and
    because Sandoval did not invalidate those regulations, it is the
    position of the Department of Justice that the Executive Order remains
    in force.
    Requirements of Executive Order 13166
        Federally Assisted Programs and Activities.--The DOJ LEP Guidance
    explains that, with respect to federally assisted programs and
    activities, Executive Order 13166 ``does not create new obligations,
    but rather, clarifies existing Title VI responsibilities.'' Its purpose
    is to clarify for federal-funds recipients the steps those recipients
    can take to avoid administering programs in a way that results in
    discrimination on the basis of national origin in violation of the
    Title VI disparate impact regulations. To this end, the Order requires
    each Federal Agency providing federal financial assistance to explain
    to recipients of federal funds their obligations under the Title VI
    disparate impact regulations.
        In developing their own LEP guidance for recipients of federal
    funds, an agency should balance the factors set forth in the DOJ LEP
    Guidance. These factors include, but are not limited to (i) the number
    or proportion of LEP individuals, (ii) the frequency of contact with
    the program, (iii) the nature and importance of the program, and (iv)
    the resources available.
        As the DOJ LEP Guidance explains, ``a factor in determining the
    reasonableness of a recipient's efforts is the number or proportion of
    people who will be excluded from the benefits or services absent
    efforts to remove language barriers.'' Similarly, the frequency of
    contact must be considered. Where the frequency and number of contacts
    is so small as to preclude any significant national origin based
    disparate impact, agencies may conclude that the Title VI disparate
    impact regulations impose no substantial LEP obligations on recipients.
        The nature and importance of the program is another factor. Where
    the denial or delay of access may have life or death implications, LEP
    services are of much greater importance than where denial of access
    results in mere inconvenience.
        Resources available and costs must likewise be weighed. A small
    recipient with limited resources may not have to take the same steps as
    a larger recipient. See DOJ LEP Guidance at 50125. Costs, too, must be
    factored into this balancing test. ``Reasonable steps'' may cease to be
    reasonable where the costs imposed substantially exceed the benefits in
    light of the factors outlined in the DOJ LEP Guidance. The DOJ LEP
    Guidance explains that a small recipient may not have to take
    substantial steps ``where contact is infrequent, where the total costs
    of providing language services is relatively high and where the program
    is not crucial to an individual's day-to-day existence.'' By contrast,
    where number and frequency of contact is high, where the total costs
    for LEP services are reasonable, and where the lack of access may have
    life and death implications, the availability of prompt LEP services
    may be critical. In these latter cases, claims based on lack of
    resources will need to be well substantiated.
        Finally, consideration of resources available naturally implicates
    the ``mix'' of LEP services required. While on-the-premise translators
    may be needed in certain circumstances, written translation, access to
    centralized translation language lines or other means may be
    appropriate in the majority of cases. The correct balance should be
    based on what is both necessary to eliminate unjustified disparate
    impact prohibited by the Title VI regulations and reasonable in light
    of the factors outlined in the DOJ LEP Guidance.
        Federally Conducted Programs and Activities.--Executive Order 13166
    also applies to federally conducted programs and activities. With
    respect to these, the Order requires each Federal Agency to prepare a
    plan to improve access to federally conducted programs and activities
    by eligible LEP persons. These plans, too, must be consistent with the
    DOJ LEP Guidance. Federal agencies should apply the same standards to
    themselves as they apply to their recipients.
    Procedural considerations
        Administrative Procedure Act.--Agency action taken pursuant to
    Executive Order 13166 and the DOJ LEP Guidance may be subject to the
    Administrative Procedure Act's (``APA'') rulemaking requirements. 5
    U.S.C. Sec. 553. Although interpretive rules, general statements of
    policy, and rules of agency organization and procedure are not subject
    to section 553, courts have ruled that any final agency action that
    carries the force and effect of law must comply with section 553's
    notice and comment requirements. See Paralyzed Veterans of America v.
    D.C. Arena, 117 F.3d 579, 588 (D.C. Cir. 1997). Agencies, therefore,
    should consider whether the action they have taken or that they propose
    to take to implement Executive Order 13166 and Title VI of the Civil
    Rights Act is subject to the APA's requirements. If it is, they must
    comply with these statutory obligations. Agencies must bear in mind,
    however, that Executive Order 13166 ``does not create new obligations,
    but rather, clarifies existing Title VI responsibilities.''
    Accordingly, agency action taken pursuant to Executive Order 13166 must
    not impose new obligations on recipients of federal funds, but should
    instead help recipients to understand their existing obligations.
        Executive Order 12866.--Agency action taken pursuant to Executive
    Order 13166 and the DOJ LEP Guidance may also be subject to
    requirements set forth in Executive Order 12866 (Regulatory Review and
    Planning, Sept. 30, 1993). That Order directs agencies to submit to the
    Office of Management and Budget for review any ``significant regulatory
    actions'' the agency wishes to take. See Sec. 6(a). Agencies,
    therefore, should consider whether the action they have taken or that
    they propose to take to implement Executive Order 13166 and Title VI of
    the Civil Rights Act is subject to Executive Order 12866's
    requirements. If it is, they should ensure that the action or proposed
    action complies with Executive Order 12866's obligations. With regard
    to federally conducted programs and activities, agencies should review
    their plans for their federally conducted programs in light of the
    clarifications below and make any necessary modifications.
    Further agency action
        Existing LEP Guidance and Plans for Federally Conducted Programs
    and Activities.--Agencies that have already published LEP guidance
    pursuant to Executive Order 13166 or Title VI of the Civil Rights Act
    should obtain public comment on the guidance documents they have
    issued. Agencies should then review their existing guidance documents
    in view of public comment and for consistency with the clarifications
    provided in this Memorandum. The Justice Department's Civil Rights
    Division, Coordination and Review Section ((202) 307-2222), is
    available to assist agencies in making this determination. Should this
    review lead an agency to conclude that it is appropriate to clarify or
    modify aspects of its LEP guidance documents, it should notify the
    Department of Justice of that conclusion within 60 days from the date
    of this Memorandum. Any agency effort to clarify or modify existing LEP
    guidance should be completed within 120 days from the date of this
    Memorandum. Agencies likewise should review plans for federally
    conducted programs and activities in light of the above clarification.
        New LEP Guidance and Plans for Federally Conducted Programs and
    Activities.--Agencies that have not yet published LEP guidance pursuant
    to Executive Order 13166 and Title VI of the Civil Rights Act should
    submit to the Department of Justice, within 60 days from the date of
    this Memorandum, agency-specific recipient guidance that is consistent
    with Executive Order 13166 and the DOJ LEP Guidance, including the
    clarifications set forth in this Memorandum. In preparing their
    guidance, agencies should ensure that the action they propose to take
    is consistent with the requirements of the Administrative Procedure Act
    and Executive Order 12866. The Justice Department's Civil Rights
    Division, Coordination and Review Section, is available to assist
    agencies in preparing agency-specific guidance. Following approval by
    the Department of Justice and before finalizing its guidance, each
    agency should obtain public comment on its proposed guidance documents.
    Final agency-specific LEP guidance should be published within 120 days
    from the date of this memorandum. Agencies likewise should submit to
    the Department of Justice plans for federally conducted programs and
    activities. The Department of Justice is the central repository for
    these agency plans.
        Federally assisted programs and activities may not be administered
    in a way that violates the Title VI regulations. Each Federal Agency is
    responsible for ensuring that its agency-specific guidance outlines
    recipients' obligations under the Title VI regulations and the steps
    recipients can take to avoid violating these obligations. While
    Executive Order 13166 requires only that Federal Agencies take steps to
    eliminate recipient discrimination based on national origin prohibited
    by Title VI, each Federal Agency is encouraged to explore whether, as a
    matter of policy, additional affirmative outreach to LEP individuals is
    appropriate. Federal Agencies likewise must eliminate national origin
    discrimination in their own federally conducted programs and
    activities. The Department of Justice is available to help agencies in
    reviewing and preparing agency-specific LEP guidance and federally
    conducted plans.
                                     ______

                    Questions Submitted by Senator Herb Kohl
           doj's and ftc's plan to divide antitrust responsibilities
        Question. The Justice Department and Federal Trade Commission (FTC)
    recently proposed a new plan for dividing their responsibilities over
    antitrust matters. Under this plan, certain subjects currently split
    between the agencies would be assigned only to one--for example, all
    communications and media matters would be reviewed by the Justice
    Department while all health care matters will be reviewed by the FTC.
    In addition, the timetable for resolving contests between the agencies
    over who is to review a matter will be expedited.
        Why have you proposed this new plan for dividing antitrust
    responsibilities between the Justice Department and the FTC? How will
    this improve on the current system? Please list the statutory
    differences in antitrust enforcement authority that exist between the
    Department of Justice (DOJ) and FTC and tell me why these will or will
    not make a difference.
        Answer. The Clearance Agreement addresses a longstanding problem
    with the process for assigning cases to the agencies that in some
    significant cases had impeded and delayed antitrust investigation and
    enforcement. The clearance system needed to be overhauled to arrest the
    trend toward more frequent and time-consuming clearance disputes that
    delay the initiation of investigations, and to allow the agencies to
    concentrate expertise and resources to investigate more effectively.
        DOJ's Antitrust Division (ATR) and the FTC each have jurisdiction
    to investigate many of the same types of conduct. The principal ground
    for clearance has always been to clear the matter to the agency with
    the most recent expertise in the particular product or products to be
    investigated. Over time, this clearance methodology has begun to break
    down and disagreements have arisen.
        Clearance disputes can cause significant delays in antitrust
    enforcement, divert scarce agency resources, and strain working
    relationships between the agencies. Before either agency commences or
    proceeds with an investigation, it must request clearance from the
    other agency. In the Hart-Scott-Rodino merger review process, the
    initial investigative period is limited by statute to 30 days. Each day
    that a clearance matter is unresolved is a day lost to investigation
    and enforcement. Timely clearance decisions also are important for non-
    merger matters; speed is crucial to ensuring that if there is an
    antitrust violation, it is stopped promptly so consumer harm ceases.
        An analysis of clearance delays released by the FTC on February 28,
    2002, indicates that, since the beginning of fiscal year 2000, the 136
    matters in which the agencies formally contested clearance took an
    average of three and a half weeks to resolve. In another 164 matters
    during this period, clearance took more than one week to resolve,
    although no formal clearance dispute occurred. On average, these 300
    matters--24 percent of all matters for which clearance requests were
    filed during this period--imposed delays of 3 weeks. In some instances,
    clearance disputes have delayed investigations for several months.
    Whether in merger or non-merger cases, this is wasted time that could
    have been used on investigation and enforcement.
        The Clearance Agreement addresses the problems caused by delay by
    setting forth new and improved procedures to assure that case
    assignments will be made promptly so that substantive investigations
    can begin sooner. The Agreement clearly allocates to one agency or the
    other primary responsibility for certain commodities, based on the
    predominant expertise of each agency. The FTC and ATR each has
    substantial industry-specific enforcement capabilities with respect to
    certain commodities, and thus has had primary responsibility for any
    matters arising within these industry sectors. The Agreement is an
    effort to formally acknowledge those areas in which the FTC and DOJ
    already have such expertise.
        The Agreement also assigns dedicated permanent staff to carry out
    the clearance function, adopts standardized procedures and terms, and
    includes a public commitment to shorten the time period for clearing
    matters to the agencies--assuring resolution of even the most difficult
    case within 10 days. Under the terms of the Agreement, more than 80
    percent of the 300 matters referenced above would have been resolved
    within 2 business days. Importantly, the Agreement does not place any
    limit on the length of an investigation or otherwise constrain agency
    enforcement once it begins. The Agreement also promotes accountability
    by placing clearer responsibility for one agency or the other to engage
    in ``community policing'' of their assigned industry areas. It provides
    clarity to the companies, public interest groups, and the bar, who are
    a key source of antitrust complaints and investigative leads for the
    agencies.
        The Clearance Agreement does not purport to limit the jurisdiction
    of either agency. ATR and FTC have largely co-extensive authority to
    enforce the antitrust laws. The FTC has authority to enforce the
    following antitrust laws: the Clayton Act, 15 U.S.C. Sec. Sec. 12-27,
    44 (1994); 29 U.S.C. Sec. Sec. 52-53; and the FTC Act, 15 U.S.C.
    Sec. 45 (1994). In addition to its antitrust enforcement role, the FTC
    has the authority to enforce a variety of consumer protection laws.
        ATR, in turn, has exclusive Federal Governmental authority to
    enforce the Sherman Act, 15 U.S.C. Sec. Sec. 1-2 (1994), and shares
    with the FTC the federal authority to enforce the Clayton Act. ATR also
    engages in competition advocacy before other federal agencies and has
    certain statutory obligations to provide advice to federal agencies on
    competition agencies. Both agencies also review transactions that are
    subject to notification under the Hart-Scott-Rodino Act, 15 U.S.C.
    Sec. 18a, et seq.
        The FTC and ATR enforce the antitrust laws in a largely consistent
    manner. Although the FTC may not directly enforce the Sherman Act, 15
    U.S.C. Sec. Sec. 1-2 (1994), it may proceed under Section 5 of the FTC
    Act against non-criminal conduct that violates the Sherman Act.
    Moreover, occasional attempts to expand the scope of Section 5 beyond
    actions that would otherwise violate the Sherman or Clayton Acts have
    not met with success, and there is broad consensus that the FTC and the
    Sherman and Clayton Acts are functionally coterminous with respect to
    civil antitrust enforcement. There is, however, at least one
    substantive difference in the enforcement capabilities of the
    agencies--in enforcing the Sherman Act, ATR can proceed against
    antitrust violations by criminal indictment.
        The Agreement does nothing to alter ATR's criminal enforcement
    responsibilities. Nothing in the Agreement changes the fact that ATR
    handles all criminal matters for all commodities. Likewise, the FTC
    will continue to handle all consumer protection matters for all
    commodities. In sum, given the high degree of similarity in the
    substantive standards applied by the agencies, and the fact that both
    are constrained by the jurisprudence of a single federal judiciary, the
    allocation of industry sectors is unlikely to have substantive effects
    on the outcome of enforcement actions.
             title v--juvenile justice local delinquency prevention
        Question. When we created the Title V program 10 years ago, we
    intended it to be a crime prevention program that gives localities
    significant flexibility to design ways to prevent juvenile crime.
    Studies show that every dollar spent on prevention funding yields
    direct savings of $1.40 to the law enforcement and juvenile justice
    system. Unfortunately, over the years, the amount of Title V funding
    that has been earmarked for purposes other than local crime prevention
    has grown to almost two-thirds of the appropriated amount.
        To ensure that Title V continues to be used for prevention
    programs, we can either eliminate the earmarks that do not focus on
    local prevention programs or expand the pot of money available to crime
    prevention. Please tell me how you think we should address the problem
    specifically with regard to Title V.
        Answer. Title V funds requested in fiscal year 2003 will be used
    primarily for prevention purposes. The 2003 President's budget requests
    $94.791 million for Title V funding, which represents a slight increase
    of $454,000 over the 2002 enacted level. These funds will be used to
    support three programs: the School Safety Initiative ($14.967 million),
    the Tribal Youth Program ($12.472 million), and the Title V Delinquency
    Prevention Program Incentive Grants ($62.319 million). These programs
    provide a variety of prevention services to youth and their families,
    including youth development, family strengthening, tutoring, mentoring,
    health and mental health, alcohol and substance abuse prevention.
                              state court funding
        Question. In the past, the Office of Justice Programs (OJP) has
    funded initiatives aimed at improving state court systems. One such
    recent project provided training for judges, court personnel,
    prosecutors, police agencies and attorneys. The state of Wisconsin
    court system would benefit immensely from a similar program that would
    train court interpreters. In light of the increasingly diverse
    population in Wisconsin, courts are experiencing a serious shortage for
    qualified interpreters to act as translators during court proceedings.
        What are DOJ's plans to specifically address problems like this and
    to improve the quality of justice provided in our state courts?
        Answer. Funding available under a number of OJP-administered
    programs may be used to address the need for interpreters and to
    otherwise improve the effectiveness of the state courts.
      --Several grant programs awarded by the Violence Against Women Office
            (VAWO) allow funds to be used to hire sign language and foreign
            language interpreters to assist the deaf and non-English
            speaking victims of domestic violence in court proceedings.
            These programs include the Violence on College Campuses
            Program, Legal Assistance Program and the Rural Domestic
            Violence Program. For example, a community project funded by a
            grant to the Morrow County District Attorney's Office in
            Oregon, under the Rural Domestic Violence program will include
            the hiring of certified court interpreters to assist Spanish-
            speaking victims through final case disposition. Also, services
            provided under a Violence on College Campuses program grant to
            Wake Forest University in North Carolina to assist sexual
            assault and stalking victims will include sign language and
            foreign language interpreters.
      --The Drug Courts Program Office (DCPO) provides grants to support
            drug courts that are operational in the state courts. Drug
            court protocols aim to improve the quality of justice dispensed
            to drug abusing offenders by being respectful of culture and
            language in the court and treatment delivery, while holding the
            offender accountable. The DCPO has developed training in
            cultural competence for operation and planning of drug courts,
            which they will begin delivering this year.
      --The Judicial Child Abuse Training program, administered by the
            Office of Juvenile Justice and Delinquency Prevention (OJJDP),
            supports model technical assistance and training programs to
            improve the court system's handling of child abuse and neglect
            cases. OJJDP is funding 23 model courts in 20 states and the
            District of Columbia, where judges are taking leadership roles
            in permanency planning, by finding eligible adoptive families.
            Each model court is making unique, court-specific changes to
            reduce the length of time children spend in foster care and to
            improve the timeliness and quality of judicial decision making.
            The overall goals of the project are to disseminate
            information, offer court improvement training programs and
            provide technical assistance widely at the national and state
            levels on permanency planning and on model court achievements
            for purposes of increasing the number of dependency courts that
            improve administrative practice in child abuse and neglect
            cases. Culture-specific training for court personnel may be
            funded under this program.
      --Resources available under the proposed $800 million Justice
            Assistance Grant Program, which will fund activities currently
            eligible under the Byrne Formula and the Local Law Enforcement
            Block Grant programs which it replaces, and under the $215
            million Juvenile Justice Accountability Incentive Block Grant
            program, which provides funds to states to promote greater
            accountability in the juvenile justice system, may also be used
            for activities to improve the quality of state court services.
      --The 2003 budget includes $63 million (a combination of $60 million
            from the Criminal Records Upgrade Program and $3 million from
            the National Stalker and Domestic Violence Reduction Program)
            to improve state criminal recordkeeping.
                           office of victims of crime
        Question. As you know, the Victims of Crime Act requires that the
    Department of Justice identify the victims of a federal crime and
    collect information on how to contact the victims or surviving family
    members. To be sure, a catastrophic terrorist incident stretches the
    Department's capabilities to satisfy this mandate. However, I was
    pleased that the Office of Victims of Crime (OVC) activated a toll-free
    number and call center by 4:00 p.m. on September 11 that provided
    victim information, crisis counseling, and referral assistance to those
    in need. And as I understand it, the information collected by this call
    center is being used to compile a comprehensive database that will
    assist DOJ in meeting its statutory obligations.
        But beyond satisfying legal requirements, it is very important that
    we support the victims of these terrorist acts--and I suspect this will
    be ongoing task for quite some time to come. That is why I am concerned
    with reports that OVC has significantly curtailed the operations of the
    call center--a service that received more than 80,000 calls in just the
    first 2 weeks alone following September 11. Such crisis counseling is
    often the first sort of victim assistance someone seeks, and we must
    ensure that it remains available at a level that will continue our
    support of terrorist victims and their families.
        Can you explain to me OVC's rationale for its decision to cut back
    the level of service offered by the call center? If not, I trust you
    will review the decision made by OVC and offer us an explanation.
        Answer. The OVC has decided to modify the level of call center
    services because states are currently providing services that are
    reducing the need for the call center. However, the call center is
    still providing information and referrals when necessary.
        The call volume was extremely high during the first 2 weeks
    following the September 11 terrorist attacks, and OVC continued to
    support the victims and their families from September 11 until November
    5, 2001. At that time, in consultations with Family Enterprise, Inc.
    (FEI) Behavioral Health (contractor operating the call center), OVC
    made the decision to cut back on the number of counselors and hours of
    operation based on call volume. The call volume ranged from an average
    daily high of 4,166 calls the week of September 11; to 630 calls from
    September 16 to 22; to 345 calls from September 23 to 29; to 212 calls
    from September 29 to October 6; to an average of 61 calls per day in
    November; to 35 calls per day in December; and to 25 calls per day in
    January 2002.
        Staffing at the call center has been cut back due to the decrease
    in the number of calls, however, the services have not changed. The
    call center staffing levels averaged 226 during the first week; 62 in
    the second week; 48 in the third week; and 45 in the fourth week. As
    the call volume began to lessen, adjustments in staffing were made. At
    the end of October, 2001, according to FEI, the call center was
    averaging 150 calls per day. They were using 8 counselors (4 per shift)
    to handle the calls, operating from 8:00 a.m. until midnight eastern
    time, Monday through Saturday. FEI indicated that there was little call
    volume after 9:00 p.m. and on weekends. Consequently, staff hours were
    modified accordingly. On weekends, FEI staff checked voice mail on an
    hourly basis and returned calls as necessary. The incoming calls were
    for financial assistance, housing, travel and referrals for crisis
    counseling.
        From September 11 to 16, the cost of staffing alone at the call
    center was approximately $559,100. From September 11 to 23, the costs
    of rent, computer leasing, etc., was $482,059. Thus, in less than 2
    weeks time, OVC expended more than $1,000,000 in support of victim
    families through the call center, operating in full activation/crisis
    mode. From September 23 to October 6, call center charges were $408,332
    and from October 7 to November 9, costs totaled $420,465. Again, the
    call center continued in full operational status to ensure that all
    victims and their family members received the maximum assistance that
    could be provided through the call center.
        The call center continues to provide telephone-based crisis support
    to victims and victim families and assessment/referral of multiple
    needs, including counseling; assessment and referral for housing/
    financial resources; travel related requests; other information/
    referral; and the Federal Bureau of Investigation (FBI) leads, which
    are passed to the FBI. The call center also often receives calls not
    related to September 11.
        OVC is reimbursing states to provide services, such as individual
    counseling, which provide a more personal and frequent contact for
    victims and their families. OVC awarded grants from the Antiterrorism
    Emergency Reserve in September, 2001 to New York, Pennsylvania, and
    Virginia. Pennsylvania used a portion of its funds to create a toll-
    free number. Funds provided through the Department of Defense
    Appropriations Act for 2002 are supporting counseling programs in
    affected states. Pennsylvania is requesting use of these funds to
    continue its toll-free number. In addition:
      --Virginia created a toll-free number on September 11 using its own
            funds.
      --New York created a special number for this disaster and continued
            to use other numbers already being advertised through the
            media.
      --New Jersey created a crisis line.
      --California used the toll-free number it already had in place for
            the crime victim compensation program.
      --Massachusetts advertised its Massachusetts Citizens Line as its
            toll-free number.
      --Connecticut has a toll-free number for crime victims, which was
            used for this purpose.
      --Victims of Crime Act formula grants funds are not being used for
            toll-free numbers. Most states used lines that were already in
            place and funded with state dollars.
                                     ______

                  Questions Submitted by Senator Patty Murray
                       law enforcement in indian country
        Question. Attorney General Ashcroft, last summer Senator Feingold
    and I initiated a dear colleague letter inviting you to visit Indian
    Country to focus on law enforcement challenges facing Native Americans.
    Thank you for your response agreeing to visit, or to send a designee. I
    realize you recently visited a tribe in New Mexico, but I hope you will
    still strongly consider visiting reservations in Washington State and
    Wisconsin.
        I must commend you for holding the U.S. Border Patrol-Native
    American Border Security Conference in January. I know of at least two
    Washington State tribes in attendance, the Lummis and the Nooksacks. I
    agree we need to foster better coordination between tribes and the
    Federal Government to protect our borders effectively. As we improve
    homeland security and fight terrorism, tribes can make crucial
    contributions to these effort. I am glad the Department of Justice
    recognizes this.
        But at the same time, I am concerned by some of the cuts to tribal
    law enforcement programs proposed in the fiscal year 2003 budget.
        Given the disproportionately high incidence of violent crime in
    Indian Country, why do you propose to cut the tribal law enforcement
    program in the Community Oriented Policing Services (COPS) program by
    $5 million, from $35 million last year to $30 million next year?
        Answer. Since September 11, 2001, the Department has reprioritized
    and shifted funding to address counter terrorism efforts. Because the
    Department understands the importance of continued funding for Indian
    Country initiatives, these programs were largely exempted from the
    proposed funding shifts. The $30 million request will fund an estimated
    114 grants that will enable many tribal law enforcement agencies to
    hire additional officers or acquire critical law enforcement equipment.
        Question. Why do you propose to cut funding for correctional
    facilities on Indian lands altogether, from $35.2 million last year to
    $0? The modest increase in the Bureau of Indian Affairs' (BIA) budget
    from correctional facilities, $3 million, hardly makes up for this
    large cut.
        Answer. The Indian Country Tribal Prison Construction Program was
    intended to alleviate the problems associated with the lack of
    institutional bed space and overcrowding resulting from large increases
    in the prison population. However, it is increasingly difficult to
    justify funding the program in light of the fact that more bed space
    has come on line while at the same time the rate of increase in the
    total number of prisoners has remained constant. According to Jails in
    Indian Country, 2000, a report by the Bureau of Justice Statistics, the
    69 Indian Country facilities are presently operating at an average 86
    percent capacity. While some individual facilities still have problems,
    the same report indicates that 17 facilities operating in Indian
    Country are expecting to increase capacity by 1,108 beds by July 2003.
    Given that Indian country facilities held 1,775 inmates at midyear
    2000, up from 1,621 at midyear 1999, there does not appear to be a
    short-term need for more beds at these facilities. In view of changing
    priorities and the emphasis on supporting counterterrorism activities,
    OJP is not requesting funds for this program in 2003.
        Question. And how do you justify flat-lining many of the other law
    enforcement programs crucial to reducing crimes against Native
    Americans, such as the Tribal Courts Grant Program ($8 million), Tribal
    Youth Initiatives ($12 million) and the Indian Alcohol and Substance
    Abuse Diversion Program ($5 million)?
        Answer. The war on terrorism has compelled the Department of
    Justice to re-examine priorities, and funding increases proposed are
    largely targeted to counterterrorism activities. As a result, many
    state and local assistance programs were either reduced or maintained
    at the fiscal year 2002 level. Because the Department understands the
    importance of continued funding for Indian Country initiatives, most of
    these programs were maintained at the fiscal year 2002 level.
                                     ______

                Questions Submitted by Senator Pete V. Domenici
                    radiation exposure compensation program
        Question. The Department of Justice estimates that $111.2 million
    in Radiation Exposure Compensation Act (RECA) claims were paid in 2001
    with regular appropriations ($10.8 million) and the ``such sums as may
    be necessary'' language in the fiscal year 2001 Supplemental
    Appropriations Act. An estimated 3,828 claims were filed; 1,571 were
    approved; 57 were denied; and 727 were pending at the beginning of
    fiscal year 2001.
        Attorney General Ashcroft, I want to congratulate the Department of
    Justice for its hard work to ensure that claimants under RECA are
    receiving claims payments instead of IOUs as was the case a year ago. I
    commend the Department for aggressively implementing language I
    sponsored in the fiscal year 2001 Supplemental Appropriations Bill that
    provided ``such sums as may be necessary'' to pay RECA claims approved
    by September 30, 2001, to compensate those who sustained injury as a
    result of the United States open-air nuclear testing and uranium mining
    activities in the 1950's through 1970's.
        Will you please tell the Subcommittee how many claims were
    approved, and how many IOUs were paid, under the language included in
    the Supplemental Appropriations bill for 2001?
        Answer. The fiscal year 2001 Supplemental Appropriations Bill
    provided a total of $100,650,000 to pay meritorious claims. Of that
    amount, $30,525,000 was approved to pay 436 pending IOUs and
    $70,125,000 was approved to pay 1,177 claims adjudicated between July
    24, 2001 and September 30, 2001.
        Question. Would you please provide for the record a breakdown of
    the number of claims paid by state and by category of beneficiary?
        Answer. The following table lists the number of claims funded by
    the 2001 Supplemental, by state and by type of claim.

    ----------------------------------------------------------------------------------------------------------------
                                                 Onsite     Uranium   Uranium      Ore        Total
                                  Downwinder  Participant    Miner    Miller   Transporter   Claims    Total Awards
    ----------------------------------------------------------------------------------------------------------------
    Alabama.....................          1   ...........         2  ........  ...........         3        $250,000
    Alaska......................          2   ...........         1  ........  ...........         3        $200,000
    Arizona.....................        439            4         19         1  ...........       463     $24,250,000
    Arkansas....................          3   ...........         2  ........  ...........         5        $350,000
    California..................         27            6          7         1  ...........        41      $2,600,000
    Colorado....................         15   ...........       115        13           2        145     $13,750,000
    Florida.....................          2            4          2  ........  ...........         8        $600,000
    Hawaii......................          1            2   ........  ........  ...........         3        $200,000
    Idaho.......................         12            1          4  ........  ...........        17      $1,075,000
    Illinois....................          1            1          2  ........  ...........         4        $325,000
    Indiana.....................  ..........  ...........         2  ........  ...........         2        $200,000
    Kansas......................          3            2          2  ........  ...........         7        $500,000
    Louisiana...................  ..........           2   ........  ........  ...........         2        $150,000
    Maryland....................          2            2   ........  ........  ...........         4        $250,000
    Michigan....................  ..........           2   ........  ........  ...........         2        $150,000
    Minnesota                             1            2   ........         1  ...........         4        $300,000
    Mississippi.................  ..........  ...........         1  ........  ...........         1        $100,000
    Missouri....................          2            1          1         1  ...........         5        $375,000
    Montana.....................          2   ...........  ........  ........  ...........         2        $100,000
    Nebraska....................          1            1          1  ........  ...........         3        $225,000
    Nevada......................        101           26          9         1  ...........       137      $8,000,000
    New Hampshire...............  ..........  ...........         1  ........  ...........         1        $100,000
    New Mexico..................          5            1         78        14           1         99      $9,625,000
    New York....................  ..........           4   ........  ........  ...........         4        $300,000
    North Carolina..............  ..........           1          2  ........  ...........         3        $275,000
    Ohio........................          1            1          1         2  ...........         5        $425,000
    Oklahoma....................          3   ...........         5  ........  ...........         8        $650,000
    Oregon......................          9            2          2  ........  ...........        13        $800,000
    Pennsylvania................          1            2   ........  ........  ...........         3        $200,000
    South Carolina..............  ..........           1   ........  ........  ...........         1         $75,000
    South Dakota................  ..........           1   ........  ........  ...........         1         $75,000
    Tennessee...................          1   ...........         1  ........  ...........         2        $150,000
    Texas.......................         10            1          2  ........  ...........        13        $775,000
    Utah........................        522            7         39         8           1        577     $31,425,000
    Virginia....................          1   ...........  ........  ........  ...........         1         $50,000
    Washington..................          2            2          4  ........  ...........         8        $650,000
    West Virginia...............  ..........  ...........         4  ........  ...........         4        $400,000
    Wisconsin                     ..........  ...........         1  ........  ...........         1        $100,000
    Wyoming.....................          3            1          2         1  ...........         7        $525,000
                                 -----------------------------------------------------------------------------------
          Subtotal..............      1,173           80        312        43           4      1,612    $100,550,000
    Canada......................  ..........  ...........  ........         1  ...........         1        $100,000
                                 -----------------------------------------------------------------------------------
          TOTAL.................      1,173           80        312        44           4      1,613    $100,650,000
    ----------------------------------------------------------------------------------------------------------------

        Question. Have all pending IOUs been paid?
        Answer. There are currently five claims pending where individuals
    received IOU letters from the Radiation Program. Two of these claims
    are pending because the claimants are pursuing an award under the
    Energy Employees Occupational Illness Compensation Program (EEOICPA).
    As you know, acceptance of compensation under that program precludes
    recovery for onsite participants and downwinders under the Radiation
    Exposure Compensation Act (RECA). A third claim remains pending while
    the claimant considers the loss of benefits from the Department of
    Veterans Affairs should the RECA award be accepted. Finally, the last
    two claims are pending because the Radiation Program is awaiting
    receipt of acceptance forms from attorneys representing the claimants.
    With the exception of those five claims, all IOUs have been paid.
        Question. I also congratulate the President and the Department for
    proposing in the 2002 budget to make payments for claims under RECA an
    entitlement. Congress did enact as part of the Defense Authorization
    bill, my amendment to make the RECA program a mandatory program. The
    Department has $172 million to pay claims in 2002 and $143 million to
    pay claims in 2003, and additional amounts in future years.
        Will you please give the Subcommittee a status report on the
    payment of RECA claims. How many claims has the Department approved and
    how much has been spent out of the Trust Fund to pay these claims since
    the inception of RECA?
        Answer. Through March 15, 2002, a total of 5,981 claims have been
    approved, with a value of $413,597,489.
        Question. What is the average amount of the claims approved, the
    number of claims denied, and the general reason for denial of these
    claims?
        Answer. RECA award amounts are fixed by statute. Uranium workers
    (uranium miners, mill workers, ore transporters) are eligible for a
    $100,000 award; onsite participants are eligible for a $75,000 award;
    and downwinders are eligible for a $50,000 award. Due to the
    predominance of downwinder approvals, the overall average of awards is
    $69,512 over the life of the Program.
        Through March 15, 2002, the RECA Program has denied 3,906 claims.
    Claims are denied if one or more of the eligibility criteria are not
    satisfied. For example, uranium worker claims are typically denied in
    cases where the documentation does not establish that the individual
    contracted an illness specified under the law. Similarly, downwinder
    and onsite participant claims are most frequently denied where the
    records fail to establish a covered disease or the individual was
    either not present in the affected ``downwind'' area or did not
    participate in atmospheric weapons testing.
        Question. For the record, would you please provide the Subcommittee
    with a breakdown of the types of claims approved or disapproved
    (childhood leukemia, other downwinder, onsite participants, or uranium
    miners), the number of claims currently pending, and the amounts
    disbursed by type of claim paid?
        Answer. The following table lists, by category, the total value of
    the awards approved by the Radiation Exposure Compensation Program, as
    well as the number of claims received, approved, denied and pending
    through March 15, 2002.

                           RADIATION EXPOSURE COMPENSATION PROGRAM--APRIL 1992-MARCH 15, 2002
    ----------------------------------------------------------------------------------------------------------------
                                         Value of         Claims
                                          Awards         Received        Approved         Denied          Pending
    ----------------------------------------------------------------------------------------------------------------
    Downwinder......................    $174,120,000           6,768           3,483           1,432           1,853
    Onsite Participant..............     $23,685,989           1,469             334             838             297
    Uranium Miner...................    $207,591,500           4,335           2,082           1,631             622
    Uranium Miller..................      $7,100,000             229              71               4             154
    Ore Transporter.................      $1,100,000              61              11               1              49
                                     -------------------------------------------------------------------------------
          TOTAL.....................    $413,597,489          12,862           5,981           3,906           2,975
    ----------------------------------------------------------------------------------------------------------------

        Question. For my use, would you please provide this same
    information specifically for claims from New Mexico, including the
    total claims received, the total claims approved, the total claims
    denied and the total claims pending?
        Answer. With respect to claims for which the primary claimant
    resides in New Mexico, the Department has approved 572 claims, with a
    total value of $55,977,799 through March 15, 2002. The following table
    lists, by category, the value of awards and the number of claims
    received, approved, denied, and pending.

                     RADIATION EXPOSURE COMPENSATION PROGRAM: NEW MEXICO--APRIL 1992-MARCH 15, 2002
    ----------------------------------------------------------------------------------------------------------------
                                         Value of         Claims
                                          Awards         Received        Approved         Denied          Pending
    ----------------------------------------------------------------------------------------------------------------
    Downwinder......................        $800,000              64              16              18              30
    Onsite Participant..............        $843,299              49              12              26              11
    Uranium Miner...................     $52,234,500           1,395             523             660             212
    Uranium Miller..................      $1,900,000              62              19               1              42
    Ore Transporter.................        $200,000              10               2               0               8
                                     -------------------------------------------------------------------------------
          TOTAL.....................     $55,977,799           1,580             572             705             303
    ----------------------------------------------------------------------------------------------------------------

        Question. How many claims are projected to be filed and processed
    under current law in the upcoming year?
        Answer. For fiscal year 2003, we presently estimate that 2,225
    claims will be filed and 2,620 claims will be processed. It is
    impossible to precisely estimate the amount of receipts for this year
    because the data is skewed as a result of the mail suspension. The
    following chart displays the number of claims filed, by month, for
    fiscal year 2001 and the first several months of fiscal year 2002.

            RECA CLAIMS RECEIVED BY MONTH--FISCAL YEARS 2001 AND 2002
    ------------------------------------------------------------------------
                                                              Fiscal year--
                                                           -----------------
                                                              2001     2002
    ------------------------------------------------------------------------
    October...............................................      188      249
    November..............................................      504   \1\ 21
    December..............................................      214   \1\ 25
    January...............................................      200  \1\ 175
    February..............................................      233      598
    March.................................................      371  \2\ 156
    April.................................................      315  .......
    May...................................................      438  .......
    June..................................................      349  .......
    July..................................................      358  .......
    August................................................      345  .......
    September.............................................      307  .......
                                                           -----------------
          Total...........................................    3,822    1,224
    ------------------------------------------------------------------------
    \1\ Reflects mail suspension during October 2001-January 2002.
    \2\ As of March 18.

        Question. Does the Administration have any long-range estimates as
    to the number of claims that might still be filed under the Radiation
    Exposure Compensation Act under current law and regulations?
        Answer. In May 2000, the Congressional Budget Office (CBO) roughly
    estimated that about 15,600 claims might be filed under Public Law 106-
    245, the Radiation Exposure Compensation Act Amendments of 2000. Since
    enactment in July 2000, nearly 5,500 claims have been filed. Using
    CBO's estimate, it is possible that an additional 10,100 claims might
    be filed over the lifetime of the current law. However, these long-
    range estimates only approximately quantify the future of the Radiation
    Exposure Compensation Program. As the Department continues to educate
    the affected communities of the availability of compensation under the
    amended Act, it is possible that a larger percentage of the eligible
    claimant population could apply for compensation, thereby exceeding the
    current estimate.
                            first responder training
        Question. Attorney General Ashcroft, I support President Bush and
    the Administration 100 percent in their efforts regarding the war on
    terrorism. There is nothing more important and no higher priority for
    this country at this time in history.
        This is the first budget that incorporates homeland security into
    ongoing federal programs. As a part of that effort, the Administration
    proposes to shift the responsibility for first responder training from
    the Department of Justice to the Federal Emergency Management Agency
    (FEMA), and to significantly increase funding for these activities. I
    have some concerns about this proposal that I would like to raise with
    you today.
        Will the entire activity of first responder training be transferred
    to FEMA, or will the Department of Justice retain some aspects of this
    critically important function?
        Answer. The President's fiscal year 2003 budget proposes to
    transfer all of the training programs administered by the Office for
    Domestic Preparedness to FEMA. These include the integrated Nunn-Lugar
    training program, the Center for Domestic Preparedness at Fort
    McLellan, the Domestic Preparedness Consortium, TOPOFF, and similar
    situational training exercises. It will not affect terrorism training
    for local law enforcement provided by the FBI.
        Question. What programs and activities and associated funding and
    staff are proposed to be transferred from the Department of Justice to
    FEMA?
        Answer. The fiscal year 2003 President's budget proposes to
    transfer all the Office for Domestic Preparedness (ODP) programs,
    activities, and associated funding and staff related to planning,
    equipment, training, technical assistance, and exercises. This proposed
    transfer includes 59 current positions. The National Institute of
    Justice's (NIJ) counterterrorism research and development program will
    remain part of the Office of Justice Programs, to be funded directly by
    the NIJ instead of through ODP.
        Question. Will the shift of first responder training
    responsibilities require legislative authorization by the Congress? If
    not, what are the appropriate legal authorities the Administration
    cites as the basis for proposing and proceeding with this
    reorganization of national domestic preparedness and first responder
    training?
        Answer. FEMA is authorized currently to assume the Office of
    Domestic Preparedness' (ODP) preparedness activities. To help states
    and localities prepare for disasters, natural or man made, FEMA may
    carry out exercises, provide grants, and offer training and technical
    assistance. FEMA derives its authority from its primary disaster relief
    and assistance statute, the Stafford Act, as well as the Federal Fire
    Prevention and Control Act.
        However, to eliminate any ambiguity the Administration included
    language in the 2003 budget amendments and errata (submitted March 14)
    to clarify that FEMA will honor ODP's obligations to its contractors,
    local partners, grantees, and staff:

        ``Provided further, That, the functions authorized under section
    819 of the Antiterrorism and Effective Death Penalty Act of 1996 and
    section 1014 of Public Law 107-56, as well as such unexpended balances
    of appropriations, full-time equivalent personnel, property, and
    records as have been assigned to the Department of Justice, shall be
    transferred to the Federal Emergency Management Agency: Provided
    further, That such transfers are made pursuant to 31 U.S.C. 1531''

        Question. In light of the supposition that the Department of
    Justice has been responsible for the great majority of first responder
    training for so long, in your opinion Mr. Attorney General, do you
    think that too much of the first responder training authority has been
    relinquished by DOJ? To put it another way, how wise would you
    characterize the decision to transfer what could be considered the most
    vital aspect of Homeland Security away from the agency with the most
    experience in handling that vital function?
        Answer. In fiscal year 2003, the Administration is requesting that
    funding for ODP's counterterrorism programs be transferred to FEMA. In
    May 2001, the President stated his belief that the numerous federal
    programs offering training and assistance to state and local
    governments be ``seamlessly integrated, harmonious and comprehensive to
    maximize their effectiveness.'' This transfer supports the
    Administration's coordination and streamlining of all terrorism-related
    activities to provide greater program cohesion and efficiency. The
    Administration also believes that FEMA, through its newly created
    Office of National Preparedness (ONP), is the appropriate federal
    agency to be the single point of contact to facilitate and oversee the
    President's fiscal year 2003 $3.5 billion First Responder Initiative
    and to implement national efforts to build and expand on first
    responder training capabilities. The transfer of ODP's first responder
    training programs to FEMA will achieve greater integration,
    coordination, and effectiveness in the administration of the Federal
    Government's counterterrorism training programs.
        Question. My understanding is that the President proposed the
    transfer of first responder training from the Department of Justice to
    FEMA last May. At that time, the program totaled about $30 million for
    the National Domestic Preparedness Consortium (NDPC) and additional
    amounts for equipment and related expenses. Following the September
    11th terrorist attacks, the NDPC grew to a total of $95.7 million plus
    another $16 million for training grants and support. In total, the
    Administration plans to transfer $234.5 million in first responder
    training programs form the Department of Justice, and turn these
    programs into a $3.5 billion first responder training program in FEMA
    in fiscal year 2003.
        I will ask this same question of FEMA--would the Department of
    Justice have the capability of implementing a dramatically expanded
    first responder training program in fiscal year 2003?
        Answer. The Department of Justice could use the National Domestic
    Preparedness Consortium and its other training partners to facilitate
    some expansion in training, but dramatic growth would be constrained by
    the capacity of existing facilities and staff to deliver effective
    training. It is our understanding that FEMA will continue to support
    the Consortium in 2003, while also providing states with formula grants
    for training and examining new methods of training delivery.
        Question. Assuming that a comprehensive first responder training
    program is developed, it is clear that responding to potential attacks
    using weapons of mass destruction--chemical and biological agents, and
    even nuclear devices--requires very specialized training. In your
    opinion, are there the necessary trainers available throughout the
    country to carry out a significant first responder training program,
    specifically one that is comprehensive and coordinated to provide a
    seamless response to a disastrous attack?
        Answer. There are enough qualified trainers to meet the current
    demand for first responder weapons of mass destruction training. While
    the requested increases in training at all levels of government may
    strain this capacity in the short term, there is sufficient untapped
    expertise to carry out a larger program in the near future.
                              mental health courts
        Question. Attorney General Ashcroft, as you are aware, the fiscal
    year 2002 Commerce, Justice, State, and Judiciary Appropriations Bill
    contained $4 million for Mental Health Courts. The funding is the
    result of the America's Law Enforcement and Mental Health Project Act,
    enacted into law two years ago. The Act authorized the creation of
    Mental Health Courts with separate dockets to handle cases involving
    individuals with a mental illness.
        The specific thrust of Mental Health Courts is simply to provide an
    individual with a mental illness and charged with a misdemeanor or
    nonviolent offense the option of out-patient or in-patient mental
    health treatment as an alternative to incarceration.
        Finally, the Department of Justice estimates that sixteen percent
    of all inmates in local and state jails suffer from a mental illness
    and the American Jail Association estimates that as many as 700,000
    persons suffering from a mental illness are jailed each year.
        Do you believe Mental Health Courts can alleviate prison
    overcrowding and create greater judicial economy within our court
    systems?
        Answer. Realistically, we do not expect that mental health courts
    will alleviate prison overcrowding. However, understanding the enormous
    cost that these individuals bring to law enforcement, judicial, and
    correctional agencies when these offenders are not treated, many sites
    are looking to the local courts to try this new initiative. Many
    mentally ill/mentally impaired individuals commit crimes that require
    some type of incarceration. Further, they often are not deterred or
    coerced from further criminal activity by a series of less-punitive
    sanctions or alternatives; many simply will not comply with a court-
    ordered treatment plan and may have to be returned to traditional
    processing that ends in some incarceration sentence. However, by more
    appropriate triage and response to these individuals early in their
    processing, mental health courts and the partnerships developed under
    this setting will provide this population with the best possible
    combination of accountability and treatment. In addition, these
    individuals may learn how not to become involved in criminal behaviors
    that will bring them back into the system later.
        By routing these individuals away from the traditional criminal
    court and into mental health courts, state and local governments will
    be meeting the objectives of the Law Enforcement and Mental Health
    Project Act (Public Law 106-515) and will be addressing the special
    needs of the mentally ill/mentally impaired, who have long been an
    overlooked population in the criminal justice system. The extent to
    which this is achievable on a national basis must also depend on how
    mentally ill defendants are treated in state law and state judicial
    systems.
        Jurisdictions with mental health courts should be able to make a
    smaller investment of scarce resources in the court and treatment
    process, rather than a larger investment in jail and prison systems,
    and may thus see some overall financial savings.
        Question. What steps are being taken by DOJ to distribute the $4
    million appropriated to implement America's Law Enforcement and Mental
    Health Project Act?
        Answer. The Bureau of Justice Assistance (BJA) will be guided in
    its implementation of this program by the objectives set forth in the
    Act. To date, BJA has had several meetings with the Substance Abuse and
    Mental Health Administration (SAMHSA) and the Department of Health and
    Human Services to discuss coordination of the implementation of this $4
    million appropriation. These discussions have explored potential
    collaboration on a mental health jail diversion initiative, although no
    final agreement has been reached. BJA has also had conversations with a
    number of advocacy and special interest groups representing courts,
    court administrators, consumer advocates, prosecutors, defenders, law
    schools, and other institutions, such as the Bazelon Center and the
    Council for State Governments.
        BJA convened a 3-day meeting beginning March 18, 2002 to receive
    input from the field. A final competitive solicitation for operational
    mental health court grants, which will be developed within the
    parameters of the Act, will be issued. This forum will also assist BJA
    in crafting a technical assistance strategy.
        Question. What plans does DOJ have to provide assistance to court
    systems seeking to develop and implement a Mental Health Court and does
    DOJ plan to offer continued technical assistance after the
    implementation of a Mental Health Court?
        Answer. BJA recognizes the need for technical assistance not only
    among mental health court grantees, but also among those sites that
    will implement a court without the support of direct federal funding.
    BJA anticipates a substantial investment of funds available under this
    appropriation for technical assistance and information dissemination to
    assist localities in their efforts to plan, implement, operate, and
    assess mental health court initiatives.
      black tar heroin and methamphetamine trafficking federal bureau of
       investigation (fbi) and drug enforcement and administration (dea)
        Question. This Subcommittee has been very helpful over the past 3
    years in tackling an issue of great concern to me. That issue is the
    serious ``black tar'' heroin problem that has plagued several northern
    New Mexico counties.
        Both the FBI and DEA have cooperated with the state and local law
    enforcement officials in New Mexico to try to break the serious cycle
    of black tar heroin trafficking and use. Several major drug busts have
    been implemented in this area of New Mexico.
        Would you please give the Subcommittee the Department's assessment
    of the progress these joint law enforcement operations in breaking the
    black tar heroin rings in northern New Mexico?
        Answer. Traditionally, Northern New Mexico's primary illegal drug
    threat has been the transshipment and distribution of cocaine and black
    tar heroin. Since 1999, DEA and FBI, in cooperation with state and
    local law enforcement officials, have had three successful joint law
    enforcement operations targeting heroin trafficking organizations in
    northern New Mexico. The first two operations in 1999 and in 2000
    targeted Nayarit Mexican heroin traffickers who were distributing uncut
    black tar heroin with purity levels sometimes exceeding 70 percent.
    This high purity level led to a dramatic increase in heroin overdose
    deaths in Rio Arriba and Santa Fe counties. The 1999 investigation
    resulted in 32 federal arrests and 20 state arrests. The 2000
    investigation resulted in 13 federal arrests, mostly in New Mexico.
    Efforts in 2001 focused on finalizing the prior years' investigations
    and ensuring that the law enforcement operations had dismantled the
    Nayarit Mexican Trafficking Organizations heroin trafficking network in
    northern New Mexico. Law enforcement efforts were evidenced by a slight
    decline in the number of overdose death rates in both Rio Arriba and
    Santa Fe counties in 2000.

    ------------------------------------------------------------------------
                                            1999 Drug          2000 Drug
     As Reported by the New Mexico OMI   Overdose Related   Overdose Related
                                              Deaths             Deaths
    ------------------------------------------------------------------------
    Santa Fe County...................                 15                 13
    Rio Arriba County.................                 46                 39
    ------------------------------------------------------------------------

        During June 2001, law enforcement officials in New Mexico jointly
    determined that another multi-agency law enforcement operation
    targeting heroin traffickers was necessary in northern New Mexico. DEA
    deployed the El Paso Field Division Mobile Enforcement Team (MET) to
    Rio Arriba and Santa Fe counties in October of 2001. In conjunction
    with the Albuquerque DEA Office, the New Mexico Department of Public
    Safety, and the Bureau of Justice Assistance (BJA)--High Intensity Drug
    Trafficking Area (HIDTA) Region III Narcotics Task Force, the MET has
    identified approximately 27 targets for federal prosecution and another
    28 targets for state prosecution. Both the United States Attorney's
    Office and the First Judicial District Attorney's Office have provided
    prosecutorial oversight since this investigation started. Intelligence
    gathered during this investigation has reinforced two major issues of
    concern for law enforcement entities working in northern New Mexico:
      --Unlike the Nayarit heroin traffickers, current heroin traffickers
            in Rio Arriba and Santa Fe counties seldom traffic only heroin.
            Most often, these dealers traffic both heroin and cocaine, and
            occasionally methamphetamine.
      --The New Mexico Office of the Medical Investigator (OMI) has
            consistently reported that very few overdose deaths in northern
            New Mexico are strictly heroin overdose. In almost every
            overdose death, the OMI reports a mixture of multiple narcotics
            in the victim's toxicology. These substances include heroin,
            alcohol, cocaine, methadone, prescription drugs, and other
            unknown substances.
      --The use of narcotics is a significant issue in northern New Mexico.
            Two facts that support this concern are also evidenced in the
            New Mexico OMI reports:
        --Nearly 50 percent of overdose death victims are in the 30-39 age
                range, another 25 percent are 50 years of age or older.
                These age ranges indicate long-term drug users and addicts
                as opposed to youthful experimenters; and
        --Over 80 percent of overdose death victims die in their own homes
                or the home of family member, indicating a tolerance of
                drug use among family and peers.
          While law enforcement efforts in northern New Mexico are
            effective and successful, law enforcement alone is not the
            answer to this problem. Consequently, following the conclusion
            of the current law enforcement operation in northern New
            Mexico, DEA will send the El Paso Field Division and the
            Albuquerque District Office Demand Reduction Coordinators to
            northern New Mexico to provide training and information to area
            residents. Additionally, forfeiture proceedings against real
            property seized during the 1999 law enforcement operation have
            recently been completed. The United States Attorney's Office
            and DEA have agreed that the most accessible and suitable of
            the two properties seized will be returned to the northern New
            Mexico community. Several groups have expressed an interest in
            using the facility for a community outreach and drug education
            center. Meanwhile, law enforcement efforts will continue, and
            DEA will further explore investigative techniques that will be
            effective in this area.
        Question. An equally serious problem is methamphetamine trafficking
    and usage. I believe both the FBI and DEA have encountered this illegal
    activity in its law enforcement activities in New Mexico, including
    northern New Mexico.
        Would you please give the Subcommittee your assessment of the
    effect these joint law enforcement operations in northern New Mexico
    have had on the methamphetamine trafficking in the area?
        Answer. The methamphetamine trafficking problem throughout the
    state of New Mexico is two-fold:
      --New Mexico's remote and mountainous landscape often provides safe
            haven to clandestine methamphetamine laboratory operators
            throughout the state. During the late 1980's and early 1990's,
            these clandestine laboratories decreased dramatically in
            response to precursor control laws which seriously restricted
            the availability of essential chemicals needed to manufacture
            methamphetamine. However, methamphetamine manufacturers (also
            known as ``cooks'') have continually updated and refined
            manufacturing procedures to circumvent precursor control laws.
          The late 1990's saw the number of clandestine manufacturing
            laboratory seizures skyrocket throughout the United States.
            While New Mexico has not experienced this problem to the extent
            that some Midwestern states have, these clandestine
            laboratories have presented a new and costly challenge. During
            the first quarter of fiscal year 2002, DEA offices in
            Albuquerque and Las Cruces, New Mexico have seized 23
            clandestine methamphetamine laboratories throughout the state.
            These 23 labs represent only the clandestine laboratories to
            which DEA agents have responded and do not include numerous
            ``chemical clean-ups'' in which state and local law enforcement
            authorities have seized necessary precursor chemicals even when
            the laboratory was not operational. The majority of these
            laboratories are small individual operations, producing
            personal use amounts up to an ounce or two of methamphetamine
            at a time. A total of 85 clandestine laboratories have been
            seized in New Mexico since October 1, 2001. However, only 6 of
            the laboratories were capable of producing multi-ounce
            quantities of methamphetamine.
          Despite the size of these operations, responding to these
            laboratories requires an excessive amount of agent hours and
            resources. On average, when DEA responds to a clandestine
            methamphetamine laboratory, the team consists of five special
            agents and a supervisory special agent. The agents must have
            specialized training and be accompanied by a ``Site Safety
            Officer'' who is trained to supervise the health and
            environmental issues that must be considered when disposing of
            flammable, explosive, and toxic chemicals and waste products.
            The average clean-up cost, for even a small laboratory in New
            Mexico is between $6,000 and $15,000. In fiscal year 2002, DEA
            has investigated and seized one clandestine laboratory in Santa
            Fe County, two clandestine laboratories in San Juan County, and
            one clandestine laboratory in Cibola County in northern New
            Mexico. The largest areas for the seizure of clandestine
            laboratories in northern New Mexico are in Bernalillo County,
            primarily in the east mountain area, and in Valencia County,
            the Los Lunas/Meadow Lakes area.
          Clandestine methamphetamine laboratories are an ongoing law
            enforcement issue throughout the United States. While law
            enforcement entities throughout New Mexico, including DEA,
            continue conducting clandestine manufacturing investigations
            successfully, clandestine manufacturing will be deterred.
            However, while criminal chemists continue to develop and
            improve their ability to circumvent new laws and regulations,
            clandestine manufacturing will not be eliminated.
      --The second area of methamphetamine trafficking that affects New
            Mexico is the distribution and transshipment of Mexican
            produced methamphetamine in and through the state. During the
            early 1990's, when the first chemical precursor control laws
            were having a serious impact on the domestic clandestine
            manufacture of methamphetamine, Mexican polydrug trafficking
            organizations seized the opportunity and began large scale
            production of methamphetamine in Mexican-based laboratories.
            These Mexican labs are capable of producing multi-kilogram
            quantities of methamphetamine that are smuggled across the
            international border in the same manner as other illegal drugs.
            New Mexico highways provide a ready corridor for transporting
            methamphetamine into the state for distribution and
            transshipment through New Mexico to eastern markets. Recent
            investigations have shown that large quantities of
            methamphetamine in New Mexico are distributed primarily in the
            areas of Albuquerque and Farmington.
          An ongoing Albuquerque investigation has uncovered a large
            Mexican-based organization that routinely distributes multi-
            kilogram quantities of methamphetamine in the Albuquerque area.
            The largest seizure in this investigation has been 25 pounds.
            The most recent cooperative methamphetamine investigation in
            the Farmington area resulted in the delivery of 7 kilograms of
            methamphetamine to an undercover agent. Recent interdiction
            seizures include a highway interdiction seizure of
            approximately 2 kilograms of methamphetamine destined for the
            Birmingham, Alabama, and a kilogram of methamphetamine
            interdicted from a Greyhound Bus passenger en route to Kansas
            City, Missouri. Intelligence information obtained from these
            investigations indicate that Mexican methamphetamine destined
            for New Mexico, routinely crosses the United States-Mexican
            Border, or is manufactured by Mexican-based trafficking
            organizations within California and sent from areas such as Los
            Angeles and/or Phoenix into or through New Mexico. Many of
            these trafficking organizations have ties within the Mexican
            state of Michoacan.
          On March 31, 2001, the FBI's Albuquerque Division, Gallup
            Resident Agency, and the New Mexico Region II Narcotics Task
            Force initiated an investigation into the seizure of 343 pounds
            of methamphetamine from a truck stopped at the Arizona/New
            Mexico port-of-entry of Interstate 40. The investigation
            revealed that the driver was working for an organization based
            in Mexicali, Mexico, which was transporting large quantities of
            illegal drugs across the United States. The driver acquired the
            343 pounds of methamphetamine in Calexico, California, and was
            en route to deliver the drugs to Atlanta, Georgia. The driver
            had previously transported 100 kilogram quantities of marijuana
            to Atlanta, Georgia, for the same organization.
          Disturbingly, undercover investigations indicate that the Mexican
            Nationals, who are transporting and distributing these large
            quantities of methamphetamine, have access to a seemingly
            unlimited supply of methamphetamine. Investigations and
            intelligence gathering by federal, state, and local law
            enforcement agencies are continuing in an attempt to further
            identify and dismantle those individuals and organizations
            operating in Mexico, Arizona, and California, that are
            supplying New Mexico and other eastern cities.
                     staffing at santa teresa port-of-entry
        Question. Mr. Attorney General, I appreciate the work and mission
    of the United States Immigration and Naturalization Service (INS),
    especially in the face of the unique demands placed on this agency
    after the tragedy of September 11.
        As I expressed in a November 2001 letter to INS Commissioner James
    Ziglar, greatly increased traffic at New Mexico's Santa Teresa port-of-
    entry has created an urgent need for additional INS inspectors to allow
    the operation of the port's two processing booths throughout the day.
    Traffic has more than doubled in the past several months compared to
    fiscal year 2001.
        The Santa Teresa port is currently operating with four INS
    inspectors, two of whom have been temporarily assigned from El Paso
    border crossings. I was pleased to learn recently that two additional
    INS personnel will be hired. However, I have been made aware that Santa
    Teresa still urgently needs an additional seven Immigration personnel
    to adequately handle increasing traffic.
        Additionally, I have learned that the Columbus port-of-entry, New
    Mexico's only 24-hour non-commercial border crossing, lacks at least
    six Immigration personnel to handle current traffic volume.
        Adequate staffing for these ports-of-entry is essential both for
    efficient commerce and for the safety and security of all parties
    involved in the flow of traffic across the border. I am concerned that
    despite my long-time role in increasing funding and personnel levels
    for the INS, New Mexico's ports-of-entry have continued to endure
    personnel shortages, experiencing no measurable benefit from these
    increased resources.
        Supplemental homeland defense funding has rightfully boosted
    resources for INS personnel, particularly along the Northern border.
    What assurance can you give me that the Southwest border, and
    particularly New Mexico's historically understaffed ports-of-entry,
    will receive personnel increases reflective of recent increased federal
    resources.
        Answer. The INS and the USCS share responsibility for operating the
    primary lane. Prior to September 11, 2001, Santa Teresa was operational
    from 6:00 a.m. until 10:00 p.m. On average, 20 cars and 52 people were
    inspected per hour. Santa Teresa has only two traffic lanes and two
    immigration inspectors on duty per shift. Immediately following the
    events of September 11, 2001, all ports were instructed to operate
    under Threat Level One requiring continuous 24-hour staffing at all
    land border ports of entry. This threat level also requires at least 2
    on-duty officers, 100 percent trunk inspection or its equivalent and
    100 percent queries for all pedestrians. Traffic seeking to avoid
    congestion at the nearby El Paso port, frequently diverts to Santa
    Teresa. The inability to accommodate the increased regular and holiday
    traffic combined with Threat Level One condition, resulted in increased
    wait times. However, in January 2002, the average wait time was 15
    minutes.
        The INS received 848 new land border inspectors in fiscal year 2002
    to enhance enforcement efforts and to reduce delays at ports of entry
    both north and south. That deployment includes 4 new positions to
    Columbus, New Mexico and 2 new positions to Santa Teresa, New Mexico.
    The INS has requested an additional 460 new land border inspectors in
    fiscal year 2003 to continue securing the ports, enhance enforcement
    and return to normal processing times. In order to accomplish that, all
    ports, regardless of their geographic location, must be adequately
    staffed to ensure that every precaution is taken when determining who
    should and who should not be admitted into the United States.
                               ins restructuring
        Question. The Immigration and Naturalization Service's mission
    involves carrying out two primary functions. One is an enforcement
    function that involves preventing aliens from entering the United
    States illegally and removing aliens who succeed in doing so. The other
    is a service function that involves providing services or benefits to
    facilitate entry, residence, employment, and naturalization of legal
    immigrants.
        Several critics have concluded that mission overload has impeded
    INS from succeeding at either of its primary functions and that the
    INS' service and enforcement functions should be separated in order to
    better administer immigration law. Consequently, there have been
    several proposals to fundamentally restructure the INS.
        I am pleased to see that the Administration and you Mr. Attorney
    General have come to recognize these problems in the past year and have
    formulated a plan that, in some ways at least, builds upon the
    separation premise I just mentioned.
        Mr. Attorney General, could you please detail your plan to
    restructure the INS that will hopefully allow it to effectively and
    efficiently administer the immigration laws?
        Secondly, can you give this committee any idea of what kind of
    financial obligation, if any, the Federal Government might have to
    undertake in order to achieve this goal or, at the very least, can you
    elaborate on how the overall funding for the INS will take shape once
    your plan is initiated?
        Answer. Two of the problems that INS continually struggles with
    under its current organizational design are: (1) competing priorities
    between its enforcement and services responsibilities; and (2)
    confusing chains of command. The creation of separate bureaus for
    enforcement and services will ensure, on one hand, improved provision
    of immigration services by staff dedicated to that function and, on the
    other an integrated law enforcement organization that can respond
    quickly to combat terrorism, human smuggling operations and illegal
    immigration activities at the border and the interior.
        The proposed organizational configuration eliminates current
    regional and district offices and creates separate area structures for
    the Bureaus of Enforcement and Immigration Services. This streamlining
    and separation will improve accountability and professionalism through
    the establishment of clearly defined chains of command staffed by
    individuals with specific expertise at all levels.
        It is estimated that the INS restructuring can be accomplished for
    approximately $70 million, $40 million of which is included in the
    Department's fiscal year 2003 request. More than half (55 percent) of
    the costs will be associated with adjustments of facilities, including
    space modifications and lease acquisition. Another 38 percent will be
    for buyouts and relocations of personnel in the field.
                   violence against women new mexico funding
        Question. In fiscal year 2002, the U.S. Department of Justice (DOJ)
    did not award any grants under the ``Grants to Encourage Arrests''
    program to New Mexico domestic violence organizations. Several of the
    New Mexico programs who had their applications denied were previously
    recipients of these grants. These organizations are now struggling to
    keep their doors open, cutting back on services that all parties, even
    the Department of Justice, agree are making a tremendous difference in
    domestic abuse cases.
        In various conversations with representatives from the Violence
    Against Women Office (VAWO), it was brought to my attention that there
    are questions about whether New Mexico law complies with the
    requirements of the grant. These questions have apparently existed in
    the past, but have not prevented the New Mexico organizations from
    receiving the grants. In an effort to ensure that this would not be a
    problem in the future, the entire New Mexico Congressional delegation
    wrote to the leadership of the New Mexico Legislature and the Governor
    to encourage them to fix the problems quickly.
        On February 12, 2002, the New Mexico House concurred with the New
    Mexico Senate, unanimously passing the legislation that will erase any
    of the doubts that might have existed.
        Because New Mexico has made a good-faith effort to remove any
    doubts that might have existed concerning the eligibility of programs
    dealing with domestic abuse, will you provide a one-year waiver to
    restore the funding that these programs desperately need?
        Answer. The Office of Justice Programs Violence Against Women
    Office (OJP/VAWO) does not have legal authority to waive statutory
    certification requirements that govern eligibility for funding under
    VAWO's Grants to Encourage Arrest Policies and Enforcement of
    Protection Orders Arrest Program (Arrest Program). [42 U.S.C.
    Sec. 3796hh relating to the Arrest Program, Id. Sec. 3796hh-1.]
        However, even if OJP/VAWO had statutory authority to grant such a
    waiver, fiscal year 2001 funding for the Arrest Program has already
    been allocated among qualified grantees.
        On February 27, 2002, the state of New Mexico received $1.1 million
    under VAWO's fiscal year 2002 STOP (Services, Training, Officers,
    Prosecutors) Violence Against Women Formula Grant Program. Funding from
    this award may be used to assist domestic violence programs in New
    Mexico.
        Question. Because the programs in New Mexico had been receiving
    funds through this program in previous years, no one in our state was
    aware that there was a problem. Therefore, the denial of funding came
    as a surprise. Would you keep me informed as the Department of Justice
    reviews the recently-passed New Mexico law to ensure that it erases all
    doubt about compliance with the DOJ requirements? Would you also make
    sure that I am made aware should something else arise that would cause
    the New Mexico programs to be denied funding?
        Answer. Every Arrest Program applicant is required, by statute, to
    submit a letter of certification. The letter of certification is not a
    Department of Justice (DOJ) requirement. The certification requirements
    are directly imposed by 42 U.S.C. Sec. 3796hh(c)(1)-(4), which
    provides:

        ``(c) Eligibility.--Eligible grantees are States, Indian tribal
    governments, State and local courts (including juvenile courts), or
    units of local government that--
                ``(1) certify that their laws or official policies--
                        ``(A) encourage or mandate arrests of domestic
                    violence offenders based on probable cause that an
                    offense has been committed; and
                        ``(B) encourage or mandate arrest of domestic
                    violence offenders who violate the terms of a valid and
                    outstanding protection order;
                ``(2) demonstrate that their laws, policies, or practices
            and their training programs discourage dual arrests of offender
            and victim;
                ``(3) certify that their laws, policies, or practices
            prohibit issuance of mutual restraining orders of protection
            except in cases where both spouses file a claim and the court
            makes detailed findings of fact indicating that both spouses
            acted primarily as aggressors and that neither spouse acted
            primarily in self-defense; and
                ``(4) certify that their laws, policies, and practices do
            not require, in connection with the prosecution of any
            misdemeanor or felony domestic violence offense, or in
            connection with the filing, issuance, registration, or service
            of a protection order, or a petition for a protection order, to
            protect a victim of domestic violence, stalking, or sexual
            assault, that the victim bear the costs associated with the
            filing of criminal charges against the offender, or the costs
            associated with the filing, issuance, registration, or service
            of a warrant, protection order, petition for a protection
            order, or witness subpoena, whether issued inside or outside
            the State, tribal, or local jurisdiction.''

        According to VAWO's Fiscal Year 2002 Arrest Program Application and
    Program Solicitation Guidelines (page 9), eligible applicants are
    instructed as follows:

        ``Eligible applicants must submit as part of the application a
    letter signed by the chief executive officer of the state, Indian
    tribal government, or unit of local government certifying to the
    conditions listed above [(1) to (4)]. If (4) above does not yet exist
    in the applicant jurisdiction, the state, Indian tribal government,
    state or local court, or unit of local government applying for grant
    funds must provide assurances that it will be in compliance with this
    requirement by the date on which the next session of the state
    legislature or Indian Tribal Legislature ends, or by October 28,
    2002.''

        The fiscal year 2002 Arrest Program application deadline was
    January 31, 2002. VAWO received and reviewed applications from the City
    of Albuquerque, Cibola County, Zuni Police Department, and Santa Fe
    County. Recommendations for fiscal year 2002 funding for some of the
    New Mexico applicants may be made pending final approval. Once VAWO
    makes final recommendations for Arrest applicants to receive grant
    awards, the recommendations then go through a clearance process in
    OJP's Office of the Comptroller and OJP's Office of Budget and
    Management Services. If any New Mexico application is approved for
    fiscal year 2002 Arrest Program funding, VAWO expects to announce these
    awards to the New Mexico delegation by May 1, 2002.
        OJP/VAWO does not ordinarily review state laws, practices and
    policies to provide legal advice to state officials for the purpose of
    certification of state compliance with federal statutory requirements.
    State officials/applicants need to conduct their own review and
    analysis and subsequently certify that they meet the statutory
    eligibility requirements. OJP/VAWO must rely on the state's review and
    certification to the federal statutory requirements, since OJP/VAWO
    staff are not experts on the laws, policies, and practices of each
    state and local government applicant. As a matter of policy or
    practice, OJP/VAWO does not look behind applicant letters that include
    proper signatures (of Chief Executive Officers) and complete
    certifications as specified in 42 U.S.C. Sec. 3796hh(c)(1-4) (i.e.,
    certifications using the exact words provided in section 3796hh(c)(1)
    to (4)).
        However, due to the extraordinary circumstances surrounding this
    issue and at the request of the New Mexico delegation, OJP/VAWO
    reviewed the newly-passed New Mexico legislation (H.B. 242) and NMSA
    Sec. 40-13-3.1. Based on this review (as explained immediately below),
    it is not entirely clear to VAWO that the Arrest Program applicants
    from New Mexico will be able to meet certification requirements in 42
    U.S.C. Sec. 3796hh(c)(3) and (4), regarding mutual restraining orders
    and imposition of fees (respectively), as described below.
        New Mexico's new law (H.B. 242) does not address mutual restraining
    orders, and this may present an issue under certification requirement
    (3). OJP/VAWO is aware that courts in New Mexico use a ``Stipulated
    Mutual Protection Order'' form that does not meet the standard
    described in 42 U.S.C. Sec. 3796hh(c)(3). It is not clear, however,
    that New Mexico will need legislation to amend or prohibit use of this
    civil court form. For example, VAWO has received a letter from the
    Chief Justice of the New Mexico Supreme Court, stating that standard
    protection order forms are currently under review. Therefore, it is
    possible, assuming the State Supreme Court has such authority and
    chooses to exercise it, that court action to prohibit use of this form
    may enable appropriate New Mexico officials to determine that they can
    certify to the requirement in 42 U.S.C. Sec. 3796hh(c)(3). As mentioned
    above, OJP/VAWO will rely on New Mexico officials to determine when (or
    if) they may certify to this statutory requirement.
        In addition, H.B. 242 and NMSA Sec. 40-13-3.1 do not specifically
    address some of the fee issues covered by the certification requirement
    provided at 42 U.S.C. Sec. 3796hh(c)(4). The new legislation makes
    clear that, in New Mexico, an alleged victim of domestic abuse,
    stalking, or assault is not required to bear the cost of (1) filing a
    criminal charge against an alleged perpetrator of the offense; (2) the
    issuance or service of a warrant; (3) the issuance or service of a
    witness subpoena; or (4) the issuance or service of a protection order.
    Neither H.B. 242 nor NMSA Sec. 40-13-3.1 address, however, whether such
    an alleged victim might be made to bear the cost of filing or
    registering a warrant, witness subpoena, or protection order; nor does
    either law address the issue of fees for petitions for protection
    orders. Finally, neither law addresses whether fees might be charged
    with regard to filing, registering, or serving out-of-state protection
    orders. OJP/VAWO simply is unable to express an informed opinion on
    whether New Mexico can certify to requirement (4), because it is quite
    possible that other state laws, policies, or practices--of which OJP/
    VAWO is unaware--may govern these issues (e.g., there may be no
    requirement under state law to file witness subpoenas or there may be
    no requirement to pay any fees for doing so); under such circumstances,
    New Mexico easily could certify to (4). To reiterate, OJP/VAWO will
    rely on state and local officials to review and analyze New Mexico
    laws, policies, and practices with respect to whether victims are
    required to bear any of these costs, as part of the certification
    process by the Chief Executive Officer for the applicant for Arrest
    Program funds.
        In an effort to assist applicants, VAWO routinely guides applicants
    to page 9 of the VAWO Arrest Program Application and Program
    Solicitation Guidelines--B. Certification of Eligibility--for sample
    language that may be included in applicant letters once the review and
    analysis of state laws, policies, and practices has been completed.
                                   new mexico
        Question. The State Justice Institute (SJI) saw its funding cut
    from just over $6 million in fiscal year 2001 to $3 million in fiscal
    year 2002. While the SJI is requesting $13.55 million for fiscal year
    2003, the President is now proposing to zero this out. The Judges in
    New Mexico and the American Bar Association inform me that this has
    been a very useful program for the judiciary in New Mexico, providing
    funding for judicial education programs, court administrative
    processes, community-wide education concerning issues such as domestic
    violence, substance abuse, and services to pro se litigants.
        Are these programs that make a difference in the efficient
    administration of justice throughout the country?
        What will be the effect on the administration of justice if the
    State Justice Institute is not funded by the Federal Government?
        Answer. The State Justice Institute was established by Congress in
    1984 as a private, non-profit corporation to make grants and undertake
    other activities designed to improve the administration of justice in
    the United States. It was created as an independent agency, and is not
    funded or administered through the Department of Justice. Therefore,
    the Department has not undertaken a review of the functions of the
    State Justice Institute nor are we able to provide any views on this
    issue.
        Question. Attorney General Ashcroft, the Chief Justice of the
    United States Supreme Court, William H. Rehnquist, and the Chief
    Circuit Judge for the Tenth Circuit, Deanell Reece Tacha, have
    described the southwest border states as being in ``crisis.'' This
    description is based upon the massive number of cases that each federal
    judge currently has on his or her docket. Chief Circuit Judge Tacha
    expressed her concern about the district of New Mexico in particular.
    The district of New Mexico ranked fourth in the nation in criminal
    filings per judgeship in 2001.
        Based upon the experiences of the United States Attorney practicing
    in this district, would you agree that the judicial system in the
    district of New Mexico is in a state of crisis?
        What would help to alleviate the problems that are making the
    administration of justice so difficult?
        Answer. I am not in a position to characterize the state of the
    judicial system in the district of New Mexico. Congress, the
    Administration and the Department have placed considerable emphasis
    over the last several years on the accelerated rate of crime along the
    southwest border, especially in illegal drug and alien smuggling. This
    has led to additional allocations of law enforcement resources for the
    southwest border states in recent years. As a result of this increased
    law enforcement presence, more immigration and drug-related cases are
    being brought at all levels of the judiciary--state, local, and
    federal, alike.
        In the last few years, the federal criminal justice system across
    the entire southwest border has processed an unprecedented volume of
    new cases. This has been made possible through a combination of
    increased funding received from Congress and a focused Department
    Southwest Border strategy. Over the last several years, the Executive
    Office for the United States Attorneys has been addressing the issue of
    increased violent crime by increasing the number of attorneys and
    support staff along the southwest border. Specifically, in the District
    of New Mexico, a total of 22 attorneys and 16 support positions have
    been added since fiscal year 1997 to help manage this workload. This
    heavy workload, in turn, impacts the federal judiciary. Increased
    staffing combined with more efficient case processing procedures has
    been highly beneficial to the United States Attorneys along the
    southwest border. An increase in resources and further refinements of
    the court's case processing procedures might yield similar benefits for
    the courts.
                               scaap elimination
        Question. Mr. Attorney General, it is clear from the President'
    budget request that there is a desire to reorganize grant programs to
    states in an effort to make those programs more efficient and more
    accessible to the neediest of areas. This desire has resulted in the
    proposal to completely eliminate funding for many grant programs that
    states have come to rely upon for assistance.
        The State Criminal Alien Assistance Program (SCAAP) is just one of
    these programs that have been proposed to be eliminated. The purpose of
    this program is to reimburse some of the expenditures states make when
    they house and/or transport federal prisoners or detainees, an activity
    that is vital not only to state interests but federal interests as
    well. The two entities working together produces the best results for
    everyone. A program such as this is incredibly important in states like
    mine where there is a significant amount of human border traffic and
    the need for law enforcement is great. We cannot expect states to make
    up for federal expenditures out of their own budgets. I again make the
    point that this is only one of many programs the President has proposed
    to eliminate.
        I am aware that the President's budget request proposes a new grant
    program that consolidates many of the aforementioned grant programs but
    I am concerned that the decrease in funds and no real clear mission for
    these new grants will leave many states in the proverbial lurch with
    nowhere to turn.
        What is your opinion on this matter Mr. Attorney General and do you
    have any suggestions for the states that have come to rely on SCAAP
    funds in order to assist in an activity that is really federal in
    nature?
        Answer. One of the Department's top priorities in fiscal year 2003
    is to prevent illegal entry of non-citizens into the United States.
    SCAAP has provided reimbursement for illegal aliens incarcerated for
    state and/or local charges or convictions, but it is not intended to
    reimburse for illegal immigrants who are temporarily held in local
    jails following their arrest by federal authorities. Such detention
    costs are the responsibility of the Immigration and Naturalization
    Service. In 2003, the Department of Justice is requesting approximately
    $1.4 billion for its new Office of the Detention Trustee to provide bed
    space for the anticipated detainee population in the custody of the
    U.S. Marshals Service and the INS. The President's budget also requests
    $3.2 billion for Immigration Enforcement to stem the flow of illegal
    aliens into the United States. This represents a $764 million increase
    over the level of funding provided in 2002. We believe that this
    increase will result in a reduction of illegal immigration, which in
    turn should reduce alien criminal activity in the long term.
        In addition, DOJ is directing other resources to border states to
    help them with the costs of processing, detaining, and prosecuting drug
    cases referred from federal arrests through the proposed $50 million
    Southwest Border Prosecution Initiative. The $50 million requested in
    2003 will provide financial assistance to county and municipal
    governments in Texas, New Mexico, Arizona, and California for the costs
    associated with the handling and processing of drug cases referred from
    federal arrests. These funds may be used for hiring and training more
    prosecutors, probation officers, and court officials, court costs,
    detention costs, courtroom technology, administrative expenses, and
    indigent expense costs. Grants will be awarded based on a number of
    factors, including southwest border county caseloads for processing,
    detaining, and prosecuting drug cases referred from federal arrests.
        Question. Mr. Attorney General, as you are aware, the President's
    budget completely eliminates funding for the State Criminal Alien
    Assistance Program, a $565 million reduction from fiscal year 2002. I
    understand that the President's budget for law enforcement emphasizes
    programs that will have a tangible impact on improving homeland
    security or reducing violent crime. However, I am highly concerned
    about the impact cutting this program will have for many already-
    struggling counties in New Mexico and the southwest.
        In past years, I have fought to increase SCAAP resources to relieve
    the significant burden imposed on local communities by the costs of
    detaining criminal aliens. The State of New Mexico received $1,672,821
    in fiscal year 2001 funding through this program. However, a recent
    United States-Mexico Border Counties Coalition study detailing costs
    associated with processing criminal illegal aliens estimates that New
    Mexico's three border counties spend an estimated $4.7 million annually
    on criminal justice, law enforcement and emergency medical care for
    illegal immigrants.
        According to the same study, the five state district courts in New
    Mexico's border counties are swamped with caseloads that are more than
    four times the national average. These counties' law enforcement and
    criminal justice systems are overwhelmed with illegal immigrants who
    are apprehended at the border for possession of drugs in quantities too
    small to meet the threshold established by the former U.S. Attorney for
    federal prosecution.
        Border counties are growing faster than any other region in the
    nation. At the same time, they have a lower per capita income and a
    higher percentage of people below the federal poverty level than any
    other region, making them the least able to foot the cost of services
    for criminal illegal aliens.
        In the face of burgeoning weight on border criminal justice
    systems, does the Federal Government have an obligation to assist
    states and localities with the disproportionate burden they carry in
    adjudicating criminals who have entered the United States illegally?
        Answer. As discussed above, the 2003 President's budget has
    proposed large increases to the immigration enforcement function of the
    Immigration and Naturalization Service, increases which should lead to
    a tighter border and a reduction in the numbers of illegal aliens
    states must deal with over the long term.
        The Federal Government has assisted and will continue to assist the
    border states by providing funding targeted at defraying the costs of
    adjudicating criminal aliens. To address the burden placed on southwest
    border county prosecutors, the 2003 President's budget requests $50
    million to continue the Southwest Border Prosecution Initiative.
        Originally administered by the Executive Office of U.S. Attorneys
    (EOUSA), the Southwest Border Initiative's initial purpose was to
    reimburse local district attorney offices along the southwest border
    for the costs of processing, detaining, and prosecuting drug cases
    referred from federal arrests. In 2001, $12 million was provided.
        In 2002, funding was increased to $50 million and responsibility
    for the program was transferred to OJP. The program will provide
    financial assistance to county and municipal governments in Texas, New
    Mexico, Arizona, and California for the costs associated with the
    handling and processing of drug cases referred from federal arrests.
    These funds may be used for hiring and training of prosecutors,
    probation officers, and court officials, court costs, detention costs,
    courtroom technology, administrative expenses, and indigent expense
    costs. Grants will be awarded based on a number of factors, including
    southwest border county caseloads for processing, detaining, and
    prosecuting drug cases referred from federal arrests.
        Question. Could the cost of law enforcement, criminal justice and
    emergency healthcare services for criminal illegal aliens pose a
    security risk by draining resources from local entities primarily
    tapped for homeland security, such as emergency medical technicians and
    law enforcement personnel?
        Answer. The 2003 President's budget is requesting $38 billion for
    homeland security, an $18 billion increase over the 2002 level.
    Included in the $38 billion request is $3.5 billion in assistance for
    state and local emergency responder training and equipment and
    increased funding adding 570 border patrol agents, 30,000 federal
    airport security workers, scores of air marshals and a host of other
    law enforcement personnel to deal with homeland security issues. Thus,
    it is unlikely that reductions to certain long-standing state and local
    assistance programs aimed at reducing and preventing domestic crime
    will pose a security risk.
        Question. What was the rationale for the Department of Justice
    eliminating funding to a program with direct impact on the viability of
    the law enforcement and criminal justice efforts of struggling
    localities?
        Answer. SCAAP is a payment program designed to provide federal
    funds to states and localities who incur costs for incarcerating
    certain criminal aliens held as a result of state and/or local charges
    or convictions. In 2003, the Administration proposes to eliminate SCAAP
    funding for the following reasons:
      --SCAAP does not advance the core mission of the Department of
            Justice. Since 1995, approximately $3.45 billion has been
            distributed to eligible state and local jurisdictions. By
            statute, SCAAP funds are unrestricted, and recipient
            jurisdictions may use these funds for any lawful state or local
            purposes, not limited to correctional or even criminal justice
            purposes. Thus, in contrast to other programs administered by
            the Department, funds awarded under SCAAP do not directly
            support efforts to develop the nation's capacity to prevent and
            control crime, administer justice or assist crime victims, and
            funds awarded are not in any way linked to overall performance
            or evaluation data.
      --The redirection of SCAAP funds provides resources that will more
            directly target specific crime-fighting efforts. Border states
            (Texas, New Mexico, Arizona and California), which received a
            large proportion of SCAAP funds, will continue to be
            beneficiaries of the expanded Southwest Border Assistance
            Initiative. Under OJP's Southwest Border Assistance program,
            funds may be used for hiring and training more prosecutors,
            probation officers, and court officials, court costs, detention
            costs, courtroom technology, administrative expenses, and
            indigent expense costs. Grants will be awarded based on a
            number of factors, including southwest border county caseloads
            for processing, detaining, and prosecuting drug cases referred
            from federal arrests.
      --Redirecting resources from SCAAP will provide needed resources for
            other Departmental and Administration initiatives. Funds made
            available through the proposed elimination of SCAAP will be
            devoted to areas such as federal counterterrorism and
            immigration enforcement efforts. This redirection will enhance
            DOJ's ability to meet its core mission and operational
            priorities.

                              subcommittee recess

        Senator Hollings. We thank you very, very much, and our
    next hearing with judiciary will be next Tuesday, March 5, at
    10 a.m. in this same room. We thank you very, very much, John.
    We appreciate it.
        Attorney General Ashcroft. Thank you.
        Senator Hollings. The subcommittee will be in recess.
        [Whereupon, at 12:35 p.m., Tuesday, February 26, the
    subcommittee was recessed, to reconvene at 10 a.m., Tuesday,
    March 5.]

    DEPARTMENTS OF COMMERCE, JUSTICE, AND STATE, THE JUDICIARY, AND RELATED
                  AGENCIES APPROPRIATIONS FOR FISCAL YEAR 2003

                                  ----------

                             TUESDAY, MARCH 5, 2002

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 10:01 a.m., in room SD-138, Dirksen
    Senate Office Building, Hon. Ernest F. Hollings (chairman)
    presiding.
        Present: Senators Hollings, Reed, Gregg, and Domenici.

                                 THE JUDICIARY

                       Supreme Court of the United States

    STATEMENT OF HON. ANTHONY M. KENNEDY, ASSOCIATE JUSTICE
    ACCOMPANIED BY:
            HON. CLARENCE THOMAS, ASSOCIATE JUSTICE
            SALLY RIDER, ADMINISTRATIVE ASSISTANT TO THE CHIEF JUSTICE
            WILLIAM SUTER, CLERK OF THE COURT
            PAMELA TALKIN, MARSHAL
            ALAN HANTMAN, ARCHITECT OF THE CAPITOL
            TONY DONNELLY, DIRECTOR OF BUDGET AND PERSONNEL

                                OPENING REMARKS

        Senator Hollings. Good morning. The subcommittee will come
    to order. We have the pleasure of welcoming Justice Kennedy and
    Justice Thomas at our hearing this morning relative to the
    Supreme Court and its budget. We welcome you both.
        Senator Gregg, do you have a comment?
        Senator Gregg. It is a pleasure to be here and have the
    Honorable Justices join us again. I notice there must have been
    a coup d'etat, because the last 3 or 4 years, Justice Souter
    was here. He appears to have been replaced.
        Justice Kennedy. We have got him busy, Senator.
        Senator Hollings. Very good. We recognize you both at this
    time and you can present your testimony before the committee.
    The full statement will be included in the record and you can
    present it or summarize it as you wish.
        Justice Kennedy. Good morning, Mr. Chairman and members of
    the committee. Justice Thomas and I bring you greetings from
    our colleagues. Thank you very much for having this hearing. I
    will just summarize my opening remarks, Mr. Chairman.
        We have with us today a number of our Court personnel and I
    will just proceed down the row so that you can identify them:
    Paul AcAdoo, who is with our Marshals Office; General William
    Suter, who is the Clerk of the Court, and who I might say runs
    the best clerk's office of any court in the country; the
    Marshal of our Court, Pamela Talkin; Tony Donnelly, who is our
    Budget and Personnel Officer, and who is well known to your
    staff. He has been working in very close cooperation with them
    and we appreciate that. Sally Rider, the Administrative
    Assistant to the Chief Justice is right behind me. We also
    have, of course, Alan Hantman, the Architect of the Capitol.
        Now, I know, Mr. Chairman, that waiting in the wings, we
    have Judge Heyburn and Ralph Mecham of the Administrative
    Office and our budget is just about 2 percent of the Courts'
    total budget, so I recognize that order of priority.
        But it is a pleasure to appear here, Mr. Chairman. You
    know, when we talk to judges from abroad in Africa and Russia
    and Asia and even in Europe, they talk about this process. They
    are fascinated with how we have established judicial
    independence. We tell them, as I say in our opening statement,
    that the tradition has been, but, of course, it is your
    constitutional responsibility and your constitutional right to
    determine the level of funding. The tradition has been you give
    some deference to us if you are satisfied we have approached
    our task in the right way and that we have been prudent and
    careful in analyzing the figures.

                              SUPREME COURT BUDGET

        Now, the budget request, because of the vagaries of the
    budgeting cycle for our major request, which is the building,
    is actually less than last year, and I would be very happy if
    we could make that the headline. As we all recognize, however,
    we are asking for an operational increase. We are asking for an
    increase of $6,288,000 on a base of $40,036,000. That is a 16
    percent increase. Two-thirds of that increase is for
    adjustments to the existing base.
        The staff did question, and I raised the same question,
    whether we should have put pay increase for our police in the
    adjustment base, but our budget officer assured us that was the
    proper thing to do. I might point out that we have lost some of
    our very best policemen to the air marshals. They are being
    paid so highly that we find it difficult to keep some of our
    very best people, but we are filling those positions.
        The increased part of our operations and expenses budget,
    quite apart from the building, is $2,268,000 and that breaks up
    really, Mr. Chairman, into two parts. One, we are asking for 14
    positions. I think four of those can be described as relating
    to the workload of the Court. We need an extra telephone
    operator, we need a case analyst in the clerk's office, and we
    need two librarians.
        Our workload is increasing. If you look at page 1.11 of the
    budget request submission, you will see that we are pushing
    toward 9,000 cases a year, and I think we will soon be at
    10,000. This means that we must support and sustain and update
    our computer function. We are computer dependent. We are
    electronic dependent in our Court. We are asking, then, for
    five positions for training and upgrading and maintaining and
    improving our computer skills. As of this point, we can barely
    keep up with what we have, but we want to go to the next level
    of learning because the committees of the Congress have always
    requested us to do that.
        We have five websites. We are heavily dependent on
    electronic information for much of the administrative work of
    the Court. Just last year, the Clerk of the Court realized how
    much time was spent in corresponding with State bar
    associations about attorney admissions and attorney
    qualifications. That usually took at least two or three letters
    each way for each attorney. They devised an electronic system,
    and I think 38 States are already on this; and it has just been
    marvelous.
        We, during the disruptions of September and October, were
    very concerned that case filings were in the mail and that they
    be protected. The post office protects the filing by the postal
    date. But we were concerned that we would just be way behind
    because we were not receiving the petition. It would be 2
    months before it would come through the mail.
        So our Clerk, I think very creatively, got hold of the 30
    or 40 biggest printers in the country, found out who had been
    printing petitions for certiorari and then contacted all the
    attorneys by e-mail and said, send us your filing by e-mail. By
    doing that, he was able to pick up 400 cases that otherwise
    would have been stalled for a couple of months. We think we
    have cured that gap, but that just shows you how we are
    dependent on information technology.
        The Clerk of the Court prepared for us a list of the hits
    on our website for just December of last year and that December
    was roughly a normal operating month. We received over
    1,200,000 hits on the computer and we had close to 150,000 net
    site sessions, where the person asks questions and gets answers
    and stays with it for a while. That is why we think this
    request is prudent; and we think it is urgent.
        The other positions, Mr. Chairman, are for our offsite
    facility. That should be up and running in April. That is where
    we are doing our mail screening. That is where we moved some of
    the hazardous functions that are now in the Court and should
    not be there for the maintenance of the Court, the woodshop, et
    cetera, and we need those positions for that offsite facility.

                             BUILDING MODERNIZATION

        Ordinarily, Mr. Chairman, as you know, it is the
    prerogative of the Architect of the Capitol to present the
    portion of our budget which pertains to buildings and grounds,
    but since there is such a substantial appropriation there, let
    me just quickly review that history.
        As you will both remember, we testified in my earlier
    tenure on this committee that we were expecting a major request
    for building improvement, and we said it could be as high as
    $20 million. The architects then found that all of the systems
    in the building had to be replaced. We had not known that. When
    we first heard figures, we heard them in the area of $170
    million and we were simply shocked and notified your staff
    immediately. We were concerned that we had given testimony it
    would be $20 million and all of a sudden we are hearing $170
    million, so we did three or four things.
        We met with the Architect of the Capitol and made it clear
    that this was not to be an elaborate, precise, historical
    reconstruction, where you match the original paint and take a
    great deal of time with that. We are respectful of the
    building, the building will look beautiful, but it is not a
    precise historical reconstruction, and that is a substantial
    cost savings.
        Second, the Architect told us that it was normal in a
    project of this size to have a peer review where other
    architects and other estimators, other engineers from the
    outside come and ask the necessary questions to make sure that
    the budgeting has been done in the appropriate way. We did that
    and we hired our own architect to make sure we were asking the
    right questions. The result was a project cost of slightly over
    $122 million. Over half of it has been appropriated. We are
    asking in this budget for the remaining appropriation of $49
    million plus.
        Mr. Chairman, we were very careful to ask whether there
    would be a cost saving if we moved out of the building and the
    answer was definitely not. The plan is to more or less work
    around us. They propose to come into each chambers only once,
    so each Justice is only disrupted one time. The construction,
    if authorized by the Congress and if the bidding process goes
    as anticipated, should begin in 2003 and we will have to live
    with our jackhammers and yours, which are across the street,
    until 2009, but we are prepared to do that. We think it is
    absolutely necessary for the building.
        We are even concerned with this timeline. We are in danger
    of a major systems failure and the electric system at any time,
    and the same with the air conditioning, but they are patching
    it together, finding parts for something that was manufactured
    a long time ago. We are the only major building on Capitol Hill
    that has not been renovated since it was built. It is 65 years
    old. In a way, I think we are maybe the victims of our own
    thrift because we have let it go for that long.
        But we think it is absolutely necessary and we very much
    appreciate the meetings we have had with you and your staff to
    explain this figure, to explain the necessity for the project,
    and we very much appreciate your recognizing the importance of
    preserving the symbolism and the real operational value of the
    Court.

                              prepared statements

        In closing, let me say that when we do go to these foreign
    countries, I am and Justice Thomas is, all of us in the
    judiciary and I am sure you in the Congress are immensely proud
    of the judiciary of the United States and we most appreciate
    your concern in examining our specific request this morning.
    Thank you.
        Senator Hollings. Very good.
        [The statements follow:]
                Prepared Statement of Justice Anthony M. Kennedy
        Mr. Chairman and Members of the Committee, Justice Thomas and I
    appreciate this opportunity to appear before your Committee to address
    the budget requirements and requests of the Supreme Court for the
    fiscal year 2003. We bring you greetings from the Chief Justice and
    from all of our colleagues at the Court.
        We have with us today Sally Rider, Administrative Assistant to the
    Chief Justice; Pamela Talkin, Marshal of the Court; William Suter,
    Clerk of the Court; and Tony Donnelly, Director of Budget and
    Personnel.
        Judicial independence as it now exists in the United States is
    still a primary objective for emerging democracies in the modern world,
    as they seek to establish enduring constitutional structures of their
    own. The same question is asked again and again in meetings in Africa,
    in the Russian Federation, in Asia, in South America, and it is this:
    What are the requisites of judicial independence? One of the points we
    stress is that judicial independence is not a single historical event
    but instead a constant, never-ending process.
        An aspect of this process which fascinates outside observers is the
    very implementation of checks and balances that we engage in this
    morning. We explain the budget process by saying that while it is the
    privilege, and the constitutional responsibility, of the Congress to
    determine the funding of the courts, tradition has it that the
    judiciary's own assessment of its needs be given some deference. In
    this respect, much depends upon the confidence you place in our
    submissions. It is our principal objective in coming before you today
    to assure you that in making our assessments, we have tried to conform
    to the highest standards of caution and prudence.
        As is customary, the Supreme Court's budget request is in two
    parts. The first is for Salaries and Expenses of the Court. The second
    is for Care of the Building and Grounds. To address what we understand
    to be the concerns of the Committee, and to allow full consideration of
    the major funding request for modernization of our building, we will be
    pleased to talk about Buildings and Grounds in much more detail than
    usual.
        Let me turn first to Salaries and Expenses. With regard to this
    portion of the Court's budget, our total fiscal year 2003 budget
    estimate is $46,324,000. This is an increase of $6,288,000, or 16
    percent, over the budget authority for the current fiscal year, 2002.
        Most of the fiscal year 2003 increase represents base adjustments--
    that is, required increases in salary and benefit costs and
    inflationary increases in fixed costs. Specifically, $3,533,000 of the
    adjustment represents required increases in salary and benefit costs.
    Also, $487,000 is requested for inflationary increases in fixed costs,
    allowing us to keep up with rising costs in all of our operations. This
    results in a $4,020,000 increase to the budget base.
        We have included in the adjustments to base two items related to
    safety and security that generate unavoidable increases in costs. We
    request $871,000 to keep our police pay schedule on par with the
    Capitol Police pay schedule and to cover police overtime costs, and we
    request $237,000 for the increased cost of larger offsite warehouse
    facilities, which include an offsite mail screening facility. Both the
    police overtime and the offsite mail handling are directly related to
    the need for increased security since the terrorist attacks last
    September.
        In addition, we request $2,268,000 over base adjustments this year
    to fund fourteen positions and two program increases. Most of the
    increase, $1,911,000, is related to technological improvements in
    automation and security. During the last ten years, the Court's use of
    information technology has increased to such an extent that an
    automated system is now an essential part of every Court function. We
    rely on automated systems to docket cases; to draft and publish the
    Court's opinions; to procure equipment, books and supplies; and to pay
    bills. The automation has increased effectiveness and efficiency; but
    automated systems and equipment must be maintained and upgraded. As
    computer hackers and other wrongdoers become more sophisticated, we
    must try to stay ahead of them and maintain secure, up-to-date data
    systems. We were unsuccessful in last year's request for additional
    funds and staff to address these critical needs and as a result, our
    current resources are stretched to the limit in keeping our existing
    systems running. In previous years, this Committee has encouraged the
    Court to adopt the most modern work processes by using the latest
    technology. We ask the Committee to support our current request for
    increases in the Court's automation program in order to enable us to
    make necessary improvements. At present, our technical staff must spend
    its time maintaining existing, inadequate systems and equipment,
    leaving insufficient resources for essential improvements. Security
    concerns arising after September 11 only exacerbate the situation.
        We request four technical positions in the Court's Data Systems
    office: two PC/Network Specialists to test and deploy new equipment and
    technology, a Local Area Network/PC Security Specialist to develop and
    support Intranet/Internet applications and ensure the security of the
    Court's sensitive data, and a Programmer/Analyst to develop new
    software applications. The total cost of these four positions is
    $216,000.
        We also request $100,000 for a consulting service contract to
    upgrade the library's research inquiry database. We are requesting an
    increase of $1,550,000 to the data systems area of the Court's budget
    to fund new software and hardware technologies, to provide training,
    and to enhance computer security. The Court will take necessary steps
    to ensure cost-effective selection of data systems, and we will try to
    achieve savings wherever possible. With this authorization we intend to
    fund such activities as: upgrading equipment for Justices, Court staff
    and the Court's technology lab; engaging consultants to evaluate and
    enhance security measures; increasing automation skill levels of Court
    staff; and introducing specialized technology for security.
        The remaining $402,000, an increase to the Salaries and Expenses
    account, is to add ten positions. Seven of these we asked for in fiscal
    year 2002 but did not receive: a telephone operator to perform
    telephone console operations duties, a secretary to provide budget,
    procurement and other administrative support for the Data Systems
    Office, and five logistical support positions for our off-site
    warehouse space--which has been expanded to meet modernization needs
    and address security concerns such as offsite mail screening. The other
    three positions we wish to add are: a library technology assistant to
    support three major library systems with training and user support, a
    special collections librarian to assist in conserving the Court's rare
    books and archival records and briefs, and a case analyst to address
    the docketing of an increasing number of cases filed.
        Since we appeared before this Committee five years ago, we have
    made substantial progress in the planned modernization of the Supreme
    Court building. Our building, which is a splendid and revered symbol of
    justice in our democracy, has not been updated since it opened in 1935.
    Unlike the White House, the Capitol, and most of the government
    buildings on Capitol Hill, the Court building has had no major
    renovation. Its basic systems fail to meet modern standards. The
    heating and air conditioning, and the mechanical and electrical systems
    must be replaced. They have long outlived their expected useful lives
    and now require constant maintenance in order to avoid a catastrophic
    failure. The engineers who designed the electrical system had not heard
    of computers, faxes or copy machines. The longer we live with these
    outdated systems, the more likely we are to experience a disruptive--
    and possibly dangerous--system failure.
        The full cost of this project is $122,283,000. Of that sum, the
    remaining appropriation required is $49,696,000.
        We have worked in close cooperation with the Architect of the
    Capitol, the design architects, an independent peer review panel and
    our own consulting architect in order to develop the most efficient
    plan to modernize and upgrade the building. Even prior to September 11,
    we were considering and designing upgrades to security and safety for
    building occupants and visitors.
        We received the bulk of the funding for the modernization project
    in fiscal year 2002 and we appreciate your acknowledgment of this
    necessity. This year, we seek the final portion of funding so that we
    can keep the project on budget and on schedule. Assuming that we
    receive this final funding in this fiscal year, we intend to begin
    construction just over a year from now, in June 2003.
        We are convinced that this project is essential for the continued
    safe and efficient operation of the Supreme Court. We underscore both
    the necessity of the work and its absolute urgency. Mr. Alan M.
    Hantman, Architect of the Capitol, will present a separate statement to
    the Subcommittee regarding this portion of the total budget.
        This concludes a brief summary of our request. We will be pleased
    to respond to any questions that the Members of the Committee may have.
                                     ______

                     Prepared Statement of Alan M. Hantman
        Mr. Chairman, I am pleased to submit a formal statement to present
    the budget for the care of the building and grounds of the Supreme
    Court.
        As background, the Office of the Architect of the Capitol is the
    agency responsible in the Legislative Branch for the structural and
    mechanical care, maintenance, cleaning, and operation of the buildings
    and facilities supporting the Congress, including the Capitol Power
    Plant. This responsibility extends to the Botanic Garden and the
    structural and mechanical care and maintenance of the Library of
    Congress buildings and grounds. This office also undertakes the design
    and construction of new facilities and alterations of existing
    facilities.
        For the Judicial Branch, the Architect of the Capitol, by authority
    of 40 U.S.C. 13a-13b dated May 7, 1934, is responsible for the
    structural and mechanical care of the United States Supreme Court
    building and grounds. My responsibilities do not include custodial
    care, which is under the jurisdiction of the Marshal of the Supreme
    Court and is provided for in the Court's salaries and expenses
    appropriation.
        Working with the Court, my emphasis has been on improving the
    safety and security of the personnel and building structures. The
    fiscal year 2003 request continues the efforts to improve the security
    and safety posture. In the past several fiscal years we placed four new
    security barricades in the driveways, and upgraded security cameras in
    all locations. In fiscal year 2002, we have installed bomb blast window
    film and plan to install a digital recorder by late spring to further
    increase building security surveillance options. Additionally, we've
    started work on the fire alarm system and fire pumps to improve safety.
    Although these last two projects are not proceeding as quickly as I
    would like, I'm working to complete them as soon as possible.
        I'm requesting $53,626,000 to meet the requirements of the Court
    for the care of the building and grounds in fiscal year 2003. This
    request supports three major areas: $49,696,000 for the Building
    Renovation Project, $3,687,000 to maintain current operations and
    maintenance services, and $243,000 in program changes. This request is
    $13,904,000 or 20.6 percent less than the fiscal year 2002 available
    amount of $67,530,000. The funding requested is less than that for
    fiscal year 2002 because the funds required to support the Supreme
    Court building renovation and modernization project are less than the
    amount appropriated last year.
                      building renovation and improvements
        By far, the most significant item in this budget is the funding
    requested for the modernization of the Supreme Court building. The
    Supreme Court building, unlike other buildings on Capitol Hill, has not
    been upgraded since its completion in 1935. At 67 years of age,
    virtually all of its building systems have far exceeded any reasonable
    life expectancy, and they require an aggressive daily maintenance
    schedule to continue operating. In addition, building life safety,
    security, and essential building system requirements have advanced
    greatly since 1935. It has become critical that the Supreme Court
    building is brought up to current standards, since each year that the
    project is postponed potential risks increase significantly to more
    than 400 occupants and 1,000,000 visitors a year. For example, the
    building incorporated the latest in fire resistant technology when it
    was built, but modern life safety systems, consisting of fire
    detection, fire suppression, fire alarms, and building egress, have not
    been provided since the building was completed. Also, security concerns
    were significantly different in federal facilities in 1935 than they
    are today--especially after September 11. Likewise, essential building
    systems, consisting of mechanical and electrical components, have not
    been upgraded since 1935. Virtually all systems have become obsolete
    and replacement parts are not available.
        The remainder of the funding for the building modernization has
    been requested in one lump sum in order to keep the project on time and
    to award a single construction contract. We have continued to move
    forward with the project with an eye toward awarding a construction
    contract in the spring of 2003. If we do not receive the remainder of
    the funding in this budget cycle, we are certain to face a significant
    delay in the project as well as a significant increase in the cost of
    the project. A single construction contract is important for several
    reasons: to achieve single source contractor accountability for
    integration of the components that comprise the life safety, security,
    mechanical, and electrical systems; to maximize success in the
    performance of the integrated components; to minimize damage to the
    historic building by disturbing ceilings, walls, and floors only once;
    and to minimize the disruption of court occupants during renovation. A
    single construction contract is also the most cost-effective, since
    every construction contract must bear an overhead cost to contract,
    move on and off the project site, provide tools and equipment, and
    disturb ceilings, floors, and walls.
        With the support of this Subcommittee, much progress has been made
    toward refining the scope and design for the project. The budget
    request for this project is now based upon completion of the
    preliminary design. I am pleased to report that the cost estimate for
    the modernization project remains at $122 million.
        As you may be aware, in fiscal year 1999 we engaged in an
    independent peer review of the project to objectively evaluate whether
    the scope and cost were valid. That effort took place in conjunction
    with an additional set of independent reviewers brought in by the
    Court. The review took place and the conclusions were threefold: that
    the scope was valid, that the cost was reasonable, and that the
    renovation was necessary and should not be delayed. We are now in a
    position to begin this project with the funding requested in fiscal
    year 2003.
        Currently, a total of $72,587,000 has been appropriated for the
    modernization project. In fiscal year 1998, an amount of $225,000 was
    appropriated on an annual basis to provide for a study on improvements
    and upgrades to the Supreme Court building and systems. Preliminary
    design of this project began in fiscal year 1999 with an amount of
    $1,529,000 which was maintained in the budget base in fiscal year 2000
    for continued design work, as well as an amount of $2 million for
    window upgrades. In fiscal year 2001 an amount of $3.5 million was
    provided for continued design work, and in fiscal year 2002,
    $63,804,000 was appropriated. The fiscal year 2002 amount consists of
    $33,804,000 that was appropriated within the Judiciary Appropriations
    Act, 2002, and $30,000,000 that was provided in the emergency security
    supplemental for fiscal year 2002, as part of Division B of the Defense
    Appropriations Act, 2002. This amount will allow us to continue on
    schedule. If we receive the remainder of the funding in fiscal year
    2003, construction will begin in mid-2003.
        Therefore, to attain the total amount of $122,283,000 for this
    project, it is requested that $49,696,000 of $63,804,000 made available
    in fiscal year 2002 be retained in the budget base for fiscal year 2003
    for full funding for the construction of the project.
                           operations and maintenance
        As noted above, I'm requesting $3,687,000 to maintain current
    operations and maintenance services. Costs for current operations and
    maintenance services have increased from last year by $111,000 for
    mandated pay-related costs and $159,000 for higher costs projected for
    utilities, training, exterior point and caulking, and supplies.
                                program changes
        A total increase of $243,000 is requested for program changes. An
    increase of $178,000 will support the hiring for three additional
    maintenance mechanic positions. The positions are needed to support
    significant increases for preventive maintenance for all equipment in
    the plumbing, HVAC, and electrical trade disciplines. Another $65,000
    is requested for two capital budget projects. These projects are to
    upgrade the kitchen fire suppression system ($10,000) and to replace
    the metal detectors ($55,000).
        I assure the Chairman and Members of this Subcommittee that I will
    work closely with you and the Subcommittee staff, as well as the Court
    to achieve adequate funding for the care of the building and grounds.
        Mr. Chairman, that concludes my statement and I will be pleased to
    respond to any questions that you and the Subcommittee may have.

        Senator Hollings. Justice Thomas, did you have any comment?
        Justice Thomas. Mr. Chairman, I am satisfied with what
    Justice Kennedy has said.
        Justice Kennedy. He does not always say that.
        Senator Hollings. Well, we are glad to get it on record
    here.

                                COURT AUTOMATION

        Justice Thomas. But I would like to add that the additions
    in the offsite facility as well as the technology area are
    basically built upon requests that we made last year. In order
    to keep up technologically, we have had to rob Peter to pay
    Paul, but this year, Peter is broke, too, and there is just no
    way we are going to be able to be current technologically if we
    do not make some quick changes. I am beginning to sound like a
    broken record because I remember saying that at EEOC when I was
    there, and here I am at the Court again saying the same thing.
        But we are falling behind and I think it is imperative
    that, because we are so information dependent in doing our
    jobs, in research and producing opinions and in managing the
    caseload, the docket, that we be current technologically. The
    Court was much farther behind than many institutions when I
    arrived, and it is not because of me that it has caught up
    somewhat, but during my decade on the Court, we have moved
    quite a bit, but we are still quite far behind. I think it was
    critical last year and it is even more critical now that we get
    caught up.
        So these are sort of redundant requests and they have to be
    looked at in the context of our request last year. That is all
    I have to add, Mr. Chairman.
        Senator Hollings. Very good. I am convinced that the
    committee and the Congress will take care of that technological
    need. I think at the time when Lewis Powell came to the Court
    from Richmond and he said he had a way better office over in
    Richmond than he had over here in Washington as a Supreme Court
    Justice we were far behind, word processing, computers, and
    everything else like that. Technology, of course, will save
    tremendous time and burden on the Court. There is no question
    there with respect to that, or in this Senator's opinion, with
    respect to the construction, that $49.7 million requested to
    complete funding for the Supreme Court rehabilitation project.

                                  JUDGES' PAY

        There is one question, and it is in the headline in the
    morning Post, relative to pay. I think the Court did the proper
    thing with respect to not considering that issue further in the
    sense that your statement, Justice Kennedy, tradition has it
    that judiciary's own assessment of its needs be given some
    deference. It is good to have that word ``some.''
        Some in the Congress feel that the Court has had an
    attitude that tradition has it that the judiciary's own
    assessment of its needs be given deference, period. The truth
    of the matter is, on both sides of the ledger, that was not the
    tradition that prevailed with Justice Powell. In that case, the
    Court was not asking enough, and on our own, we increased at
    this particular committee level all the programs with relation
    to the technological needs.
        On the other hand, for the tradition here of the past
    several years, judges' pay has been tied to the congressional
    pay and that was made permanent in law last year. If there is
    any question still, and I am going to look at it and see,
    perhaps the judges' inclusion in that 1989 provision for COLAs
    be deleted so there is no question about it for the simple
    reason that if it were otherwise, the approach that has been
    taken by some on the Court or within the judiciary that once we
    passed a COLA in 1989, it would be unconstitutional to repeal
    that provision from there on. That would be a permanent
    increase each year, however the economy developed.
        I, for one, am not up to speed and fully read because I
    have not had an opportunity this morning. When reading that
    Post article, though, I said, wait a minute here, and this
    feeling that I expressed is within the Senate and the Congress.
    I can tell you that, because we almost had to sneak in to get
    last year's pay increase. We had to what we call fence the
    money in another budget to make sure that giving you the
    increase would not raise a point of order under a certain Rule
    28 that it had never been provided that money in either bill.
        So we are very respectful of the Court and the tremendous
    job the Court is doing. There is no question about that. You
    folks do know your needs better than any, but ordinarily
    speaking, that pay issue is tough. I happen to think Senators
    are underpaid, and I have stated that, not now, but I stated
    that 20 years ago and everything else of that kind. I have
    school board superintendents and so forth back home that are
    paid way more and do not have to keep up two homes or anything
    else like that. So we are not trying to hold the judges down,
    but we are trying to politically, I guess, get some way to
    attract just working people to public service here in the
    Congress rather than millionaires.
        Having said that, let me yield to my distinguished former
    chairman.
        Senator Gregg. Thank you, Mr. Chairman.
        It is always a pleasure to have members of the Court appear
    at this hearing. I have always felt it is a peculiar situation,
    and as a result, I have never really taken the opportunity of
    the legislative branch to be very inquisitive. I am not sure
    what our Founding Fathers had as their basic philosophy here,
    but clearly in the separation of power issue, the question of
    funding for the Court was one of the gray areas. But it does
    come from the Congress and, therefore, we do have a
    responsibility in this area, but it is still a peculiar
    symposium, in my opinion.
        I would say I want to second the chairman's comments
    relative to the decision on pay raise. I happen to have
    aggressively pursued an effort to delink the two, the court
    system and the Congress. I feel very strongly that we need to
    pay our Federal judges more in order to attract and keep
    quality people on the Federal court, especially on the district
    court level, because of the fact that we have got people with
    young families and it is very hard for them to raise those
    families compared to what they could make if they were not on
    the court. But, unfortunately, we have not been able to sell
    that to our colleagues. However, someday, hopefully, we will be
    able to sell that concept to our colleagues. But in any event,
    the authority resides with us and I think the Court's decision
    in this area was an excellent one, not that you need our
    counsel as to what your decisions are.
        We may appear before you as this committee in the future,
    as a matter of fact, and since we are not asking you any
    questions, hopefully you will not ask us any questions.
        It is with an amicus brief on an issue that affects our
    jurisdiction rather significantly.
        With that, I yield and appreciate the Justices appearing.
        Justice Kennedy. Mr. Chairman, our budget traditionally has
    not included any request for raise of salaries, and I think the
    deference that you and I referred to applies primarily to the
    resources of the judiciary rather than to the salaries.
        I did not come here prepared to make a statement about
    salaries and I am reluctant to state too much, in part because
    I fear my remarks might be inadequate to express the feeling of
    frustration and disappointment on the part of Article III
    judges throughout the United States at having been specifically
    denied four different COLAs when all other members of the
    Government, save the Congress, received it.
        The decision, I will not comment on. It stands. As you
    know, even the dissent from failure to grant certiorari is
    simply to say we think there is an issue here which should be
    heard, that there is an argument on the other side. It is not
    an indication of how even the dissenting judges would rule.
    Four different Federal judges looked at this and two thought
    that the denial of COLAs was constitutional, two thought it was
    not. That decision just will simply have to stand and it speaks
    for itself.
        I will say that from an institutional standpoint, the cloud
    of that suit has now disappeared. That suit is over. It is
    finished. It seems to me that once again, it is the absolute
    urgent responsibility of the Congress of the United States to
    address the fact that judicial salaries since 1970 compared
    with the national average of salaries, have declined in real
    dollar value 36 percent. We are losing, Mr. Chairman, judges at
    a record rate, and when you lose a judge who is eligible for
    senior status, you have to pay all his retirement, all his full
    salary anyway. But then you have to replace that judge by more
    judges, so it is not cost effective anyway.
        We have a judge, just as one example--had a judge who
    probably was among the 10 most knowledgeable people in the
    United States on class actions. He handled our asbestos
    litigation. He had computer websites. He had models for how
    attorneys intervene, et cetera. It was just like a symphony,
    the way he conducted that massive suit. We lost him. He left.
    He left because the Congress would not even grant him a cost-
    of-living raise to keep his salary even.
        There are two issues on the salary, as you well know, Mr.
    Chairman. One is to keep it from eroding. The other is what the
    base level should be compared to whatever benchmark you want to
    decide, private practice or law school deans or whatever.
        The suggestion has been that there be a commission
    appointed to make a recommendation to the Congress, and if that
    is what the Congress needs to give it the necessary advice and
    guidance in this area, of course that should be done. How this
    is done is really for you to decide, but I simply would be
    remiss, although I was not prepared to make these remarks, in
    not telling you the urgency that my colleagues in the Federal
    judiciary feel on this point.
        Senator Hollings. I am glad I raised the subject, because
    your comments are well taken. Again, they can apply just to my
    crowd. I can see, as you give that one example, I can see
    Senator Nunn and Senator Bumpers and Senator Ford and Senator
    Johnson, and I can start going down a list. They just could not
    keep up two houses and everything else and really take care of
    their families like they were able to do, and therein lies our
    problem. I wish I had you in the Senate to make that argument.
        Justice Kennedy. I will come anytime, Senator.
        Senator Hollings. We will get you up more and more over
    here, because it is well taken.
        Senator Gregg.
        Senator Gregg. I obviously agree. I agree with the concern.
    I think it is very real, and as the Justice knows, this is not
    about the belief that we feel that judges are not being paid
    fairly. We know they are not being compensated adequately. It
    is about Congress. We have hitched our wagon to your star,
    regrettably, on this issue.
        Senator Hollings. Very good. We appreciate your appearance,
    both of you, here this morning.
        We will now hear the testimony on the Federal judiciary,
    Chief Judge John G. Heyburn.
        Justice Kennedy. Thank you very much, Mr. Chairman.
        Senator Hollings. Thank you very, very much.
        Justice Thomas. Thank you, Senator.
        Senator Hollings. Thank you very much, Justice Thomas.
                               Federal Judiciary

    STATEMENT OF JUDGE JOHN G. HEYBURN II, CHAIRMAN,
                COMMITTEE ON THE BUDGET OF THE JUDICIAL
                CONFERENCE OF THE UNITED STATES
    ACCOMPANIED BY:
            JUDGE M. BLANE MICHAEL, MEMBER, COMMITTEE ON THE BUDGET OF THE
                JUDICIAL CONFERENCE OF THE UNITED STATES
            LEONIDAS RALPH MECHAM, DIRECTOR, ADMINISTRATIVE OFFICE OF THE
                UNITED STATES COURTS, AND MEMBER, EXECUTIVE COMMITTEE OF
                THE JUDICIAL CONFERENCE OF THE UNITED STATES

        Senator Hollings. We also have Judge Michael of the Fourth
    Circuit and Mr. Mecham from the Administrative Office of the
    Courts.
        Judge Heyburn, we will be happy to hear from you at this
    time, sir.

                                OPENING REMARKS

        Judge Heyburn. Thank you very much, Mr. Chairman, Senator
    Gregg. It is my very great pleasure to appear before a
    committee of Congress now for the sixth year and represent and
    present the judiciary's appropriation request.
        As Justice Kennedy indicated, these sessions really never
    cease to remind me of the majesty as well as the delicacy of
    our Nation's Constitution. The Founding Fathers created an
    independent judiciary to protect the rights of all of our
    citizens, to enforce the laws that you enact, and to mediate
    the disputes between ordinary citizens, States, and our
    national government. I appear before you today to share with
    you the resource requirements that we believe are necessary to
    do exactly that job that the Founding Fathers had in mind.
        I am pleased to have with me Judge Blane Michael from the
    Fourth Circuit and the great State of West Virginia, and Ralph
    Mecham, as you know, the Director of the AO from the great
    State of Utah. They will be pleased to answer any of your
    questions, as I will.
        First, I want to thank you very much for the consideration
    in the appropriation that you gave the judiciary last year and
    to also thank your staff for the cooperative way that they have
    been working with our staff in helping us to answer the
    questions that you have pertaining to our request. We believe
    that process is absolutely vital and we are here to work
    cooperatively with you.
        I look forward to answering any questions that you have
    about specific parts of our request. But before I have that
    opportunity, I want to make just a couple of comments
    emphasizing our primary commitments.
        First, we do have a commitment, and I have a commitment, to
    try to explain and give you all the information necessary to
    make as clear as possible what we are asking for and why we
    need it. For fiscal year 2003, we are asking for an additional
    $500 million, and whether you are from Washington, Kentucky,
    South Carolina, or New Hampshire, that is a lot of money. We
    recognize that, even though, of course, it is a small amount
    compared to the entire Federal budget.
        But, we believe that the increase is necessary to handle
    the judiciary's additional workload--a workload, I might add,
    that is largely uncontrollable. It is thrust upon the court in
    a variety of different ways: whether it is additional criminal
    cases; whether it is providing counsel for indigent defendants,
    who are an increasingly large percentage of those indicted for
    Federal crimes; whether it is to fund probation officers to
    take care of the increasing numbers of persons who are on
    Federal probation, or supervised release; or, whether it is
    providing for the increased security needs that we all feel
    post-9/11.
        Second, we have a commitment to the stewardship of the
    funds that you give us each year and we take that stewardship
    very, very seriously. We do that by developing staffing
    formulas that try to objectively quantify the personnel needs
    that we have. We do that by encouraging teleconferencing and
    long distance learning, as opposed to travel, for court staff
    for educational purposes. We do that by trying to redeploy the
    resources that you give us to the proper places, or the proper
    court units, as technology changes. We do that by trying to
    determine and enforce standards for court buildings so that
    they are uniform and adequate. And, we are constantly looking
    for ways that we can be better stewards of the funds that you
    give us.
        We know we do not have all the answers. In hearings such as
    this in the past, both before the House and the Senate, we hope
    that you believe we have been receptive to your ideas, because
    again, we know we are not the final answer to all the difficult
    problems that we face.
        We know the budget is tight again this year as it has been
    in the past, but we are confident that we can do a good job
    with the funds you give us. We are one of the few entities that
    actually returns funds for use in a subsequent fiscal year. In
    fact, in this budget, we have already identified $100 million
    in what we term as carryover. It is not money in hand, but we
    try to identify for you as early as possible funds which we
    believe will be saved in the course of our normal operations
    and we have already identified $100 million. That is $100
    million that you do not have to appropriate out of your fiscal
    year 2003 allocation of funds.
        So we are looking forward to working with you. As Justice
    Kennedy said, it truly is an independent judiciary that sets
    apart our country in so many ways from the rest of the world.
    As an institution, we are a pretty conservative lot, I must
    say. We do not go out and create cases or look for cases. We
    wait for the cases to be brought before us and then we decide
    them, and that is how we do justice, one case at a time. And
    hopefully, the mosaic of those cases, we can all be proud of,
    and not just the decisions we agree with. We can all disagree,
    of course, with an individual decision, but it is the way we go
    about it and the trust that we place in individual justices and
    judges and the responding trust that we receive from the public
    that makes our country so special and unique.
        We create justice in many, many ways, enforcing our laws
    for the poor and the rich, and for people of all colors. We do
    it by talking to jurors and making them feel good about their
    public service and making them understand their role. We create
    justice by sentencing criminals who are dangerous to prisons.
    We do that by working with probation and pretrial services
    officers to give people who might benefit from a second chance
    another opportunity to start on the path of a law-abiding life
    instead of one of crime and prison. We do that by safeguarding
    our freedom of religion, our freedom of speech, enforcing the
    laws against discrimination, and preserving our equal rights.

                              prepared statements

        Chairman Hollings, Senator Gregg, we present to you today
    the budget that we believe is necessary to do all those things
    and we look forward to working with you.
        [The statements follow:]
               Prepared Statement of Honorable John G. Heyburn II
                                  introduction
        Chairman Hollings, Senator Gregg, and Members of the Subcommittee,
    thank you for giving me the opportunity to testify on the judiciary's
    fiscal year 2003 budget request. With me today are Judge M. Blane
    Michael, Judge of the United States Court of Appeals for the Fourth
    Circuit; and Leonidas Ralph Mecham, Director of the Administrative
    Office of the United States Courts, who is also the Secretary of the
    Judicial Conference and a member of its Executive Committee.
        Before addressing our fiscal year 2003 budget request, on behalf of
    the entire judiciary I want to express our sincere appreciation for the
    generous funding levels provided to the judiciary for fiscal year 2002.
    Faced with responding to both the need for additional resources due to
    the terrorist and anthrax attacks and continuing fiscal pressure, the
    Congress was able to provide significant resources for several of the
    judiciary's highest priorities. While we did not receive funding for
    all the new probation and pretrial services positions and clerks'
    office positions, you provided funding for a significant increase in
    the hourly rates paid to private panel attorneys representing
    defendants who cannot afford to pay for their representation; the
    judiciary's highest priority security needs; the first installment on
    the renovation of the Supreme Court building; and a COLA for judges.
    Although we did not get all the funding we requested, we are very
    grateful that you and your dedicated staff worked with us to fund our
    most pressing needs.
                                budget overview
        The judiciary's fiscal year 2003 request totals $5.2 billion, a
    10.7 percent or $507 million increase over available fiscal year 2002
    appropriations, including the emergency counterterrorism supplemental
    funding. Three quarters of this requested increase ($375 million) is
    required to continue current operations such as pay and benefit
    adjustments, inflationary adjustments, increases in GSA space rental
    costs, an increase in filled Article III judgeships, and continuation
    of the enhanced security measures taken since the terrorist and anthrax
    attacks. The remainder ($132 million) is requested for programmatic and
    workload related needs such as: additional bankruptcy court staff to
    process an all time high number of bankruptcy filings; additional
    probation staff to supervise a record number of offenders released from
    prisons and living in our communities; and an increase in district
    court staff to handle the projected growth in criminal filings as the
    number of Department of Justice prosecutors continues to grow.
        In addition to the funds requested, the judiciary has identified
    $129.8 million required to implement the Administration's proposed
    legislation to shift the full cost for selected retirement benefits for
    current employees from the Office of Personnel Management to each
    individual agency. If this legislation is enacted, the judiciary would
    require a total appropriation of $5.4 billion. A detailed explanation
    of our fiscal year 2003 request is included as an Appendix to this
    statement.
                      impact of the september 11th attacks
        An independent judiciary that all citizens trust and respect, which
    can fairly and expeditiously dispense justice and resolve citizens'
    disputes, is a fundamental tenet of our nation. The events of September
    11th, and the anthrax incidents that followed, tested the judiciary's
    ability to maintain the high quality of justice our country deserves. I
    am pleased to report that the men and women of the Third Branch came
    together in a remarkable show of pride, teamwork, and patriotism to
    make certain that the work of the judiciary continued unabated.
        In New York City, the 2nd Circuit Court of Appeals, the Court of
    International Trade, and the district and bankruptcy courts, probation
    and pretrial services offices, and federal public defender offices for
    the Southern District of New York are all located within a few blocks
    of the World Trade Center. The judiciary thankfully suffered no
    casualties as a direct result of the attacks. The attacks resulted in
    some facility damage, a disruption in court operations, ongoing air
    quality issues and exerted untold emotional stress on court employees.
    However, with the assistance of judiciary staff across the country,
    especially those in the Eastern and Northern Districts of New York, the
    District of New Jersey, and the Eastern District of Pennsylvania, these
    courts were able to continue to function. For example:
      --Pretrial services officers from New York Eastern and New Jersey
            provided office space and telephones. They assisted in home
            confinement/electronic monitoring by following up on alerts for
            86 defendants. In many cases, because streets were closed to
            vehicles and the subway was not operational, officers walked to
            appointments with defendants.
      --The bankruptcy court, which was using the judiciary's new case
            management/electronic filing system, was up and running within
            hours after court executives contacted the Administrative
            Office to receive electronic backups.
      --The 2nd Circuit Court of Appeals heard oral arguments at the
            Association of the Bar of the City of New York while awaiting
            permission to move back into its courthouse.
      --District Court Clerks offices' staff in the Eastern District of
            Pennsylvania, the District of New Jersey, and the Northern
            District of New York volunteered to travel to the Southern
            District of New York to assist with various processing
            functions that were delayed due to the attacks.
                         impact of the anthrax attacks
        The anthrax attacks also had a significant impact on the judiciary.
    The most dramatic was the evacuation and temporary closing of the
    Supreme Court building. The Court continued to hear arguments at the
    ceremonial courtroom in the District of Columbia E. Barrett Prettyman
    United States Courthouse. Examples of other impacts on the judiciary
    include: finding alternative ways to receive time sensitive case
    materials from prosecutors, defendants, and civil litigants without
    utilizing the U.S. mail; receiving juror qualification questionnaires
    without relying on the U.S. mail to ensure that adequate numbers of
    jurors were available to continue trials; significantly scaling back on
    the Administrative Office's use of the U.S. mail to communicate with
    the courts and relying almost exclusively on electronic communications
    via the judiciary's nationwide Data Communications Network; and
    responding to anthrax hoaxes to ensure the safety of court facilities.
                             long-term implications
        In response to the terrorist attacks, the judiciary is taking steps
    to protect against future incidents that could disrupt the operations
    of the judiciary. These steps include heightened security, the
    development of a nationwide continuity-of-operations plan, studying the
    feasibility of establishing a court operations center located outside
    of Washington, D.C., and the continued use of technology to decrease
    the courts' reliance on mail to perform routine business (i.e., the
    electronic filing of documents, electronic noticing, and processing
    juror questionnaires).
        Also in the long-term, the workload of the judiciary is expected to
    increase. As additional resources are provided to the various law
    enforcement agencies of the Department of Justice and additional
    Assistant U.S. Attorneys are hired to combat terrorism, the result will
    be continued growth in the workload of the judiciary. Any number of
    high profile trials could result from prosecutions already known or
    probable. These cases will cause increased security and defense
    expenditures. Our budget request does not specifically take into
    account these potential trials. However, we will monitor the costs of
    these proceedings so that Congress and the public can be kept informed.
                              heightened security
        Since the September 11th attacks, the judiciary has significantly
    enhanced security at judiciary facilities. The additional resources
    appropriated by Congress in the fiscal year 2002 emergency supplemental
    will enable the judiciary to maintain the level of court security
    officer (CSO) coverage recommended by the U.S. Marshals Service,
    procure upgraded X-ray machines for courthouse loading docks and
    mailrooms, create 106 new deputy marshal positions to coordinate
    security in each circuit and district, begin to address the mail
    handling and screening needs of the courts, and provide increased
    protection both for CSOs and court facilities, especially those with
    high-profile terrorist cases.
        The judiciary's budget request for Court Security totals $298
    million and will continue the current higher level of security in the
    courts for fiscal year 2003. The request is $1.4 million below our
    fiscal year 2002 spending plan and takes into account non-recurring
    funding for security systems provided in the emergency supplemental.
    Working with the U.S. Marshals Service, the judiciary will continue to
    evaluate its security needs and will keep the Committee informed of our
    requirements.
        While not part of the judiciary's budget request, the Marshals
    Service is responsible for the security of courthouses, judges,
    criminal proceedings, and the transportation and security of prisoners.
    The impact of the war on terrorism and the growing number of criminal
    cases has had a dramatic impact on the resource needs of the Marshals
    Service. The dedication and professionalism which the men and women of
    the Marshals Service have displayed since the September 11th attacks
    has been immeasurable. The judiciary appreciates that you were able to
    provide the Marshals Service with significant funding increases in
    fiscal year 2002.
        We hope that in fiscal year 2003 the Committee will be able to
    continue to provide the Marshals Service with additional staff for
    protection of the judicial process. In districts such as the Southern
    District of Florida and those along the southwest border, the number of
    defendants detained by the Marshals Service has grown dramatically in
    recent years, and additional deputy marshals are desperately needed to
    secure these potentially dangerous defendants. Additional deputy
    marshals are also needed for counterterrorism efforts associated with
    the terrorist-related cases the courts are currently hearing and
    additional cases that may be heard in the future. We encourage you to
    provide the Marshals Service the necessary resources to support their
    judicial protection responsibilities.
             impact of additional assistant u.s. attorneys (ausas)
        Over the past few years, additional resources have been provided to
    the U.S. Attorneys to increase gun prosecutions, promote school safety,
    combat cyber crime, and establish joint terrorism task forces. As the
    number of AUSAs continues to grow to address the priorities of Congress
    and the Administration, workload in the judiciary will continue to
    grow. The potential growth in criminal filings that could result from
    additional AUSAs has a far-reaching impact on the judiciary. Additional
    criminal cases brought to federal courts require additional judges to
    hear cases, court staff to administer them, pretrial services officers
    to supervise defendants released in our communities while awaiting
    trial, court-appointed counsel to represent additional defendants, and
    more probation officers to prepare presentence reports and supervise
    offenders released from prison serving their mandatory terms of
    supervised release.
                              court support staff
        The work of the judiciary is largely uncontrollable. The courts
    must handle whatever number of civil, criminal, or bankruptcy cases are
    filed, fairly and expeditiously. The judiciary cannot control the
    number and length of trials, the resulting number of jurors, and the
    number of defendants requiring representation. The courts also are
    unable to control the number of offenders serving a term of supervised
    release or defendants awaiting trial who require supervision. In order
    to ensure resources are deployed to match workload demands, the
    judiciary has developed scientifically-derived staffing formulas that
    are used to construct the budget request and allocate funding to court
    clerks' offices and probation and pretrial services offices. Each court
    program (courts of appeals, bankruptcy courts, district courts, and
    probation and pretrial services) has its own formula which takes into
    account the individual workload drivers for the functions performed by
    these offices.
        The staffing formulas were updated in the summer of 2000 after
    completion of an extensive series of analytical studies of the work
    performed in clerks' offices and probation and pretrial services
    offices. The formulas are used to determine the level of resources
    needed to allow the judiciary to provide a consistent level of service
    to the bench, bar, and the public, taking into consideration upward and
    downward changes in workload. As filings and other workload drivers
    fluctuate from year to year, the application of the formulas to
    individual court units allows for a corresponding increase or decrease
    in funding allocations. This allows the judiciary to ensure that
    resources are allocated equitably to all court units based on their
    individual workloads.
        Although the courts' workload continues to increase in fiscal year
    2002 the judiciary was unable, due to funding constraints, to fund
    fully its staffing formulas. The judiciary was able to provide some
    additional law enforcement resources only to probation and pretrial
    services offices where workload is increasing the most.
        In fiscal year 2003, the budget requests funding for 1,297
    additional FTEs to fund fully the courts' fiscal year 2002 and 2003
    workload requirements (461 FTEs for probation and pretrial services and
    836 FTEs for clerks' offices). Without sufficient staff, judicial
    processes are short-changed, civil and bankruptcy cases are delayed,
    support provided to judges and the public deteriorates, and offenders
    and defendants living in our communities are not adequately supervised.
                        probation and pretrial services
        Federal probation and pretrial services officers protect the public
    through the investigation and supervision of defendants and released
    offenders within the federal criminal justice system. A pretrial
    services officer supervises defendants awaiting trial who are released
    into our communities and provides a source of information upon which
    the court can determine conditions of release or detention while
    criminal cases are pending adjudication. To support sentence
    determinations, which require both uniformity and attention to
    individual circumstances, probation officers provide the court with
    reliable information concerning the offender, the victim, and the
    offense committed, as well as an impartial application of the
    sentencing guidelines. Probation officers supervise offenders coming
    out of federal prison who are required to serve a term of supervised
    release. Many of those under supervised release have substance abuse
    and mental health conditions.
        In order to highlight the vital role played by these dedicated
    officers, I would like to offer an example of an incident where a
    probation officer went the extra mile in preparing a presentence report
    for the judge.

        In March of 2001, a probation officer from the Northern District of
    California was assigned a presentence report of a case where the
    defendant pled guilty to Conspiracy to Bring Aliens Into the United
    States Illegally, Transportation of Minors in Foreign Commerce for
    Illegal Sexual Activity, and Subscribing to False Tax Returns. The case
    came to the attention of authorities when a minor female died of carbon
    monoxide poisoning in one of the defendant's apartment complexes.
    Further investigation revealed that this female and other minor females
    were illegal aliens who had been smuggled into the United States with
    fraudulent visas. The defendant began having sexual relations with many
    of the victims when they were as young as 11 years old.
        The probation officer left no stone unturned in preparation of the
    presentence report. She interviewed each agency involved, including the
    city attorney's office, the Immigration and Naturalization Service, the
    American Civil Liberties Union-Immigration Rights Project, the victims'
    civil attorney, the Internal Revenue Service, and the mental health
    professionals who were working with the victims. It was through these
    interviews that the probation officer determined the extent of the
    psychological injuries to the victims.
        The probation officer's presentence report to the Court recommended
    that the Court depart upward due to the extreme psychological injury to
    the victims. This upward departure was not part of the plea agreement,
    and became a point of contention at the sentencing hearing. The judge
    believed there was evidence to support this factor and agreed that an
    upward departure of two levels was warranted on that basis. The
    attorneys agreed to revise the plea agreement to include the upward
    departure. The defendant was ultimately sentenced in accordance with
    all of the factors that were presented and supported through the
    probation officer's extraordinary investigation.

        The mission of our probation and pretrial services officers is not
    only to protect the public by supervising the activities of offenders
    and providing information to the court but it is to help offenders and
    defendants get back on their feet and integrate back into our
    communities. For example:

        In the Western District of Kentucky, an offender recently released
    from prison entered the probation office and experienced an emotional
    breakdown because his proposed housing had fallen through. With the
    help of a probation officer, the offender was admitted to a Crisis
    Invention Unit where the offender lived and received emotional
    counseling for several months. While the offender was admitted, the
    probation officer helped the offender apply for Social Security
    benefits and food stamps. The officer also helped the offender secure
    an apartment, which he was able to pay for using his Social Security
    benefits. The offender is now living on his own, receiving bi-monthly
    counseling sessions, and is in total compliance with the terms of his
    release.

        These are only two examples of the dedication and commitment that
    each employee of the Third Branch brings to the job.
        In fiscal year 2001, probation and pretrial services officers
    supervised a record number of offenders and defendants (139,797) living
    in our communities. This is above the federal prisoner population and
    is projected to continue to grow in fiscal year 2002 and fiscal year
    2003 as the number of offenders released from federal prisons continues
    to increase.
        The fiscal year 2003 budget requests 461 additional probation and
    pretrial services FTEs to provide the additional staff required to
    manage this growing workload. Without the additional resources needed
    to manage their growing workloads, probation and pretrial services
    officers will be unable to maintain their high level of service to the
    community. Without adequate staffing, officers will focus most of their
    efforts supervising those persons they believe to be the most dangerous
    felons released from federal prison, while reducing the level of
    supervision over other released offenders who appear to be less
    dangerous, but may still pose a threat to the community. In addition,
    the officers would be unable to devote sufficient time to prepare
    sentencing recommendations to the court and helping struggling
    offenders in need of assistance.
                              clerks' office staff
        The fiscal year 2003 budget also requests 836 FTEs to support the
    operations of the courts. This includes 494 FTEs for bankruptcy courts
    to handle the explosive growth in bankruptcy filings. In fiscal year
    2001, bankruptcy filings were a record 1,437,354 and they are projected
    to continue to increase. The long term impact of insufficient staffing
    in bankruptcy clerks' offices will be seen in longer disposition times,
    more case management errors, and reduced level of service to the judges
    and the bar. Ultimately this will negatively affect both debtors and
    creditors.
        The request also includes 289 FTEs for district courts where the
    number of criminal defendants is projected to increase by 9 percent in
    fiscal year 2002 over fiscal year 2001. This anticipated growth in
    criminal workload reflects the projected increases in the number of
    cases the U.S. Attorneys offices will be able to prosecute given their
    recent increases in funding. Without additional staff to process this
    extra work, we can expect delays in civil filings and decreased service
    to the bench, bar, and public.
        Finally, the request includes 53 FTEs to support circuit courts of
    appeals where between fiscal year 2000 and fiscal year 2001, appeals
    increased by 5 percent.
                               defender services
        The Sixth Amendment to the U.S. Constitution provides that ``in all
    criminal prosecutions, the accused shall enjoy the right . . . to have
    the assistance of counsel for his defense.'' In enacting the Criminal
    Justice Act of 1964, Congress charged the federal judiciary with
    responsibility for providing counsel in connection with federal
    criminal prosecutions and related matters and authorized a separate
    Judiciary account the Defender Services appropriation to pay for these
    appointed counsel services.
        As is true of the Judiciary's workload generally, the demand for
    appointed counsel services is not within the Judiciary's control. Both
    the number and complexity of cases in which counsel must be appointed
    are a function of both decisions made by the Department of Justice and
    the criminal laws and related statutes enacted by the Congress.
        The substantial rate increase you provided for fiscal year 2002
    will go a long way toward ensuring that competent counsel are available
    to meet the demands. I not only want to reiterate and re-emphasize how
    much this milestone is appreciated by those of us in the Judiciary
    responsible for managing the appointed counsel process, but also to let
    you know that panel attorneys from around the country have asked that
    we convey to you directly their appreciation for what you have done. At
    a time when the world's attention is likely to be focused on our
    federal criminal justice system, we believe that this increase will
    have a meaningful, positive impact on how well that system operates.
        Excluding funding for panel attorney rate increases, we are seeking
    only a modest increase for Defender Services in fiscal year 2003 to
    cover workload growth and inflationary increases. Defender Services
    obligations are projected to grow by just 7.6 percent in fiscal year
    2003. Half of this growth is associated with the need to provide
    representation in the greater number of criminal matters that are
    expected to be filed in fiscal year 2003 than in fiscal year 2002. The
    remainder is needed to fund inflationary increases and mandatory pay
    and benefit adjustments.
              cost containment and the judiciary's budget process
        The Constitution created the judiciary as a separate and
    independent branch of government. One of the by-products of the
    distinction as a separate branch, is the judiciary's authority to
    submit its budget request to Congress through the President ``without
    change'' by the executive branch. 31 U.S.C. Sec. 1105(b).
        The judiciary takes this authority seriously. The Judicial
    Conference of the United States recognizes that the responsibility for
    budgetary oversight requires stewardship and fiscal responsibility in
    both providing for the judiciary's requirements while considering the
    needs of the nation. The Judicial Conference established a Committee on
    the Budget, of which I am the Chairman, to assemble and present to
    Congress the budget for the judicial branch. In response to a request
    from the Congress, the Judicial Conference determined that the Budget
    Committee's jurisdiction should be expanded to include an Economy
    Subcommittee responsible primarily for: (1) coordinating efforts of the
    judiciary to achieve fiscal responsibility, accountability, and
    efficiency; (2) advising the Budget Committee on development of
    fiscally responsible budget estimates; and (3) coordinating the
    development of reliable long-range budget estimates. The Budget
    Committee continues to meet each of these objectives.
        With the assistance of the professional staff at the Administrative
    Office who support the committees of the Judicial Conference, the
    Economy Subcommittee and the Budget Committee analyze and debate the
    budget requests of the various program committees of the Judicial
    Conference. After intensive review, the Budget Committee recommends a
    budget request to the Judicial Conference that balances both the
    judiciary's responsibility to request sufficient funding to effectively
    operate the courts and the judiciary's duty as stewards of the public's
    funding.
        In addition to the annual review of the budget request by the
    Budget Committee, the judiciary on a regular basis retains outside
    consultants to evaluate independently our financial and operational
    requirements and identify areas for improvements and efficiencies.
    While these studies are sometimes undertaken at Congress' behest, more
    often the judiciary itself initiates these reviews. Over the past few
    years, under the leadership of the Administrative Office, independent
    consultants have evaluated the courts' space and facilities program,
    the information technology program, the library services program, and
    the court security program. Currently, the judiciary is conducting a
    comprehensive assessment of the probation and pretrial services system.
    Upon completion of these independent program studies, the
    Administrative Office and the applicable committees of the Judicial
    Conference review the results and implement program changes to improve
    the level of service provided by the courts and make the courts more
    efficient.
        While the judiciary is working at the national level to review
    budget requests and conduct independent program reviews, we, with the
    assistance of the Administrative Office, also are working at the local
    level to ensure that the funding you provide us is spent efficiently.
    Chief judges and unit executives receive training on the financial
    responsibilities of operating their court; local court unit financial
    analysts are trained in budget and accounting; and Administrative
    Office staff conduct court audits and program assessments that help
    court managers improve the management of their resources. These efforts
    are done to ensure that every court--from the large urban courts to the
    small rural courts--is effectively managing the funding provided to the
    judiciary.
                   contributions of the administrative office
        As I discussed earlier, the Administrative Office plays a pivotal
    role in the budgeting and management of the funding you provide the
    judiciary. It not only performs important administrative functions such
    as personnel, payroll, procurement, space management and planning, and
    accounting, but also provides a broad range of legal, financial,
    management, program, and information technology services to the courts.
    The Administrative Office, under the direction of the Judicial
    Conference, is the manager of change in the judiciary. This change
    includes: implementing throughout the courts modern automated systems,
    such as personnel, accounting, library services, jury management, and
    case management; and expanding the use of technologies to assist in the
    supervision of offenders and defendants.
        The Administrative Office was also instrumental in providing direct
    support to the courts to restore operations, upgrade security and
    facilitate new mail handling procedures, after the events of September
    11. The exemplary performance was commended in a letter I read from the
    Chief Judge of the Southern District of New York. He recognized the
    Administrative Office for the resource and personnel help that enabled
    the court to carry on its business while bearing the burdens of
    September 11.
        I urge the Committee to fund fully the Administrative Office's
    budget request including its modest request for eight additional FTEs.
    The Administrative Office is integral to the judiciary's ability to
    perform its work. Without the Administrative Office's support, the
    judiciary could not continue to improve its efficiency. The increase in
    funding will ensure that the Administrative Office continues to provide
    program leadership, policy guidance, and administrative support to the
    courts, and to lead the efforts for them to operate efficiently.
                  contributions of the federal judicial center
        The Federal Judicial Center is the federal judiciary's education,
    training, and research arm. With Judge Smith, I thank you for last
    year's programmatic increase, the first such increase in over ten
    years, and only the second full current services increase in the same
    period. We are grateful.
        The Center is vital to our work as judges, and a main element of
    its modest 8.7 percent increase this year involves education for
    judges. I want also to recognize the Center's education for the
    employees in our clerks, probation, and pretrial offices in these
    troubled times of employee unease and uncertainty. Center management
    training, almost all of it offered by satellite and on the web, has
    never been more important and highlights the need for the three
    educational technology positions the Center requests.
        Center education is also vital to our work as judges. The Center
    seeks an increase of $500,000 to allow it to restore its basic judicial
    continuing education programs to an annual basis. Since 1999, the
    Center's reduced appropriation has meant that district, magistrate,
    bankruptcy, and appellate judges may attend one of these seminars no
    more than once every eighteen months. This cutback has been a matter of
    great concern to judges over the country. The Board of the Center took
    the unusual step of adding its own statement to supplement Judge
    Smith's justification for this increase.
        These programs provide updates on caselaw trends, on innovations in
    managing cases, and on such specialized topics as admissibility of
    scientific evidence. Furthermore, we can share notes with colleagues
    from other courts as well as with the excellent faculty that the Center
    assembles. I believe the Center's request deserves the committee's
    support and urge favorable action on the full amount.
                             judicial compensation
        Before closing, I would like to express our appreciation for
    Congress' approval of a fiscal year 2002 Employment Cost Index (ECI)
    adjustment for federal judges, members of Congress and top officials in
    the executive branch. The Judicial Conference strongly encourages
    Congress to authorize an ECI adjustment for fiscal year 2003, which
    will require a provision to waive section 140 of Public Law 97-92.
    While the law provides for a 3.1 percent increase, the President's
    Budget reduces this adjustment to a maximum 2.6 percent increase. We
    urge that Congress take action this year to avoid further salary
    erosion.
                                   conclusion
        Chairman Hollings and members of the subcommittee, this concludes
    my statement. I look forward to working with you and I would be pleased
    to respond to any questions you may have.
                                    Appendix
                                    summary
        The fiscal year 2003 appropriation request for the Courts of
    Appeals, District Courts and Other Judicial Services totals
    $4,961,693,000, an increase of $507,705,000 over the fiscal year 2002
    available appropriations which included $82,221,000 in emergency
    supplemental funding. In addition to appropriated funds, the judiciary
    utilizes other funding sources to supplement its appropriations.
    Included in these sources of funding are fee collections, carry forward
    of fee balances from a prior year, and the use of no-year funds.
        Of the $507,705,000 increase in appropriations, 75 percent
    ($382,134,000) is for adjustments to the fiscal year 2002 base
    associated with standard pay and other inflationary increases as well
    as other adjustments that will allow the courts to maintain current
    services in fiscal year 2003. The remaining 25 percent ($125,571,000)
    is needed to respond to continued increases in the courts' workload, as
    well as increased requirements for security, magistrate judges, and
    federal defender offices. The request for the principal programs are
    summarized below.
                             salaries and expenses
        The salaries and expenses of circuit, district, and bankruptcy
    courts and probation and pretrial services offices account for most of
    the judiciary's request. A total of $4,304,243,000 is required for this
    activity. Funding totaling $287,352,000 is expected to be available
    from other sources including fee collections and carryforward balances
    to fund requirements. This leaves a direct appropriation need of
    $4,016,891,000, $409,603,000 above the fiscal year 2002 available
    appropriation which included $5,000,000 in emergency supplemental
    funding.
        Nearly 72 percent of the $409,603,000 increase ($294,157,000) is
    needed to fund adjustments to the fiscal year 2002 base for pay and
    benefits increases for courts support staff ($115,100,000), pay and
    benefits increases for judges ($9,881,000), the filling of vacant
    judgeships and increases in senior judges ($13,887,000), additional
    space rental costs ($80,784,000), additional information technology
    costs ($23,143,000), financing adjustments necessary to maintain
    current services ($39,655,000), and inflationary increases in other
    operational costs ($11,707,000).
        The remaining increases ($115,446,000) will fund 7 additional
    magistrate judges and their staff ($2,163,000) to provide an effective,
    yet less costly, way of providing help to Article III judges to handle
    the growing volume of civil and criminal cases facing the courts;
    additional court support staff ($102,727,000) to allow the courts to
    keep pace with increases in its largely uncontrollable workload;
    enhanced mail handling facilities and services ($10,000,000) to improve
    security in mail room operations; medical examinations for probation
    and pretrial services officers ($200,000); and distance learning and
    web-based training initiatives ($356,000).
                               defender services
        A total of $588,741,000 in appropriations is required for the
    Defender Services program to provide representation for indigent
    criminal defendants in fiscal year 2003. This represents an increase of
    $88,070,000 over the fiscal year 2002 enacted appropriation of
    $500,671,000.
        Most of the increase ($87,470,000) is needed for adjustments to the
    fiscal year 2002 base for inflationary and workload increases. Included
    in these adjustments is $18,087,000 for costs associated with
    maintaining the base level of representations; $30,066,000 to annualize
    the fiscal year 2002 non-capital private panel attorney rate increase
    to $90 per hour; $17,142,000 to increase private panel attorney rates
    to $113 per hour in all districts beginning April 1, 2003; and a
    $22,175,000 net increase associated with 6,300 additional
    representations projected in fiscal year 2003.
        The remaining increase ($600,000) will fund the start up costs of
    two new federal defender organizations. The Congress and the Judicial
    Conference have urged us to establish more federal defender
    organizations as an alternative to using panel attorneys in districts
    where this would be appropriate.
                        fees of jurors and commissioners
        For the Fees of Jurors program, an appropriation of $57,826,000 is
    required, an increase of $9,695,000 from the fiscal year 2002 enacted
    appropriation of $48,131,000. This increase funds inflationary
    adjustments ($450,000); a net decrease in projected juror days
    (-$878,000); and financing adjustment required to avoid a cessation of
    civil jury trials ($10,123,000).
                                 court security
        For the Court Security program, an appropriation of $298,235,000 is
    required. This is a $337,000 increase over the fiscal year 2002
    available appropriation of $297,898,000 which included $77,221,000 in
    emergency supplemental funding.
        Adjustments to base include increases of $33,412,000 including
    standard pay, benefit, and contractual services increases
    ($13,273,000); funding to annualize the costs for new deputy U.S.
    Marshals funded through the emergency supplemental ($9,800,000);
    funding to annualize 24 new court security officers (CSOs) expected to
    be brought on in fiscal year 2002 ($584,000); funding for increases
    associated with new and existing space including 10 new CSOs and
    security systems and equipment ($2,266,000); and funding for the
    cyclical replacement of existing security systems and equipment
    ($7,489,000). These increases are offset by a decrease of $42,600,000
    for non-recurring costs that were funded with emergency supplemental
    appropriations in fiscal year 2002. This results in an overall net
    reduction in funding for base adjustments of $9,188,000.
        The remaining increase ($9,525,000) is for program increases. These
    include $8,656,000 for security systems and equipment enhancements,
    $550,000 for CSO and contracting officer technical representative
    training programs, and $319,000 (4 FTE) for additional judiciary-funded
    positions at the U.S. Marshals Service to improve the management of the
    Judicial Facility Security Program.
                                     ______

                  Prepared Statement of Leonidas Ralph Mecham
                                  introduction
        Chairman Hollings, Senator Gregg, and Members of the Subcommittee:
    I am pleased to appear before you this morning to present the fiscal
    year 2003 budget request for the Administrative Office of the United
    States Courts (AO). I appreciate this opportunity and your time.
        Let me first take a moment to thank you for your help in conference
    on the fiscal year 2002 appropriation for the AO. Your support was
    critical in allowing us to maintain our current level of service to the
    courts, and for this I am grateful. I also want to express my
    appreciation for your leadership in providing the judiciary with the
    fiscal year 2002 emergency supplemental security funding necessary to
    address some of the most pressing requirements we identified in the
    aftermath of September 11th and the anthrax exposures that followed.
    Without the assistance of this Subcommittee, we would not have received
    the additional resources to heighten mail and building security across
    the country; purchase an emergency communications backup system to
    ensure that judges and court administrators can maintain contact with
    the AO, the U.S. Marshals Service, and General Services Administration
    personnel during emergency situations; or improve the physical security
    of the Thurgood Marshall Federal Judiciary Building. Your attention to
    the needs of the judiciary, and the focus of your staff, is very much
    appreciated.
                       role of the administrative office
        Created by an Act of Congress in 1939 to eliminate the separation
    of powers issues raised by the Department of Justice's handling of the
    judiciary's administrative needs, the Administrative Office of the
    United States Courts serves as the central support agency for the
    federal court system, with key responsibility for judicial
    administration, program management, and oversight.
        As such, the AO is the focal point for judiciary communication,
    information, program leadership, and administrative reform. Our court
    administrators, accountants, systems engineers, analysts, architects,
    lawyers, statisticians, and other staff provide professional services
    to meet the needs of judges and staff working in the federal courts
    nationwide.
                      response to 2001 terrorism incidents
        Nowhere was the exemplary service and outstanding abilities of the
    Administrative Office staff more evident than in its response to the
    terrorist events of September 11, 2001. Calling upon the judiciary's
    existing disaster response group formed in 1992 after Hurricane Andrew,
    within hours of the World Trade Center attacks, we assembled an
    emergency response team to work with court staff in New York City to
    facilitate recovery of communications and computer systems and return
    the courts to normal operations as soon as possible.
        The emergency response team assisted the courts in acquiring
    cellular phones, rerouting e-mail and computer networks, resolving
    procurement issues and ensuring that employees were paid accurately and
    on time. The team also kept court employees and the public posted on
    the status of operations in New York on the judiciary's Internet site.
        The anthrax contaminations that followed soon after, and the
    ensuing mail delays, required a number of adjustments to court
    operations, including the relaxing of rules about the timeliness of and
    the means by which cases and pleadings are filed (i.e., electronic and/
    or fax). The mail delays also required finding creative ways of
    ensuring that juror questionnaires were returned in a timely manner,
    guaranteeing that sufficient juror pools would be available to continue
    trials.
        In addition, the threat posed by contaminated mail required the AO
    to reduce significantly paper mailings to the courts and enhance the
    use of our nationwide Data Communications Network. The AO expanded its
    already widely used e-mail broadcast system and created a series of
    electronic mailing lists to target particular court audiences. The use
    of these broadcasts went beyond simple letter communications and
    included the distribution of documents via the judiciary's intranet. AO
    employees are continuing to rely heavily upon e-mail messages, e-mail
    broadcasts, faxes, and postings to the judiciary's intranet for
    communications with court staff. Fortunately, the judiciary's
    investment in information technology, made possible through the support
    of this Subcommittee, and the establishment of a nationwide electronic
    infrastructure, positioned us to move more quickly toward electronic
    communication solutions during this crisis.
        AO staff continued assistance by providing information to all
    courts on enhanced security, mail handling, testing for anthrax and
    responding to threats from anthrax and other biological and chemical
    agents. Information was developed and disseminated to highlight health
    and safety concerns such as: how to handle crisis benefit issues,
    including Worker's Compensation and the Employee Assistance Program;
    public health issues; and special information on how to deal with
    trauma in the work place.
        AO staff also coordinated the judiciary's request for emergency
    supplemental funds to provide for additional court security, protective
    window film, upgraded x-ray machines, an emergency communications
    system, heightened mail screening, and other perimeter security
    enhancements for the courts. Working with the Office of Management and
    Budget (OMB) we were provided $19.7 million from funds appropriated to
    the President to cover the cost of increased court security officer
    (CSO) coverage. Then, with your leadership and assistance, the
    judiciary received additional emergency security funds totaling $95.4
    million in the fiscal year 2002 emergency supplemental.
    Longer-Term Implications
        As Chief Justice Rehnquist pointed out in his 2001 Year-End Report
    on the Federal Judiciary, the Administrative Office played a pivotal
    role in ensuring that the federal courts around the country have
    effective security precautions and adequate mail screening procedures
    in place. But, as the central support agency for the administration of
    the federal court system, we must now turn our attention to the long-
    range planning aspects of crisis response, identify and address our
    vulnerabilities, and determine where changes in court operations are
    necessary in light of these newly recognized threats.
    Offsite Court Operations Support Center
        One significant vulnerability is the location of our key
    administrative and operational support systems at the AO in Washington,
    D.C. With the encouragement of this Subcommittee, the AO currently is
    studying the feasibility of opening a court operations support center
    that would provide a separate location outside Washington, D.C. for the
    operation of systems critical to the work of the courts. The Support
    Center also would provide a location from which key personnel could
    operate in the event the Thurgood Marshall Federal Judiciary Building
    were forced to close for any reason. From a national perspective, the
    Support Center would better ensure the continuity of operations of the
    judiciary's information technology infrastructure that supports the
    day-to-day operations of the courts so that justice would continue to
    be served during any situation that might otherwise disrupt normal
    operations.
    Continuity of Operations Planning
        Outside of Washington, D.C., courthouses are often the most visible
    and potentially vulnerable federal facilities. Recognizing this threat,
    an emergency preparedness function was established at the AO in
    November 2001 to allow us to better focus on crisis response, occupant
    emergency planning, and continuity of operations planning. We intend to
    develop model continuity of operation plans for use by the courts and
    the AO. The objective of these plans is to ensure the capability exists
    to continue core business functions throughout the courts, and to
    achieve an orderly recovery under all emergency situations.
    Acceleration of Move to E-business
        Another vulnerability, discussed earlier, was how the routine
    business of the courts, including the filing of motions and receipt of
    juror questionnaires, was disrupted when mail service became
    unreliable. For the past several years, the judiciary has been
    progressing toward heavier use of electronic means of transacting
    business, including the move toward electronic case filings, as well as
    incorporating e-business into our voucher and bill payment operations.
    The judiciary is considering whether the move toward these systems can
    be accelerated.
    Unique Issues Associated with High Threat Trials
        The terrorist threat to our nation also means that the federal
    courts are likely to be the forum for many more highly publicized and
    security-sensitive criminal proceedings. Already we know of three such
    trials upcoming--the Zacarias Moussaoui and John Walker Lindh cases in
    the Eastern District of Virginia and the Richard Reid case in
    Massachusetts. The courts face unprecedented and extraordinary
    challenges involving a wide range of issues, including security
    concerns, information technology, and furnishing closed-circuit
    broadcasts of the proceedings to victims' families. The AO is providing
    support and advice to the courts on all of these issues, as we did in
    the Oklahoma City bombing cases.
        I look forward to working with you and the Members of this
    Subcommittee as we develop more specific plans to ensure that the
    federal courts are safe and readily accessible to the public, and that
    the business of the judiciary can and will continue without disruption
    in the event of a terrorist attack, chemical or biological
    contamination, or natural disaster.
                      administrative office budget request
        The fiscal year 2003 budget request for the Administrative Office
    of the U.S. Courts is $66,912,000, representing an increase of
    $2,369,000, or 3.7 percent above fiscal year 2002 available
    appropriations. However, when the emergency supplemental funding is
    excluded, the fiscal year 2003 increase for the AO is $5,248,000, or
    8.5 percent more than the fiscal year 2002 enacted level. In addition
    to this amount, the AO's budget request identifies $3,947,000 required
    to implement the Administration's proposed legislation to shift the
    full cost of selected retirement benefits for current employees and
    health benefits for retirees from the Office of Personnel Management to
    each individual agency. If this legislation is enacted, the AO would
    require a total appropriation of $70,859,000 in fiscal year 2003.
        More than three-fourths of the requested increase for the AO,
    $4,055,000, is necessary to fund standard pay and benefit cost
    adjustments and general inflationary increases to maintain our current
    level of service to the courts. The remaining increase of $1,193,000,
    which I will describe in greater detail in a moment, is requested to
    strengthen our programmatic oversight role, enhance crisis response,
    security and safety programs, and allow us to fund an increase in the
    transit subsidy benefit for AO employees.
    Transit Subsidy
        Pursuant to the Transportation Equity Act for the 21st Century
    (Public Law 105-78), the AO implemented a transit subsidy benefit for
    its employees within available funding in fiscal year 2000. The benefit
    is currently $60 per month with a participation rate of approximately
    50 percent. Executive Order No. 13150 provided for an increase in the
    allowable benefit to $100 per month in January 2002.
        The already limited parking available in and around the Thurgood
    Marshall Federal Judiciary Building has been reduced by the loss of
    parking spaces at Union Station due to security considerations.
    Further, the planned construction of Station Place has eliminated a
    commercial parking lot immediately behind the AO building where many of
    our employees parked. This, coupled with the continuing increase in
    traffic congestion in the Washington, D.C. area, has increased AO
    employee interest in the transit subsidy program. The requested program
    increase of $400,000 will allow us to increase the benefit for AO
    employees to the authorized level of $100 per month and cover the cost
    of an anticipated increase in the participation rate to 60 percent.
    AO Staff Support of the Courts
        An increase of $793,000 is requested to provide eight additional
    FTE for program oversight. Continuing to develop new programs and
    systems while supporting a court system whose proportional growth far
    outpaces that of the AO is a daunting task. The staffing level in the
    AO has remained approximately the same over the last six years, while
    court staffing has grown by 15 percent during the same time period.
        To make the most efficient use of the resources provided the AO,
    each vacancy that occurs is evaluated and used to fulfill our highest
    priority needs. However, because sufficient resources must be committed
    to core functions such as payroll, personnel, and financial management,
    and to provide support to the committees of the Judicial Conference,
    program oversight functions are in serious need of additional
    resources. The eight additional FTE we are requesting will enable the
    AO to perform more adequately its audit, review, and assessment
    responsibilities and, as I have detailed in my testimony, the tragic
    events of last fall highlight the need for new resources to staff
    adequately our crisis response, security, and safety programs in
    support of the courts.
                      responsibilities and accomplishments
        As I mentioned earlier, the Administrative Office has key
    responsibility for judicial administration, program management, and
    oversight. It supports the Judicial Conference in determining judiciary
    policies, and develops new methods, systems, and programs for
    conducting the business of the federal courts. The AO also assists the
    courts in implementing better management practices, developing and
    supporting innovative technologies that enhance the operations of the
    courts, and collecting and analyzing statistics on the business of the
    federal courts for planning and determining resource needs.
        It assists the courts in program management, addressing areas such
    as case management, jury administration, defender services, court
    interpreting services, and court reporting. One of our major areas of
    support is probation and pretrial services. In fiscal year 2001, the AO
    assisted the probation and pretrial services offices in supervising a
    record number of offenders and defendants (139,797) living in our
    community at an average cost of $11 per day. This is above the federal
    prison population (120,827), which has an average inmate cost of $55
    per day. The AO also provides financial management services to the
    judiciary including budget formulation, execution, and accounting; and
    personnel and payroll support for 32,000 judiciary employees. It
    supports the facilities and security needs of over 800 facilities
    housing judiciary operations, and conducts audits and reviews to ensure
    the continued quality and integrity of federal court operations.
        Throughout 2001, the AO excelled in its day-to-day
    responsibilities. Let me take a moment to highlight several areas.
    Financial Stewardship
        Working with the courts to ensure the efficient and effective use
    of resources is a key AO function. We recognize that it is imperative
    that we do all in our power to ensure that the monies appropriated to
    the judiciary are utilized prudently; assets and resources are
    protected from loss, waste, or abuse; operations are efficient and
    effective; financial reports are accurate and reliable; and business
    practices comply with applicable laws and regulations.
        In fiscal year 2001, the AO undertook an initiative to assist chief
    judges and court unit executives in carrying out their fiscal
    stewardship and management oversight responsibilities. Current
    delegations of authority and other financial controls were reviewed to
    ensure they are documented, up-to-date, and clearly defined. The AO
    also worked to ensure that judges and court managers are provided with
    tools to assist them in their oversight responsibilities. To do this,
    the AO convened a group of judges and court executives to develop
    improved management oversight and stewardship training programs and
    guidance. Seminars for chief district and bankruptcy judges were
    delivered, a Handbook on Management Oversight and Stewardship for chief
    judges and unit executives was published, and a companion educational
    program for court unit executives is being prepared. In addition, a
    task force on internal controls is working to develop a model internal
    control plan for the courts.
    Automation
        In the area of automated systems, one of our largest initiatives in
    recent years is the Case Management/Electronic Case Files (CM/ECF)
    project, which permits courts to receive documents over the Internet
    and maintain electronic case filings. We began national roll-out of CM/
    ECF in the bankruptcy courts last March and will begin implementation
    in the district courts this spring. More than 12,000 attorneys have
    already filed documents electronically and, in 2001 alone, over 50,000
    people signed up for PACER (Public Access to Court Electronic Records),
    which facilitates all electronic public access to court data, including
    CM/ECF. This new system will save considerable court resources while
    also significantly improving public access to federal court records.
        Also during 2001, AO staff began delivering the Probation and
    Pretrial Services Automated Case Tracking System-Electronic Case
    Management (PACTS-ECM) system to the courts. It is a comprehensive
    system designed to help probation and pretrial services officers by
    making offender case information more easily accessible. The system
    electronically generates, stores, and retrieves investigation and
    supervision case information, and provides digital images of offenders.
    It also will have remote capabilities to allow officer access while in
    the field. The PACTS-ECM system will be an invaluable resource as the
    number of offenders released from Federal prison who are serving terms
    of supervised release escalates.
        Our Bankruptcy Noticing Center had a record-setting year, producing
    and mailing 84 million notices. By electronically retrieving data from
    court case management systems, it generated paper notices at a fraction
    of the time and cost that it would have taken if produced by local
    courts. The work is performed under contract and managed by AO staff.
    This program has saved the judiciary almost $23 million since 1993. We
    are continuing to work with the bankruptcy community to move to an
    electronic noticing system to avoid postage costs.
        And, as detailed in our Report on the Jury System in Federal
    Courts, prepared at the Subcommittee's request and delivered on
    February 1, 2002, the judiciary has also nearly completed implementing
    an electronic Jury Management System that streamlines jury
    administration. At the end of fiscal year 2001, 74 of the 94 district
    courts were using the system, with complete deployment expected by June
    2002.
        In addition to leading the development and installation of these
    automated systems, the AO has managed the installation of modern audio/
    visual technologies in new, renovated, and existing courtrooms across
    the nation. These technologies have proved to be useful tools for video
    evidence presentation, video conferencing for presentation of
    testimony, and electronic record-taking.
    Policy Guidance
        The AO also provides the courts with policy guidance and direction.
    For example, with the enactment of the DNA Analysis Backlog Elimination
    Act of 2000, probation officers are required to collect DNA samples for
    certain federal offenders. The AO worked with the Department of Justice
    and the Federal Bureau of Investigation (FBI) to determine the type of
    samples required and the qualifying offenses. The AO then distributed
    procedures to all probation offices on how to determine which offenders
    require DNA collection, what steps to take to make the collection, and
    how to pay for the collection. The AO also aired an educational
    broadcast on the Federal Judicial Television Network on the probation
    officers' role in DNA collection and sent the courts instructional
    videos produced by the FBI. Because of the in-depth instruction on this
    new program, DNA collection by probation officers can be done
    consistently across the country to meet the goals of the Congress in
    collecting DNA from violent offenders.
        Another example is the assistance the AO continues to provide
    district courts in implementing the Civil Justice Reform Act to ensure
    the just, speedy and inexpensive resolution of civil disputes. Working
    with a number of judges, the Administrative Office and the Federal
    Judicial Center drafted the Civil Litigation Management Manual. The
    manual, which has now been approved by the Judicial Conference and sent
    to all district and magistrate judges, presents a compendium of
    litigation management and cost and delay reduction techniques that will
    assist courts in achieving a high level of case management efficiency.
                                   conclusion
        Mr. Chairman, Members of the Subcommittee, I hope I have provided
    you with a better understanding and appreciation for the wide array of
    responsibilities vested in the AO and the seriousness with which we
    undertake them. For every issue that affects the judiciary, every new
    piece of legislation that expands federal jurisdiction, every
    Administration initiative that impacts federal law enforcement, every
    congressional request for information, there are personnel at the AO
    who must quickly master the subject area and render expert advice.
        I am proud of our record of accomplishment and service to the
    courts and the American public. And, as I stated earlier, nowhere were
    the capabilities of the dedicated AO staff more evident than in the
    hours, days, and weeks that followed the terrorist attacks of September
    11, 2001. You can count on my efforts to see that this level of service
    not only continues but also improves through the active oversight and
    stewardship of the resources you have entrusted to us. I ask your
    support in accomplishing this by granting the modest increase the AO is
    seeking for fiscal year 2003.
        Thank you for giving me the opportunity to be here today. I would
    be pleased to answer any questions you may have.
                                     ______

      Prepared Statement of Gregory W. Carman, Chief Judge, United States
                          Court of International Trade
        Mr. Chairman, Members of the Committee: Thank you for allowing me
    this opportunity to submit this statement on behalf of the United
    States Court of International Trade, which is a national trial-level
    federal court established under Article III of the Constitution with
    exclusive nationwide jurisdiction over civil actions pertaining to
    matters arising out of the administration and enforcement of the
    customs and international trade laws of the United States.
        The Court's budget request for fiscal year 2003 is $13,777,000,
    which is $674,000 or approximately 5.1 percent over the fiscal year
    2002 enacted appropriation. This request will enable the Court to
    maintain current services and provide for standard pay and other
    inflationary adjustments to base. The Court is not requesting any
    program increases. I would like to specifically point out that for
    eight consecutive years the Court's requested increases have been held
    to below 6 percent.
        Since the Court is located in Manhattan, New York City, less than
    half a mile away from ``ground zero,'' the events of September 11, 2001
    have had a direct impact upon the operations of the Court. On September
    11th, the Courthouse was evacuated and remained closed for five
    business days. Because the Court is a national court, the majority of
    its case filings are received via the U.S. Postal Service. Since there
    were no mail deliveries for some time after September 11th, the Court
    experienced a backlog in receiving and processing its filings. The
    Court's telephone system was disrupted for a number of months and only
    became fully operational in December 2001. The Court lost its
    connection to the Judiciary's Data Communications Network (DCN),
    thereby affecting the Court's ability to send and receive external e-
    mail and its capability to record obligations and expenditures in the
    Judiciary's Central Accounting System. Smoke from ``ground zero''
    filtered through the ventilation system forcing GSA to shut all fans
    that provide and circulate air throughout the Courthouse. Public
    transportation to and from the Courthouse was disrupted for a period of
    time, and continues to be problematic in several areas, thus impacting
    the ability of some of those who work at and have business before the
    Court to reach the Courthouse.
        During the period following the September 11th tragedy, the entire
    Court staff worked feverishly to ensure that the services of the Court
    continued and that the needs of the Court family, bar and public were
    met. The staff developed and implemented alternative methods of
    connecting to the DCN and arranged to have the accounting data input
    into the Judiciary's Central Accounting System. Court staff also worked
    closely with GSA to ensure the physical and environmental integrity of
    the Courthouse and to obtain cell phones to address our
    telecommunications needs. Due to the staff's dedication and team
    approach to problem solving, the obstacles encountered after September
    11th were handled effectively.
        The Court's fiscal year 2003 request includes funds to pay for
    increased GSA space rental and building related services costs. The
    requested amount, $276,000, includes funds to pay the Court's pro rata
    share of operating and maintaining improvements in the security systems
    for the perimeter of the Courthouse and Federal Civic Center,
    implemented in fiscal year 2002 as a result of the tragic events of
    September 11, 2001.
        In accordance with its Long Range Plan, the Court, in fiscal year
    2003, remains committed to ensuring that the Court's technology
    infrastructure will support its short and long term needs, thereby
    permitting the Court to operate efficiently and effectively. To this
    end, the Court's request includes funds for continuing the internal and
    external implementation of the Court's Case Management/Electronic Case
    Files (CM/ECF) System and the related file tracking, and scanning and
    indexing solutions. Additionally, there are funds in the request for
    several ongoing projects, specifically: (1) the Court's Internet and
    Intranet Web servers that facilitate the external and internal sharing
    of Court information; (2) the online library automation system that
    enables the Judges and Court staff to search electronically for books
    and resource materials in the Court's Information Resource Center's
    collection; (3) a networked records management and tracking system for
    all case records; (4) the Court's new phone system, with unified
    messaging capability, that enables the Court to address its current and
    future telecommunications needs; and (5) the cyclical maintenance of
    Court facilities and the replacement of certain furniture with
    ergonomic designs that will help to minimize the risk of injury to
    Court personnel.
        The Court's fiscal year 2003 request will enable the Court to
    expand its in-house training programs in the utilization of automation
    and technology. Additionally, this request will support the Court's
    effort in the education and training of Judges and Court staff by
    ensuring the continuation of the Court's interactive training
    environment that enables Judges and staff to view and participate in
    training programs broadcast through the Federal Judicial Training
    Network.
        Lastly, the fiscal year 2003 request also includes funds for the
    support and maintenance of security system upgrades implemented by the
    Court in fiscal years 1999 through 2002.
        The Court's commitment to fulfill its mission through the use of
    technology will enable it to enhance the delivery of services to the
    Court family, bar and public.
        I would like to reaffirm that the Court will continue, as it has in
    the past, to conserve its financial resources through sound and prudent
    personnel and fiscal management practices.
        The Court's ``General Statement and Information'' and
    ``Justification of Changes,'' which provide more detailed descriptions
    of each line item adjustment, were submitted previously. If the
    Committee requires any additional information, we will be pleased to
    submit it.
                                     ______

     Prepared Statement of Hon. Fern M. Smith, Director, Federal Judicial
                                     Center
        Mr. Chairman, members of the subcommittee: Thank you for allowing
    me the opportunity to submit a statement in support of the Federal
    Judicial Center's annual request for appropriations. This is the third
    request I have submitted since becoming Director of the Center in 1999.
    I have been a U.S. district judge since 1988.
        First I want to thank you for the 7.5 percent increase in our 2002
    appropriation. It is our first program increase, and our second full
    current services adjustments increase, in more than ten years. The
    seven new positions will be of great assistance in our efforts to
    provide the federal courts effective distance education.
        This statement summarizes our 2003 request and, like last year's,
    provides you a brief accounting of some of the Center's major
    activities, in particular: Helping the courts deal with the effects of
    September 11; promoting the fair and efficient disposition of
    litigation; assessing court administration practices; assisting the
    judiciaries of foreign countries; and improving the Center workplace.
                                  2003 request
        The requested 2003 appropriation of $21,885,000 represents an 8.7
    percent increase to provide adjustments to base and modest program
    enhancements: a return to a shorter cycle of recurring education and
    training programs for federal judges and three new automation
    positions.
        The Center's statutory Board, which the Chief Justice chairs,
    unanimously approved the request before you today. The Board regards
    the funds for more timely education for federal judges to be
    sufficiently pressing that it prepared its own brief statement in
    support of that portion of the request (the statement is included on
    the next page).
    Judicial education and training programs ($500,000)
        Center educational programs last year reached almost 50,000
    participants, the great majority of them non-judge employees who
    participated in satellite broadcasts and other forms of distance
    education. In most respects, distance education has been a great
    success.
        For federal judges, the Center provides education in several forms,
    such as manuals on scientific evidence, satellite broadcasts about the
    USA Patriot Act, and small seminars or workshops to orient newly
    appointed judges to their new responsibilities or provide experienced
    judges assistance in specific areas, such as mediation or intellectual
    property law.
        Periodic, general continuing education programs for circuit judges,
    district judges, magistrate judges, and bankruptcy judges are a
    fundamental element of our education for judges. These programs are our
    opportunity to assist judges on a variety of subjects, including
    updating them on the caselaw interpreting frequently litigated
    statutes, describing new techniques of case management, and reviewing
    the ethics requirements that govern judges. Moreover, these programs
    present opportunities for judges to learn from their colleagues as well
    as from the faculty we assemble and to share innovations that have
    proven successful and those that have not.
        Until 1999, a judge could attend one of our general continuing
    education programs once a year. In 1999, we shifted to an 18-month
    cycle as our appropriation declined and because we thought that
    distance education could compensate for longer intervals between
    programs.
        That decision has provoked considerable commentary from judges
    across the country to their colleagues on the Center Board and to the
    staff of the Center. Based on our analysis, we have concluded that
    effective third branch education requires restoring these programs to
    their original 12-month cycle. Below is the statement of the Board of
    the Center, which explains the importance it attaches to this request.
             statement of the board of the federal judicial center
                           approved february 8, 2002
        At a telephone conference meeting on October 22, 2002, the Board
    approved the Center's 2003 appropriations request for submission to
    Congress. This year as every year, we scrutinized the request to be
    certain it is responsible and seeks no more than is necessary for the
    Center to do its job.
        This year's request includes $500,000 to restore the Center's
    ability to offer each federal judge the opportunity to attend a three-
    day general continuing education program once a year. Typically, the
    Board does not burden Congress with direct communications about the
    Center's appropriation, relying instead on the Center director for that
    task. The special importance of restoring these programs to an annual
    basis merits an exception to that practice.
        Of all the comments we receive from other judges about the Center's
    work, none is as frequent and widespread as the need to make these
    programs available on an annual basis. The Center's general continuing
    education programs are the core of its educational effort for judges.
    They are essential to helping judges meet the challenges of rapid
    change, increasing complexity, and growing numbers in the cases before
    them.
        We remain committed to the use of non-travel alternatives for third
    branch education. The staffs of the courts receive almost all of their
    education through this medium. Judges, however, need the additional
    opportunity for reflective, interactive discussions with colleagues
    about common problems and often-sensitive concerns, and need that
    opportunity more frequently than twice every three years.
        We appreciate your consideration of this special need.
                    the board of the federal judicial center
                            The Chief Justice, Chair
        Judge Stanley Marcus, U.S. Court of Appeals for the Eleventh
    Circuit, Miami, Florida
        Judge Pauline Newman, U.S. Court of Appeals for Federal Circuit,
    Washington, D.C.
        Judge Robert Bryan, U.S. District Court for the Western District of
    Washington, Tacoma
        Chief Judge Jean Hamilton, U.S. District Court for the Eastern
    District of Missouri, St. Louis
        Judge William Yohn, U.S. District Court for the Eastern District of
    Pennsylvania, Philadelphia
        Magistrate Judge Robert Collings, U.S. District Court, District of
    Massachusetts, Boston
        Chief Judge Robert Hershner, U.S. Bankruptcy Court, Middle District
    of Georgia
        Leonidas Ralph Mecham, Director, Administrative Office of the
    United States Courts, Washington, D.C.
        As the Board statement makes clear, this request in no way signals
    the Center's retreat from distance education. Our travel budget, with
    this request, would still be more than $1,000,000 below our travel
    budget in 1995.
        A chart we provided in last year's statement shows that 10 years
    ago, Center educational programs reached slightly over 10,000
    participants, less than half of them through travel-based programs. Our
    programs now reach almost 50,000 participants a year, but the number of
    participants in our travel-based programs has actually decreased. We
    want to continue to exploit cost-effective, non-travel, asynchronous
    learning for the employees of the courts and for judges to the degree
    it is effective.
        At the same time, we recognize, as do other distance learning
    proponents, that some face-to-face educational opportunities are
    essential, especially for those with responsibilities such as those of
    federal judges. Heavy caseloads and the isolation inherent in
    performing judicial duties limit opportunities for judges to meet in a
    detached atmosphere and discuss the nuances of changing precedents and
    case management techniques. The judge's job is becoming more
    complicated. Supreme Court decisions, for example, impose on district
    judges significant new obligations to evaluate the scientific merit of
    proposed expert testimony and to evaluate patent claims. This new
    judicial role requires a greater understanding of science and of how to
    manage such cases efficiently. These are not subjects or procedures
    that lend themselves to learning solely by computer or video screen.
    Three additional positions to enhance the Center's use of distance
            education technologies ($192,000)
        These three positions are needed to support the Center's long-
    standing and increasing reliance on distance education technologies
    that I described above. Last year, 90 percent of the roughly 50,000
    participants in Center programs, and in local training events using
    Center services, used distance education technologies, including but
    not limited to the Federal Judicial Television Network, which the
    Center began operating in April 1998. Since fiscal 1998, the Center has
    been requesting 10 additional positions (video, multimedia, and
    automation specialists). With the funds provided in 2002, we plan to
    hire: 2 software engineers to exploit the Web to its full potential,
    especially as we learn more about interactive computer-based training;
    1 automation security officer; 1 additional employee for system
    maintenance; 1 television assistant for the Media Production Unit; 1
    judicial education specialist; and 1 assistant to our Web master.
        Our present plan for the three positions we seek in 2003 is to hire
    two additional software engineers and one computer-training
    technologist to analyze user needs in the development of projects.
                         center services and activities
        Please permit me to describe, as I did last year, some of the
    Center's current activities, as a means of accounting to you for our
    stewardship of the funds you provide for the Center.
    Helping the courts deal with the effects of September 11
        The Center's programs for court leaders and managers continually
    stress the need for effective leadership. These programs became all the
    more timely now that all federal courts are on security alert with the
    rest of the country.
        Court leaders and managers must be prepared to deal with safety and
    with the apprehensions and tensions of court employees, as well as
    jurors, witnesses and others who visit our courts. The Center has a
    variety of resources, and is developing some new ones, to assist
    courts. We are also producing several Federal Judicial Television
    Network broadcasts, including a new safety series, begun in December,
    for probation and pretrial services officers, and several broadcasts
    for court managers and court staff for leading in and coping with
    extraordinary circumstances. Cyber crime and cyber terrorism are the
    focus of the next program in our ``special needs offenders'' series for
    probation and pretrial services officers. Our conference for chief
    district judges next month will emphasize leadership, and we will offer
    another round of seminars based on President Lincoln's leadership in
    times of crisis. The forthcoming revised edition of our Deskbook for
    Chief Judges of U.S. District Courts has a chapter on leadership,
    conceived before September 11 but particularly timely now.
        We are also helping the courts understand the new legal environment
    created in the wake of the terrorist attacks. Our two most recent
    national workshops for district judges included sessions titled
    ``Domestic Courts in an Interconnected World'' and last month we
    broadcast ``Terrorism and the Law: The U.S.A. Patriot Act and Military
    Commissions,'' a balanced program of analysis by law professors,
    Justice Department officials, and legislative staff members about the
    new law and about the possible relationships between military tribunals
    and the work of federal courts.
        We have also been sensitive to the greater anxiety and need for
    information of the employees in the Thurgood Marshall building and have
    instituted a ``September 11'' lecture series, presenting a program once
    a month on subjects ranging from ``living in times of crisis'' to the
    nature of Islam.
    Promoting the fair and efficient disposition of litigation
        I described last year our diverse offerings to help judges honor
    their responsibility to dispose of cases fairly, quickly, and
    inexpensively. This is the major theme of our initial orientation
    seminars for newly appointed judges, and we provide judges an extensive
    array of manuals and sourcebooks about case-management techniques.
    Recent additions include
      --Manual on Recurring Problems in Criminal Trials, Fifth Edition;
      --Guide to Judicial Management of Cases in ADR, which helps judges
            use alternative forms of dispute resolution in appropriate
            cases to provide more effective, less costly, and more timely
            justice--The Center for Public Resources, a leading nonprofit
            organization promoting the use of ADR, especially in commercial
            disputes, awarded the Guide its best book award for 2001;
      --Effective Uses of Courtroom Technology, A Judge's Guide to Pretrial
            and Trial, which we produced in cooperation with the
            nonpartisan National Institute for Trial Advocacy, helps judges
            understand the new technologies that counsel use and to manage
            cases involving them--in fact, a federal judge, faced recently
            with the question of whether a civil defendant unnecessarily
            ran up production costs by printing out 3 million pages of
            paper cited our Courtroom Technology Guide several times for
            the proposition that the parties should have met and conferred
            on electronic discovery procedures at the outset of the case;
      --Redistricting Litigation: An Overview of Legal, Statistical, and
            Case-Management Issues, which will provide judges facing the
            wave of litigation this year with a resource to understand the
            statutory and caselaw framework for redistricting litigation,
            the statistical evidence commonly offered in such cases, and
            the vagaries of managing the three-judge district courts
            convened to hear them; and
      --the Judicial Conference's Civil Litigation Management Manual,
            produced pursuant to a legislative mandate with the assistance
            of Center staff in cooperation with the Administrative Office.
    Assessing court administration practices
        An important part of the Center's statutory mandate is ``to conduct
    research and study of the operation'' of the federal courts. Often that
    research leads directly to educational manuals such as those described
    above.
        The 28 research projects we are currently conducting for Judicial
    Conference committees or the courts themselves include assessment of
    three ADR programs, the impact on litigation costs of discovery
    involving electronic documents, and the special needs of Native
    American offenders under federal court supervision. We also developed
    ``plain language'' class action notices as models for attorneys to ease
    confusion in litigation and help everyday citizens understand the legal
    documents sent to them in regard to class actions.
        At the request of the chair and ranking member of the House
    Judiciary Subcommittee on Courts, the Internet and Intellectual
    Property, we are conducting an analysis of public orders of chief
    circuit judges' handling of complaints filed pursuant to 28 U.S.C.
    Sec. 372(c).
    Assisting the judiciaries of foreign countries
        In the last twelve months, the Center has provided briefings about
    the U.S. judicial system to 394 judges and legal officials from 35
    countries.
        We also provided more substantial assistance, in the form either of
    specific in-country technical assistance or seminars held here in the
    United States. I should emphasize, as I did last year, that our
    briefings as well as our more extensive projects for foreign
    judiciaries are not funded from the Center's appropriation. We provide
    this assistance at the request of either U.S. government agencies or
    foreign institutions, which fund the travel, lodging, and subsistence.
      --Puerto Rico's Interamerican Center for the Administration of
            Justice and Public Policy has begun its programming. As
            discussed at last year's hearings, we have worked with faculty
            members of the University of Puerto Rico Law School to help
            establish the Interamerican Center and design its curriculum
            and services to teach Latin-American judges how to function
            under new criminal procedure codes.
      --A public defender seminar and observational experiences that we
            developed with the law school at American University, and seven
            U.S. federal defender offices, provided Venezuelan chief public
            defenders with management skills and techniques to help ensure
            effective representation for defendants in the Venezuelan
            criminal courts.
      --An exchange program in India in which an American delegation,
            headed by two members of the U.S. Supreme Court, met with the
            Indian Supreme Court, other judges, and members of the Indian
            bar, about alternative dispute resolution, case management, and
            judicial training. I was pleased to be included in the
            delegation and am anticipating a visit by members of the Indian
            courts to the United States this year.
      --Assistance to the Russian Academy of Justice, the Russian
            Federation's counterpart to the Federal Judicial Center.
            Academy officials spent a week at the Center and then three
            Center officials traveled to Moscow to provide on-site
            technical assistance.
      --The Center provided major assistance to the exchange program
            involving the Mexican Supreme Court and an American delegation
            headed by Chief Justice Rehnquist. The exchange occurred
            shortly after the September 11 attacks. I and the Center's
            deputy director were members of the U.S. delegation. As a
            follow-on, we hope to arrange a seminar in Washington on
            judicial education techniques requested of us by officials of
            Mexico's Instituto de la Judicatura Federal.
      --Center staff helped Argentina's federal and provincial judiciaries
            improve their judicial education capabilities.
      --The Center is working with the judiciary of Thailand on the
            development of effective case-management procedures and a
            court-annexed alternative dispute resolution program.
        We have also provided assistance to the growing number of federal
    judges whose dockets include problems in transnational litigation, such
    as service of process, discovery in foreign countries, and disputes
    over choice of law or jurisdiction. Our research suggests that at least
    a third of federal judges face such matters on an occasional basis or
    more often. That proportion will surely grow. This year we published
    International Insolvency, a treatise primarily for bankruptcy judges
    with cases that include international parties, issues, or implications.
    Improving the Center workplace
        Finally, I should mention developments affecting Center employees.
    The Center's statute gives it somewhat greater flexibility in personnel
    matters than many federal agencies. For example, we adopted a broad
    paybanding system in 1993 and implemented a revised system last year
    after we concluded that our initial paybands were too broad to allow
    effective position classification.
        We have had policies in place prior to 1990 permitting flextime for
    all employees and, since 1994, allowing employees to choose a
    compressed work schedule. All of our employees use flextime and about
    46 percent are on compressed work schedules.
        In 1997 we established a telecommuting policy applicable to all
    Center employees, subject to managers' discretion. I have to say in
    candor that the number of employees who telecommute regularly is
    currently only 10 employees or about 7 percent of our present staff.
    Partly that is because it is not practical to do some Center jobs--such
    as video production at home. We also make telecommuting available to
    employees on a case-by-case basis, as the needs present themselves. We
    believe, however, that we may be able to do more in this regard. Last
    year I appointed a broad-based employee committee to review the full
    range of our personnel policies and make recommendations to me. The
    committee has reported, and we are currently reviewing the
    recommendations and determining how best to adjust our policies to
    further our ability to give the taxpayers their due while providing
    employees flexible work schedules and workplace options. We know that
    the latter often contributes to the former.
        To encourage employee use of public transportation, we offer our
    employees a transportation subsidy and are looking into increasing the
    amount from $30 to $60 per month.
        Our employees are also eligible to participate in a number of
    supplemental benefits programs, such as: pretax health insurance
    premium payments, flexible spending accounts to fund health care, child
    care, and commuter costs (beyond those covered by the subsidy noted
    above), and a long-term care insurance program. We are grateful to the
    AO for developing these innovative policies.
        Mr. Chairman, I appreciate this opportunity to explain our
    budgetary needs for the next fiscal year and to describe some of the
    Center's work and its effect on the work of the courts.
                                     ______

    Prepared Statement of Diana E. Murphy, Chair, United States Sentencing
                                   Commission
                                  introduction
        Mr. Chairman, members of the Subcommittee, thank you for the
    opportunity to submit a statement in support of the United States
    Sentencing Commission's appropriation request for fiscal year 2003. The
    Sentencing Commission is an independent agency within the judicial
    branch that seeks to respond to national crime and social problems with
    effective sentencing guidelines. Our work is intended to serve both the
    statutory purposes of sentencing and the needs of communities, victims,
    and families affected by crime and the release of offenders. I
    currently serve as chair of this important agency.
        Our substantial workload each year includes developing guideline
    amendments, analyzing sentencing in federal cases, responding to
    Congressional directives, and providing information and training on
    guideline application. This year, however, we join with the rest of the
    nation in diverting resources from our other critical responsibilities
    to address the pressing concerns presented by international and
    domestic terrorism, achieving homeland security, and preventing
    corporate crime. Even before September 11, the Commission was concerned
    about penalties for terrorism offenses, and on May 1, 2001, we sent
    amendments to Congress that substantially increased penalties for
    nuclear, chemical, and biological weapon offenses. These penalty
    increases became effective November 1, 2001, less than two months after
    the September 11 terrorist attacks, and terrorism is again on our 2002
    agenda as we work to implement the USA PATRIOT Act, Public Law 107-56.
        After a long period with no commissioners, the Commission was
    reborn with the appointment of a full complement of seven voting
    commissioners on November 15, 1999. During the period when there were
    no commissioners, the Commission's budget was dramatically cut and
    staff levels dropped by approximately 20 percent. The new Commission
    nevertheless was able to make progress clearing the backlog of
    legislative directives that had accumulated during the prolonged
    absence of commissioners because of extensive background work staff had
    been able to prepare when there were no other ongoing Commission
    activities. This helped us accomplish a productive first amendment
    cycle, but in the next cycle in fiscal year 2001 we became painfully
    aware of how much our needs surpassed the staffing level we could
    afford. This realization then affected our appropriation request for
    fiscal year 2002.
        In a relatively short period since our appointments, the Commission
    has completely cleared the backlog of legislative directives, and
    Congress has without exception accepted all of the Commission's
    amendments. These many amendments have implemented new legislation,
    modified existing guidelines, and resolved circuit court conflicts of
    guideline interpretation. We have worked hard and made substantial
    progress, promulgating amendments covering sexual offenses against
    children, human trafficking and peonage, intellectual property
    infringement, identity theft, counterfeiting, money laundering,
    immigration offenses, and ecstasy and methamphetamine offenses, among
    many others. We would not have been able to accomplish this work if
    Congress had not responded to our fiscal year 2001 and 2002 requests to
    begin restoring our appropriation to permit us to restaff. We are still
    below the level we need, however.
        The Commission has also received feedback from other sources which
    recognizes the quality of our work. The economic crime package passed
    by the Commission has just been described by Professor Frank Bowman in
    the Indiana Law Review as ``a milestone in the history of the Federal
    Sentencing Guidelines.'' Roughly twenty percent of defendants sentenced
    under the Guidelines have committed economic crimes. This package marks
    the first time in the history of the guidelines that the Commission has
    thoroughly rewritten the guidelines governing a major crime category.
    According to Professor Bowman, ``the economic crime package is the
    first federal sentencing reform initiative in the guidelines era to
    have been conducted in the public eye from its inception'' and is a
    product of the Commission's now ``more open and deliberative process.''
    These guidelines significantly increase penalties for offenses
    involving high dollar losses, and provide more discretion to judges in
    sentencing defendants who caused or intended relatively low losses. We
    expect that judges and other guideline users will find sentencing of
    economic crimes easier and more just as a result. In addition, new
    information available this year shows the wisdom of our ecstasy
    amendment, which was criticized by many as too harsh when promulgated.
        This amendment cycle, the Commission is working on many important
    issues, including terrorism, corporate crime and organizational
    compliance, drug policy, and Native American issues. We also are
    developing amendments to ensure that all forms of sex trafficking are
    covered by the guidelines and to protect our cultural heritage and
    national treasures, particularly in this time of heightened danger. We
    remain constrained by inadequate resources, however. We continue to
    feel the effects of the appropriation setback before our arrival and
    are simply unable to do the job Congress gave us in the Sentencing
    Reform Act with our current staffing level. The Commission requests an
    appropriation of $13,200,000 for fiscal year 2003 to enable us to hire
    six positions necessary for us to carry out our statutory duties.
        New policy initiatives continue to be identified by the Commission,
    and new crime legislation continues to flow from Congress, the most
    recent being the USA PATRIOT Act. In response to this important
    legislation, we expect to submit to Congress on May 1, 2002 a complex
    multipart amendment that will incorporate the new federal criminal
    offenses and increased statutory maximum penalties created by the Act
    into the guidelines. We recognize, however, that our work in this
    area--like Congress's--will be of an ongoing nature. Rest assured that
    the Commission stands ready to assist Congress in any way that our
    resources permit.
        The Commission has recently formed an ad hoc advisory committee to
    study and make recommendations regarding sentencing guidelines for
    corporations and other organizations, particularly on making compliance
    programs more effective. The organizational guidelines created by the
    Commission have spawned complementary efforts by a number of regulatory
    and law enforcement authorities and have led to compliance programs
    across the country to prevent and detect criminal conduct. The
    organizational guidelines have been in place for over a decade,
    however, and suggestions have been made as to how they might be
    strengthened. The fifteen person advisory committee is made up of
    distinguished and experienced individuals, and we expect this group's
    contribution to be particularly timely and important in light of recent
    developments involving Enron and Global Crossing. It will first meet
    this month, and the Commission expects to begin considering the
    committee's recommendations in fiscal year 2003.
        In fiscal year 2003, the Commission will continue its assessment of
    how well the guidelines are meeting the goals of the Sentencing Reform
    Act as they reach their 15th anniversary and have been applied to more
    than over half a million federal offenders. The purpose of this effort
    is to give Congress the information necessary to evaluate whether the
    guidelines are fulfilling legislative intent. We are studying the need
    to ensure that federal prisons are being used most effectively to
    incapacitate offenders with extensive criminal histories and high
    recidivism rates. We are also examining whether quantity should play as
    large a role in drug sentencing as opposed to other measures of an
    offender's culpability and role in the offense. These projects require
    staffing and research costs, but we believe Congress and the public
    will find value in the results.
        The Commission is also forming an ad hoc advisory committee to
    study the impact of the Federal sentencing guidelines on Native
    Americans. In June 2001, the Commission held a public hearing in Rapid
    City, South Dakota, on issues relating to application of the guidelines
    to Native Americans. In response to the testimony (placed on the
    Commission website), we conducted three intensive training sessions in
    South Dakota in fiscal year 2002 to teach local attorneys, other
    counselors, and probation officers about use of the guidelines. We hope
    to expand this training to include other states with significant Native
    American populations. The type of intensive training involved and the
    complexities of managing a meaningful advisory process on Native
    American issues will require significant resources in fiscal year 2003.
        Congress also has increasingly turned to the Commission for expert
    advice on sentencing policy. For example, several leading members of
    Congress have requested that the Commission examine the current federal
    penalties for drug offenses, specifically crack cocaine and powder
    cocaine. The Commission is conducting an intensive project which
    involves analyzing the court documents for 1,600 cocaine offense cases
    sentenced in fiscal year 2000--representing approximately 20 percent of
    all Federal cocaine offenses that year. This endeavor involves tracking
    important variables such as the offender's function in the offense, the
    geographic scope of the offense, and the presence of certain
    aggravating factors, including weapon involvement and bodily injury. We
    plan to report the results of that project in the near future. The
    Commission is scheduled to conduct a similar study for other major drug
    types in the near future and, depending on our resources, results of
    those studies could be available to lawmakers in fiscal year 2003. In
    addition, the Commission has been monitoring the increased prevalence
    of abuse of the pain killer Oxycontin and related congressional
    hearings and plans to study whether the guideline penalties for
    offenses involving the drug are appropriate.
        In fiscal year 2003, the Commission must also struggle to handle
    the continuing surge in the number of cases sentenced under the
    guidelines, for it is required under the Sentencing Reform Act to
    collect the data and analyze these cases. The Commission maintains a
    comprehensive, computerized data collection system which forms the
    basis for its clearinghouse of federal sentencing information. This
    comprehensive database is the basis for the Commission's monitoring and
    evaluation of guidelines application, for many of its research
    projects, and for responding to the hundreds of data requests received
    from Congress and other criminal justice entities each year. We
    currently are funded and equipped to process approximately 40,000 cases
    annually, but for the past four years there have been well over 50,000
    cases each year. The projected caseload in fiscal year 2002 is 67,000,
    and there is reason to believe it will be considerably higher in fiscal
    year 2003.
        This appropriation request continues to build on the progress made
    over the past few years, gradually reestablishing the staffing levels
    necessary to support a fully functioning Commission.
                              resources requested
        The Commission's appropriation request for fiscal year 2003 is
    $13,200,000. We understand increases are generally hard to justify and
    that the war on terrorism is costly, but the Commission continues to
    struggle as a result of budget constraints and prior staffing
    reductions and we are playing our role on national problems. Staff
    resources have become increasingly stretched as the agency must analyze
    the surge of case filings, develop a significantly increased number of
    proposed guideline amendments each year, and respond to more directives
    and requests from Congress and training needs. The Commission asks that
    Congress approve its request for $13,200,000 in fiscal year 2003 to
    enable the Commission to meet these increased demands and to continue
    to improve its services.
                                 justification
    Sentencing Reform Act Requirements
        The Commission was created under the Sentencing Reform Act of 1984
    as a permanent, independent agency within the judicial branch. Congress
    gave the Commission a dual mission: (a) to establish and maintain a
    national guideline system for federal sentencing policies and
    practices; and (b) to serve as an expert agency and leading authority
    on federal sentencing matters.
        In fulfilling these basic requirements, the Commission annually
    issues a sentencing guidelines manual that delineates penalty levels
    for all federal offenses. In addition to encompassing all federal
    offenses, the guidelines manual incorporates amendments approved by the
    Commission for newly enacted crime legislation passed by Congress. The
    guidelines manual is used by prosecutors, defense counsel, and
    probation officers in making sentencing recommendations to the court.
    Federal district judges must use the guidelines manual when imposing a
    sentence, and it must also be relied upon by all federal appellate
    judges and the justices of the United States Supreme Court when
    reviewing the imposed penalties. Since the first manual went into
    effect on November 1, 1987, over half a million defendants have been
    sentenced under the guideline system.
        In fulfilling the second component of its ongoing mission, i.e., to
    serve as an expert agency and leading authority on federal sentencing
    matters, the Commission was given continuing statutory responsibility
    and authority in many areas, including ensuring that sentencing
    policies and practices provide certainty and fairness, that they avoid
    unwarranted sentencing disparities while maintaining enough flexibility
    for individualized sentences when those are warranted, and that they
    reflect advancements in our knowledge of human behavior as it relates
    to the criminal justice process.\1\
    ---------------------------------------------------------------------------
        \1\ For a complete list of the Commission's responsibilities under
    the Sentencing Reform Act, see Appendix A.
    ---------------------------------------------------------------------------
    Demonstrated Accomplishments Following Increased Funding
        The work of the Commission generally is determined by three
    sources: (1) legislative directives by Congress and new crime
    legislation; (2) resolution of conflicting interpretations of
    sentencing guidelines among the circuit courts of appeals; and (3)
    internal priorities that are set by the commissioners following an
    annual solicitation published in the Federal Register. Due to the
    extended absence of voting commissioners, the current Commission
    focused most of its resources the last two amendment cycles addressing
    the significant backlog of legislation. As a result of the Commission's
    diligent work in this area, there are no outstanding congressional
    directives awaiting Commission action. These legislative matters
    covered a wide range of criminal conduct of great concern to Congress
    and members of the federal criminal justice system:
        Nuclear, Biological, and Chemical Weapons.--In response to the
    Chemical Weapons Implementation Act of 1998, and a sense of Congress
    expressed in the National Defense Authorization Act for Fiscal Year
    1997, in April 2001, the Commission significantly increased penalties
    for offenses involving the importing and exporting of nuclear,
    biological, and chemical weapons. This amendment became effective
    November 1, 2001.
        Human Trafficking.--In response to an emergency directive contained
    in the Victims of Trafficking and Violence Protection Act of 2000, in
    February 2001, the Commission amended the guidelines applicable to
    peonage, involuntary servitude, slave trade offenses, and possession,
    transfer, and sale of false immigration documents in furtherance of
    such human trafficking to reflect the heinous nature of these offenses.
    The amendment accounts for new offenses and increased statutory maxima
    created by the Act. The Commission currently is considering further
    changes to address more adequately sex trafficking of children by
    force, fraud or coercion in violation of 18 U.S.C. Sec. 1591. This
    amendment also addressed adequate penalties for criminal violations of
    the Fair Labor Standards Act and the Migrant and Seasonal Agricultural
    Worker Protection Act.
        Protection of Children.--In response to a directive contained in
    the Protection of Children from Sexual Predators Act of 1998, in April
    2000, the Commission amended the guidelines pertaining to certain
    sexual abuse offenses and distribution of child pornography to provide,
    among other things, enhancements for use of a computer in connection
    with a sexual abuse offense against a minor and misrepresentation of an
    offender's identity in connection with such an offense. In April 2001,
    the Commission provided additional increased penalties for violations
    of chapter 117 of title 18 and for sexual offenses against children
    that involve a pattern of activity.
        Stalking.--In response to a directive contained in the Victims of
    Trafficking and Violence Protection Act of 2000, in April 2001, the
    Commission increased penalties for certain stalking and domestic
    violence offenses.
        Identity Theft.--In response to a directive contained in the
    Identity Theft and Assumption Deterrence Act of 1998, in April 2000,
    the Commission added to the fraud guideline a sentencing enhancement
    for violations of 18 U.S.C. Sec. 1028 (relating to fraud in connection
    with identification documents).
        Ecstasy.--In response to an emergency directive in the Ecstasy
    Anti-Proliferation Act of 2000, in March 2001, the Commission
    significantly increased penalties for the manufacture, importation, or
    trafficking of ecstasy and other ``club drugs'' so that they are
    comparable to penalties for other major drugs of abuse.
        Intellectual Property Offenses.--In response to an emergency
    directive contained in the No Electronic Theft (``NET'') Act of 1997,
    in April 2000, the Commission made comprehensive changes to the
    copyright and trademark infringement guideline to more adequately
    account for the harm caused by these offenses.
        Telemarketing Fraud.--In response to a directive contained in the
    Telemarketing Fraud Prevention Act of 1998, in April 2000, the
    Commission promulgated a permanent amendment that provides for three
    separate sentencing enhancements for fraud offenses that involve mass
    marketing, a large number of vulnerable victims, and the use of
    sophisticated means to carry out the offense.
        Telephone Cloning.--In response to a directive contained in the
    Wireless Telephone Protection Act of 1998, in April 2000, the
    Commission added a sentencing enhancement to the fraud guideline for
    these offenses.
        Methamphetamine and Amphetamine Trafficking.--In response to the
    Methamphetamine Trafficking Penalty Enhancement Act of 1998, and
    emergency directives in the Methamphetamine Anti-Proliferation Act of
    2000, the Commission has amended the guideline's drug quantity table to
    conform to new mandatory minimum sentences and significantly increase
    penalties for a given drug quantity, added severe sentencing
    enhancements for methamphetamine and amphetamine manufacturing that
    creates a substantial risk of harm to human life, the environment,
    minors, and incompetents, increased the penalties for amphetamine
    offenses such that they are identical to the penalties for
    methamphetamine offenses, and increased the penalties for offenses
    involving certain precursors of methamphetamine.
        Firearms Offenses.--In response to Public Law 105-386, which
    amended 18 U.S.C. Sec. 924(c) to create a tiered system of mandatory
    minimums and presumed maxima in cases in which a firearm is involved in
    a crime of violence or drug trafficking offense, in April 2000, the
    Commission promulgated an amendment which incorporated the new tiered
    sentencing scheme into the guideline pertaining to violations of
    section 924(c). In addition, in April 2001, the Commission added a
    sentencing enhancement for offenses involving more than 100 firearms.
    The Commission currently is considering a proposed amendment that would
    improve the operation of the career offender guideline in the context
    of section 924(c) offenses.
        College Scholarship Fraud.--In response to a directive contained in
    the College Scholarship Fraud Prevention Act of 2000, in April 2001,
    the Commission broadened an existing enhancement to specifically cover
    offenses involving fraud or misrepresentation in connection with the
    obtaining or providing of information to consumers regarding college
    scholarships, loans, and grants.
    Commissioners Complete Longstanding Policy Work
        The Commission also has worked hard to address several policy
    initiatives that at different points in time have been supported by
    various constituents, including the Department of Justice and the
    Committee on Criminal Law of the United States Judicial Conference. In
    April 2001, the Commission passed amendments that addressed the
    following important substantive areas:
        Economic Crime Guidelines.--After a number of years of data
    collection, analyses, public comment, and public hearings, the
    Commission passed a comprehensive economic crime package that, among
    other things, provides significantly increased penalties for mid and
    high level fraud, theft, and tax offenses involving moderate and large
    monetary losses, consolidated the theft, fraud, and property
    destruction guidelines, and clarified the definition of loss to include
    all reasonably foreseeable harms. Our work in this area was extensive.
    Working in conjunction with the Criminal Law Committee of the Judicial
    Conference, the Commission conducted a field test of the proposed loss
    definition by surveying federal judges and probation officers and
    applying the new definition to actual cases. In addition, in October
    2000, the Commission sponsored a two day National Symposium on Federal
    Sentencing Policy for Economic Crimes and New Technology Offenses at
    the George Mason University School of Law. The symposium was attended
    by approximately 150 judges, prosecutors, defense attorneys, and
    academicians and provided valuable input on the proposed package.
        Money Laundering.--Closely related to the economic crimes package,
    the Commission worked with the Department of Justice to develop a
    revision to the money laundering guidelines that more accurately
    captures the seriousness of the money laundering offense conduct. The
    new guideline structure ties the penalties for money laundering
    penalties more closely to the penalties for the underlying offense that
    generated the criminally derived proceeds, distinguishes between
    offenders who launder funds derived from their own criminal conduct as
    opposed to those offenders who launder funds for others, and provides
    significant sentencing enhancements for aggravating money laundering
    conduct. The amendment is the culmination of several years work of on
    this area.
        Counterfeiting.--In response to recommendations from the Department
    of Treasury, in April 2001, the Commission voted to provide increased
    penalties for (1) manufacturers of large amounts of counterfeit
    currency and (2) offenders who possess counterfeiting paper similar to
    the distinctive paper used by the United States, or a feature or devise
    essentially identical to a distinctive counterfeit deterrent used by
    the United States. This amendment to the counterfeiting guideline
    addresses recent changes in how counterfeit currency is produced.
    Because of the advent of new and inexpensive technology, such as laser
    printers, and the availability of illegal copies of currency on the
    Internet, offenders now generally print counterfeit currency on an ``as
    needed'' basis, with no substantial accumulation of inventory. Thus, an
    alternative mechanism to achieve increased sentences was needed for
    this class of offenders.
        Safety Valve.--In order to ensure that federal prison space is used
    to punish serious offenders, in April 2001, the Commission voted to
    expand the applicability of the two level reduction for non-violent,
    first time drug offenders who meet the safety valve criteria set forth
    at 18 U.S.C. Sec. 3553(f)(1)-(5) to defendants who currently receive a
    sentence below five years.
        Illegal Reentry.--In response to difficulties experienced by
    prosecutors with large caseloads and concerns raised by judges,
    probation officers, and defense attorneys along the southwest border,
    in April 2001, the Commission voted to amend the guideline pertaining
    to illegal reentry to provide a more graduated sentencing enhancement
    for offenders with prior aggravated felony convictions. The amendment
    reserves the most serious sentencing increase for the most dangerous
    offenders and may result in a reduction in the departure rate for such
    offenses.
    Personnel Needed to Meet Other Statutory Duties
        Human resource needs of the agency continue to increase as the
    routine annual amendment cycle is reestablished, new policy initiatives
    are identified by the reconstituted Commission, and new crime
    legislation is enacted by Congress. In order to become a fully
    functional agency that performs all of its statutory functions in an
    exemplary manner, the Commission needs adequate resources, particularly
    in the following areas:
                Commission Contending with Sharp Increase in Caseload
        In fiscal year 2001, the Commission received court documents for
    more than 67,000 cases sentenced under the Sentencing Reform Act
    between October 1, 2000, and September 30, 2001. The Commission's
    organizational structure and physical facilities, however, are designed
    and funded to handle only 40,000 cases per year.
        For each case received, the Commission extracts and enters into its
    comprehensive database more than 260 pieces of information, including
    case identifiers, sentence imposed, demographic information, statutory
    information, the complete range of court guideline application
    decisions, and departure information. This data is vital to the
    Commission's deliberations when modifying the guidelines to adjust
    federal sentencing policy in a timely manner. Yet due to staff
    vacancies, the Commission even now has a backlog of 20,000 cases that
    have not yet been processed. The Commission is studying ways to
    streamline our work process and achieve efficiencies, perhaps by
    receiving court documents by electronic means. Unless additional staff
    are hired, however, the Commission will be unable to code data on each
    case sentenced under the guidelines and will be forced to rely on less
    reliable statistical sampling to guide its sentencing policy
    development and to advise Congress on crime policy. Our work depends on
    this critical information.
                Increased Inquiries from Congress for Commission Expertise
        The Sentencing Reform Act gives the Commission the responsibility
    to advise Congress about sentencing and related criminal justice
    issues. To fulfill this responsibility, the Commission continues to
    provide members of Congress and their staffs with timely and valuable
    sentencing related information and analyses. Commission staff have
    recently responded to requests from Congressional staff for
    comprehensive briefings on current data and research concerning crack
    and powder cocaine. Now that the Commission has a full complement of
    commissioners, Congress is once again turning to the Commission for
    advice on sentencing policy, a development that the Commission
    enthusiastically welcomes.
        In addition to congressional inquiries such as the request
    regarding crack cocaine and powder cocaine penalties noted above, the
    Congress often asks the Commission to provide expert testimony at
    congressional hearings. For example, on March 21, 2001, I testified
    before the Senate Caucus on International Narcotics Control about
    changes made to the Federal sentencing guidelines for ecstasy
    trafficking, in response to the Ecstasy Anti-Proliferation Act of 2000,
    Public Law 106-310. I highlighted the harmful pharmacological and
    physiological effects of ecstasy, its trafficking pattern, and use of
    ecstasy by minors, as well as the significant impact on sentences for
    serious traffickers of ecstasy under the amendment.
        Each year the Commission also informs Congress's legislative
    deliberations by responding to hundreds of congressional requests for
    assistance. These inquiries, both written and oral, include requests
    for federal sentencing and criminal justice data, analyses of proposed
    legislation and how it may impact the guidelines, explanations of
    guideline operation, technical assistance in drafting legislation, and
    Commission publications and resource materials.
                Research and Information Dissemination
        The Commission is rebuilding its research staff in order to analyze
    sentencing patterns and practices, respond to inquiries about the
    effectiveness of sentencing policies, and assess thoroughly the impact
    of proposed guideline amendments and new sentencing related
    legislation. The Commission's research staff, for example, has taken
    the lead in conducting an intensive coding project on Federal cocaine
    offenses that we hope to have completed soon. The research staff will
    be tasked with the same role for a similar project for other major drug
    types that the Commission plans to conduct during fiscal year 2003,
    resources permitting.
        The research staff also leads the recidivism study the Commission
    has undertaken as part of the 15 year assessment of the guidelines.
    When the study is complete, the resulting database would provide the
    most comprehensive and sophisticated profile of the criminal histories
    of Federal criminal offenders and their rates and patterns of
    recidivism. The recidivism study is being accomplished through
    cooperative efforts with the Federal Bureau of Investigation, the
    Federal Bureau of Prisons, the United States Parole Commission, the
    Administrative Office of the United States Courts, with research grants
    anticipated from the National Institute of Justice. Following its
    statutory directive to monitor the guidelines to insure that they are
    meeting the purposes of sentencing required by Congress, the Commission
    is undertaking this valuable endeavor that will require significant
    staff resources.
        The Commission also continues to advance its statutorily directed
    research and information dissemination through presentations of
    analyses at numerous sentencing policy symposia, including the annual
    meeting of the American Society of Criminology. In fiscal year 2002,
    Commission staff made presentations on, among other things, Federal
    drug sentencing policy and drug trafficking trends, sexual predator
    offenses, and immigration offenses.
        The agency annually publishes an updated Guidelines Manual and an
    Annual Report and accompanying Sourcebook of Federal Sentencing
    Statistics, which contains statistical charts, tables, and analyses on
    sentencing pattern and practices gathered from the agency's extensive
    database. The Commission's sentencing database includes information on
    sentences imposed for every single district in the country. The
    Commission also publishes an annual Guide to Publications and Resources
    and continues to add a variety of publications and sentencing data to
    its award winning Internet web site.
                Increased Training Needs for Larger Federal Criminal
                        Justice System
        Over the last several years, as Congress has devoted increased
    resources to law enforcement, the number of federal judges,
    prosecutors, probation officers, and defense attorneys who require
    training and assistance on how to use the guidelines has increased
    accordingly. The Sentencing Reform Act requires the Commission to
    provide guideline training, in part because training promotes
    uniformity in guideline application and thereby reduces sentencing
    disparity, both goals of the Act.
        Commission staff provided training on the sentencing guidelines in
    2001 to more than 2,500 individuals at approximately 50 training
    programs across the country, including ongoing programs sponsored by
    the Commission, the Federal Judicial Center, the Department of Justice,
    the American Bar Association, and other criminal justice agencies. Each
    year the Commission cosponsors a National Sentencing Seminar to train
    hundreds of probation officers, prosecutors, and defense attorneys on
    guideline application. The program is so popular that we must turn away
    people due to the high volume of interest. Commission also play a major
    role preparing for and participating in the biennial National
    Sentencing Institute sponsored by the Federal Judicial Center and
    attended by a large number of Federal judges. Also, as noted above, in
    fiscal year 2002, the Commission conducted three days of intensive
    training in South Dakota as we embarked on a push to improve guideline
    training in and around Indian County. In fiscal year 2003, we hope to
    expand those efforts to reach other areas of the nation with large
    Native American populations, such as Arizona and New Mexico.
        The Commission also maintains a telephone HelpLine service to
    answer guideline application inquiries from federal judges, probation
    officers, prosecuting and defense attorneys, and law clerks. To expand
    the availability and cost efficiency of training and information
    sharing, the Commission has joined the Federal Judicial Center and the
    Administrative Office of the U.S. Courts in launching a satellite
    television network to provide programming on sentencing related issues.
    The Commission makes a regular contribution to a news series for
    probation and pretrial services designed to update officers on
    important information regarding the Commission and its activities.
    However, if the Commission is not provided sufficient funding to
    restore personnel in other areas of the agency, its quality of training
    will suffer because its training staff may have to be utilized for more
    pressing projects as they arise.
        As a result of its leadership in the corporate compliance area,
    Commissioners and staff are regularly invited to share their expertise.
    The Commission and the Ethics Officer Association (EOA) jointly sponsor
    a series of regional forums about implementing the organizational
    guidelines. The Commission also regularly addresses national and
    regional compliance organizations and responds to numerous inquiries on
    the organizational sentencing guidelines and compliance issues.
    Interest and inquiries come from governmental agencies, corporations,
    industry coalitions, nongovernmental organizations, and academic
    institutions, both within the United States and overseas.
    Commissioners Face Large Number of Circuit Conflicts
        In addition to its other work, the Commission has primary
    responsibility to resolve conflicts in court interpretation of the
    guidelines. See Braxton v. United States 500 U.S. 344 (1991). There are
    presently more than 40 conflicts between circuit courts, many of which
    accrued during the absence of voting commissioners.
        The Commission has made significant progress in reducing the number
    of outstanding circuit conflicts. In fiscal year 2000, the Commission
    promulgated amendments that resolved five circuit conflicts, and in
    fiscal year 2001 another nineteen. Among the conflicts resolved last
    year are: (i) whether admissions made by the defendant during a guilty
    plea can be considered ``stipulations'' for purposes of Sec. 1B1.2(a);
    (ii) whether the enhancement in the aggravated assault guideline for
    use of a dangerous weapon during such an assault is impermissible
    double counting if the weapon used was not inherently dangerous; (iii)
    whether the enhancement in the fraud guideline for misrepresenting that
    one acts on behalf of a charitable, educational, religious, or
    political organization, or a governmental agency applies to a defendant
    who works for the entity but diverts benefits; and (iv) whether a
    reduction for mitigating role is precluded in the case of a single
    defendant drug courier whose base offense level is determined by the
    quantity personally handled.
        The Commission intends to continue resolving circuit conflicts in
    the process of dealing with other policy work. In addition to
    monitoring case law to identify circuit conflicts, the Commission
    continues to follow cases interpreting New Jersey v. Apprendi, 120 S.
    Ct. 2348 (2000) (other than the fact of a prior conviction, any fact
    that increases a penalty for a crime above the statutory maximum must
    be submitted to a jury and proved beyond a reasonable doubt) to assess
    its potential impact on the guidelines.
                                   summation
        The Commission has worked very hard with limited resources to clear
    the significant backlog of crime legislation that await implementation,
    long standing policy initiatives that need completion, and circuit
    conflicts that require resolution. With the necessary resources, in
    fiscal year 2003 the Commission expects to continue work in important
    policy areas such as terrorism offenses, corporate misconduct, the
    impact of the guidelines on Native Americans, calibrating criminal
    history to account for the risk of recidivism, and drug penalties that
    account for the culpability of the offender. We cannot undertake a
    policy agenda of any real significance without appropriate staff
    levels, however, given the large increase in our caseload and the many
    demands on us in working for an effective, certain, and fair sentencing
    system.
                     Appendix A: Statutory Responsibilities
        The responsibilities of the United States Sentencing Commission
    under the Sentencing Reform Act are:
      --ensuring that sentencing policies and practices provide certainty
            and fairness, that they avoid unwarranted sentencing
            disparities while maintaining enough flexibility for
            individualized sentences when those are warranted, and that
            they reflect advancements in our knowledge of human behavior as
            it relates to the criminal justice process;
      --developing means to measure the effectiveness of sentencing, penal,
            and correctional practices in meeting the purposes of
            sentencing;
      --monitoring the performance of probation officers regarding
            sentencing recommendations, including application of the
            guidelines;
      --issuing instructions to probation officers concerning the
            application of the guidelines;
      --establishing a research and development program within the
            Commission to serve as a clearinghouse and information center
            for information on Federal sentencing practices;
      --consulting with federal courts, departments, and agencies in
            developing, maintaining, and coordinating sound sentencing
            practices;
      --systematically collecting data from studies, research, and the
            empirical experience of public and private agencies concerning
            the sentencing process;
      --publishing data concerning the sentencing process;
      --systematically collecting and disseminating information concerning
            sentences actually imposed on more than 61,000 cases sentenced
            in the Federal district courts each year (and on about 1,000
            appellate decisions on sentencing) and the relationship of
            those sentences to the factors judges are required to consider
            under 18 U.S.C. Sec. 3553(a);
      --systematically collecting and disseminating information regarding
            the effectiveness of sentences imposed;
      --conducting seminars and workshops around the country to provide
            continuing studies for people engaged in the sentencing field;
      --conducting periodic training programs for judicial and probation
            personnel and other persons connected with the sentencing
            process;
      --making recommendations to Congress on changes that might be made to
            statutes relating to sentencing, penal, and correctional
            matters that would help to carry out effective, humane, and
            rational sentencing policy;
      --holding hearings and calling witnesses to assist the Commission in
            the exercise of its powers and duties;
      --recommending any changes in prison facilities that may be necessary
            because of the sentencing guidelines; and
      --performing any other functions necessary to permit federal courts
            and others in the federal criminal justice system to meet their
            responsibilities in the sentencing area.
                                     ______

    Prepared Statement of Haldane Robert Mayer, Chief Judge, U.S. Court of
                        Appeals for the Federal Circuit
        Mr. Chairman, I am pleased to submit my statement to the Committee
    for this court's fiscal year 2003 budget request.
        Our 2003 budget request totals $21,893,000. This is an increase of
    $2,548,000 over the 2002 approved appropriation of $19,345,000. Thirty-
    one percent of the requested increase, $799,000, is for mandatory,
    uncontrollable increases in costs. The remaining increase of $1,749,000
    is for funding of additional positions and other program increases.
                         request for program increases
        A total of $1,749,000 for program increases is requested. The
    breakdown and further justification for each amount follows. The
    justifications for the program increases are separated into three
    categories: staffing; renovations; and technology advancements.
    Two New Staff Positions
        The court requests $209,000 to cover the cost of two new positions
    for nine months in fiscal year 2003. The positions requested are for a
    Deputy to our Circuit Executive position ($130,000) and a Computer
    Security Specialist ($79,000).
        The position of Deputy to the Circuit Executive has become
    necessary to assist the Circuit Executive with the variety of duties
    assigned to that office. The Deputy would act in the absence of the
    Circuit Executive as well as assist in overseeing the offices that
    operate under the direction of the Circuit Executive.
        We also request funding to hire a full-time permanent position
    entitled Information Technology Specialist. Upon completion of a formal
    security review and assessment of the court's electronic information
    system, the National Security Agency concluded that the court should
    hire an Information Technology Specialist. This person would monitor
    and protect the security of the court's information system. The
    Information Technology Specialist would insure that all electronic
    communications and information in judges' chambers and staff offices
    are protected and secure from compromise or unlawful release.
    Courtroom Renovations
        The court is again requesting $900,000 to begin the long-overdue
    renovations of our courtrooms to bring them up to 21st Century security
    and technology standards to benefit the judges, attorneys, and
    litigants. There have been no upgrades to our courtrooms, with the
    exception of new carpet, since the opening of the courthouse in 1967.
        We requested this amount in our 2001 and 2002 budget requests. We
    have taken our request to GSA with no favorable response. It would be
    impossible to reprogram current appropriated funds to renovate the
    courtrooms without reducing our staffing levels or cutting back on the
    funding for other necessary items such as IT equipment and lawbooks.
    Improvements in the Court's Courtroom and Courthouse Computer
            Technology and Security
        We request $640,000 for program advancements in the area of
    technology in the courtrooms, judges' chambers, and staff offices:
    $150,000 of this amount is to upgrade the court's e-mail system in
    order to be a part of the new judiciary-wide e-mail system now being
    implemented nationwide.
        The Judicial Conference of the United States recognized that
    courtroom technologies are a necessary and integral part of courtrooms.
    Based on those findings and the fact that the Administrative Office of
    the U.S. Courts (AO) currently is implementing this program in courts
    across the country, the court is requesting funding to upgrade the
    courtroom technology in one of our courtrooms. The figure of $215,000
    was provided to the court by the AO based on its experience to date
    with upgrading courtrooms. Not only would this benefit the Judiciary
    and the court, it would be a benefit to counsel and litigants. One
    phase of this new technology will give counsel the opportunity to argue
    a case offsite while connected to the courtroom as if the attorney were
    in the courthouse, thus cutting expenses for the litigant.
        We request $205,000 to develop and augment a disaster recovery plan
    for the court's electronic data system. In the event of a major
    disaster, it will be necessary to access the court's computer network
    from a remote site as well as locally. This amount is a one-time cost
    estimate to put this recovery system in place.
        The National Security Agency performed a study of court security
    and recommends improved computer security hardware and software to
    assist in the detection and prevention of electronic computer attacks
    and intrusions to the court's computer network. The cost of upgrading
    the security of the court's computer system is $70,000.
        I would be pleased, Mr. Chairman, to answer any questions the
    Committee may have or to meet with the Committee members or staff about
    our budget requests. Thank you.

                          PANEL ATTORNEY RATE INCREASE

        Senator Hollings. Judge, that is the key, working with us
    and particularly our staffs here because we have got a good
    bipartisan staff that works on these issues. We will not have
    any difficulty. In fact, I had a chance last evening to go over
    each one of these items and I find them, generally speaking, in
    good order except for when you include an adjustment to the
    base here on a defender services pay increase. You jump that up
    from $90 an hour to $113 an hour for panel attorneys.
        Judge Heyburn. Right.
        Senator Hollings. What is the justification for that, sir?
        Judge Heyburn. Well, I think there are two separate issues
    here. We have talked with this committee and the House, as
    well, about the need to increase the panel attorney rate and we
    were very, very gratified last year when you increased the
    hourly rate paid to private attorneys who represent indigent
    defendants in Federal court. You raised the rate from $75 in
    court--it was even lower in some places--and $60 out of court,
    to $90 an hour in and out of court, which is a wonderful
    achievement and tremendously appreciated.
        We had requested $113 an hour, and at the time we put
    together this budget, we had not learned of the results of your
    final conference action last year. So the recommendation of the
    Judicial Conference and our committee still stands at $113 an
    hour as what we believe is necessary to make up for, I believe
    it was, 15 years where there was no rate increase.
        But you have raised the question, and it is a very
    legitimate and proper one, now that the rate has been raised to
    $90 an hour. We do not know, of course, what impact that rate
    is going to have on the system as a whole because the rate does
    not go into effect until May. We know it is going to be
    positive. We still believe that the rate needs to be raised to
    $113, but it is quite possible that the $90 rate will have a
    tremendously beneficial impact.

                     RATE INCREASE AS AN ADJUSTMENT TO BASE

        As to the second issue, whether or not the request for $113
    should be categorized as an adjustment to base, I think you
    raise a very good question. I think an argument could just as
    well be made that this is a program increase rather than an
    adjustment to base. We include it as an adjustment to base
    because the CJA statute provides for annual inflationary
    adjustments and that's what the $113 rate represents. So we
    considered it like a pay increase, which we consider an
    adjustment to base. However, I think it is fair enough for you
    to characterize it as a program increase as well. I think it is
    certainly a gray area in terms of how you want to categorize it
    in the budget process and I think you raise a good point.
        Senator Hollings. Thank you, sir.
        Senator Gregg.

                            COST OF TERRORISM TRIALS

        Senator Gregg. Yes, Judge. I am wondering, and maybe you
    can get some of your colleagues to comment on this, have you
    done an estimate as to how much it will cost us in additional
    funds if we have to run another trial along the lines of what
    we did for the first World Trade Center bombing? If we bring
    the September 11 terrorists back here and put them through a
    criminal justice process, I presume the costs are going to be
    staggering. Do you have a reserve fund for that? Have you tried
    to anticipate some of these additional costs of trying these
    terrorists in the United States?
        Judge Heyburn. In our budget request that we present to you
    today, the possibility of these very expensive trials is not
    included. We recognize that they may occur, but the estimates
    for defense costs and other associated related costs of
    security and the like are based upon the experience that we are
    now having in 2002. So the estimate, the way we present our
    budget, is based on the actual 2002 numbers, not a projection
    of what may happen.
        Senator Gregg. So you do not have like a reserve fund,
    which is reasonable----
        Judge Heyburn. If there was a significant expense in 2003
    for a trial such as that, we would simply have to redeploy our
    resources, and if we have a carryover, perhaps those funds
    could be used. But it is not specifically a part of our budget.
        Senator Gregg. Would you expect to submit a supplemental to
    us, then, if that were the case?
        Judge Heyburn. In the past, for instance, Oklahoma City,
    the associated trial costs were significant. There was quite a
    bit of comment from both the Senate and the House about the
    expense of defending those persons with private lawyers at
    Federal expense. I do not know the exact amount, although it
    was considerably less than the prosecution's expense. But, we
    could get that to you. I know it was in the millions of
    dollars. We did not ask for a supplemental on that occasion. It
    would have to be a fairly extraordinary expense before we
    would, I think, come in with a supplemental.
        [The information follows:]

    Summary of Funds Expended for the Representation and Defense of Timothy
    J. McVeigh from Arrest through Sentencing

    Attorneys...............................................      $6,741,015
    Attorney Support Staff, Housing, and Security...........       1,467,947
    Investigators...........................................       1,976,583
    Expert and Consulting Services..........................       3,053,405
    Travel..................................................         541,885
                        --------------------------------------------------------
                        ____________________________________________________
          Total.............................................      13,780,835

                    OFF-SITE COURT OPERATIONS SUPPORT CENTER

        Senator Gregg. The Administrative Office building over here
    is a pretty pricey place, very nice, has wonderful trees
    inside. Of course, coming from New Hampshire, we are wondering
    why the trees are not outside rather than inside, but that is a
    technical point.
        It would seem that most of the functions of that office
    could be done somewhere outside of the District and that the
    security issues raised by 9/11 might imply that it might be
    better to do those outside of the District. Are you taking a
    look at moving the Administrative Offices outside the District
    and then freeing up that space for utilization for departments
    or agencies which might have to, by their nature, be here in
    Washington?
        Mr. Mecham. Do you want me to respond to that?
        Judge Heyburn. Yes.
        Mr. Mecham. Pursuant to direction from your committee, we
    are looking at the necessity for some offsite space to meet
    emergency needs. One of the things we discovered from 9/11 and
    the anthrax situation is that we had inadequate communications.
    We could not communicate with the Southern District of New
    York, which was virtually paralyzed, and we realized that we
    are terribly vulnerable. We could be in a position, if the
    building were destroyed or otherwise put out of action, where
    we could not pay the judges, the court staff, or the jurors.
    Our entire communication system could break down.
        However, through your good help, we have a data
    communications network now that links all courts and judges
    throughout the United States. So, we applauded your request and
    are busily engaged in endeavoring to comply with a plan for
    certain offsite functions.

                              RELOCATION OF THE AO

        With respect to moving the AO, the AO is the principal
    administrative office function for the entire Federal
    judiciary. The functions we perform must be done centrally. We
    have substantially decentralized much of what we used to do
    here. Starting in 1990, I urged strongly that substantial
    functions be delegated out to the courts, which they were, and
    I think we have struck a nice balance.
        In the meantime, the courts have grown over the last 6
    years by about 15 percent. Our staff has stayed essentially
    flat because we had decentralized substantial activities. But
    we still must have a central communication system. You cannot
    run that in 92 different courts.
        Senator Gregg. Yes, but my point is, it does not need to be
    in the District of Columbia.
        Mr. Mecham. I think it would be very important to have it
    here. The Chief Justice is our boss. If you want to put us
    1,000 miles away from our boss, that is something you could do.
    I mean, you have that right, but I would not urge that you do
    that. Many of our functions relate to the General Services
    Administration. We work with them on buildings and grounds and
    the planning of buildings. We work closely with the U.S.
    Marshals Service. It is very important that we be linked to
    them. We also support the Judicial Conference of the United
    States, the policy making organization which is headquartered
    here in Washington. They will be meeting here next week under
    the direction of the Chief Justice.
        Senator Gregg. So you are saying, basically, you think you
    need to be in the District of Columbia?
        Mr. Mecham. I would say very strongly that the AO needs to
    be.
        Senator Gregg. Rather than in South Carolina or----
        Mr. Mecham. Or New Hampshire, even, perhaps New Mexico.
        Judge Heyburn. We would love to be in South Carolina.
        Judge Michael. West Virginia.
        Judge Heyburn. We like West Virginia.
        Judge Michael. Very open spaces.
        Mr. Mecham. I personally would like to move it to Salt
    Lake, now that the Olympics are over, and have it out there.
    But, I do not think it would be very practical, Senator, in all
    candor, and I tell you that as somebody on the way out the
    door, not coming in the door.
        Senator Gregg. That was my point. I wanted to get that
    information. But you are setting up the emergency--you are
    going to get us some papers on how you are going to be able to
    handle an emergency that might shut down your----
        Mr. Mecham. We shall, and thanks for asking us to do that.
        Senator Hollings. Senator Domenici.

            SERVICES FOR THE MENTALLY ILL WITHIN THE JUDICIAL SYSTEM

        Senator Domenici. Thank you, Mr. Chairman. Two parochial
    questions and one general one. Let me take the general one
    first.
        I have a great concern for the mentally ill and the courts
    and the mentally ill and the prisons and jails. It is a
    startling reality that in the United States, there are more
    seriously mentally ill people in jails--county and city jails
    across the land--than there are in all of the hospitals and
    institutions that we have that try to take care of them. At the
    national level, non-Federal, we are doing some work with mental
    health courts with a very small amount of money, thanks to the
    Congress, and they get to be experts at how to handle the
    mentally ill that are coming before them.
        I hope we can develop a lot more expertise and do a better
    job across the board, but what does the Federal Government and
    the judicial system that we call the Federal system, what do
    they do with reference to mentally ill defendants or people
    that are accused? What is the process? Is there any way that
    was built in to help them and to treat them differently?
        Judge Heyburn. I can answer that in a couple of ways.
    Number one, and just in terms of the facts and figures, I think
    partly with your urging and the urging of others in Congress,
    we have dramatically increased the attention and funding for
    the U.S. Probation and Pretrial Services System for services to
    mentally ill persons who are within the judicial system. I
    think the resources that are devoted to that have increased 50
    percent over the last couple of years.
        From personal experience as a district judge, we from time
    to time come into contact with defendants who have serious
    mental illness, whether it is a question of their mental
    capacity to stand trial or some other mental problem. My
    experience with the Federal health system has been a very
    positive one. They are professional, and at least as far as
    Kentucky is concerned, the hospitals that we can send these
    people to are within a reasonable proximity.
        They do a good job, and these are very, very difficult
    problems when you have a person who has committed perhaps a
    serious crime and yet is now--and may have been at the time--
    under some mental incapacity and is incapable of standing
    trial. It is a difficult problem for a judge and it is also, of
    course, difficult for the psychiatrist involved.
        I have been very impressed with the ability of the medical
    services, which are not directly under our control, of course,
    to respond to our particular needs. But, I do not know if that
    is the general experience around the country.
        Mr. Mecham. Could I just add one thing to that?
        Judge Heyburn. Please.
        Mr. Mecham. One of our responsibilities here in Washington
    is to provide administrative support for Federal probation and
    pretrial services throughout the country.
        Senator Domenici. Right.
        Mr. Mecham. Judge Heyburn is a chief judge and he has a
    chief probation officer and a chief pretrial services officer,
    as do all the courts. There were about 8,700 offenders and
    defendants, or about 6 percent of the 140,000 under
    supervision, that received mental health treatment in fiscal
    year 2001 at a cost of $8.4 million. It is an expanding thing,
    I regret to say, but yet it is important to do and we are doing
    our part and we are grateful for the support that this
    committee has provided that enables us to do that. As Judge
    Heyburn pointed out, we have had a 50 percent increase in
    mental health expenditures during the last 2 years.
        I should point out, Senator, that we actually supervise
    more people through the probation system, about 140,000, than
    there are in the Federal penitentiaries, about 129,000, and we
    do it at a cost of about $11 per person and the Federal
    penitentiary is about $55. So we are a bargain for you.
        Senator Domenici. If you could do them all and we would not
    need any prisons, that would be fine, but it does not work that
    way.
        Mr. Mecham. We would probably have to build some prisons to
    put them in.
        Senator Domenici. Let me, Mr. Chairman, just take a moment
    and exchange here with you and for the record some facts with
    reference to the mentally ill and the court system and the jail
    system.
        Actually, more and more medicines are being developed that
    help even the most severely mentally ill--schizophrenics, manic
    depressives, et cetera, but those drugs, in order to be
    effective, are new, they are experimental, and they are very
    expensive. One of the problems that we have, whether it is in a
    county jail or a city jail or a State jail, is that there is
    not enough money to provide the medication that is necessary to
    inhibit the hallucinations with which a schizophrenic attempts
    to live.
        Do we have any such problem with reference to the
    availability of resources for medicine, medication, or would
    that be under somebody else, Mr. Mecham? Do you have any way of
    telling us about that, Judge?

                        MEDICATIONS FOR THE MENTALLY ILL

        Judge Heyburn. I think there is, again, from my own
    experience as a district judge, there is always a problem. The
    problem that is least controllable for us is when a defendant
    is incarcerated prior to trial. At that point in time, even
    though they are under the supervision of the Marshals Service,
    they are usually placed in a State facility, a State jail, a
    county jail for that temporary period of time, and on those
    occasions and during that limited period of time, it is more
    difficult for us to ensure that they get the proper medicines
    that they need, and it comes up more often than we would like.
        Now, when they are actually under Federal supervision, that
    is not in direct custody but under supervised release, under
    home detention, then they are more directly under the
    supervision of the Probation Office and their ability to get
    the proper medicines is improved as I think the people are much
    more attentive.
        But as you can imagine, with thousands of county jails
    around the country where Federal prisoners may be held for
    short times in custody, the quality control, if you will, is
    just simply not the same as when they are in the Federal
    system.
        Senator Domenici. I found out about it today, and I am
    going to try to do something to see if we cannot put some
    resources into making sure that medicines are available. At
    least we can do that much.

                    STATUS OF LAS CRUCES FEDERAL COURTHOUSE

        I have two quick questions about New Mexico. First, I do
    not think I have to state the background facts with reference
    to New Mexico as a border State and the city of Las Cruces,
    which is on the border, and from which the District of New
    Mexico is now trying two-thirds of their criminal cases. I
    believe we fit the definition of a district in crisis. I would
    like to ask, with reference to Las Cruces which is a city about
    220 miles from Albuquerque and on the border, about the need
    for a new courthouse. It is desperately needed. What is the
    status of the courthouse?
        Mr. Mecham. Through your good efforts, Senator, the Fiscal
    Year 2002 Treasury and General Government Appropriations Act
    included $4.1 million for design of the Las Cruces courthouse.
    Construction is going to cost about $46 million and it is
    scheduled under the judiciary's 5-year prioritized plan, which
    obviously you have to agree to or disagree with for next year.
    It is the seventh item under the 2004 list. It will not be
    ready for construction in 2003 and therefore was not considered
    for our 2003 prioritized list. We were directed by Congress to
    develop priorities. It was a painful process, but we did it.
        So it depends a lot, Senator, on whether or not we can fund
    the projects for 2003. The President only recommended one-
    fourth of what we need to cover the buildings that are in
    fiscal year 2003, so if we go down the priority list, if a lot
    of those are delayed, then that is going to push the Las Cruces
    project farther down in 2004.
        Senator Domenici. Thank you very much.

                      ADDITIONAL JUDGESHIP FOR NEW MEXICO

        There is a bill working its way through conference which
    would provide an additional Article III judgeship for New
    Mexico, which the judges there have indicated they would like
    to house in the city of Las Cruces, county of Dona Ana, where
    this enormous build-up of cases is occurring. Could I ask,
    based upon your knowledge, would you agree that New Mexico
    should have an additional Article III judge if we are going to
    have some border judges in a bill which is in conference?
        Mr. Mecham. Not only do we agree, we strongly support it.
    It is part of legislation which we have submitted to Congress,
    which regrettably has not been introduced. We would like to see
    54 new judges, but there is a particularly acute need in the
    border States, as you point out, including New Mexico, which
    has six district judgeships but has a 681 weighted case filing.
    We ask for a new judge at 430. Your judges are working hard and
    their health is being compromised in at least one case that I
    know of. We strongly support an additional Article III
    judgeship for New Mexico.
        The Senate has not passed a judgeship authorization bill
    since 1990, even though the workload has gone up. Mercifully,
    your committee, however, has taken the lead to authorize 10 in
    1999 and 9 in 2000, and I noticed that the Senate, just before
    you adjourned last year, had put 9 judges in the Department of
    Justice authorization bill. Unfortunately, it does not include
    New Mexico.
        Senator Domenici. I understand.
        Mr. Mecham. It includes five for the Southern District of
    California, two for Texas, two for North Carolina, all of which
    are acutely needed, but New Mexico is not in there. I would
    hope you would talk to the conferees, Senator----
        Senator Domenici. We are.
        Mr. Mecham [continuing]. In support of New Mexico and maybe
    some of these other judgeships.
        Senator Domenici. That is why we asked you, so we can go
    there and tell them that you agree.
        Mr. Mecham. We agree 100 percent.
        Senator Domenici. Thank you very much, Mr. Chairman.
        Senator Hollings. Thank you. Senator Reed, you are such a
    quiet and polite Senator, I did not----
        Senator Reed. I want to apologize. There is a hearing in
    Armed Services with respect to the CINCs from the Pacific and
    SOUTHCOM and Korea, so I apologize and I have no questions at
    this time.
        Mr. Mecham. Senator, can I just make one comment while
    Senator Reed is here?
        Senator Hollings. Certainly.

                          NEW FEDERAL DEFENDER OFFICE

        Mr. Mecham. Chief Judge Torres has complimented Senator
    Reed to me and said what a great job he did in supporting a new
    defender office in Providence. He phoned me to say that Senator
    Reed had already called him to tell him your committee has
    approved it and I just want you to know your judges approve of
    your good work, Senator.
        Senator Reed. I know I came here for some reason.

                         ADDITIONAL COMMITTEE QUESTIONS

        Senator Hollings. Very good. Judge Heyburn, we thank you
    and your associates here this morning. Thank you very much.
        Judge Heyburn. Thank you very much for allowing us to be
    here.
        [The following questions were not asked at the hearing, but
    were submitted to the judiciary for response subsequent to the
    hearing:]
                Questions Submitted by Senator Patrick J. Leahy
            junkets/efforts to lobby the judiciary through seminars
        Question. A number of groups and individuals, including Senator
    Feingold, have expressed concerns about the practice of sitting judges
    attending resorts for educational seminars bankrolled by corporations
    and other groups interested in shaping and influencing the development
    of law in ways that would benefit those who fund such seminars, for
    example in the area of environmental law or takings law. The Chief
    Justice has defended privately funded judicial education seminars.
        Nevertheless, I would like to ask each of you whether you have any
    concerns about the appearance of impropriety created by the attendance
    of federal judges at educational seminars funded by private groups,
    including groups that may have interests in the outcome of federal
    litigation?
        Answer. Several ethical guidelines bear on the question whether a
    judge may properly attend a private educational seminar. Judges are
    under a statutory duty by virtue of 28 U.S.C. Sec. 455(a) and (b)(1) to
    disqualify themselves from any case in which they have a ``personal
    bias or prejudice concerning a party'' or otherwise where their
    ``impartiality might reasonably be questioned.'' See also Canon 3C of
    the Code of Conduct for United States Judges. Specific advice about
    attending private seminars is contained in Advisory Opinion No. 67,
    issued by the Judicial Conference Committee on Codes of Conduct.
    Additionally, the Judicial Conference Gift Regulations and Canon 5C(4)
    of the Code of Conduct for United States Judges permit judges to accept
    reimbursement of expenses to attend law-related activities.
        The advice contained in Advisory Opinion No. 67 sets out three key
    principles: (1) whether the sponsor of the seminar is involved (or
    likely to be involved) in litigation before the judge; (2) whether the
    source of funding for the seminar is involved (or likely to be
    involved) in litigation before the judge; and (3) whether the subject
    matter of the seminar relates to the litigation in which the sponsor or
    funding source is involved. The opinion advises judges that it would be
    improper to participate in seminars organized by non-governmental
    entities if the sponsor or funding source is involved or likely to
    become involved in litigation and the topics covered in the seminar are
    related to the subject matter of such litigation. The opinion also
    observes:

        ``The education of judges in various academic disciplines serves
    the public interest. That a lecture or seminar may emphasize a
    particular viewpoint or school of thought does not in itself preclude a
    judge from attending. Judges are continually exposed to competing views
    and arguments and are trained to weigh them.''

        The analysis in Advisory Opinion No. 67 was endorsed in the most
    recent federal circuit decision to review this subject, Aguinda v.
    Texaco, Inc., 241 F.3d 194 (2d Cir. 2001). That decision specifically
    addressed the question of funding and support for private educational
    seminars. The court ruled that a party's ``indirect and minor funding
    role'' in a seminar, coupled with the lack of connection between the
    litigation and the seminar, did not render a judge's attendance at the
    seminar improper. As the court observed, ``[n]o reasonable person would
    believe that expense-paid attendance at such [private seminar] events
    would cause a judge to be partial, or to appear so, in litigation
    involving a minor donor--whether a party or counsel to a party--to a
    bar association, law school, or program administering a particular
    seminar.''
        Over the years, judges have benefitted from educational programs
    offered by bar associations, universities, law schools, nonprofit
    foundations, and other private organizations. It is difficult to
    determine in the abstract whether a judge's attendance at a particular
    private seminar will give rise to impartiality concerns. Specific
    information about the sponsor of the seminar, the source of funding,
    their involvement in litigation, the content of the seminar, and the
    judge's relationship to such litigation all bear on the question
    whether a judge's participation is proper or improper. Additionally,
    judges who properly attend a seminar may later find it necessary to
    consider recusal if a case appears on their docket involving the
    sponsor or source of funding. These factors require consideration on an
    individual basis.
        Question. In what ways do you think that the financial disclosure
    process could be improved to provide for more complete disclosure of
    the costs of attendance at such seminars, whether paid for directly by
    the private group as a ``gift'' or paid for by the judge and then
    ``reimbursed'' by the private group?
        Answer. The disclosure requirements set forth in section
    102(a)(2)(B) of the Ethics in Government Act of 1978 (5 U.S.C. app.
    Sec. 102(a)(2)(B)) are quite adequate for reporting reimbursements.
    Each filer is required to report the source, location, date, and nature
    of expenses reimbursed by the source. For judges, conflict of interest
    recusal is based on the identity of the source and not the cost of such
    reimbursement.
        Question. Would you agree that it would be beneficial for financial
    disclosure statements--after any redactions authorized by the Judicial
    Conference Committee on Financial Disclosure in accord with the
    statute--or financial conflicts (investments) lists to be posted at the
    court houses where the judges sit?
        Answer. Financial disclosure statements do not necessarily provide
    an accurate statement of a judge's financial holdings for recusal
    monitoring purposes because of the delay inherent in filing the reports
    (due May 15) and the time period covered (preceding calendar year).
    Thus, the listing of assets in a report is already at least four-and-a-
    half months old when filed and may not accurately reflect a judge's
    financial holdings on the day of case assignment or trial. In addition,
    the reports are both over- and under-inclusive, in that they require
    judges to list interests that are not disqualifying (e.g., bonds), and
    they fail to require disclosure of interests that are disqualifying
    (e.g., stock holdings under $1,000).
        At the March 1999 meeting, the Judicial Conference of the United
    States considered whether it should encourage all courts to maintain
    recusal lists in the courthouse. After reviewing the appropriate
    Committees' recommendations and discussion, the Conference agreed that
    the better course of action was to continue to support the efforts of
    the Committees on Codes of Conduct and Financial Disclosure to educate
    and inform judges of their responsibilities under 28 U.S.C. Sec. 455,
    the Code of Conduct for United States Judges, and the financial
    disclosure provisions of the Ethics in Government Act of 1978. Recently
    the Chief Justice of the United States has referred the issue of
    posting recusal lists in the courthouse to the appropriate committees
    of the Conference for further consideration. This referral was in
    response to a letter from Representatives Howard Coble and Howard L.
    Berman of the Subcommittee on Courts, the Internet, and Intellectual
    property of the House Judiciary Committee concerning hearings held in
    November 2001 that touched on this issue.
        Question. In recent testimony a judicial nominee noted that he now
    believes the better practice would be not to attend expense-paid
    seminars unless he knew who was providing the funding to the group
    sponsoring the seminar so that he could make a better informed judgment
    about possible conflicts and the appearance of impropriety. What do you
    think about that suggestion and should it be incorporated in a
    guideline or rule for federal judges?
        Answer. This issue is addressed in current published ethics
    guidance. Advisory Opinion No. 67, discussed above in response to an
    earlier questions, advises that, if there is a reasonable question
    concerning the propriety of a judge's participation in an educational
    seminar, the judge should take steps to satisfy himself or herself that
    there is no impropriety. Similar guidance appears in Aguinda v. Texaco,
    Inc., 241 F. 3d 194 (2d Cir. 2001), which states:

        ``Presentations at bar association meetings or law schools may well
    relate to particularized issues, and recusal should be considered
    seriously, but on a case-by-case basis. Judges should be wary of
    attending presentations involving litigation that is before them or
    likely to come before them without at the very least assuring
    themselves that parties or counsel to the litigation are not funding or
    controlling the presentation.''
                              tracking civil cases
        Question. Some have noted that fewer civil cases are going to trial
    in federal courts these days as more cases are disposed of by motion or
    settlement. Does the Administrative Office or do the circuits have a
    process for determining whether judges are being slow or derelict in
    their responsibilities in timely considering motions?
        Answer. The Civil Justice Reform Act of 1990 (CJRA) requires the
    Director of the Administrative Office of the United States Courts to
    prepare a semiannual report for every U.S. district and magistrate
    judge, showing all motions pending before that judge for more than six
    months, all bench trials that have remained undecided for more than six
    months, and all civil cases pending for more than three years. Pursuant
    to that law, these reports are delivered to the Senate and House
    Judiciary Committees every six months. In addition, the Judicial
    Conference's Committee on Court Administration and Case Management,
    which has jurisdiction over the policies relating to the CJRA, has
    instituted a procedure to identify and assist courts that may be
    experiencing case processing problems.
        Question. All too often litigants complain that judges delay
    considering timely motions for summary judgment until the eve of trial,
    after the parties have gone to considerable expense for preparing for
    trial. Sometimes, we have heard, motions are pending for years and
    then, when new judges are confirmed to the court, such cases and their
    old motions are transferred to the new judges, resulting in even more
    delay. The Administrative Office and the courts have very good
    procedures for tracking how criminal cases are handled under the Speedy
    Trial Act. There seems to be precious little accountability,
    comparatively, regarding how speedily civil cases are handled.
        What additional measures of accountability might we build into our
    civil justice system to provide the public with more information about
    how promptly civil cases and motions are considered?
        Answer. As noted above, the Administrative Office, pursuant to the
    CJRA and the policy of the Judicial Conference, biannually publishes
    and provides to Congress a comprehensive and specific report on the
    status of each federal district and magistrate judge's docket.
    Individual judge and district reports, which contain more detail, are
    also available in the clerk's office in each district. In addition,
    each circuit executive's office maintains copies of their respective
    districts' CJRA reports. It is not uncommon for the local press to pick
    up this information and publish a story about the rankings of the
    judges in their districts.
        However, the vast majority of federal district courts dispose of
    their cases in relatively short order. The median time from filing to
    disposition for civil cases in district courts is approximately nine
    months--a figure that has remained fairly constant, never exceeding ten
    months, over the past 15 years.
        Question. Could a computerized tracking system be designed, or
    could the system that tracks the criminal cases be adapted, to provide
    such information about the time it takes for courts to dispose of
    certain types of motions and civil cases?
        Answer. For the past three years, the CJRA report discussed above
    has been primarily prepared by an automated program, the Integrated
    Case Management System/CJRA Statistical Reporting Program (ICMS/CJRA).
    As a result, all pending motions, bench trials, three-year old cases,
    Social Security cases, and bankruptcy appeals are being reported in a
    standard and consistent fashion. The implementation of this automated
    processing system has promoted a highly accurate and well-documented
    analysis of the pending civil caseload for each district and magistrate
    judge.

                              subcommittee recess

        Senator Hollings. The subcommittee will be in recess.
        [Whereupon, at 10:56 a.m., Tuesday, March 5, the
    subcommittee was recessed, to reconvene subject to the call of
    the Chair.]

    DEPARTMENTS OF COMMERCE, JUSTICE, AND STATE, THE JUDICIARY, AND RELATED
                  AGENCIES APPROPRIATIONS FOR FISCAL YEAR 2003

                                  ----------

                            THURSDAY, MARCH 7, 2002

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 10:02 a.m., in room SR-253, Russell
    Senate Office Building, Hon. Ernest F. Hollings (chairman)
    presiding.
        Present: Senators Hollings, Gregg, and Stevens.

                       FEDERAL COMMUNICATIONS COMMISSION

    STATEMENT OF MICHAEL K. POWELL, CHAIRMAN

                               prepared statement

        Senator Hollings. The committee will come to order, and we
    are pleased this morning in our appropriations oversight to
    welcome Mr. Michael Powell, the Chairman of the Federal
    Communications Commission. Mr. Powell, we would be delighted to
    hear from you, sir.
        Mr. Powell. Thank you, Mr. Chairman, Senator Gregg. It is
    my understanding that you are interested in getting into some
    of the policy issues, and in deference to your wishes, I would
    ask that my full testimony be presented into the record.
        Senator Hollings. It will be included, and you can
    summarize it as you wish.
        [The statement follows:]
                    Prepared Statement of Michael K. Powell
        Mr. Chairman, Ranking Minority Member, and Members of the
    Subcommittee, I appreciate this opportunity to appear before you today
    to provide you with a report of our work conducted during the past
    calendar year and to discuss the Federal Communications Commission's
    (``FCC'') fiscal year 2003 Budget.
        Less than nine months ago, I appeared before this Subcommittee for
    the first time and made a personal commitment to effectuate fundamental
    change within the Commission. I guaranteed that the Commission, as an
    institution, would complete a thorough self-examination and develop a
    reform plan designed to make the FCC a more responsive, efficient and
    effective agency, capable of facing the technological and economic
    opportunities and challenges of the new millennium. The Commission
    delivered on this promise and sent you a reprogramming request for its
    reorganization six months later. We appreciate your rapid consent to
    our request.
        I also pledged to enhance the Commission's independent technical
    and engineering expertise. The Commission dedicated resources to
    recruiting, training and retaining a solid technology-oriented
    workforce under our ``Excellence in Engineering'' Program. We have
    hired 18 mid- and senior-level and five entry-level engineers. We
    instituted training programs to keep current and future engineers up to
    date in their profession. And, we have improved the environment for
    engineers by purchasing equipment to facilitate the spectrum management
    process, and to upgrade the Columbia, Maryland Laboratory's testing
    capabilities. Our on-going efforts in this regard, coupled with the
    Agency's ``FCC University'' and ``Excellence in Economic Analysis''
    initiatives, hopefully will preserve our existing wealth of FCC staff
    knowledge and expertise and enhance and extend that collective
    knowledge into the new millennium.
        When I last appeared before this Subcommittee, I pledged to make
    the Commission a model of solid management techniques and performance.
    As such, the Commission moved forward to continue to streamline agency
    processes and procedures, automate agency processes, provide improved
    access to agency information, and modernize its information technology
    infrastructure. During our January 2002 Open Agenda Meeting, the
    Commission's staff delivered with statistics showing substantial
    improvement in backlog reduction levels and other management
    benchmarks.
        Finally, I also vowed that the Commission would use the remainder
    of its fiscal year 2001 and expected fiscal year 2002 funds to
    implement its statutory mandates and serve as a constructive and fair
    independent agency, cognizant of the intent of Congress and dedicated
    to serving the public interest and consumer welfare. I am confident
    that the Commission has met all of these commitments and, in doing so,
    has achieved significantly higher levels of customer benefit and policy
    and management performance.
        The Commission has made these achievements, however, against the
    backdrop of tragic and dramatic national events. The events of
    September 11, 2001, provided us all with an important lesson in the
    significance of the FCC's portfolio. We know now that our society has
    developed more than just an appetite for communications services--
    America is dependent upon these services in times of crisis and in
    times of peace. A strong and competitive communications network is
    essential to a healthy economy and our nation depends on both, whether
    to bolster its ability to defend itself, or to communicate in times of
    normalcy.
        Last year, this Subcommittee initially provided the Commission with
    full funding, plus additional resources for the ``Excellence in
    Engineering'' Program. Although our final funding was slightly less
    than originally requested, I am appreciative of this Subcommittee's
    efforts to ensure that we had adequate resources to achieve our goals
    and effectuate significant intra-agency reform efforts. For fiscal year
    2003, the Commission is requesting $278,092,000, of which $268,327,000
    will be dedicated toward our operational requirements.
        This year, you have my personal pledge to continue driving forward
    in a patient and deliberate manner--to handle the expected and the
    unexpected, from homeland and internal security to biennial reviews, an
    expected influx of Section 271 long-distance applications, and pending
    major merger reviews, just to name a few. The Commission intends to use
    its expected funding to continue its campaign to upgrade the Agency's
    facilities, as well as to initiate and complete critical rulemakings.
    The present request is the minimum amount necessary to continue to
    capitalize our past successes and to carry us through the immense
    challenges of the next fiscal year. Already, fiscal year 2002 has been
    marked by a tidal wave of expected and unexpected events and policy and
    regulatory issues. I expect fiscal year 2003 to be at least as
    opportune and challenging.
                fiscal year 2002: maximizing available resources
        It is fitting that we have this hearing on March 7th, a day marked
    by important historical milestones for the telecommunications industry.
    On this day in 1876, Alexander Graham Bell received a patent for the
    telephone. Fifty years later on the same day, the first successful
    transatlantic radio-telephone conversation took place between London
    and New York. In retrospect, 50 years seems like a very long period of
    time between these achievements. Today, we develop new communications
    products and services at a more rapid speed then ever before, in an
    exponential fashion that makes science fiction a matter of science fact
    within just a handful of years. Looking forward, that makes for policy
    and management opportunities, as well as hurdles and challenges.
        As a consequence, the Commission continues to capitalize on its
    well-established core competencies, especially honed over the past six
    years, to eliminate barriers to entry in domestic communications
    markets; to deregulate where appropriate to promote competition; to
    vigorously enforce Commission rules so that corporate entities compete
    fairly; and, to promote competition in international communications
    markets. Moreover, the Commission continues to build upon the
    cornerstone principles of the public interest and general consumer
    welfare to promote access for all Americans to communications service,
    and to promote heightened consumer education and information.
        The Commission must stay abreast of technological advances and be
    prepared to face the future before the future arrives. To do so, the
    Commission needs funding to improve its use of internal technology and
    to develop a highly trained workforce to evaluate communications
    industry trends. Last year when I appeared before you, I discussed the
    Commission's critical need to upgrade its infrastructure. I also
    emphasized our efforts to re-evaluate the Agency and develop a business
    plan to reform its organizational structure. A well-funded
    infrastructure and an efficient organizational structure are
    intrinsically linked. The overall ability of the Commission to function
    as an institution is dependent upon the quality of both. When I last
    testified, we already had made strides toward upgrading information
    technology and technological resources. Six months after my testimony,
    I sent you a report outlining a significant internal reorganization of
    the Commission.
        The foundation for the Commission's reorganization rests on the
    shoulders of its staff--a diverse and committed group of people
    dedicated to utilizing resources to maximum capacity and rebuilding a
    trim, well-focused organization that meets the needs of America's
    communications industries and their consumers. The reform and
    reorganization of the Commission is built along four specific concepts:
    (1) a clear substantive policy vision; (2) a pointed emphasis on
    management; (3) an extensive training and development program; and (4)
    organizational restructuring. The implementation of each of these
    concepts exemplifies how the Commission utilized its financial
    resources during the past year, and explains our plans for additional
    funding in fiscal year 2003.
    A Clear Policy Vision
        I enumerated above a set of policy and management imperatives that
    will extend the Commission's mission, evolve its operational
    strategies, and drive further the culture of efficient, effective and
    responsive performance. First, we articulated a clear policy vision.
    The Commission's staff also evaluated our activities in these
    identified issue areas and tied the highlighted policies to the reform
    of the Commission as an institution. We initially specified several
    areas for policy-making emphasis: broadband deployment, competition
    policy, spectrum policy, building a foundation for media ownership
    regulation, digital television transition, and homeland security.
    Although these issues sometimes overlap, their individual significance
    guides our dedication of resources in the regulatory arena.
                Broadband
        Recently, I noted that one of the FCC's central policymaking
    focuses is, and should be, the promotion of efficient, widespread
    deployment of broadband infrastructure. Recognizing the importance of
    broadband deployment--a topic of conversation that is extensively
    discussed here on Capitol Hill, as well as at the Commission, Wall
    Street, and Main Street--the Commission is taking a concerted,
    comprehensive approach to bring regulatory clarity to what is, at best,
    a murky and confusing policy area. To that end, the Commission has
    committed significant resources to consider and initiate several
    proceedings that pointedly address broadband issues. Of course, our
    actions in this area will first and foremost be grounded in the Act,
    taking into account the statutory objectives of competition, universal
    service, and consumer protection.
        It is important to emphasize that while we have committed
    significant resources to initiating or completing various rulemakings,
    the legal and regulatory issues implicated here have yet to be
    resolved. But they must be resolved if we collectively intend to
    facilitate the ubiquitous availability of broadband to all Americans.
    The Commission welcomes the input of all Americans in our deliberative
    process--especially the opinions of the Members of this Subcommittee
    and Congress as a whole--as we proceed in developing a regulatory
    framework for successful broadband deployment.
                Competition Policy
        Competition is a fundamental and guiding statutory principle under
    the Telecommunications Act of 1996. It is the root from which most of
    our other policy areas grow. Under my leadership, the Commission has
    been outspoken in its support for competition, both inter- and intra-
    modal. More significantly, however, our actions have backed up our
    words.
        Positive rules to promote competitive entry are meaningless without
    a credible enforcement effort to back them up. Therefore, we have made
    enforcement the cornerstone of our competition policy. As you will
    recall, last year we called on Congress to increase dramatically the
    forfeiture amount allowed under the statute. While we eagerly await the
    fulfillment of this request, we have vigorously enforced our rules that
    serve to promote competition. In addition, in contemplating our
    competition policy, we recognized that ensuring that competitors have
    access to those network elements that are necessary to provide
    competing telecommunications services is only half the battle. Indeed,
    the competitive local exchange carrier (``CLEC'') community told us
    that to be useful, network elements must be provisioned in a timely
    manner. In response to provisioning concerns, we launched two Notice of
    Proposed Rulemakings on performance standards. Through these
    proceedings, we have embarked on an effort to simplify performance
    levels and standards to both clarify obligations and to allow for a
    mechanism for swift enforcement when those levels and standards are
    compromised.
        Moreover, the Commission has been vigilant in its review of Section
    271 applications. Since passage of the 1996 Act, the Commission has
    denied as many Section 271 applications (this includes situations where
    the application has been withdrawn, an effective denial) as it has
    granted. In 2001, despite the fact that the roadmap for approval has
    been drawn, two Section 271 applications involving three states were
    withdrawn, demonstrating the Commission's continued determination in
    ensuring the competitive checklist is met and local markets are open
    for competition. Furthermore, the Commission has begun a second
    analytical look at the regulatory implementation of the Act, through
    our Triennial Review of Unbundled Network Elements Requirements NPRM,
    that takes account of market experiences to determine which of our
    regulations are working to provide a competitive environment for
    consumers and which are not.
                Spectrum Policy
        The Commission's first assigned task in 1934 was to manage the
    spectrum. The same basic principles articulated then continue to exist
    today. The Commission has an obligation to ensure that spectrum, an
    important and precious resource, is used in a wisely manner that
    ensures the broadest public benefit and meets urgent public needs.
        The Commission has acted decisively--utilizing our staff and the
    spectrum auctions process to follow Congress' mandate that we work
    toward the rapid deployment of spectrum. During the past few months, we
    have reallocated the spectrum used for channels 52-59, designated the
    4.9 GHz band for public safety purposes, and authorized the use of
    spectrum for Ultra-Wideband technology. In a major rulemaking completed
    on December 28, 2001, the Commission reallocated 27 MHz of spectrum
    transferred from the Federal Government. This spectrum will permit the
    initiation of new and flexible services--for example, in the fixed
    satellite service, fixed mobile service, telemetry, and low power
    radio. In addition, the Commission has experimented with innovative
    methods for licensing that encourage private band management within the
    confines of existing statutory guidelines.
                Media Ownership Foundation
        The time has come to rebuild the factual foundations that support a
    contemporary regulatory regime for media ownership regulations.
    Although the media landscape has changed dramatically since the
    initiation of many of the Commission's ownership regulations, the
    longstanding goals of diversity, competition, and localism remain
    paramount.
        As you are aware, the U.S. Court of Appeals for the D.C. Circuit
    recently vacated some of the Commission's broadcast ownership rules,
    and has remanded others for our reconsideration. At the heart of the
    court's concern is the ability of the Commission to justify these
    restrictions in light of the dynamic changes in today's marketplace.
        Long before the recent court decision, however, I expressed concern
    about the quality of the record the Commission relied on in reaching
    media ownership decisions. In an effort to shore up this area, I
    announced the creation of a Media Ownership Working Group on October
    29, 2001. This working group is tasked with developing a solid factual
    and analytical foundation for media ownership regulation. Moreover,
    they are working to provide an empirical and analytical basis for the
    Commission to ensure that our regulatory regime in this area actually
    serves to meet the goals of diversity, localism, and competition in the
    media marketplace.
        It is important to note, however, that the D.C. Circuit's recent
    decision found that the Act compels the Commission to review the full
    panoply of media ownership regulations every two years and to repeal
    these regulations unless the Commission makes an affirmative finding
    that the rules are necessary to serve the public interest. To address
    the court's criticism that we lack a factual foundation for our
    ownership rules, we must expend a meaningful amount of resources to
    improve the evidence before us. We cannot afford to sit back and hope
    the public submits all the information we need to make good decisions.
    We must be proactive in deciding what questions need to be answered,
    and then to go out and answer them. That is what I have set up the
    Media Ownership Working Group to do.
        We then need to apply those factual findings to our media ownership
    rules and determine if the rules as written truly promote competition,
    diversity and localism, or whether today's media market requires
    different approaches. I welcome that challenge and would simply note
    that overhauling our knowledge base on media ownership and then re-
    initializing it every two years hence will require a significant
    commitment of resources.
        In addition to appointing specific FCC personnel to gather
    empirical information, the Commission has launched a comprehensive
    examination of rules on multiple ownership of local radio stations and
    set interim policies to resolve pending radio transfer applications.
    The Commission also, as recommended by the prior Commission, initiated
    a proceeding to review the newspaper-broadcast cross-ownership rule.
    The Commission also began a rulemaking on cable ownership rules last
    year. In addition, the Commission has proposed new equal employment
    opportunity rules for broadcast and cable. I believe that by next year,
    with the proper allocation of resources within the Commission, I will
    be able to report on significant beneficial progress in this area.
                Digital Television Transition
        While broadband deployment and the inherent competitive issues
    involved rank as the most important communications issues facing
    America, the economic by-products of digital television (``DTV'') are
    equally important in scope and stature. Television is, after all, a
    central part of our society and provides our citizenry with essential
    information and entertainment. Consequently, the DTV transition and its
    economic and regulatory implications maintain an important place in the
    Commission's overall policy-making efforts. In October 2001, I
    announced the creation of a Digital Television Task Force. This task
    force will review the ongoing transition to DTV, and make
    recommendations to the Commission concerning priorities to facilitate
    the transition and promote the rapid recovery of broadcast spectrum for
    other uses. In addition to making recommendations for agency action,
    the Task Force has been facilitating discussions with the various
    industries that are largely responsible for the transition.
                Homeland Security
        In response to the events of September 11, 2001, the Commission
    established a Homeland Security Policy Council (``HSPC''). The
    formation of the HSPC and its work involves the use of significant
    resources in an area that we did not consider for budgetary purposes
    during the fiscal year 2002 appropriations process. Like other
    agencies, we are using our current pool of Full-Time Employees
    (``FTEs'') to cope with the events of September 11, 2001, and we are
    demanding more of them in handling their regular workload along with
    new tasks.
        HSPC is assigned to handle overlapping security issues and respond
    to specific mission objectives. First, the mission of this group is to
    assist the Commission in evaluating and strengthening measures for
    protecting U.S. telecommunications, broadcast and other communications
    infrastructure and facilities from further terrorist attacks. Second,
    HSPC assists the Commission in ensuring rapid restoration of U.S.
    telecommunications, broadcast, and other communications infrastructure
    and facilities after disruption by a terrorist threat or attack. Third,
    HSPC assists the Commission in ensuring that public safety, public
    health, and other emergency and defense personnel have effective
    communications services available to them in the immediate aftermath of
    any terrorist attack within the United States.
    Emphasis on Management
        As an outgrowth of the Commission's self-examination and reform,
    the Commission has placed a new emphasis on the management of available
    resources and the creation of tools designed to enhance the operation
    of the bureaus. We asked all managers to review their internal
    processes and develop real solutions to existing problems. Specified
    management initiatives include: (1) backlog reduction; (2) better use
    of technology, including a re-designed Internet site; (3) improved
    productivity; and (4) consolidated and simplified licensing systems.
        At our January 2002 Open Agenda Meeting, most Bureau and Office
    Chiefs reported on their reduction in regulatory backlogs--a matter
    that has dogged the Commission. We have posted these statistics on the
    Commission's Internet site (), so that our progress
    in this area is evident to the industry. One major highlight in this
    area is the Wireless Telecommunications Bureau. In 1998, they had a
    13.12 percent backlog of applications pending for more then a year. By
    December 2001, that percentage had dropped to 0.24 percent. Likewise,
    the International Bureau managed to achieve a 55 percent reduction in
    pending applications for Review and Petitions for Reconsideration, as
    well as a 56 percent reduction in the number of existing non-routine
    applications and a 25 percent reduction in existing satellite space
    station applications.
        This past year, the Commission's management maximized improved
    information technology resources to increase responsiveness to
    consumers. The FCC's redesigned Internet site is part of our management
    plan to make the Agency more responsive and transparent. We average
    approximately 265,000 hits on a daily basis, and we were ranked third
    overall among federal agencies for Internet site design. At the end of
    November 2001, the Commission launched a new FCC search engine to
    improve its Internet site.
        In addition to a general managerial emphasis on outreach, the
    Commission's staff leadership is tasked with improving bureau
    productivity. For instance, the Commission instituted comprehensive
    accounting and reporting reform for incumbent local exchange carriers.
    And, in an effort to reach out to our core constituencies, the bureaus
    have all undertaken efforts designed to consolidate and simplify
    licensing systems. The Commission has proposed new procedures to
    increase the efficiency of satellite licensing procedures. The
    Commission also has proposed a uniform system for filing informal
    complaints. This particular change would promote efficiency and
    predictability for consumers and service providers.
    Training and Development
        The Commission's long-term policy objectives require a highly
    trained staff capable of adapting to technological change and industry
    trends. Accordingly, the Commission has instituted a range of training
    and technical initiatives: (1) the ``FCC University''; (2) the
    ``Excellence in Engineering'' Program to recruit engineers and improve
    their physical resources; and (3) recruitment and retainment of
    economic experts, or the so-called ``Excellence in Economic Analysis''
    Program.
        Already we have instituted internal training programs in a variety
    of areas and brought outside experts in to train our staff in various
    disciplines. The most successful element of this program so far,
    however, is the FCC's ``Excellence in Engineering'' Program, initiated
    during the previous fiscal year and continued with funds in our fiscal
    year 2002 appropriation. Already we have hired 18 mid- and senior-level
    and five entry-level engineers in open FTE positions. We have
    instituted a special training program to educate and retain our
    technological experts. We have dedicated a substantial portion of our
    funding to improving the physical infrastructure used by the engineers
    for testing and other purposes. At the Columbia, Maryland Laboratory,
    we have purchased five new spectrum analyzers and three new signal
    generators to enhance our ability to adequately measure emissions. As a
    result of these improvements, we now have the capability to take
    measurements at 110 GHz instead of the outdated 30 GHz level. We also
    have dedicated financial resources toward the purchase of equipment
    designed to measure cellular phone radiation.
    Restructuring
        Although managerial goals and engineering equipment are essential
    components of an efficient agency dedicated to high-tech matters, the
    key to ensuring a well-functioning agency is to create an
    organizational backdrop that maximizes human and technological
    resources. On January 17, 2002, the Commission sent the cornerstone of
    its improvement plan to this Committee--a Section 605 Report detailing
    the reorganization of the Commission. We are in the initial stages of
    implementing that reorganization. The Commission's plan is more then a
    simple retooling of an old agency--it represents an important step in
    streamlining the Commission. Although there will be no initial
    budgetary impact from the restructuring, we expect that in years to
    come, the streamlining approach taken here will pay dividends in
    efficiency and good management. I have attached to my written testimony
    a copy of the proposed organizational chart for the Commission.
        We intend to dedicate the bulk of our human resources to continue
    to move forward in these areas, to make the Agency responsive to
    consumer and industry demands and to facilitate telecommunications
    growth and deployment. The best way to accomplish this goal is to
    ensure adequate funding to purchase necessary equipment, improve our
    information technology capabilities, and hire and retain trained
    technical personnel capable of assisting the Commission in its
    decision-making process.
                fiscal year 2003: continuing a year of progress
        It is important to note that all of the reform and restructuring
    efforts started in fiscal year 2001 continue to be limited by the
    available discretionary funding in fiscal year 2002. Currently, 69
    percent of the fiscal year 2002 appropriation is earmarked for salaries
    and benefits. Additionally, 29 percent will cover non-discretionary
    cost increases related to rent and supplies. That amount leaves the
    Commission with two percent of its total appropriation to implement
    reform--streamline operations, enhance technical and economic
    expertise, oversee spectrum management, and provide funds for
    resolution of ongoing enforcement issues such as cramming/slamming. For
    this reason, focussing on improving the funding picture in the future--
    i.e., fiscal year 2003--is especially important.
        The $268,327,000 in operational costs requested by the Commission
    for fiscal year 2003 is the bare minimum needed to allow us to continue
    the progress made during the past year. In order to achieve our goals,
    and stay abreast of telecommunications developments, the Commission
    must keep ahead of changes in technology, economics, and the law.
    Accordingly, we are requesting $15,066,000 for critical programmatic
    initiatives. An additional $8,190,000 would be dedicated toward
    uncontrollable cost increases related to salaries, benefits, and
    inflationary cost increases for rent and supplies. The Administration's
    request of $9,765,000 for retirement costs brings the total Commission
    fiscal year 2003 budget to $278,092,000. The fiscal year 2003
    regulatory fee offset for the Commission would be 89 percent of the
    proposed fiscal year 2003 budget, making our direct appropriation
    request from this committee 9.5 percent over our total fiscal year
    budget, or 13.5 percent with the pension costs included.
        From the perspective of funding Commission objectives, the critical
    segment of the overall budget is the $15,066,000 dedicated to
    programmatic initiatives. Of that amount, $4,986,000 will be dedicated
    toward Commission employee training, enforcement, and spectrum
    management initiatives. Due to national security needs identified since
    September 11, 2001, the Commission also will spend $1,000,000 to
    improve internal security and support other security efforts. The
    remainder of these funds, $9,080,000, will improve information
    technology critical to supporting program performance initiatives. With
    these funds, the Commission will improve existing systems to ensure
    compliance with Government-wide standards pertaining to system
    security, accessibility, and financial management.
        In addition to the policy objectives and reform outlined in my
    testimony, our specific objectives for this funding include:
      --Continued expansion of electronic filing and other initiatives to
            enhance public access and expedite Commission policy decision-
            making;
      --Improved technical and economic expertise of staff;
      --Life-cycle replacement of technical monitoring and testing
            equipment;
      --Ongoing infrastructure improvements to Columbia laboratory
            facility;
      --Expeditious and effective response to public requests for
            assistance and information;
      --Enhancement of information technology infrastructure to make it
            responsive to changes in the industry; and,
      --Enable the FCC to improve its homeland security posture.
        One of the Commission's main objectives during the next year is to
    maintain a safe and secure working environment for the FCC's employees
    and visitors who frequent the Commission. As with most other agencies,
    the Commission has faced the fallout from September 11, 2001, with
    unanticipated costs. This year we must provide enhancements to a
    variety of activities and programs, including on-site physical
    security; relocation and processing of mail at multiple off-site
    locations; and systems upgrades to ensure that our information
    technology infrastructure has adequate cyber-security safeguards.
    Although we have $1,000,000 specifically set-aside for these projects
    in fiscal year 2003, the Commission also has requested the use of
    excess regulatory fees collected in previous years for fiscal year 2002
    security needs. In addition to receiving full funding, we would
    appreciate a favorable decision related to this request.
        Without adequate support, we will be required to eliminate some of
    the Commission's programmatic initiatives, or cut back on the
    implementation of individual programs. I believe that I already have
    made the hard choices necessary to operate the Commission on as tight a
    budget as practicable. As I outlined in the first part of my testimony,
    the infrastructure and manpower initiatives are interconnected to the
    general health of the agency and the completion of its core mission.
                                   conclusion
        The Federal Communications Commission has been using, and continues
    to use responsibly its financial resources to meet the needs of a
    dynamic regulatory, economic, and technological environment. This past
    calendar year, the Commission's staff has handled a new workload based
    on national exigencies, worked toward improving overall agency
    management, and initiated a restructuring process designed to ensure
    that the Commission of today is prepared for the regulatory mission of
    tomorrow. The Commission's budget request is a reflection of an
    imperative need. We have trimmed the fat and focused all available
    resources to follow through on much needed rulemaking matters, reform
    and restructuring, and other essential programmatic needs. I
    respectfully request that this Subcommittee grant the Commission its
    full funding request for fiscal year 2003.
        Thank you. I would be happy to answer any questions this
    Subcommittee may have.

                               SUMMARY STATEMENT

        Mr. Powell. Thank you. I would like to read a brief
    statement concerning the Commission's fiscal year 2003
    appropriations request.
        It is fitting that we have this hearing on March 7, a day
    marked by important historical milestones for the
    telecommunications industry. On this day in 1876, Alexander
    Graham Bell received a patent for the telephone. Fifty years
    later, on the same day, the first successful transatlantic
    radiotelephone conversation took place between London and New
    York. In retrospect, 50 years seems like a very long period of
    time between these achievements. Today, we develop new
    communications products and services at a more rapid speed than
    ever before, in an exponential fashion that makes science
    fiction a matter of science fact within just a handful of
    years.
        Less than 9 months ago, I appeared before this subcommittee
    for the first time and made a personal commitment to effectuate
    fundamental change within the Commission. I guaranteed that the
    Commission as an institution would complete a thorough self-
    examination and develop a reform plan designed to make the FCC
    more responsive, efficient, effective, and capable of facing
    the technological and economic opportunities and challenges of
    the new millennium. And, as always, to do so in a fashion that
    always attempts to protect consumer welfare and the public
    interest.
        I believe that the Commission delivered on this promise. We
    sent you a reprogramming request for the FCC's reorganization 6
    months later, in January 2002, and we deeply appreciate the
    chairman's rapid consent to our request.
        I also pledged to enhance the Commission's independent
    technical and engineering expertise. The Commission dedicated
    resources to recruiting, training, and retaining a solid
    technology-oriented workforce under our Excellence in
    Engineering Program. We have, I am happy to report, hired 18
    mid- and senior-level engineers and five entry-level engineers
    this year, more than the FCC has hired in nearly 20 years. We
    instituted training programs to keep current and future
    engineers up to date in their profession. And, we have improved
    the environment for engineers by purchasing equipment to
    facilitate the spectrum management process and to upgrade the
    Columbia, Maryland, laboratory's testing capabilities. Our
    ongoing efforts in this regard, coupled with the agency's FCC
    University and Excellence in Economic Analysis initiatives,
    hopefully will preserve our existing wealth of FCC staff
    knowledge and expertise and enhance and extend that collective
    knowledge into the new millennium.
        When I first appeared before this subcommittee, I pledged
    to make the Commission a model of solid management practices.
    As such, the Commission moved forward to continue to streamline
    agency processes and procedures, automate agency processes,
    provide improved access to agency information, and modernize
    its information technology infrastructure. During our January
    2002 Open Agenda Meeting, the Commission's staff delivered--
    with statistics showing substantial improvement in backlog
    reduction levels and other management benchmarks.
        Finally, I also vowed that the Commission would use the
    remainder of its fiscal year 2001 and expected fiscal year 2002
    funds to implement its statutory mandates. In this regard, the
    Commission has demonstrated during the past calendar year a
    continuation of steadfast commitment to its regulatory purpose.
    The fundamental mission of the Commission, as a constructive
    and fair independent agency, is to implement the Communications
    Act of 1934, as amended, in a manner that promotes competition,
    innovation, deregulation, and the availability of high-quality
    communications services for all Americans. I am confident the
    Commission has met this and the rest of our commitments and, in
    doing so, has achieved significantly higher levels of policy
    and management performance.
        The Commission has made these achievements, however,
    against the backdrop of tragic and dramatic national events.
    The events of September 11, 2001 provided us with an important
    lesson in the significance of the FCC's portfolios and the
    networks that it oversees. We know now that our society has
    developed more than just an appetite for communications
    services. America is heavily dependent on these services in
    times of crisis and in times of peace. A strong and competitive
    communications network is essential to a healthy economy, and
    our Nation depends on both, whether to bolster its ability to
    defend itself or to communicate in times of normalcy.
        I am unwavering in my commitment to implement the long-term
    business plan outlined in my full written statement. To
    effectuate our stated goals, however, the FCC has requested
    $278 million and 1,975 FTEs for fiscal year 2003. This request
    includes $9.8 million to fund the administration's Government-
    wide proposal to fully fund retirement costs in each agency's
    budget.
        The Commission's requested operating costs are $268.3
    million. These operational costs requested by the Commission
    for fiscal year 2003 are the bare minimum needed to allow us to
    continue the progress made during the past year. In order to
    achieve our goals and stay abreast of telecommunications
    developments, the Commission must keep ahead of changes in
    technology, economics, and the law. Accordingly, we are
    requesting $15 million for critical programmatic initiatives.
    An additional $8 million would be dedicated toward
    uncontrollable cost increases related to salaries, benefits,
    and inflationary cost increases for rent and supplies. The
    administration's request of $9.8 million for the retirement
    costs brings the total budget to $278,092,000. The fiscal year
    2003 regulatory fee offset for the Commission would be 89
    percent of the proposed fiscal year 2003 budget, making our
    direct appropriation request from this committee a 9.5 percent
    increase over total fiscal year budget last year, or 13.5
    percent if you include the administration's pension costs.
        From the perspective of funding Commission objectives, the
    critical segment of the overall budget is the $15 million
    dedicated to these initiatives. Of that amount, $4.9 million
    will be dedicated toward Commission employee training,
    enforcement initiatives, and spectrum management initiatives.
    Due to national security needs identified on September 11th,
    the Commission will also spend $1 million to improve internal
    security and support other security efforts. The remainder of
    these funds, $9 million, will include information technology
    critical to supporting program performance initiatives. With
    these funds, the Commission will improve existing systems to
    ensure compliance with Government-wide standards pertaining to
    security, accessibility, and financial management.
        This year, Senators, you have my personal pledge to
    continue driving forward in a patient and deliberate manner--to
    handle the expected and the unexpected, from homeland and
    internal security to biennial reviews and an expected influx of
    271 long-distance applications, as well as pending major merger
    reviews, just to name a few.
        The Commission intends to use its expected funding to
    continue its campaign to upgrade the facilities, as well as to
    initiate and complete critical rulemakings.
        The present request is the minimum amount necessary to
    continue to capitalize our past success and to carry us through
    the immense challenges of the next fiscal year. Already, fiscal
    year 2002 has been marked by a tidal wave of expected and
    unexpected events and policy and regulatory issues. I expect
    fiscal year 2003 to be at least as opportune and challenging.
        For that reason, I respectfully request that this
    subcommittee grant the Commission its full funding request for
    fiscal year 2003. I thank you for your indulgence, and I am
    happy to answer any questions the subcommittee might have.
        Senator Hollings. Chairman Powell, we have no doubt about
    your management abilities. When you state you are going to
    drive forward and take care of all these challenges, however,
    you need to understand that as the Chairman of the FCC all you
    need to do is to take care of the laws that we pass. And you
    have just that responsibility. Instead, you seem to abandon
    that responsibility and assign it to the market. And you stated
    just 10 days ago, ``My religion is the market.'' You don't care
    about these regulations. You don't care about the law or what
    Congress sets down. Working for the public interest, you have
    to have the attitude to look out for the public interest, and
    you say the public interest is about as empty a vessel as you
    can accord a regulatory agency. That is the fundamental. That
    is the misgiving I have of your administration over there. It
    just is amazing to me you just pell-mell down the road and seem
    to not care at all. I think you would be a wonderful executive
    vice president of a chamber of commerce, but not a Chairman of
    a regulatory commission at the Government level. Are you happy
    in your job?
        Mr. Powell. Extremely.
        Senator Hollings. And you do think that your religion is
    the market? Is that right?
        Mr. Powell. I don't recall ever saying that, but----
        Senator Hollings. Well, you were quoted in USA Today just
    on February 25, and the other quote I used was from the
    American Bar Association, specifically the submission that you
    made with regard to NextWave. I am reading to you the law. This
    bothers me because we have got an important appeal by the
    Federal Communications Commission before the United States
    Supreme Court, and it is disturbing that perhaps the Commission
    won't make an authoritative kind of appeal.

                            1934 COMMUNICATIONS ACT

        You are talking with all that history and Ma Bell and
    everything. Let's go back 68 years ago to the 1934
    Communications Act. Let me read from the Act. ``It is the
    purpose of this Act''--I am reading Section 301. ``It is the
    purpose of this Act, among other things, to maintain the
    control of the United States''--that is the word, ``control,''
    not the distribution and taking care of all the new challenges
    and everything else that you might think of but, rather, the
    congressional control that has been assigned to you--``the
    control of the United States over all the channels of radio
    transmission and to provide for the use of such channels, but
    not the ownership thereof''--``not the ownership thereof''--
    ``by persons or limited periods of time under licenses granted
    by Federal authority, and no such license shall be construed to
    create any right beyond the terms, conditions, and the periods
    of the license.''
        Yet you were going along with the market. A good
    arrangement and everything else, like it had absolutely nothing
    to do with that. Do you think that is the law?
        Mr. Powell. I absolutely think it is the law. I also think
    that the law indicates that there are benefits and market
    economics for the public interest.
        Senator Hollings. What is that?
        Mr. Powell. I think that the law also recognizes that the
    use of market forces can be concomitant with the public
    interest.
        Senator Hollings. But there is no public interest feature
    to that particular categorical provision, is there?
        Mr. Powell. Certainly there----
        Senator Hollings. You think, in other words, that with the
    public interest you can amend that law?
        Mr. Powell. No, sir. But I think that the public interest
    confers on the Commission a duty and obligation to implement
    the statute where there are ambiguities and to look for the
    mechanisms using regulatory tools, including uses for fostering
    competitive market economics, that will enhance overall the
    consumer welfare.
        I could also quote provisions of the statute that speak in
    those terms.
        Senator Hollings. That is a wonderful statement for a
    chamber of commerce executive, but being the Chairman of the
    regulatory body, where in there is there any discrepancy or
    vagueness or anything else like that? I don't know how to
    categorically state it more. In other words, assuming we lose
    the case--I have thought about that, and if we lose the case, I
    don't know how to state it better here when it says ``the
    control of the United States over all the channels'' and
    ``provide for the use of those channels, but not the ownership
    thereof.''

                                 NEXTWAVE CASE

        Now, you wanted to vest the ownership in the NextWave case
    into the bankrupt agency, and it could have no ownership
    whatsoever. They only had a license, and the license was
    automatically revoked under the terms of the auction. Where was
    all that at the big hearing you had and the big brief you had
    and the testimony you gave over on the House side?
        Mr. Powell. I think it was there. Senator, I am the one who
    sought certiorari from the----
        Senator Hollings. You did what, sir?
        Mr. Powell. I am the individual who sought certiorari in
    the Supreme Court on the NextWave matter. I am the one who
    argued for it vociferously, was quite pleased to see it
    granted. If you will recall, you called me last summer on
    vacation, and we discussed this matter, and I committed to you
    the continued pursuit of the litigation.
        Senator Hollings. But you ran in both directions. You
    pursued the litigation, but you got rid of the litigation in a
    deal that would vest ownership.
        Mr. Powell. That is not accurate. Nothing in the deal led
    to the termination of the Supreme Court case. I absolutely
    insisted that any effort to try to settle the matter would not
    moot the Supreme Court case. Nothing in that agreement did so.
        Senator Hollings. Well, I can see we have just got a
    fundamental difference of opinion, but I was pleased this
    morning when I saw the article by the most conservative of
    conservative writers, William Safire, ``The Urge to Converge,''
    with ``the round-heeled Michael Powell steering the Federal
    Communications Commission toward terminal fecklessness.''
        I don't say that to hurt your feelings and all, but I am
    trying to denote there is a disturbing sense in the Congress,
    your particular administration, particularly now that we have
    got this hiatus going on relative to the deregulation of the
    Bell Companies. They have veritably voted it in the Tauzin-
    Dingell bill over on the House side, and we will be considering
    it here, have a hearing on the 20th with Mr. Tauzin himself.
    But it seems like you are trying to get with the notices you
    have given for the Commission on hearings in this regard, you
    are trying to outdo the Congress before we can get to that or
    before even Tauzin can get to it.
        Mr. Powell. I don't think so. The broadband item that I
    think you are making reference to has a very fundamental
    difference from anything being considered by the Congress. I
    think as you point out, the Commission can only do what it can
    within the context of the law. The Commission cannot change the
    law. The Congress is free to modify the statute itself. We are
    not. And I do not generally agree with some of the
    characterizations put forth in media that the item is the
    functional equivalent of currently pending legislation in
    Congress. I think that we have stated for many, many months,
    long before the heated aspects of this particular legislation,
    that there were areas that presented important regulatory
    questions.
        We have a number of courts around the country have
    criticized the Commission for not clarifying the regulatory
    classification of these new emerging services, and I think it
    would be irresponsible for us to continue to leave those
    questions unanswered in the context of the increasing growth of
    new Internet access services.
        Senator Hollings. Senator Gregg.
        Senator Gregg. Thank you, Mr. Chairman.
        To continue this discussion, I do find it ironic that
    members of the other side of the aisle are suddenly outraged
    that there may be someone who they perceive as pursuing
    regulatory overreach. It was the philosophy, it appears to me,
    of the other side of the aisle during the prior administration
    for there to be dramatic overreach by the regulatory agencies.
    But I don't see your agency doing that, anyway, so I don't
    think it is necessary to defend you on that turf.

                              TAUZIN-DINGELL BILL

        I do have some questions, however. I would be interested in
    your giving us your analysis of the Tauzin-Dingell bill.
        Mr. Powell. I think I am enough of a politician not to do
    too much of that.
        The best that I can say is that I think the Tauzin-Dingell
    bill, to the extent that I understand it--and I would have to
    confess that I am not intimately aware of its most recent
    details--is an effort to modify the statute itself with respect
    to specific limitations and regulations, in an effort to
    dramatically stimulate and in some cases require the deployment
    of new and advanced infrastructure and architecture.
        I do not have an opinion about whether those sweeping
    efforts are meritorious or compelled by the market conditions.
    I think that we can, at the Commission, make substantial
    progress in clarifying the regulatory environment and
    introducing incentives to stimulate broadband deployment that
    will be meaningful and will have consumer benefits even within
    the context of the statute unchanged by legislation.
        Senator Gregg. Well, you sort of initiate something here
    which is called--it has actually been referred to as a national
    broadband policy in the FCC. How do you see that staying within
    the context of the present law?
        Mr. Powell. I think that the present law was quite
    thoughtful in at least being anticipatory of these kinds of
    changes. For example, one only needs to look at the preamble to
    the 1996 Act to find support for those objectives: ``an act to
    promote competition and reduce regulation in order to secure
    lower prices and higher-quality service for American telecom
    consumers, and encourage the rapid deployment of telecom
    technologies.''
        Under Section 706, we are tasked with encouraging the
    ``deployment on a reasonable and timely basis of advanced
    telecommunications capabilities to all Americans'' utilizing
    regulatory methods that remove barriers to infrastructure
    investment.
        We believe that one of the central things the Commission
    needs to do in this space is to clarify the regulatory
    classifications of new and emerging services that have
    characteristics of different definitions, not our definitions,
    but those that exist in the statute.
        The statute covers multiple classes of communications and
    attaches different regulatory treatment to each one. If you are
    a cable service provider, certain regulatory obligations exist,
    certain do not. The statute defines information service
    providers; certain obligations apply to them, certain do not.
    And, it defines telecommunications carriers, in the same way.
        When we begin to have convergence and new services entering
    the space with new characteristics, questions arise as to which
    proper classification should be applied to them, and then
    subsequently, what are the consequences for regulatory policies
    and concerns?
        This item is designed to be responsive to that first
    question principally. How should we classify under the
    statute's definition these new emerging broadband services? And
    I think just as importantly, which I think often is omitted in
    the anxiety expressed in press reports, the Commission tees up
    ways to protect all types of regulatory policies and concerns
    that are implicated by that definition.
        So I think we are operating within the statute because we
    are trying to figure out which of the statute's classifications
    govern which service. It is our duty to figure out which
    provisions of the statute we continue to apply and how they
    would continue to apply. I would conclude by emphasizing, that
    if there are problems, including market power and anti-
    competitive and access concerns--the Commission also has
    extensive power that Congress conferred to it in 1934 under
    Title I. In fact, the Commission has regulated access terms and
    conditions of information services for the better part of two
    decades, using its Title I authority, and has been upheld by
    the courts in doing so.
        To the extent that there are categories of services that
    will not have specific Title II attached to them, we will have
    Title I authority to exercise in order to protect important
    governmental interests.
        Senator Gregg. Well, trying to reduce that to a simple
    statement, what happens last mile?
        Mr. Powell. What happens last mile?
        Senator Gregg. Yes.
        Mr. Powell. The last mile is the most important part of
    broadband deployment. A number of things can happen
    increasingly because that last-mile loop, depending on its
    construction, may be capable of doing any number of things at
    the same time.
        One of the things I think Congress thought about is
    focusing on the services being provided and not the nature of
    the technology underlying it. So what will start to happen, if
    we continue in this direction, is we will begin to try to
    classify regulatory treatment, not by the nature of the
    technology that is that last mile, but the nature of what
    services are being offered over it.
        For example, when America Online or Earth Link or Juno or
    any number of the major ISPs offer high-speed Internet access
    service over that infrastructure, they are being regulated as
    information services, and they are doing so in a much less
    regulated way than the provision of telecommunications services
    over that.
        So what happens is greater granularity on regulatory
    treatment, depending less on the architecture and more on the
    nature of the services being provided.
        Senator Gregg. Does that mean you are going to end up
    asking them to share the last mile?
        Mr. Powell. Yes. I think that to some degree they have to
    share the last mile, and I think that part is faithful to the
    statute as well.
        Section 251 compels access to those unbundled elements for
    particular kinds of services that still will have to be
    available.
        If there are questions about other types of services that
    do not have those obligations attached to them, our computer
    inquiry decisions--sorry to use more historical regulatory
    approaches--continue to affix to those services, and they, at
    least for the moment, will have to be provided on an unbundled
    basis as well.
        Senator Gregg. I know I don't have all the time in the
    world. I would like to pursue this into the long-distance
    question.
        Senator Hollings. Go right ahead.
        Senator Gregg. But let me switch and go on to a question
    which is more parochial and more to my own interests, which is
    the NextWave issue that the chairman raised.
        This committee has kept its finger in the dike on that
    issue through a number of Congresses, and then was replaced by
    the court system and by the FCC carrying the ball on this
    question. But that risk here is somewhere in the vicinity,
    depending on whose estimate, of $12 to $16 billion of what I
    believe are taxpayers' moneys.

                           OWNERSHIP OF THE SPECTRUM

        And my question is: When the FCC files its briefs, what
    will be the theory of the brief, if you are willing to disclose
    them at this time? And will it be based on the belief that the
    ownership of the spectrum is a taxpayer asset?
        Mr. Powell. Absolutely. The Commission, I think, has fought
    this long consistently on that principle, the belief that we
    are not another creditor in bankruptcy, and that no property
    rights attach to spectrum in auctions. I do not even think that
    is a disputable proposition under the statute, which expressly
    states that there are no property interest or ownership
    interest rights in the spectrum.
        The difficulty in the context of auctions is we have been
    treated by the court systems as a creditor and subject to the
    bankruptcy limitations thereof. I thought very strongly that
    the D.C. Circuit opinion was wrong. I thought it was wrong
    because I think it denied the regime that Congress established
    for the allocation of public spectrum and the Commission's
    rights under that statutory provision to reclaim its property,
    the property of the public, when a person defaults on the terms
    and conditions established for its permissive use.
        I always have believed a license automatically cancelled.
    Everything that we have done has preserved that principle. So
    even in the context of the Supreme Court case--and you can see
    some of this in our cert petition that was granted--we argue
    quite strongly that the D.C. Circuit failed to provide the
    appropriate deference with regard to the telecommunications
    policies of the United States and that the Bankruptcy Code
    should not be interpreted as in conflict with that.
        Hopefully that got the court's attention, and hopefully
    that will be the basis of reversal of the D.C. Circuit's
    decision.
        Senator Gregg. Well, I certainly hope so, too, and I
    believe that the Congress has a legitimate interest here, too,
    as the protector of the taxpayers' rights here. And I hope we
    will file an amicus brief on behalf of your position.
        One last question, and then I would yield my time. The
    Northpoint issue. I just don't understand why it has taken so
    long to get a decision, number one; and, number two, I don't
    understand why you would have to go back to auction since, as I
    understand it, the technology is only--it is agreed that the
    spectrum can be shared, and the technology is understood to
    exist, and there is only one group that met the requirements of
    filing necessary. So why aren't we just making a decision on
    this thing and moving forward?
        Mr. Powell. Well, I do not really want to offer any
    excuses. I had hoped the Commission would be done with this at
    the end of last year. It has failed to do so. I think that is
    unfortunate.
        I would say that we did put an item on the floor in
    November. I personally have voted for the item. I am awaiting
    the votes of some of my colleagues who are continuing to
    wrestle with particular questions. I continue to urge them to
    do so expeditiously.
        Regrettably, it is not appropriate for me to talk
    specifically about the merits of pending issues, including
    whether to auction or not to auction, which, candidly, have not
    been resolved until there has been a majority conclusion as to
    those questions.
        I continue to hope and push hard for a decision, and I
    would still like to characterize it as imminent. I would love
    to talk to you in more detail, perhaps privately or in a
    context consistent with our ex parte rules, about the specific
    merits of the pending claims, but I am not permitted to do so
    in this forum.
        Senator Gregg. I appreciate that. Thank you.
        Senator Hollings. Senator Stevens.
        Senator Stevens. Well, thank you very much.

                             UNIVERSAL SERVICE FUND

        Mr. Chairman, I commend your notice of inquiry on ways to
    finance the Universal Service Fund. I am a little worried about
    that, as we have talked about privately. I do think that the
    fund was created originally to assure that rural America could
    keep up with continuing developments as far as
    telecommunications is concerned, and now the major drains on
    the fund are for the inner-city applications of the E-Rate.
        There is a proposal pending to increase the fund by $500
    million to provide additional resources to schools and
    libraries, and that is, again, inner-city money. It is coming
    down at an enormous rate.
        Can you tell me, what do you see for the future of
    universal service under these circumstances?
        Mr. Powell. Well, as we have discussed, I think the
    Commission, too, shares some of your concerns, and indeed it
    has initiated a number of proceedings to begin to explore
    perhaps modifications to the collection and contribution regime
    in order to ensure, as the statute requires, the preservation
    and advancement of the objectives as well as their sufficiency.
        I also think that the Commission has been somewhat bold and
    willing to start to entertain whether the threats to the
    universal service program are sufficient to begin to justify us
    to consider exercising the discretionary authority that you
    gave us to extend contribution obligations to carriers that are
    not specifically telecommunication carriers but use
    telecommunications.
        Heretofore, we have never done that, and it may not yet be
    warranted. But it seems to me that under Section 254(d) the
    Congress anticipated that possibility and gave us discretionary
    authority to extend the pool of people that contribute in order
    to protect their sufficiency.
        Indeed, in the broadband item, as controversial as it may
    be, more ink is dedicated substantively to the questions about
    universal service than any other subject in the item. Indeed,
    we openly ask questions about to what degree universal service
    will be impacted by the rise of advanced services and whether
    some honest consideration of whether the extension of
    contributions is warranted.
        We did not reach any conclusions, but we did put those
    important questions on the table, and, I would note, over some
    dissent. That is an area in which I think that we have one of
    our most sacred regulatory obligations. I think we will
    continue to push for new and creative ways to allow that
    program and the objectives to continue to flourish.
        I also think one of the values of the promotions of some of
    the newer and advanced technologies is they have enormous cost
    benefits, many of them. In many ways they have the potential
    for solving parts of our universal service anxieties by virtue
    of their much more efficient infrastructure and architecture.
    So I think in some ways a pro-new-technology approach is also a
    pro-universal service approach in that we at least see the
    possibilities through getting companies to migrate to more
    advanced architectures to lower the cost of the provision of
    those services, which has always been the problem for rural
    America and places like Alaska.
        As you know and since you fought so hard for DBS services,
    providing video components to the State of Alaska was vital.
    Through the use of new technology, it allowed it to lower the
    traditional costs associated with having to wire such a large
    region.
        So those are the major things we are doing, and we do share
    some of your concerns.
        Senator Stevens. But you are proposing new rules for
    broadband, as I understand it, and I think that those two have
    a real impact on the continuing expansion of the demand on
    universal service. But I have got to tell you, when I look at
    some of the places up our way which have never had
    communications services before and are now getting
    communications services for schools, libraries, and health
    facilities. However, they are not getting it in the rest of the
    city or village at all, and I wonder seriously about the
    policies we have set to extend so much money to the inner
    cities while we still have many places in the country with no
    service at all, except for the schools, libraries, and health
    facilities in those communities. We are leaving a lot of people
    behind. There is a line of thinking now that considers the E-
    Rate connection to a small area pipe. If that pipe isn't full,
    they think maybe they can lease that pipe out to someone else.
    We are seeing the fudging the concept of E-Rate in order to
    extend service to those that are left behind. I think we ought
    to be right up front and admit that we have got to have two
    funds: one for rural America and one for the inner city. Right
    now, this is just a way to take money from the rural fund and
    put it into areas where the Congress has not provided enough
    money to assist the inner core cities for schools. I have heard
    of portions of schools actually being rebuilt with the E-Rates
    in inner cities.
        I don't want to belabor it, but I do hope that in the
    future universal service remains one of the really predominant
    goals of the Commission to assure that rural America keeps up
    with the rest of the country as we progress.
        You did comment on Senator Gregg's question about the
    Supreme Court case on NextWave and the position of--I don't
    know if we are going to file an amicus brief or not, but what
    about the problem of the delay? The further the delay extends,
    the less merit there is to whatever the Court decides. If it
    agrees with you, it is going to go back to the bankruptcy
    court, and we will start all over again getting a decision. It
    will be appealed right back up through the chain again.
    Meanwhile, the money is sitting there, and the spectrum is tied
    up, which is vital, really, to the recovery of the whole
    industry.
        Have you given thought to asking us to find some way to
    resolve this issue, as we almost did last year with the
    approval of some mechanism that would bring about a settlement
    so this matter could be resolved within the industry itself
    with your approval?
        Mr. Powell. Yes, sir. As we have asked, I think repeatedly,
    for any number of years--and I am looking at three members who
    have been extremely supportive of our efforts to try to avoid
    this problem with the law and change it--I still think that the
    public interest is served in some ways if Congress altered the
    law and made the modification, because if they could do that, I
    believe that we could get the spectrum into use much more
    expeditiously.
        I believe 100 percent in my case, and I believe I have the
    opportunity to win it. I also know it is going to come at a
    huge cost because I cannot do anything about the extraordinary
    delay that will be a consequence of it.
        This case is not likely to be argued until next term. At
    best, we are going to have a decision in January 2003, perhaps
    as late as June 2003. There were very critical issues that the
    D.C. Circuit did not decide because it thought their order took
    care of everything, so I would anticipate even if we won, we
    will be remanded to the D.C. Circuit for resolution of those
    issues. Even when we get through that, we are in bankruptcy
    court again for the allocation of rights under the statute.
        I think that one of the reasons I did, somewhat reluctantly
    but willingly, accept an effort to try to settle the case
    previously was because I think the public's interest is not
    exclusively in the money that it would provide; it is also in
    having spectrum put to productive use. While I believed in the
    case, I believed that it would cost the consumer the ability to
    make use of that spectrum for a very long time, perhaps 2 and 3
    years more.
        We only have two options, though. I agree with Senator
    Hollings. First and foremost, this legal principle has to be
    rectified, and I do not think there is any real opportunity for
    a good, productive resolution of the claims without being
    assured that this component is completed. And there are only
    two ways, either our continued pursuit of the case or an act by
    the Congress that removes that risk for future auctions and
    would allow us to pursue other options to get the public its
    money and the public its spectrum.
        But we are committed to the long course of the case if that
    is the preference of this institution.
        Senator Stevens. I am still committed to try and work it
    out so that spectrum can be put into use. I remember too well
    the meeting we had that indicated the status of our industry
    and the global economy of telecommunications is severely
    limited because of the availability of spectrum right here at
    home. I really think we should do something about it.
        Let me shift gears, though. When the World Trade Towers
    came down, KNET, the public station, went down and it has not
    been able to go back up. It tried to get other providers like
    satellites to help them, but that was refused.

                         EMERGENCY BROADCAST PLATFORMS

        Do you have the authority to require other platforms or
    carriers to broadcast signals in times of emergency and post-
    emergency periods? And if you don't, do you think Congress
    should give that to you?
        Mr. Powell. That is a good question. I do not know the full
    range of that. To some extent, the answer is partly yes in
    advance because the cable companies, for example, under the
    must-carry obligations carried them. For example, in New York,
    we lost a lot of broadcast stations initially, but a lot of
    consumers still had access to that local broadcast feed over
    the cable architecture which they were watching as opposed to
    over the air. That was a benefit.
        I would have to look specifically at questions like whether
    we have the authority to direct broadcast satellite carriage,
    although Congress has required must-carry there as well, and
    that is progressing.
        The Commission recognized this concern. We have long had
    Federal advisory committees that helped us with these network
    security emergency issues in the phone system. We recognized
    that we did not have the functional equivalent in the broadcast
    or communications, news types of system. One of the things we
    have just announced is that we are creating a companion to the
    telephone service's system called NRIC. We are creating a
    network reliability group to focus on media issues in times of
    emergency and looking for ways to develop mutual assistance
    planning so that if there was critical news and information
    that was not available because of an outage, there would be
    perhaps some effort to shift coverage and responsibility.
        A number of other major cable channels fortunately also
    were willing to convert capacity to broadcast signals. For
    example, the Viacom properties that covered--they normally
    carry things like MTV and other of their cable programs,
    switched to the local broadcast feed for coverage in the New
    York City area.
        We are looking for ways to make that not coincidental and
    gratuitous, but hopefully a little more planned for and
    anticipated.
        Senator Stevens. Well, I hope you will notify this
    committee--and there is also the Commerce Committee--if there
    is something that we need to do to extend your powers in order
    to meet those emergency situations.

                               DIGITAL CONVERSION

        My last question, Mr. Chairman, pertains to digital
    conversion. The public and commercial broadcasters in my area
    of Alaska, Anchorage, have developed a plan to allow them to
    meet digital conversion deadlines by providing full service to
    the vast geographic area in the Anchorage area. Because of our
    unique geographic conditions, it will require the use of two
    towers, and both digital and analog spectrum.
        Now, we were told yesterday--Mr. Stewart has indicated the
    Commission may not have legal authority to approve this plan.
    We think this is a crisis for our area, and we would like to
    move forward as rapidly as possible. I would appreciate it if
    you would contact your people and see if there is a change in
    the law that is required in order to approve this rather unique
    partnership that has been formed in our State with public and
    commercial broadcasters. It ought to be a model for the rest of
    the country, but I am disturbed to learn that what they have
    worked on now may be beyond your legal authority, and I would
    appreciate it very much if you would look at it and give us a
    report on it. I don't expect an answer now, but I would
    appreciate it very much because I think they have worked very
    hard and have got a format now that allows conversion for
    public and digital broadcasters at a much lower cost and within
    the time frame anticipated by Congress. And it would be
    difficult for us to wait for Congress to act in the future if
    that is the case.
        Mr. Powell. We will get you at least an answer on where we
    think the legal authority exists very quickly.
        Senator Stevens. Thank you for your patience, Mr. Chairman.
        Senator Hollings. Thank you, Senator.

                           VIEW ON ABOLISHING THE FCC

        Chairman Powell, reference has been made to a political
    view of your regulatory commission, and I readily acknowledge
    that there is the view that we ought to just abolish the FCC.
    In fact, you referred to Section 251 of the Tauzin-Dingell bill
    that abolishes your oversight responsibility. You, the FCC, and
    the State Commission under Section 4(a) no longer will have
    authority over the access to the Bell monopolies. But be that
    as it may, I want to emphasize, since you brought in the
    history of the thing, that you do not advocate abandoning your
    regulatory authority to the market. We know what market forces
    do to communications. Back in 1912, when Sarnoff got on top of
    the Wanamaker Building, and the Titanic sank, everybody got
    into wireless, and by the mid-1920s, the communications
    industry begged Herbert Hoover, then-Secretary of Commerce, to
    please regulate us because everybody was using all the same
    frequencies, and there was nothing but a jamming. Nobody could
    hear anybody. So that resulted in the 1934 Act.
        Otherwise, I think of the loss the day before yesterday of
    a distinguished chairman here, Howard Cannon, who chaired the
    Commerce Committee. We had the airline deregulation, and we
    thought it wise that, by gosh, there would be no question that
    we would not only deregulate, we got rid of the deregulatory
    entity, namely, the Civil Aeronautics Board. And there have
    been bankruptcies and takeovers, in fact, regulated European
    takeovers of the unregulated American airlines, many of them
    facing bankruptcy. And you will get the wiseacres who will come
    up and say deregulation is fine. But it has ruined the airline
    industry.
        Knowing that, in 1996, we did not do away with the so-
    called CAB, namely, you, the Federal Communications Commission.
    We wanted a regulatory body to oversee in a deliberate way
    total deregulation. Now, of course, the bottleneck in it is the
    Bell companies that lied. They begged and begged and begged. I
    know, because I helped write that thing, and I met with Jim
    Cullen from Bell Atlantic that represented all seven of the
    monopoly Bells, and it was a 4-year hiatus getting that bill
    out. And at all times they said we want to get into long
    distance, we want to get into long distance, by gosh,
    deregulate us, we want to compete, we want to compete. We
    passed the 1996 Act, and instead of competing, they combined.
    And that is exactly what is written about in the New York
    Times, merger mania that seemingly is approved again and again
    by the Commission. And so we have just got bigger monopolies,
    and if it continues, we will be back to AT&T. And regarding Ma
    Bell, if we can't get it done in the Congress, we will have to
    get a Federal judge.
        That is what goes through a lot of minds here in the
    Congress. You can look at that debate over on the House side.
    They have got me, you know, I am adamantly against it, and how
    much I am a big friend of AT&T. I told the head of AT&T just
    last week, Mr. Armstrong, I said, You know, I know intimately
    the Bell South crowd down in South Carolina. I can't name who
    represents you down there in South Carolina. I have gotten
    contributions from both.
        But I do have a feel for the wonderful Federal
    Communications Commission. I have been working with it now for
    over 35 years, since we started, and to see it just go pell-
    mell down the road with these statements made that the market
    is your religion and you don't know where in the world can
    anybody discern or find a public interest, that is about as
    nebulous as anything. And then the rulings that we have, it is
    hard to play catch-up ball over here at the congressional level
    with your administration of the Federal Communications
    Commission.
        We don't want to cut you short on money. We will give you
    all the money because you have got many, many questions before
    you. But just mind you me, we are passing the rules and
    regulations and the policies, and it is your responsibility to
    administer those regulations and those policies, not the
    market. That is why we have got you. There are some who want to
    get rid of you, and in part that is what Tauzin-Dingell does.
    That is what bothers me. AT&T and Bell South don't want to get
    rid of you. I have got a lot of friends in Bell South. I would
    like to get one of their retirement policies and get on their
    board.
        Mr. Powell. Me, too.
        Senator Hollings. They are in 22 countries. They are very
    competitive, and I have followed them, and they are making
    money. I don't know why their stock is down. If they ever get
    this monopoly expanded, it will go through the ceiling. You buy
    some. Call me and we will both buy it.
        But let's look at this thing objectively. Competition does
    count, and we have got a dynamic, competitive situation all
    over communications, save 93 percent of that last line into the
    home and business, is still by those Bell monopolies. They
    squatted in the middle of the road. They questioned the
    constitutionality of the act. They have taken us through a
    legal gymnast of a 6-year period, and we are not getting
    anything done. And if they go forward, they have gotten so bold
    now with Tauzin-Dingell that they have got no idea of
    deregulating or competing.

                         ADDITIONAL COMMITTEE QUESTIONS

        We appreciate your appearance this morning.
        Mr. Powell. Thank you, Senator.
        Senator Hollings. Thank you very much.
        [The following questions were not asked at the hearing, but
    were submitted to the Commission for response subsequent to the
    hearing:]
               Questions Submitted by Senator Ernest F. Hollings
        Question. As stated, in its broadband NPRM, the FCC concluded that
    broadband Internet access service is an information service, and the
    transmission component of the service is telecommunications, rather
    than telecommunications services. If the FCC concluded that the
    transmission component is not a telecommunications service would that
    mean that competitors would not be able to obtain unbundled network
    elements (consistent with the requirements of section 251) in order to
    provide DSL or broadband service? Under what authority could the FCC
    impose such requirements for DSL service?
        Answer. Although the Commission will decide this issue through
    statutory interpretation in our Broadband NPRM proceeding,
    classification of the transmission aspect of an information service as
    ``telecommunications'' would not preclude competitors from obtaining
    unbundled network elements. For example, one possible reading of
    Section 251(c)(3) of the 1996 Act is that the availability of elements
    turns on whether the competitor offers a ``telecommunications
    service.'' Thus, competitors who choose to offer DSL separate from
    Internet access could, under this one possible reading, obtain network
    elements to provision that offering. As I have stated, however, the
    Commission will resolve this issue in the Broadband NPRM proceeding.
        The Broadband NPRM seeks to develop a robust and comprehensive
    record on the obligations that providers of wireline broadband Internet
    access service, including the incumbent LECs, may face under the Act if
    we adopt the tentative conclusions that your question references. In
    particular, the Commission, in the Broadband NPRM, asked several
    questions regarding the implications and interplay between the
    tentative conclusion that wireline broadband Internet access service is
    an information service and the obligations in section 251, including
    the unbundling obligations. The Commission will, of course, implement
    and enforce the law, including unbundling of the local loop for
    telephone service, regardless of its ultimate conclusion with respect
    to the classification of wireline broadband Internet access service.
    Moreover, the Commission has authority pursuant to Title I of the Act
    to impose access obligations for the provision of services falling
    within Title I. Indeed, the Commission exercised this authority in the
    Computer Inquiries proceedings, which initially recognized distinctions
    between telecommunications and information services. My hope is that
    the record on these questions will inform our understanding and help
    shape future Commission policy regarding the ability of competitors to
    obtain unbundled network elements for broadband services.
        Question. If CLECs and ISPs are unable to obtain Bell facilities in
    order to provide broadband service, would this allow the ILECs to
    leverage their existing local monopolies into the broadband and
    Internet business and residential markets? If so, how would this result
    be consistent with the competitive requirements of the 1996 Act, and
    the FCC's own longstanding precedent in the Computer II and Computer
    III cases?
        Answer. At the outset, I would note that ILECs' ability to leverage
    their market power in local telephony would be constrained by the
    presence and growth of other broadband providers, such as cable modem
    service providers. For example, cable modem providers enjoy a marked
    lead over ILEC broadband DSL providers in terms of buildout and
    subscribers, particularly in the residential markets. With such real
    broadband alternatives available to consumers, ILECs will risk losing
    subscribers to cable if they attempt to exercise market power.
        That said, the Commission's mandate under the 1996 Act is to
    encourage robust competition among various communications providers. We
    are therefore examining the regulatory requirements that should apply
    to the provision of broadband services so that we can preserve and
    encourage opportunities for broadband competition in light of the
    ILECs' position in the local exchange market. The Broadband NPRM seeks
    comment on whether the Computer Inquiry requirements, which provide for
    access to Bell facilities based on assumptions shaped largely by
    certain service and market characteristics that were prevalent decades
    before passage of the 1996 Act, should be modified or eliminated for
    the nascent broadband market. Notably, we have not reached any
    conclusions, tentative or otherwise, on whether to require access to
    Bell facilities to provide broadband Internet access service.
        We are conducting the Broadband NPRM in conjunction with the
    Incumbent LEC Broadband Notice in which we are examining the
    competitive characteristics of the domestic broadband
    telecommunications services market and the appropriate regulatory
    framework that should apply to the incumbent LEC provision of these
    services. We recognize that the findings related to market power that
    we may make in that proceeding can inform our decision in the Broadband
    NPRM. Specifically, to the extent that the Commission finds there is
    sufficient competition in the broadband telecommunications services
    market to warrant modification of some or all of the Computer Inquiry
    requirements, but not enough competition to warrant complete
    deregulation, we will consider alternative requirements.
        Question. Could you share views as to how the FCC's broadband NPRM
    will impact existing CLECs and ISPs seeking access to incumbent
    networks in the market? In answering this question please explain your
    view as to the NPRM's impact on market certainty, private capital's
    flow to competitors, and your view as to the future financial viability
    of competitors in light of the NPRM.
        Answer. The NPRM has no immediate impact because it only serves to
    initiate a rulemaking and does not change existing Commission rules or
    precedent. Rather, the NPRM expressly seeks comment on the implications
    of the classification of Internet access as an information service on
    key legal and policy objectives, such as unbundling, access and
    universal service obligations. One of my primary goals, however, is to
    provide as much regulatory certainty and clarity as possible in order
    to promote investment and innovation in broadband-capable networks and,
    in turn, investment and innovation in the services and applications
    that will ride over those networks. Therefore, a main focus of our
    pending proceedings is to ensure clarity, certainty, and predictability
    in the rules governing local competition and broadband. Furthermore, it
    is worth mentioning that, in some instances, capital has been flowing
    to some CLECs who are building their own facilities.
        While these are difficult questions, I firmly believe that we must
    answer them now in order to provide market certainty and flow of
    capital. Only with these answers will incumbents and competitors know
    what to expect and be able to make prudent decisions to build and enter
    new broadband markets. We can encourage capital flow to competitors by
    minimizing regulatory costs and uncertainty in our rules governing
    broadband and engaging in swift enforcement when those rules are
    compromised. While I realize that recent economic conditions have made
    it difficult to compete, I believe that creating a regulatory
    environment in which competitors can access the incumbents' networks
    through certain and established mechanisms, even if they are market-
    based arrangements, will encourage investors.
        Question. Currently the FCC has a number of proceedings that
    address issues such as whether RBOCs should be declared nondominant in
    the provision of broadband services, whether RBOCs should no longer
    have to provide high capacity unbundled network elements, and whether
    RBOC broadband services and facilities used to provide Internet access
    should be reclassified as information services. Do you intend in these
    proceedings to reduce a state commission's authority to implement or
    enforce the Telecommunications Act of 1996 or to take away the
    authority of state commissions to promote competition for local
    telecommunication services? Would these proceedings impact state
    commissions ability to protect consumers in any way?
        Could these proceedings promote duopoly competition as opposed to
    multiple competitors across multiple platforms? Would these proceedings
    result in de facto duopoly markets even if that is not your intent?
        Answer. Our state partners play a key role in promoting competition
    and protecting consumer interests. On these issues we share the same
    goal as our state colleagues to ensure that our policies afford
    consumers high-quality, innovative services provided in a robustly
    competitive market. Moreover, because of the importance of the state
    role, we expressly sought comment in the proceedings you reference, on
    state views concerning broadband deployment. We also recognized that
    states bring particular knowledge of their local competitive landscapes
    and consumer concerns. We look forward to input from our state
    colleagues on these issues.
        Our intent in these proceedings is to create consumer benefits
    through increased competition. That competition will come, as it has to
    date, in many forms, including competition between and among different
    broadband delivery platforms (intermodal competition). In our Triennial
    Review proceeding to update incumbent LECs' unbundling obligations, for
    example, we will continue to require unbundling as Congress directed in
    section 251 and will tailor incumbent LECs' unbundling obligations to
    where competitors are actually impaired without access to the
    incumbents' networks. We therefore expect intramodal competition
    through access to the incumbents' networks to continue to be a viable
    option for some competitors. In combination with the growth in
    intramodal competition through new wireline facilities construction,
    and the growth in intermodal competition from cable, wireless,
    satellite, and fixed wireless providers, the possibility of duopoly is
    remote.
        Question. The Telecommunications Act of 1996 promoted both inter-
    modal and intra-modal competition. Intra-modal competition is affected
    by the ability of CLECs to use unbundled loops and other pieces of the
    ILEC networks to provide services to customers. Do you believe the FCC
    should continue a policy of promoting and enforcing both modes of
    competition equally?
        Answer. Yes. The Commission's responsibility is to interpret and
    execute the Telecommunications Act in a manner that is faithful to
    Congress's intent and promotes the public interest. Thus, the
    Commission is statutorily bound to require incumbents to permit both
    facilities-based and non-facilities-based entry. Moreover, faithful to
    this statutory mandate, the Commission has implemented regulations that
    provide competitors with unbundling and resale rights consistent with
    market-opening provisions of the Act. At the same time, the Commission
    has previously recognized that only through the promotion of
    facilities-based competition, which creates greater opportunity for
    innovation and price differentiation, will sustainable competition take
    root in the marketplace. So long as the Commission continues to find
    that competitors are impaired without access to the incumbents'
    networks, then the Commission will enforce unbundling rules on the
    incumbents, thus promoting intramodal competition. Our overall
    objective, however, is not to pick winners or losers, but to encourage
    competition in order to deliver benefits to consumers.
        Question. Setting aside rural and underserved areas, would you
    agree that low consumer demand for broadband services is a greater
    obstacle to widespread broadband adoption than the pace of broadband
    deployment?
        Answer. No. Widespread consumer adoption of broadband requires both
    availability and demand. With respect to availability, the Commission
    recently concluded its third inquiry concerning the availability of
    advanced telecommunications capability in the United States. Although
    the Report focused on the availability of advanced services capability,
    we acknowledged the important relationship between demand and
    deployment and recognized that subscription rates may influence
    business and investment decisions. The Report indicates that high-speed
    subscribers were reported in 78 percent of the zip codes in the United
    States and 7 percent of American households subscribe to high-speed
    services. But it remains unclear whether subscribers throughout these
    zip codes, particularly in residential areas, generally have any choice
    in broadband infrastructure providers. Thus, in keeping with the Act's
    mandate that we encourage deployment ``to all Americans,'' we must
    continue to find new ways to promote broadband infrastructure
    investment.
        Demand can be a useful measure of consumers' appetite for certain
    broadband applications, or their willingness to pay for broadband
    services. Nevertheless, I am hesitant to speculate about the meaning of
    adoption rates at this time. Indeed, the broadband market is continuing
    to develop, and many questions remain as to what broadband services
    consumers will value. At this early stage, I believe that it is
    important to ensure that the market takes its cues from consumers, and
    that market participants should be given the opportunity to resolve
    challenges of matching supply to demand through relative marketplace
    advantages in areas such as marketing, service and innovation.
        Question. On November 8, 2001, in conjunction with the FCC's Notice
    of Proposed Rulemaking, Performance Measures and Standards for
    Unbundled Network Elements and Interconnection et al., CC Docket Nos.
    01-318 et al. you made the statement:

        ``This Notice acknowledges what has been apparent for some time:
    that facilities-based competition is the mode of market entry most
    likely to foster simultaneously and sustainably the Act's mandates of
    competition, deregulation and innovation.''

        On February 27, the FCC released data on the status of competition
    in the local telephone market. The report cited a growth rate of 16
    percent in the CLEC market during the first six months of 2001. In
    terms of how the service is provided, CLEC's reported: 33 percent of
    lines were served using their own facilities; 23 percent by reselling
    ILEC services; and 44 percent by using unbundled network elements.
        In light of the fact that almost half of the total competition is
    provisioned through UNEs, and given the reluctance of capital markets
    to advance funding for facilities-based construction, do you believe
    that facilities-based competition is most likely mode to bring about
    competition in the local telephone market?
        Answer. We believe that facilities-based competition holds the most
    promise, in the long run, for sustained competition and the consumer
    benefits that competition brings. Facilities-based competition creates
    greater opportunity for innovation and price differentiation. The
    Commission has also been clear, however, that with respect to
    facilities-based entry, we seek to promote entry not only by fully
    facilities-based carriers, but by those facilities-based carriers that
    purchase UNEs, such as the local loop, as well. Indeed, investment in
    facilities also furthers public safety and infrastructure development
    goals, which have become increasingly important since the events of
    September 11th. At the same time as we implement the Act's mandate to
    make unbundled network elements and resale options available to CLECs,
    I am encouraged by the fact that even during the first six months of
    2001, the number of customers served by CLEC-owned lines actually grew
    by 11 percent. That being said, our pending proceedings do not--and
    could not consistent with the statutory framework--contemplate
    eliminating unbundled access to incumbent facilities for competitors
    seeking to provide telecommunications services.
        Question. Can the FCC realistically hope to meet the burden imposed
    by the Fox case of showing, every two years, the necessity of retaining
    your broadcast ownership and many other telecommunications rules? If
    not, will the Commission seek further review of the D.C. Circuit's
    decision, or should Congress act to revise the biennial review
    provisions included in the 1996 Telecommunications Act?
        Answer. Section 202(h) of the Telecommunications Act of 1996
    requires the Commission to review its media ownership rules biennially
    to determine if these ``rules are necessary in the public interest as
    the result of competition.'' The statute also states that once the
    agency makes the determination, it must ``repeal or modify any
    regulation it determines to be no longer in the public interest.'' In
    Fox Television Stations, a three-judge panel of the D.C. Circuit
    addressed the Commission's 1998 and 2000 determinations not to repeal
    or modify the national television broadcast ownership rule (NTSO) or
    the cable-broadcast ownership rule (CBCO). The Commission had argued
    that its determination was appropriate because the rules continue to
    serve the public interest. The Fox court held, however, that, in order
    to retain the rules, the Commission was required to show not only that
    that the rules serve the public interest, but rather that they remain
    ``necessary'' to serve the public interest. The court also held that
    the Commission failed to satisfy that standard. See Fox Television
    Stations v. FCC, 280 F.3d 1027, 1042 (D.C. Cir. 2002) (``Commission has
    no valid reason to think the NTSO Rule is necessary to safeguard
    competition.''). Specifically, under the Court's interpretation of the
    statute, the Commission must review and prove, every two years after
    any rule's promulgation, each media ownership rule is ``necessary'' to
    serve the public interest. The Commission respectfully disagrees with
    the court's decision. As required by federal regulations (28 C.F.R.
    0.20), the Commission is discussing with the United States Department
    of Justice and the Office of the Solicitor General the possibility of
    appealing. If a decision is made not to seek further review of the
    court's ruling, or if the government seeks further review and the Fox
    decision is not reversed, then the Commission will be bound by the
    court's decision unless the Congress revises the biennial review
    statute to clarify that the statute does not impose a higher burden on
    the Commission than that already required for agency rulemaking, i.e.,
    the rule must not be arbitrary or capricious.
        Question. Because the D.C. Circuit vacated the cable/broadcast
    cross-ownership rule without giving the Commission a chance to
    reconsider its significance in the digital age, does the Commission
    plan to challenge the Court's order to repeal the cross-ownership rule?
        Answer. As an initial matter, the D.C. Circuit ruling in Fox
    permits the Commission to reissue the cable/broadcast cross-ownership
    rule if it can justify the rule. See Fox Television Stations v. FCC,
    280 F.3d 1027, 1052 (D.C. Cir. 2002) (``[i]f the agency wants to re-
    promulgate the Rule and is able to justify doing so, it presumably can
    require any entity then in violation of the Rule to divest either its
    broadcast station or its cable system in any market where it owns
    both.''). The court vacated the CBCO rule because it doubted that the
    Commission would be able to justify the re-issuance of the rule. The
    Commission is also discussing with the United States Department of
    Justice and the Office of the Solicitor General the possibility of
    seeking further review of the Fox court's decision to vacate the CBCO
    rule.
        Question. Please detail for Committee the specific steps taken by
    your media ownership working group to examine consolidation in the
    media marketplace. Please detail what steps are planned to conduct
    detailed, objective analysis of media consolidation and its impact on
    diversity of ownership, diversity of viewpoints, and on localism. Do
    your analyses plan to include research conducted by retained outside
    market experts, economists, and academics capable of performing the
    significant objective market research necessary?
        Answer. I am committed to improving the factual record on which the
    Commission addresses media ownership issues. Although I am confident
    that the public will submit insightful, factual information about the
    media market in our ownership rulemakings, I took the step of
    establishing the media ownership working group to improve our
    collective understanding of the media market. At this point, I
    anticipate that the group will focus its work on three areas:
        1. How do consumers experience the media? It is essential that the
    Commission put the consumer at the center of our media ownership
    policymaking. We can do that only if we have a better understanding of
    how Americans use the various media options available to them. For
    instance, I would like to know the extent to which various media
    outlets might be substitutes for one another. Existing Commission
    ownership rules make assumptions about how consumers substitute among
    media, but we need better data about the nature of that behavior to
    ensure that our current rules are based on today's market reality. I
    expect the ownership group will address these questions both by
    studying past consumer usage of different media as well as conducting
    an actual survey of consumer attitudes.
        2. How has the media landscape changed over time? We understand
    that growth in electronic media options at the national level has
    expanded dramatically, but Americans experience media at the local
    level, not the national level. Therefore, we need to ask questions such
    as ``What did the media world look like to a resident of a particular
    market in 1960 versus today? How do those changes compare to the
    changes experienced by a resident of another market between 1960 and
    today?'' Data such as these will give us valuable context for
    addressing our media ownership questions.
        3. How do media market structures affect output? We intend to take
    advantage of past rule changes and waivers of our ownership rules to
    study whether certain market structures affect competition, diversity
    and localism. For example, I would like to know the extent to which
    broadcast-newspaper combinations affect viewpoint diversity and
    competition, as well as any other benefits or costs they have produced.
    Since there are a number of grandfathered broadcast-newspaper
    combinations, we will study how they affect the realization of our
    policy goals.
        Finally, Commission economists and attorneys and outside experts
    will perform the media ownership working group's research and analysis.
    I have full confidence that all the contributors to the media ownership
    group have the expertise and objectivity to perform the analysis that
    the Commission requires.
        Question. You've had a DTV Task Force in place since last year.
    Tell us what steps the FCC plans to take, and when, to move the
    transition to digital television forward?
        Answer. In October 2001, I announced the formation of a Digital
    Television Task Force at the FCC. The Task Force is a cross-Bureau,
    cross-disciplinary group that has several functions, including: (1)
    helping to coordinate and establish priorities for the Commission's DTV
    efforts; (2) bringing outside parties together to attempt to resolve
    important issues that may be impeding the transition; and (3) providing
    a single point of contact for outside parties on DTV matters. More
    broadly, the Task Force reflects my commitment to doing everything we
    can to move the DTV transition forward for consumers and to recover
    spectrum for other uses such as public safety and advanced wireless
    services. At the same time, I believe we need to recognize that the
    success of the transition depends in no small measure on consumer
    demand for services and purchase of equipment over which the FCC has no
    direct control.
        During the past several months, the Task Force and other Commission
    staff have taken proactive steps in several areas, including the DTV
    build-out, cable compatibility and copy protection. Regarding the
    build-out, for instance, we temporarily deferred some of our regulatory
    requirements to make it less expensive for broadcasters to get on the
    air with a digital signal. On cable compatibility and copy protection,
    the Task Force has held several meetings with the consumer electronics
    industry, cable, content producers, and others, in an attempt to work
    through some of the difficult issues that may be hindering the
    transition. While much work remains, I'm encouraged by the results thus
    far. We plan to stay actively involved in these issues to ensure that
    progress continues.
        We also have several ongoing proceedings at the Commission related
    to the DTV transition e.g., DTV must-carry, mandatory DTV tuners and
    labeling for ``cable ready'' DTV sets--that I hope to act on as
    expeditiously as possible. Most immediately, we are conducting a close
    staff examination of the approximately 850 extension requests filed by
    commercial broadcasters seeking relief from the upcoming May 1, 2002
    build-out deadline. We will work with those broadcasters that have
    demonstrated a legitimate need for an extension, to help them get on
    the air with a digital signal as soon as possible.
        In addition, I anticipate that we will initiate at least two other
    proceedings in the coming months to move the DTV transition forward.
    First, I plan to ask the Commission to begin a proceeding to develop
    rules for low-power stations and TV translators to make the transition
    to digital. These stations play an important role in our broadcast
    system, and we need to begin the process of helping them make the
    transition to digital. Second, we will begin our next periodic review
    of the progress of the conversion to digital television, a review that
    the Commission undertakes every two years to ensure that progress on
    the transition continues and that any potential sources of delay within
    our purview are eliminated.
        In sum, I am committed to doing what we can to promote a smooth and
    expeditious DTV transition for the American public, and I look forward
    to working with the Committee as the transition continues to progress.
        Question. Last fall, the FCC received a petition proposing to open
    the 70 and 80 GHz frequencies for commercial ``gigabit broadband'' use
    and setting forth spectrum license rules that would expedite such use.
    What is the Commission's schedule for beginning and completing the
    rulemaking?
        Answer. On September 10, 2001, Loea Communications Corporation
    filed a petition requesting the commencement of a rulemaking proceeding
    to adopt service rules governing the licensing and point-to-point use
    of the 71.0-76.0 GHz and 81.0-86.0 GHz (70-80 GHz) spectrum bands. The
    Commission promptly sought comment on Loea's Petition. The period for
    filing comments to Loea's Petition ended on November 13, 2001.
    Commission staff is currently analyzing the comments received and the
    technical issues involved in establishing service rules for this
    spectrum, which is shared with the government.
        The Commission expects to initiate a formal proceeding on Loea's
    Petition during the second quarter of 2002. Licensing the 70-80 GHz
    band will require consideration of a number of intricate issues; thus
    it is difficult at this time to predict a completion date for the
    rulemaking. In particular, the shared aspect of the spectrum (between
    government and non-government) will require careful coordination of
    this proceeding with the National Telecommunications and Information
    Administration.
        Question. What efforts are being made by the FCC to follow
    Congress' directive under section 222 of the Act to ensure that
    wireless location information cannot be used by carriers without the
    prior consent of a wireless subscriber? Does the Act provide the FCC
    with sufficient authority to similarly limit the re-disclosure of
    wireless location information by third parties or must Congress provide
    future legislative authority?
        Answer. The statutory amendments to section 222 of the Act
    addressing privacy of wireless location information became effective on
    October 26, 1999, and telecommunications carriers are bound by those
    requirements. Carriers are aware of the requirements and, to our
    knowledge, the carriers are following them. Indeed, in November 2000,
    the Cellular Telecommunications and Internet Association (CTIA) filed a
    petition for rulemaking seeking adoption of certain privacy principles
    pursuant to the wireless location information provisions of section
    222. The Commission issued a Public Notice on March 16, 2001,
    requesting comment on the petition. The record has now closed and the
    Commission is analyzing the comments and reply comments that were
    received.
        As to the breadth of the statute, by their terms, the wireless
    location information provisions, as part of the overall statutory
    scheme of section 222, apply only to telecommunications carriers. The
    terms of the provisions do not expressly address non-carriers and,
    thus, the privacy limitations imposed on carriers' use or disclosure of
    wireless location information would not appear to be directly
    applicable to third parties' use or disclosure of such information. A
    number of parties have raised the issue of third-party disclosure of
    location information in the context of the CTIA petition for
    rulemaking, however. Thus, this issue is before the Commission for
    consideration.
                                     ______

                Questions Submitted by Senator Daniel K. Inouye
        Question. The FCC recently concluded that broadband service is
    being deployed in a timely manner. I also understand that broadband has
    achieved 10 percent penetration in 4 years and that compares favorably
    with the adoption rates for other consumer technologies such as PCs (10
    percent in 4 years), CD players (10 percent in 4.5 years), cell phones
    (10 percent in 8 years), VCRs (10 percent in 10 years), and color TVs
    (10 percent in 12 years). The Congress may need to work to make sure
    that broadband is deployed in rural or underserved areas. However,
    deregulation of ILECs won't solve this problem. Therefore, in light of
    this, why has the FCC proposed in its Broadband rulemaking proceeding
    to take action so drastic that it would undermine competition under the
    guise of deploying broadband service.
        Answer. I agree that the penetration and deployment rates for
    broadband have been encouraging as we recently announced in our 706
    Report to Congress. These facts alone, however, do not establish that
    the Commission has achieved the broadband deployment goals that
    Congress set forth in the Act. Section 706 mandates that the Commission
    promote the deployment of broadband to all Americans using tools such
    as regulatory forbearance and the removal of barriers to infrastructure
    investment. To satisfy this mandate, we must facilitate the deployment
    of at least one and preferably multiple broadband infrastructures
    throughout the Nation. At the same time, we must safeguard the ability
    of competitors to use the incumbent telephone company network to
    provide telecommunications services, as prescribed by the Act. By
    clarifying the regulatory classifications and treatment of wireline
    broadband Internet access service, I believe that we will improve the
    environment for competition by providing both incumbents and
    competitors with the certainty they need to make decisions to build and
    deploy broadband. I also believe that to the extent that our final
    rules remove regulatory barriers to deployment, we will remain faithful
    to the Congress' directive to ``preserve the vibrant and competitive
    free market that presently exists for the Internet and other
    interactive computer services, unfettered by Federal and State
    regulation.'' In addition, by clearly defining and developing the rules
    under which broadband services will be regulated, the Commission will
    allow for a more stable environment for the investment needed to build
    broadband-capable networks. By providing regulatory clarity in this
    area, the Commission will serve to lower the risks associated with
    investing in these networks, which in turn should help spur the
    deployment of broadband-capable networks to all Americans and provide
    for an environment that promotes investment and innovation in broadband
    services and applications.
        Question. In October of last year, the Commission granted waivers
    submitted to the six largest wireless carriers from the FCC's ``E911''
    rules. These rules would require that wireless carriers make certain
    information available to public safety entities in order to help
    pinpoint the location of wireless callers. In adopting these waivers,
    the FCC required each of the six carriers to comply with specific
    implementation schedules with enforceable, interim benchmarks that
    would ensure the timely, nationwide rollout of E911 services by 2005.
    Today, not five months later, three of the six carriers have already
    filed additional waivers and a fourth (Nextel) has no need to file a
    waiver yet, because its first benchmark will not occur until the end of
    this year. Given these developments, is the Commission committed to
    aggressively enforcing these rules and to looking disfavorably upon
    further waivers?
        Answer. The Commission is committed to having Phase II of E911
    deployed as soon as possible, and to pursuing aggressive enforcement
    action where necessary and appropriate. As the Commission acknowledged
    when it first adopted the E911 requirements, the implementation of
    wireless E911 is very complicated. Wireless location technology did not
    exist at the time of the original mandate, and has developed
    differently than originally predicted. Adding to the complexity of the
    problem is that Phase II deployment requires coordinated action by the
    CMRS carriers, their vendors, the incumbent local exchange carriers,
    and local public safety entities. In light of these complications, the
    Commission recognized that, in some situations, individual carriers
    might have to seek relief from certain of the requirements.
        In September 2000 and October 2001, the Commission granted
    individualized waivers to the six large nationwide wireless carriers
    AT&T, Cingular, Nextel, Sprint, Verizon, and VoiceStream conditioned
    upon adherence to detailed E911 Phase II compliance plans proposed by
    each carrier. The orders granting these waivers sent a clear message to
    carriers that there will be penalties if they fail to comply with the
    rollout schedules contained in their plans. Further, the orders signal
    that the Commission will look disfavorably upon any requests for
    further relief, indicating that they will not be entertained absent
    ``extraordinary circumstances.''
        The Commission has already referred two carriers to the Enforcement
    Bureau regarding their TDMA markets, and we will not hesitate to make
    more referrals to ensure that E911 capability is implemented as quickly
    as possible. It should be noted that while certain of the nationwide
    carriers have again requested additional time, others appear to be on
    track to meet their benchmarks. We applaud the efforts of these
    carriers in leading the way in deployment of this lifesaving
    technology.
        Question. It has been just over four years since the Commission
    released a Notice of Proposed Rulemaking on updating its rules for the
    Direct Broadcast Satellite (``DBS'') Service. Since the NPRM was
    issued, a vast consolidation has occurred among DBS licensees. In
    addition, after years of waiting, DBS licensees have only recently
    begun providing DBS programming packages to consumers in Alaska and
    Hawaii. Unfortunately, much of the subscriber packages are not
    comparable with the programming that is available to consumers in the
    mainland 48 states and are not competitive with cable television
    services in Hawaii.
        The 1998 NPRM proposed to improve the FCC's geographic service
    requirements in order to ensure that consumers in Alaska and Hawaii are
    provided with comparable multichannel video programming opportunities
    as consumers in the rest of the United States. Unfortunately, the
    Commission has not yet released an order in the proceeding resolving
    the issue. Recognizing the importance of comparable multichannel video
    programming opportunities for residents in Alaska and Hawaii, when does
    the Commission estimate it will be able to release an order concluding
    this long-pending proceeding?
        Answer. The Commission is in the process of completing its DBS
    rulemaking that addresses service to Alaska and Hawaii, among other
    issues. We expect to release an order in the near future. In the
    process of our consideration, Commission staff has carefully reviewed
    the numerous ex parte filings of the State of Hawaii and we share the
    state's concern that its citizens, as well as those of Alaska, receive
    DBS service. According to recent filings, Hawaii is receiving DBS
    service but with fewer channels than are available to mainland
    consumers. We note that the Commission has undertaken several efforts
    over the years to facilitate joint discussions with government
    representatives from the States of Hawaii and Alaska and the two DBS
    licensees, and that thereafter, offerings of DBS service in those
    states improved.
        Question. Media consolidation is of great concern to me. I have
    been troubled by some of your comments that ownership caps are based on
    ``romantic notions.'' Although the level of consolidation in the media
    industry in the marketplace today may not rise to the level of a
    violation of our antitrust laws, it nonetheless may have an adverse
    impact on such public interest objectives as diversity of ownership,
    diversity of voices, and localism. Will you work to honor these public
    interest objectives?
        Answer. I remain fully committed to a media market that is not only
    robustly competitive but that is serves the Commission's longstanding
    goals of localism and diversity. Our framework for achieving these
    goals will give significant attention to how consumers actually use the
    media so that our ownership policies truly reflect the realities of
    today's media environment. Our framework also will consider how
    existing regulations affect the continued economic viability of media
    outlets such as local broadcast television stations and broadcast
    television networks. I continue to have concerns about how some of our
    rules affect the financial health of broadcasters, especially in small
    and medium sized markets and television networks.
        With respect to our policy goals of promoting competition,
    diversity and localism, our challenge is to develop a method of
    analysis that fairly reflects all of these objectives. There are well-
    settled metrics for assessing how certain market structures promote or
    diminish competition in economic markets, including media markets. But
    far less thought has been given to how various market structures affect
    ``viewpoints'' and ``localism.'' I intend to bring a closer scrutiny to
    these concepts so that we have real-world evidence to inform our media
    ownership decisions.
        Question. What steps are being taken by the FCC to identify and
    clear new spectrum that can be used by the CMRS industry to provide 3G
    broadband services? What if any obstacles must Congress address to help
    facilitate this process?
        Answer. Due to the increased growth of wireless mobile services and
    requests for additional spectrum to support 3G, or advanced wireless
    services, the Commission initiated a rulemaking proceeding seeking
    public comment on potential frequency bands for 3G wireless systems, as
    well as potential frequency bands for relocating incumbent spectrum
    users. In addition to the ongoing Commission rulemaking proceeding, and
    because some of the spectrum that may be allocated for 3G wireless
    systems is currently allocated for federal government use, last
    October, FCC staff and the National Telecommunications and Information
    Agency (NTIA) began a joint interagency staff-level effort to examine
    and develop possible spectrum options for 3G wireless systems. This
    effort is also evaluating the potential for sharing between 3G wireless
    systems and current spectrum users, as well as reviewing possible
    options for relocation spectrum.
        FCC staff are focusing on a 60 MHz block of spectrum--from 2,110-
    2,170 MHz--that is currently allocated for commercial use, and the
    executive branch agencies are focusing on a 60 MHz block of spectrum--
    from 1,710-1,770 MHz--that is currently allocated for federal
    government users, most notably the U.S. Department of Defense.
    Importantly, the U.S. Congress has already facilitated this process and
    has previously mandated that 45 MHz of spectrum be transferred to the
    commercial sector from the federal sector--from 1,710-1,755 MHz. Thus,
    one of the principal focuses of the interagency staff working group is
    to determine the feasibility of whether an additional 15 MHz of
    spectrum--from 1,755-1,770 MHz--can be made available for commercial 3G
    wireless systems. The U.S. Department of Defense currently operates
    over these frequencies.
        This interagency effort is scheduled to be completed in late spring
    of this year. The result of this assessment will be considered, along
    with all of the other information in the public record, in the ongoing
    Commission rulemaking proceeding relating to 3G services. Because there
    is existing consumer demand for these services, the Commission will
    strive for an expeditious resolution of these spectrum issues.
        However, because reaching careful and complete decisions as to
    appropriate spectrum for 3G services is of considerable significance to
    the economy and the national security of the United States, I do have
    graver concerns about the current statutory auction deadline of
    September 30, 2002, established by the Balanced Budget Act of 1997.
    While the FCC, NTIA, and other federal agencies have worked diligently
    since October 2000 to identify appropriate 3G spectrum, and much
    progress has been accomplished toward completing this joint interagency
    effort to select the 3G bands by late Spring 2002, it is becoming
    increasingly clear that the original timeframe contemplated for auction
    of 3G spectrum is not consistent with our obligations to act in the
    best interests of national security and sound spectrum management.
        The Administration has already suggested the need for legislation
    that would shift the statutory auction deadlines from September 30,
    2002 to September 30, 2004. As the Secretary of Commerce wrote to
    Congress, ``[w]hile the Federal Government is committed to identifying
    spectrum for 3G services as expeditiously as possible, the current
    statutory auction deadline affecting certain of the bands under
    consideration does not provide sufficient time to conclude the
    identification process and conduct an auction before September 30,
    2002.'' I note further that the President's fiscal year 2003 budget
    plan endorsed moving the auction deadline to September 30, 2004.
    Congress' support for flexibility and relief from the auction dates
    would be appreciated.
                                     ______

               Questions Submitted by Senator Barbara A. Mikulski
        Question. Access to high-speed Internet connections is crucial to
    consumers and communities in today's economy. High speed connections to
    the Internet can provide a lifeline to small business, schools and
    hospitals and can help communities prosper and grow in the Information
    Age.
        It is my understanding that the FCC has been grappling with a
    solution--how big a fund, who should pay in and who should receive
    payouts since the enactment of the Telecommunications Act of 1996.
        Can you tell me what you are doing to address the issue of
    universal service as it applies to the Internet to ensure that
    residential and business customers, as well as rural and urban, have
    service and a choice about to who serves them?
        Answer. I agree that widespread deployment of broadband
    infrastructure has become the central communications policy objective
    of our day. The Commission is acting to remove barriers to deployment
    and investment and minimize the cost of bringing service to consumers
    by minimizing regulatory costs. In doing so, the Commission is actively
    working to promote broadband availability throughout the Nation over
    multiple technical platforms.
        As shown by our recent report to Congress, advanced services are
    being deployed by wireline carriers, cable providers and satellite
    operators in a reasonable and timely manner. We believe that by
    promoting the development and deployment of broadband services over
    multiple platforms, competition in the provision of these services can
    thrive, and thereby ensure that the needs and demands of the consuming
    public are met. I assure you that I am committed to preserving and
    advancing universal service and encouraging the ubiquitous availability
    of broadband to all Americans.
        We are examining how to accomplish these goals through a variety of
    vehicles, including our recent examination of the classification of
    wireline broadband Internet access and our on-going examination of the
    way in which universal service contributions are collected. I am
    confident that all of these actions taken together will continue to
    ensure that broadband services are deployed throughout the nation.
        Question. What effect has more choice had on prices for broadband
    services? In areas of the country where consumers have less choice in
    providers, are prices generally higher or lower for those services as
    compared to areas that have more competition?
        Answer. The Commission does have some data on the national range of
    prices for broadband services. We do know that for basic ADSL services,
    monthly charges range from $45 to $59, and installation charges range
    from free to $250. Free installation generally requires that customers
    install premises equipment themselves. For cable services, monthly
    charges range from $45 to $60. On the other hand, Starband, one of only
    two major satellite providers, charges a monthly fee of $70. Starband's
    customers also buy an equipment package that retails for $499. The
    standard installation charge for that equipment starts at $199. This
    data suggests that customers whose only option is satellite are paying
    more on a monthly basis for broadband services and are also paying one-
    time fees that are at least as costly as those charged by other
    providers.
        That said, both the cable television and telephone industries
    appear to price their high-speed Internet access services (cable modem
    service and DSL respectively) largely in a uniform manner across
    markets independent of whether or not the other service is available in
    a particular market. For example, cable operators typically price cable
    modem service at between $45-$50/month across their markets. Likewise,
    Verizon, for example offers four price points for it's DSL service
    ($49.95, $59.95, $69.95, and $79.95) depending upon data speed and
    other features independent of whether a local area has cable modem
    service. Some cable operators and DSL providers have ``specials''
    including free modems, free first month(s), or lower prices for the
    first several months of service. These marketing specials appear to be
    more frequent now that both cable modem service and DSL are more widely
    available and perceived by consumers to be competitors.
        Question. Would you please describe the status of the CLEC industry
    today? Are there more or fewer competitive providers than there were
    three years ago? Please give specific numbers, if possible.
        Answer. Although we do not collect data on the number of CLECs
    providing service per se, we do measure the CLEC industry by the number
    of access lines served by competitors. The Commission's most recent
    statistics on the CLEC industry reflect data from June 30, 2001 and
    show a 16 percent growth in CLEC market size during the first six
    months of 2001. This builds on top of a 63 percent increase in the six
    months ending December 2000. I recognize that recent economic
    conditions have made it difficult to compete in the telecommunications
    sector and that a number of CLECs have exited the market. The FCC is
    absolutely committed to doing what it can to stimulate competition in a
    manner that comports with the statute and with market dynamics. We are
    therefore taking a number of actions that CLECs have requested to
    improve their ability to provide service. Specifically, we have
    strengthened enforcement of our local competition rules, initiated
    rulemakings on performance measurements for unbundled network elements
    and special access services that incumbent LECs provide to CLECs, and
    we have been working with the Local State Government Advisory Committee
    to improve access to rights-of-way.
        Question. Is the availability of investment capital a major part of
    the problem facing the CLEC industry today?
        Answer. Yes. Capital is less available to the CLEC industry today
    than it has been. Although the Commission cannot be guided by reacting
    to short-term fluctuations in the capital markets, one of our primary
    goals is to provide as much regulatory certainty as possible in order
    to promote investor confidence. Therefore, a main focus of our pending
    proceedings is to ensure clarity, certainty, and predictability in the
    rules governing local competition and broadband. Furthermore, it is
    worth mentioning that, in some instances, capital has been flowing to
    some CLECs who are building their own facilities. In addition, cable
    telephony providers are competing with ILECs without relying on
    incumbent network facilities. Indeed, even in the first six months of
    2001, the number of customer lines served by CLEC-owned facilities grew
    by 11 percent.
        Question. It is my understanding that the FCC has recently
    initiated three major proceedings Docket 01-338, which is considering
    whether to eliminate high capacity Unbundled Network Elements; Docket
    01-337, which is considering whether the Bell companies should be
    declared non-dominant in the provision of broadband services and
    facilities; and Docket 02-33, which is considering whether the Bell
    companies' broadband services and facilities used to provide Internet
    Access should be reclassified and removed from the regulations that
    apply to telecommunications services. All three of these proceedings
    are considering fundamental changes to the rules and regulations that
    govern the provision of broadband services to consumers.
        What effect will these proceedings have on consumers of broadband
    services who are currently served by competitive carriers who rely upon
    access to unbundled network elements at TELRIC prices? Will these
    consumers be able to continue receiving services if the Commission
    decides to eliminate some unbundled network elements or decides to
    change the pricing structure?
        Answer. The Commission launched the three proceedings you have
    referenced to consider in a unified way, the appropriate legal and
    policy framework for broadband services. The goal of these proceedings
    is not to reduce consumer choice but to ensure a robustly competitive
    market for broadband services generally. Ultimately, when the
    Commission reaches its conclusions in these proceedings, it will
    consider whether the interests of consumers not individual competitors
    are served.
        Clearly, one of our primary goals is for consumers to have the
    opportunity to access broadband services from a variety of sources. Our
    Triennial Review (Docket No. 01-33) evaluation of the incumbent LECs'
    wholesale obligations to make their facilities available to competitive
    LECs for the provision of broadband services is designed to evaluate
    these rules, first adopted in 1996, in light of the six years of real
    market experience we have gained. This proceeding was scheduled to take
    place at this time to ensure that our unbundling rules keep pace with
    market realities. Integral to our unbundling analysis is whether viable
    alternatives to the incumbent network are available to competitors to
    serve their customers. If we were to determine that certain elements
    were no longer unbundled, it would be based, in part, on our assessment
    of available viable alternatives. Through these alternatives, consumers
    would be able to continue to receive services from competitors.
        The second proceeding you reference (Docket No. 01-337) would have
    no effect on the availability and pricing of network elements used by
    competitors to provide service.
        In the Broadband NPRM, Docket No. 02-33, which examines the
    appropriate classification of broadband Internet access services under
    the Act, the Commission also asks many questions about the appropriate
    approach to providing competitive broadband providers with access to
    the incumbent LECs' networks to provide services. We look forward to
    vigorous comment and analysis on this issue in the record.
                                     ______

                    Questions Submitted by Senator Herb Kohl
        Question. The FCC's 1997 Benchmark Order continues to be effective
    in driving down U.S. carriers' international settlement charges and
    prices to U.S. consumers. However, there are two areas that need
    attention.
        First, I understand that foreign carriers are beginning to charge
    higher prices for completing calls from the United States to mobile
    phones overseas. With the growth of mobile phone usage worldwide, this
    new factor could undo the positive impact of the Benchmark Order. What
    could the FCC do to work with foreign regulators and carriers to lower
    these charges that are raising U.S. consumer prices?
        Second, even with full implementation of the Benchmark Order,
    settlement rates will remain at levels that are above cost. In some
    instances, these high rates create profit incentives for scam operators
    to devise schemes that lure American consumers to unknowingly place
    international calls. In any event, these settlement rates are certainly
    above the levels that we consider reasonable for call termination in
    the domestic marketplace.
        Is it time to update the Benchmark Order, and beyond that, what
    other steps can the Commission take to ensure that U.S. carriers and
    consumers are not paying too much for international calling?
        Answer. Foreign regulatory authorities are concerned that
    termination rates on mobile networks may be too high and thus,
    adversely impact consumers. At the same time, the Commission is
    continuing to look at ways to achieve lower consumer rates for
    international calls. Through continued enforcement of the benchmarks
    policy and interaction with foreign regulators and multilateral
    organizations, the Commission can reinforce the importance of lower
    accounting rates to U.S. and foreign consumers and carriers. Thus, the
    FCC is determined to continue discussions with our regulatory
    counterparts overseas. In these discussions, we will note the impact on
    U.S. consumers when international calls are completed on mobile
    networks and share our experiences with respect to mobile termination
    in the United States. Termination rates on mobile networks in the
    United States are often lower than similar rates in foreign markets.
        Pursuant to the policies the Commission set forth in its Benchmarks
    Order, there remains one additional round of foreign routes (countries
    with a teledensity that is less than 1) for which carriers must
    negotiate benchmark-compliant agreements for traffic beginning January
    1, 2003. In addition to the benchmarks policy, market forces, bypass,
    and refiling of traffic continue to place pressures on foreign carriers
    to lower their accounting rates to and below the benchmark rates. The
    trend toward lower accounting rates is benefiting U.S. consumers
    through lower average consumer calling prices, as accounting rates are
    the major cost component in international calling prices. Currently,
    over 90 percent of the minutes for U.S.-international traffic are being
    settled at or below the benchmark rate.
        Question. You may recall that I asked you last year what the FCC
    could do to bring more competition to the set top box market, and to
    ensure that set top boxes are available for purchase at retail stores
    so that consumers have another choice besides renting them from cable
    operators. A year has passed, and very little has changed.
        To be sure, the National Cable Television Association has published
    the OpenCable Application Platform (OCAP) specification, and this is an
    important first step. However, absent implementation of this
    specification in the next generation of digital set top boxes and cable
    ready televisions, or even a commitment from the cable industry to use
    this standard in their own equipment, I fear a retail market employing
    the OpenCable standard will not develop.
        Moreover, the Pod-Host Interface License Agreement (PHILA) is also
    crucial to the creation of a viable competitive market. Even if we
    could immediately resolve the standards-related difficulties posed by
    the adoption of the OpenCable specification, competitive devices would
    not be able to connect to digital cable systems without first signing
    PHILA. To make matters worse, the FCC has not yet published PHILA for
    public comment a process that is essential to create digital ready
    products that will work on cable systems across the country.
        So again I ask the question: what can the FCC do to both bring more
    competition to the set top box market and ensure the creation of a
    digital cable ready consumer electronics product market? Also, why
    hasn't the FCC published PHILA for public comment? Absent a compelling
    reason, this is an act I trust the FCC will take as soon as possible.
        How important is it to the development of a competitive set top box
    market that the cable companies adhere to the OCAP specification in the
    same manner as a competitive set top box manufacturer?
        Do you believe the FCC has the jurisdiction to require device
    manufacturers to respond to a ``broadcast flag'' that would prevent
    redistribution of free over-the-air digital broadcasting to the
    Internet?
        Answer. The Commission continues to work with the relevant
    industries to develop retail set-top boxes and digital television sets
    that can be interconnected with cable television systems. Pursuant to
    Section 629 of the Telecommunications Act of 1996, the Commission
    adopted rules in 1998 to create a regulatory framework that would allow
    for the manufacture of such devices while adequately protecting the
    security of cable operators' systems and services. In September 2000,
    the Commission issued a Further Notice of Proposed Rulemaking and
    Declaratory Ruling. The Further Notice sought comment on three areas:
    (i) whether OpenCable, the cable industry's initiative for set-top box
    and television receiver interconnection specifications, adequately
    represents the full range of interested parties and delivered
    specifications that allow consumer electronics manufacturers to build
    competitive devices for purchase at retail; (ii) whether the Commission
    should revise the January 1, 2005 phase-out of the provision by cable
    operators of set-top boxes with integrated security; and (iii) any
    obstacles to the development of commercial availability or other
    factors ``impeding or affecting achievement of the goals of Section
    629.'' The Declaratory Ruling aspect of that Order is discussed below.
    The pleading cycle in the Further Notice is complete and the Commission
    anticipates that a Second Report and Order resolving these issues will
    be issued in the near future.
        The successful achievement of a competitive retail market for set-
    top boxes and digital cable ready television sets involves a confluence
    of market sectors, and the resolution of issues, which, in many cases,
    the Commission has less-than-clear jurisdiction, as well as the
    development of numerous complex and interrelated technical
    specifications. For example, the following specifications developed in
    conjunction with the retail availability of set-top boxes and digital
    television receivers that can be interconnected with cable television
    systems have been adopted as ANSI or SCTE standards: Modulation and
    Compression Standards; Network Interface; POD-Host Interface; Pod-Host
    Copy Protection; Digital Transmission Content Protection (``DTCP'');
    Digital Visual Interface (``DVI'') output with High Bandwidth Digital
    Content Protection (``HDCP''); and IEEE 1394.
        In addition, CableLabs has recently published the OpenCable
    Application Platform Specification (``OCAP'') version 1.0. CableLabs
    has stated that reducing the OCAP specification to a finalized standard
    is its number one priority. Although not without difficulties, given
    the number of parties and the conflicting interests involved, progress
    has been made towards resolving the standards issues. The Commission
    continues to monitor these developments and assist, where it can, to
    further progress in this area.
        Another recent development is the NCTA proposal to make digital-
    only set-top boxes available at retail as soon as possible. NCTA
    asserts that its plan addresses retailer's major concerns about
    competing with ``superior'' set-tops leased from a cable operator
    because the devices at retail are identical to the boxes available from
    a cable operator. NCTA maintains that its proposal also eliminates
    objections related to the PHILA license because no license is necessary
    with an integrated box. Finally, NCTA states that its proposal also
    substantially addresses portability concerns through its buy-back
    component. While NCTA's proposal will not lead to the manufacturing
    freedom and open cable architecture envisioned by Section 629, it could
    serve as a first step in establishing a set-top retail presence and
    should acquaint consumers with the concept of obtaining their set-top
    box from sources other than their cable provider.
        Finally, it is also important to remember that, although the
    Commission has established a regulatory framework, the availability of
    competitive set-top boxes is also dependent upon other factors, some of
    which are largely outside of the Commission's control. Significantly,
    for example, there continue to be sharp and unresolved differences
    between the cable and retail industries on what business model is most
    appropriate for the manufacture and sale of competitive set-top boxes.
    Content Protection/PHILA
        The development of a comprehensive mechanism to protect digital
    content from unauthorized uses, such as retransmission over the
    Internet, also has proven to be difficult. It was in this context that
    the Commission issued its Declaratory Ruling in September 2000. The
    Declaratory Ruling addressed the narrow issue of whether technology
    licenses, such as the Dynamic Feedback Arrangement Scrambling Technique
    (``DFAST'') license, now called the POD-Host Interface License
    Agreement (``PHILA''), requiring copy protection measures to be located
    within a set-top box are consistent with the Commission's navigation
    devices rules. The Declaratory Ruling found that some measure of anti-
    copying encryption in both the POD module and the host device to
    protect a gap where digital data would otherwise be available ``in the
    clear'' and accessible for digital copying is consistent with the
    intent of the rules. The Commission clearly stated that:

        ``. . . we do not intend this declaratory ruling to signal that any
    terms or technology associated with such licenses and designated as
    necessary for copy protection purposes are consistent with our rules.
    We believe, however, that such issues are best resolved if specific
    concerns involving finalized licenses that implicate our navigation
    devices rules are presented to the Commission.''

        The Declaratory Ruling also required CableLabs to submit to the
    Commission a report on the status of the DFAST/PHILA license, including
    a final version of a completed license agreement. CableLabs submitted
    its report and a draft final license to the Commission in December
    2000. This draft license has been available to the public since that
    time. To date, no formal complaints have been filed with the
    Commission. The Commission recently requested and received for
    evaluation an updated version of the PHILA. This version, which appears
    to differ only slightly from the December 2000 license, was submitted
    with a request for confidentiality. The Commission is currently
    evaluating the merits of the confidentiality request. Should the
    Commission deny the request for confidentiality, it would then consider
    whether to put the PHILA out for public comment.
        The Commission is keenly aware that content protection is central
    to all facets of the digital transition, including the retail
    availability of set-top boxes. We continue to work with interested
    parties in the digital transition to encourage them to forge a
    resolution on content protection matters that is fair to consumers,
    program distributors, and content owners alike.
    Cable Reliance on OCAP
        Our rules as currently constituted do not require cable operators
    to adhere to the OCAP specification. As noted above, eight large cable
    MSOs have committed to support OCAP on their systems. In addition, our
    rules require that, after January 1, 2005, cable operators are
    prohibited from deploying new set-tops that contain integrated
    security, i.e., cable operators must rely on the POD and POD-Host
    interface to decrypt scrambled programming. In this atmosphere, it
    appears more likely that cable MSOs may voluntarily rely on an OCAP-
    based system for these nonintegrated devices. Such reliance, however,
    is not mandated. Cable operators could use a proprietary system that
    operates in conjunction with the POD and POD-Host interface but it
    would be expected that these set-tops would function no better or worse
    than competitive set-top boxes obtained at retail. On the other hand,
    competitive manufacturers have advantages that may be unavailable to
    cable operators. Manufacturers have the ability to combine OCAP-reliant
    navigation devices with other consumer electronic products, such as
    television receivers, DVD players, digital video recorders, and home
    theater systems, or combine all into a simple product. This may be
    highly desirable to consumers, as was the case with cable ready analog
    television receivers. Moreover, competitive set-top manufacturers are
    equally free to develop new applications that will operate with or in
    conjunction with the OCAP platform that will differentiate their
    product from devices available from cable operators.
        Undoubtedly, requiring cable operators to adhere to OCAP in exactly
    the same manner as competitive manufacturers would create the most
    level playing field possible. At the same time, such a regime is not
    consonant with the intent in which the Commission implemented Section
    629. Our rules were specifically crafted so as not to freeze in place
    technology. In the Navigation Devices Order, the Commission stated that
    permitting the development of a commonly used interface specification
    ``. . . is a rather loose and flexible requirement which we believe,
    however, may provide the involved parties sufficient guidance to
    proceed while not creating barriers to the types of change and
    technical advance that the Section 624A [Consumer Electronics Equipment
    Compatibility] amendments sought to protect.'' Requiring cable
    operators to move in ``lockstep'' with competitive manufacturers may
    have the ultimate effect of impeding competition by stifling innovation
    and leading to one ``vanilla'' set-top box. The flexibility inherent in
    our rules will provide the cable operator with the freedom to test new
    service offerings that may not initially conform to the OCAP standard
    or any other existing standard. Any successful service could then be
    included in an existing or newly created OpenCable standard for
    inclusion in newer models of competitive set-top boxes.
        Finally, with respect to the Commission's authority to require
    devices to respond to a ``broadcast flag,'' there is no statute that
    explicitly grants the Commission jurisdiction to impose such a
    requirement. The best argument that could be made is that the
    Commission could invoke its ancillary jurisdiction to impose such a
    requirement in order to effectuate the Commission's responsibilities to
    promote DTV services and to ensure the viability of a free over-the-air
    system of broadcasting. However, such an argument likely would be
    challenged in court, and it would be difficult to defend without
    explicit statutory authority.
                                     ______

                  Questions Submitted by Senator Patty Murray
        Question. In its recently issued Broadband Initiative, the FCC
    proposes to deregulate the provision of advanced services by incumbent
    local exchange carriers, based partly on the presence of competition
    from cable and satellite service providers.
        How will the FCC promote the provision of broadband via satellite?
    Will satellite systems be viable competitors to future ILEC advanced
    service providers?
        Answer. Currently, satellite providers are offering high-speed Ku-
    band broadband service to residential and business customers on long-
    distance and last-mile bases in the United States. The number of
    satellite broadband providers and subscribers is expected to grow. The
    FCC has now authorized sixteen companies in two rounds of application
    processing to provide fixed-satellite service in the Ka-band. A couple
    of those licensees plan to launch their first Ka-band satellites as
    early as 2003. Many of the Ka-band licensees propose to provide via
    satellite a wide variety of broadband interactive, direct-to-home and
    digital services to all areas of the United States, including
    underserved and rural areas, and around the world. With the development
    of Ka-band systems, we anticipate that satellite systems will be viable
    competitors to ILECs and cable systems, particularly in areas where
    terrestrial services cannot easily provide broadband service.
        Question. A number of global and domestic satellite providers--
    among them ICO--are betting their business on providing satellite
    services at broadband speeds to both urban and rural users. They're
    seeking FCC approval for flexible spectrum use in order to do this.
        What is the status of these proceedings?
        Answer. On August 17, 2001, the Commission released a Notice of
    Proposed Rulemaking to consider whether to grant flexibility in
    delivery of communications by mobile satellite service operators. The
    proceeding was initiated in part to consider proposals by New ICO
    Global Communications and Mobile Satellite Ventures Subsidiary LLC to
    integrate ancillary terrestrial components with their networks using
    their assigned satellite spectrum. Comments on the proposals were due
    on October 22, 2001, and reply comments were due on November 13, 2001.
    On March 6, 2002, the International Bureau released a public notice
    seeking limited technical comment on specific issues raised in the
    proceeding. Comments on the Technical Public Notice are due on March
    22, 2002.
        The record in this proceeding now exceeds 1,700 pages. The
    Commission staff is currently in the process of reviewing and analyzing
    comments from the industry on the Commission's proposals and analyzing
    the possibilities for providing spectrum flexibility in the mobile
    satellite service bands. The Commission staff will begin reviewing the
    additional technical comments as soon as they are filed.
                                     ______

                Questions Submitted by Senator Pete V. Domenici
        Question. You told NARUC that, ``We need to keep incentives alive
    that encourage investment in alternate platforms (such as cable,
    wireless, and satellite) and push entrepreneurs to find creative ways
    to bypass incumbents and get into the home'' (10/25/01). I voted for
    the Telecommunications Act of 1996, which envisioned intramodal
    competition as well. What are you doing to promote competition over the
    local loop?
        Answer. We take very seriously our obligations to carry out the
    unbundling provisions of the Telecommunications Act, and have found in
    both unbundling proceedings to date that competitors are impaired
    without access to the local loop. We have also recently initiated two
    proceedings, the UNE Performance Measurements and Special Access
    Performance Measurements proceedings, to explore ways to measure how
    well incumbents are performing their unbundling obligations, including
    provisioning the local loop, and how we could use those measures to
    enforce incumbents' obligations. The Commission has been aggressive
    about using our current enforcement authority to ensure that carriers
    comply with their statutory obligations. Finally, the Commission
    proactively monitors ILEC compliance with section 271. The Commission's
    Enforcement Bureau identifies and monitors section 271 compliance risk
    areas, coordinates with state public service commissions, and meets
    with competing carriers and other parties to hear allegations of 271
    violations.
        Question. New Mexico has a number of rural areas and tribal
    regions. How can we best ensure that broadband reaches these people? If
    you see USF as part of the solution, are you concerned that data
    deregulation would reduce the amount of funding available for universal
    service support?
        Answer. I understand your concern regarding the availability of
    advanced services in rural and tribal areas in New Mexico. You should
    be assured of my commitment to providing the appropriate regulatory
    framework that will help promote the deployment of broadband services
    to all Americans, especially those living in more remote regions of our
    nation.
        You will be interested to know that during the Commission's recent
    inquiry concerning the availability of advanced telecommunications
    capability, the Commission found that there has been promising growth
    in the availability of broadband services in rural and tribal areas.
    Specifically, between December 1999 and June 2001 the reporting of
    high-speed subscribership increased from 19.9 percent to 36.8 percent
    for the least densely populated zip codes. Additionally, the reporting
    of high-speed services in tribal areas increased from 49 percent to
    71.3 percent.
        Despite the encouraging progress in rural and tribal areas, I agree
    that it is important to consider closely the unique challenges to
    providing broadband services in more rural areas of our nation. Indeed,
    market trends in rural areas appear to be in a period of transition,
    and service providers are working hard to establish viable business
    plans that will make the successful deployment of broadband services in
    rural areas economically feasible. Recent trends in technology are also
    especially promising for rural areas. For example, service providers
    recently deployed a two-way platform for satellite high-speed services
    in all 50 states. In addition, various DSL extensions products have
    been developed that may bring consumers, especially those in low-
    density areas, within range for DSL services.
        The second part of your question raises an important issue. Section
    254(d) of the Communications Act requires all telecommunications
    carriers that provide interstate telecommunications services to
    contribute to universal service. Because information service providers
    are not telecommunications carriers, they are not currently required to
    contribute directly to support universal service. Section 254(d),
    however, gives the Commission discretion to require providers of
    interstate telecommunications to contribute if the public interest so
    requires. Cognizant of this discretionary authority, we devoted
    substantial attention in the recent Broadband NPRM to the question of
    how to sustain universal service in an evolving communications market.
        I assure you that I am committed to preserving and advancing the
    universal service goals set forth in the Act. We are examining
    universal service issues through a variety of vehicles, including our
    on-going examination of the way in which universal service
    contributions are collected. I am confident that all of these actions
    taken together will continue to ensure specific, predictable, and
    sufficient support mechanisms.
                                     ______

              Questions Submitted by Senator Kay Bailey Hutchison
        Question. Please describe your broadband vision and new regulatory
    policy paradigm. In addition, please share your timeframe objective for
    establishing a national, technology-neutral broadband policy.
        Answer. I, and the full Commission, have articulated the principles
    and goals for our national broadband policy most recently in the
    Broadband NPRM and in the Cable Modem Declaratory Ruling. First and
    foremost, we emphasized that the Commission's broadband policy will be
    guided by, and grounded in, the Communications Act. I, therefore, view
    the Communications Act, and its mandate to both encourage robust
    competition among various communications providers and preserve and
    advance universal service, to be the foundation of the Commission's
    broadband policy.
        In addition, the Commission is guided by several other principles
    and goals. Specifically, our primary policy goal is to ``encourage the
    ubiquitous availability of broadband to all Americans.'' Section 706 of
    the Telecommunications Act of 1996 charges the Commission with
    ``encourag[ing] the deployment on a reasonable and timely basis of
    advanced telecommunications capability to all Americans'' by
    ``regulatory forbearance, measures that promote competition . . ., or
    other regulating methods that remove barriers to infrastructure
    investment.'' Moreover, consistent with section 230(b)(2) of the Act,
    we seek ``to preserve the vibrant and competitive free market that
    presently exists for the Internet and other interactive computer
    services, unfettered by Federal or State regulation.''
        As your reference to a technology-neutral policy also suggests, the
    Commission's broadband policy will recognize that broadband is evolving
    across multiple electronic platforms as traditional wireless, cable,
    satellite and wireline providers have made substantial investments in
    broadband capable infrastructures. We believe that by promoting the
    development and deployment of multiple platforms, broadband competition
    can thrive and the needs and demands of consumers can be met. As we
    commit to preserving opportunities for broadband competition, we must
    be cautious not to embed particular technologies, and instead, create a
    rational and consistent framework for the regulation of competing
    services that are provided via different technologies and network
    architectures. Finally, we believe that broadband services should exist
    in a minimal regulatory environment that promotes investment and
    innovation in a competitive market. We recognize that substantial
    investment is required to build out the networks that will support
    future broadband capabilities and applications. Therefore, our policy
    and regulatory framework will work to foster this investment by
    limiting regulatory uncertainty and unnecessary or unduly burdensome
    regulatory costs.
        With regard to a timeframe objective, we have several proceedings
    pending that are part of our effort to establish a national broadband
    policy. Specifically, the Broadband NPRM focuses on the appropriate
    legal and policy framework for broadband access to the Internet over
    domestic wireline facilities. We have already issued the Cable Modem
    Declaratory Ruling, which also contains an NPRM seeking comment on the
    regulatory implications of our finding that cable modem service is an
    information service. In the Incumbent LEC Broadband Notice, we are
    examining whether incumbent LECs that are dominant in the provision of
    traditional local exchange and exchange access service should also be
    considered dominant when they provide broadband telecommunications
    services. In the Triennial UNE Review Notice, we address, among other
    things, the incumbent LECs' wholesale obligations under section 251 of
    the Act to make their facilities available as unbundled network
    elements to competitive LECs for the provision of broadband services.
    Depending on resource constraints and the need to satisfy any statutory
    deadlines or mandates, we hope to resolve some, if not most, of these
    issues by the end of the year.
        Question. In its current broadband rulemakings, will the FCC
    consider the extent to which regulation may increase a broadband
    facility provider's infrastructure and operational costs and the
    potential impact on the price consumers' pay for broadband services?
        Answer. In all of the proceedings the Commission has initiated to
    establish a national broadband policy, we have focused on the need to
    create a minimal regulatory environment for such services. One of our
    primary goals is to provide as much regulatory certainty and clarity as
    possible in order to promote investment and innovation in facilities
    and in turn, investment and innovation in the services and applications
    that will be delivered to consumers via those networks. I fully intend,
    therefore, to consider the costs and benefits of all of our broadband
    regulations and their impact on all existing and potential providers of
    broadband services. Moreover, I believe that in creating a clear regime
    for broadband regulation we will provide the certainty necessary for
    the markets to make the investment decisions that will fund further
    deployment and provision of broadband services.
        In particular, the Triennial Review of Unbundled Network Element
    Obligations proceeding is intended to develop a comprehensive record on
    how changes in the marketplace, technology and other factors have
    affected whether competitors are impaired without access to such
    elements. It is our hope that by examining the real world experience of
    incumbents, new entrants, cable operators, and wireless service
    providers that we will be able to more accurately gauge the impact,
    including costs, of our unbundling rules. For example, as it did in the
    UNE Remand Order, the Commission has specifically asked for comment on
    how to assess the impact of our unbundling requirements on carriers'
    incentives to invest in facilities and to further deploy broadband
    services. We also acknowledge that there may be significant tension
    between our duties under the Communications Act to promote competition
    in opening the local exchange bottleneck and to promote continued
    investment in bringing broadband services to America. We seek,
    therefore, to identify and adopt regulatory requirements that preserve
    and encourage opportunities for facilities-based competition, maximize
    incentives for further infrastructure deployment, and minimize the
    regulatory costs on providers of broadband services.
        We also note that in the Broadband NPRM, the Commission is
    considering specifically the costs and benefits associated with any
    requirements that it might impose on broadband facilities providers to
    allow competitive providers to access their infrastructure. As part of
    this inquiry, we have asked parties to comment on the costs and
    benefits associated with both the Commission's existing access
    regulations as well as alternative market-based approaches to broadband
    regulation.
        Finally, we recognize that the price consumers are charged for
    retail broadband services is subject not only to the costs of providing
    that service, but by the degree of competitive alternatives available
    to that consumer. In view of our section 706 mandate to promote the
    deployment of broadband to all Americans, our aim is to further this
    goal by fostering the deployment of at least one and preferably
    multiple broadband infrastructures throughout the Nation.
        Question. I understand the FCC has recently contemplated revision
    to the current universal service funding mechanism. How has competition
    and technological advances changed the traditional funding regime? What
    changes and/or revisions to the funding mechanism is the FCC
    considering? Please explain the various funding alternatives and the
    pros and cons of each. Also, how does the FCC intend to address the
    recent Court remand related to Qwest v. FCC?
        Answer. In 1997, the Commission adopted a system under which
    telecommunications providers contribute to universal service based on
    their interstate end-user telecommunications revenues. As you note,
    since that time, the telecommunications marketplace has changed rapidly
    and technologies have evolved. For example, customers are migrating
    from traditional wireline telephone services to new products and
    services, such as mobile wireless services, bundled service offerings,
    and/or services utilizing broadband platforms, for which interstate
    telecommunications revenues may be difficult to identify. Other changes
    include Regional Bell Operating Company entry into the long distance
    market and related price competition. These trends may erode the
    contribution base over time and may lead to regulatory uncertainty and
    marketplace distortions.
        In light of these trends, the Commission began a proceeding to
    revisit its universal service contribution methodology in May 2001.
    Commenters representing all segments of the industry, consumer groups,
    and state regulatory bodies submitted a range of innovative ideas and
    proposals for reforming the current system. In February 2002, the
    Commission requested additional comment on a specific industry proposal
    to replace the existing, revenue-based assessment mechanism with one
    based on the number and capacity of connections provided to a public
    network. The Commission also invited commenters to present any further
    arguments or data regarding proposals to modify the existing revenue-
    based system. We look forward to a lively discussion on these issues
    from industry and consumers groups, among others.
        Under the industry proposal, wireless and wireline carriers would
    contribute $1 per month for each physical connection provided to
    residential customers. Contributions for business connections would be
    based on the maximum available capacity, or bandwidth, of the
    connection. The proponents of this proposal argue that, because the
    number of connections historically has been more stable than interstate
    revenues, a connection-based system would provide a more stable funding
    source for universal service as technologies evolve. They also argue
    that a connection-based system also would eliminate some of the
    complexity involved with charges that carriers often pass-through to
    their customers and would simplify contributor reporting obligations by
    eliminating distinctions between interstate and intrastate revenues, or
    telecommunications and non-telecommunications revenues.
        Other proposals seek to address specific concerns regarding the
    existing revenue-based system. For example, some have proposed looking
    at projected revenue to address the concern that basing contributions
    on historical revenue data benefits new entrants and contributors with
    increasing assessable revenues, while disadvantaging contributors with
    declining revenues. Other proposals include assessing collected instead
    of billed revenues to account for uncollectibles. Opponents of these
    proposals assert they would increase the complexity and decrease the
    stability of universal service contributions.
        Of course, modifying the Commission's contribution methodology
    would potentially require a transition period for carriers to adjust to
    changed reporting requirements and may result in a shifting of
    contribution obligations among different industry segments. The
    Commission is actively considering these and other alternative
    proposals regarding whether and how to change the way carriers
    currently contribute to universal service.
        In response to your last question, the Commission intends to
    address the remand in Qwest v. FCC with an order following
    recommendations from the Federal-State Joint Board on Universal Service
    (Joint Board). Because the Joint Board previously considered many of
    the issues remanded by the court, we concluded that further Joint Board
    input would be beneficial. Accordingly, we referred these issues to the
    Joint Board and requested a recommended decision by August 15, 2002.
                       SECURITIES AND EXCHANGE COMMISSION

    STATEMENT OF HARVEY L. PITT, CHAIRMAN

                               prepared statement

        Senator Hollings. The committee will next hear from Harvey
    L. Pitt, the Chairman of the Securities and Exchange
    Commission.
        Chairman Pitt, the committee welcomes you, and we would be
    delighted to receive your statement at this time in its
    entirety, if you wish, or you can file it and highlight it, as
    you wish.
        Mr. Pitt. Well, thank you, Mr. Chairman, and Senator Gregg.
    I would ask that my full statement be included in the record,
    and I have a few opening remarks, if that is okay.
        Senator Hollings. Yes, sir.
        [The statement follows:]
                      Prepared Statement of Harvey L. Pitt
        Chairman Hollings, Senator Gregg, and Members of the Subcommittee:
    Thank you for the opportunity to testify before you today on behalf of
    the Securities and Exchange Commission regarding the President's fiscal
    2003 budget request. This is the first time I have appeared before this
    Subcommittee, and I want to begin by expressing my gratitude, and that
    of the entire SEC, for the tremendous bipartisan support this
    Subcommittee has given the Commission over the years. I look forward to
    continuing this strong and positive working relationship.
        The past year has tested the mettle and resiliency of our country,
    our markets, and the investing public's confidence. At a time when the
    complexity of our financial markets continues to grow unabated, and the
    number of Americans who participate in them is steadily increasing, the
    Commission must ensure that its traditional high standards are not
    compromised. The goal of the SEC is to ensure that our financial
    markets are transparent and fair to all investors, and to do so, we
    must make certain that the public is adequately informed about
    investing and that corporate America provides the disclosure investors
    need to make fully informed decisions based on sound and reliable
    information. An integral part of our investor protection efforts is the
    SEC's aggressive law enforcement program, which protects investors from
    fraudulent and unfair practices. Given this backdrop, it is therefore
    critical that the SEC have the resources it needs to fulfill its
    multiple missions.
        I was privileged to spend the first ten years of my career as a
    lawyer at the SEC. When I returned there last fall, 23 years later, I
    had hoped to have the opportunity to perform an in-depth review of the
    Commission's operations, effectiveness, and resource needs prior to
    beginning the fiscal 2003 budget process. With the events of September
    11th, the destruction of our Northeast Regional Office, and the recent
    bankruptcy of Enron, I have not had this chance. Yet all of these
    events have demonstrated just how critical the Nation's capital markets
    are to national security, and the essential role of the SEC.
                                 funding level
        The President's budget requests an appropriation of $466.9 million
    for the Commission in fiscal 2003. This amount excludes $13 million
    that would be provided to the SEC to fund the Administration's
    retirement accrual proposal, if enacted. The 2003 appropriation request
    is therefore approximately 6.6 percent more than our fiscal 2002 budget
    of $437.9 million.\1\
    ---------------------------------------------------------------------------
        \1\ In fiscal 2002, the Commission also received a supplemental
    appropriation of $20.7 million to cover some of the costs associated
    with rebuilding our Northeast Regional Office and increasing security
    agency-wide.
    ---------------------------------------------------------------------------
        This proposed funding level provides the SEC with a ``zero-growth''
    budget in that it provides no new staff and only modest amounts for the
    SEC's e-government and information technology initiatives,
    telecommunications systems, and security enhancements. The Commission
    has not received a staffing increase in the last two years, despite the
    additional responsibilities we have received as a result of enactment
    of the Commodity Futures Modernization Act and the Gramm-Leach-Bliley
    financial services modernization act. If the SEC remains at its current
    staffing level, the agency will be required to continue to divert
    resources from other program areas to meet our enforcement needs and to
    address the additional initiatives we are undertaking to improve
    financial reporting and disclosure.
                                   pay parity
        Although the Commission requested full funding for ``pay parity''
    in fiscal 2003, as authorized by the ``Investor and Capital Markets Fee
    Relief Act'' (Public Law 107-123), enacted this January, the
    Administration's proposed funding level provides no new money to
    implement this vitally important program. We estimate that an
    additional $76 million is needed to provide pay parity for the agency
    in fiscal 2003.\2\ At this critical time for the Nation's financial
    markets, the SEC must be able to keep our most experienced, talented,
    valuable and productive employees. The only way I believe we can do
    that is to provide staff with pay parity at levels comparable to those
    with whom they regularly work at the other federal financial regulatory
    agencies.
    ---------------------------------------------------------------------------
        \2\ In fiscal 2001, the Commission received approval and funding to
    implement ``special pay'' to help begin addressing our recruitment and
    attrition problems. In fiscal 2002, we also received funding to
    continue special pay. The appropriation proposal for fiscal 2003
    provides $19 million to fund special pay. We estimate that an
    additional $76 million is needed to fund pay parity for fiscal 2003.
    ---------------------------------------------------------------------------
        Since the Senate confirmed me this past August, pay parity has been
    and remains my highest budget priority. In making this funding request,
    I am grateful to have bipartisan backing from the Chairman and Ranking
    Member of the SEC's Senate oversight body, the Committee on Banking,
    Housing and Urban Affairs. Notably, in the past month, Chairman Paul
    Sarbanes and Senator Phil Gramm both have called for full funding of
    pay parity. Chairman Sarbanes and Senator Gramm have pointed out that
    this is a crucial time in the development and strategic future
    direction of our capital markets. The SEC cannot afford to continue
    suffering the staffing crisis it has endured for the past decade at
    such an important juncture. Pay parity provides benefits we truly need
    to meet the increasing regulatory challenges we face.
        If we receive funding for pay parity, I want to assure you that the
    SEC intends to make responsible increases in staff salaries and
    benefits to ensure the appropriate use of merit and performance-based
    principles. Our $76 million cost estimate represents a conservative
    approach that is lower than the amount that we believe would be
    required to match what several of the banking agencies currently
    provide. A fully implemented system identical to the FDIC model, for
    example, could easily cost more than $100 million. We do not intend to
    provide large-scale, across-the-board increases. Instead, we intend to
    base our system on the intent of Congress and begin a modest,
    considered approach to pay parity that we can assess responsibly before
    including additional benefits. Merit will be an integral component of
    any program we put in place.
        However, I want to make emphatically clear that failure to fund pay
    parity now would only exacerbate the problems that the legislation
    passed by Congress last December was intended to cure. By raising
    expectations and hopes in anticipation of finally achieving pay parity,
    I believe we will face even greater employee losses and suffer greater
    irreparable harm to morale if pay parity is not funded in fiscal 2003,
    and thereafter. Even if we can cobble together a pay parity program for
    the remainder of this fiscal year, which OMB has said it would support,
    the threat of either terminating the program in fiscal 2003 or
    terminating approximately 700 employees--the number we estimate would
    have to be cut from the agency to continue the program--would cripple
    many of the projects we have underway, which are important for the
    protection of investors and Americans whose retirement accounts are
    invested in the securities of public companies.
        So, if there is one message I can leave with you today, it is:
    Please, please fully fund pay parity for the SEC in fiscal 2003.
                           additional staffing needs
        Because of recent events, we need to restore full confidence in our
    capital markets, and I believe we cannot do that without additional
    personnel. Accordingly, in addition to requesting additional funds
    needed to implement pay parity, I am requesting that the 2003 staffing
    level be increased by 100 positions to meet our immediate resource
    needs. Although I intend to make a strategic, agency-wide assessment of
    resource needs over the next several months in preparation for the
    fiscal 2004 budget, with the goal of identifying efficiencies that we
    can introduce, I have been able to identify some immediate needs that I
    hope this Subcommittee will consider funding in fiscal 2003. These 100
    positions would allow us to add:
      --35 accountants and lawyers in the Division of Enforcement to deal
            with the increasing workload from financial fraud and reporting
            cases. To give you a sense of scale of this increasing
            workload, consider that over the first two months of this year,
            the Division of Enforcement has opened 49 cases investigating
            financial fraud and reporting, compared to 18 cases that were
            opened over the same time period last year.
      --30 professional staff, including accountants and lawyers, in the
            Division of Corporation Finance to expand, improve and expedite
            our review of periodic filings. Our Division of Corporation
            Finance has undertaken to monitor the annual reports submitted
            by all Fortune 500 companies that file periodic reports with
            the Commission in 2002. This new initiative, which we announced
            in December, significantly expands the Division's review of
            financial and non-financial disclosures made by public
            companies.
      --35 accountants, lawyers, and other professionals in the other
            divisions--including the Office of Chief Accountant--to deal
            with new programmatic needs and policy.
        Under a pay parity system, this increased staffing level will
    require an additional $15 million to our budget request. These are the
    minimum staffing levels I believe we require to deal with our immediate
    post-Enron needs. I will be examining closely our need for resources
    throughout the agency and expect that our 2004 budget request, even
    with identified efficiencies, may reflect other increases, particularly
    in our examination program to meet our goals for timely and frequent
    on-site exams of investment companies and advisers, broker-dealers, and
    the exchanges. The remainder of my testimony addresses initiatives we
    are undertaking in the areas of enforcement, corporate disclosure and
    accounting, investor education and technology.
                             real-time enforcement
        One of our major new initiatives--``real-time'' enforcement--is an
    important component of our fiscal 2003 budget. Our goal is to provide
    quicker, and more effective, protection for investors, and better
    oversight of the markets with our limited enforcement resources. As
    recent experience has reinforced, the SEC must resolve cases and
    investigations before investors' funds vanish forever; that means we
    must act more quickly, both in identifying violations and taking prompt
    corrective action to protect investors. Faster enforcement can help
    prevent continued fleecing of public investors and dissipation of
    assets, and will promote investor confidence in the integrity of our
    markets. As a result, you will see us moving faster to obtain temporary
    restraining orders, freezes of assets, and appointment of court
    monitors to oversee enterprises that commit, or used to commit,
    securities fraud. These efforts necessarily require resources, the most
    important of which is appropriate staffing. An immediate staffing
    increase of 35 accountants and lawyers in our Division of Enforcement,
    which I have already outlined, would strengthen our real-time
    enforcement program, especially in the area of financial fraud and
    reporting cases, which involve complex and time-consuming
    investigations.
                           disclosure and accounting
        Recent events also have underscored the need for public companies
    to have a strong commitment to full disclosure, accounting and
    compliance with all regulatory regimes to which their companies are
    subject. In his State of the Union Address, the President appropriately
    demanded ``stricter accounting standards and tougher disclosure
    requirements.'' He also stated that he wants corporate America to ``be
    made more accountable to employees and shareholders and held to the
    highest standard of conduct.'' The SEC shares and embraces these
    principles, and I am firmly committed to making them a reality.
        Recently, we announced our intention to propose changes in
    corporate disclosure rules as the first in a series of steps designed
    to improve our financial reporting and disclosure system. The proposed
    rules would require companies to report additional critical information
    on a current basis and in a complete manner, such as transactions by
    company insiders, critical accounting policies, and changes in rating
    agency decisions. They also would expedite the filing of existing
    periodic reports. While these proposed rules would only be a first
    step, they will provide the most dramatic and significant improvements
    in our disclosure system in at least two decades, and they can be
    implemented quickly while other, more sweeping proposals are
    considered. During the remainder of 2002, we anticipate proposing
    further comprehensive reform proposals covering financial reporting and
    disclosure requirements, accounting standard setting, regulation of the
    auditing process and profession and corporate governance. These
    initiatives include the following:
      --A ``current'' disclosure system.--Investors need current
            information, not just periodic disclosures. We want investors
            to have an accurate and current view of the posture of their
            company, as seen through the eyes of management. Public
            companies should be required to make affirmative disclosures of
            unquestionably material information in real time, including
            providing updates to prior disclosures.
      --Public company disclosure of significant current ``trend'' and
            ``evaluative'' data.--Providing current trend and evaluative
            data would enable investors to assess a company's evolving
            financial posture. This information, upon which corporate
            executives and bankers already base critical decisions, can be
            presented without confusing or misleading investors,
            prejudicing legitimate corporate interests or exposing
            companies to unfair assertions of liability.
      --Clear and informative financial statements.--Investors, and
            employees concerned with preserving and increasing their
            savings and retirement funds, deserve comprehensive financial
            reports they can easily and quickly interpret and understand.
      --Conscientious identification and assessment of critical accounting
            principles.--Public companies should be required to identify
            the most critical accounting principles upon which a company's
            financial status depends, and which involve the most complex,
            subjective, or ambiguous assessments. Investors should be told,
            concisely and clearly, how these principles are applied, and
            should be informed about a range of possible effects in
            differing applications of these principles.
      --More meaningful investor protection by audit committees.--Audit
            committees must be proactive, not merely reactive, to ensure
            the quality and integrity of corporate financial reports.
            Especially critical is the need to improve interaction between
            audit committee members and senior management and outside
            auditors. Audit committees must understand why critical
            accounting principles were chosen, how they were applied, and
            have a basis to believe the end result fairly presents the
            company's actual status.
      --Effective oversight of those who audit public companies.--We are
            firmly committed to taking a lead role in assuring that the
            accounting profession functions properly, expeditiously and in
            the public interest. To that end, we are addressing how best to
            restructure the regulatory system that governs the accounting
            profession. We envision a regulatory body that will assume
            responsibility for auditor and accountant discipline and
            quality control. A substantial majority of its members would be
            unaffiliated with the accounting profession, and the oversight
            body would be funded not by the accounting profession but from
            the private sector.
      --Ensuring those entrusted with the important public responsibility
            of auditing public companies are single-minded in their
            devotion to the public interest, and not subject to conflicts
            that might confuse or divert them.--Those who perform audits
            must be truly independent and in particular must not be subject
            to the conflict of increasing their own compensation at the
            risk of ensuring the public's protection. Their fidelity to the
            cause of full, fair and understandable financial reporting must
            be ironclad and unequivocal.
        These are just some of the initiatives that we are working on, both
    on our own and together with Congress, the President's Working Group,
    investor groups and other SEC constituents to improve corporate
    disclosure and accounting. These initiatives, if done properly and
    responsibly, will require additional resources to plan and implement,
    if we are to keep up with our existing, on-going responsibilities at
    the same time.
        Regrettably, at this time, I cannot give you even an estimate of
    those costs. As I stated at the outset of my testimony, I plan to
    conduct a top-to-bottom review of the way the Commission currently
    allocates its resources, with the intention of making better use of our
    existing resources. But, in light of the events of the past six months,
    I think it is foreseeable that the SEC will require additional funding
    to implement improvements to our corporate disclosure and accounting
    systems.
                               investor education
        Even with our shift toward real-time enforcement and our current
    efforts to improve financial disclosure, the first line of defense
    against fraud is always an educated investor. The Commission works with
    numerous public and private organizations to foster investor
    educational programs. Our staff gives presentations to countless
    schools, religious organizations, and investor clubs, explaining basic
    investing concepts and answering questions. We also host ``Investor
    Town Meetings'' across the United States, that bring together industry,
    federal, and local government officials to educate investors on basic
    financial concepts. And this spring we will host our first ``Investor's
    Summit,'' to discuss policies and proposals that impact them. We want
    to give all Americans an opportunity and an avenue to weigh in on the
    broad policy objectives that ultimately could impact their ability to
    send their children to college or retire comfortably. We plan to use
    the Internet to broadcast the summit so that anyone can participate. We
    also are asking people to write us and call us so that we can hear the
    broadest possible range of viewpoints. We want to hear the concerns and
    aspirations of America's investors.
                             information technology
        Like the rest of the government, our needs in the area of
    information technology continue to increase. Given the critical and
    increasing role of technology in the financial markets, the President's
    budget requests $4.0 million to fund the SEC's e-government
    initiatives. This is an area where the Commission needs to improve,
    both internally and externally. Technology is constantly altering the
    landscape of our markets, and SEC staff must have the necessary tools
    at their disposal to successfully meet the increasing demands that we
    face. In particular, funds proposed for fiscal 2003 will allow the SEC
    to get better and more timely enforcement information from the markets,
    enhance our intrusion detection capabilities, and meet the President's
    security requirements for information technology. These initiatives are
    a small, but important, first step toward meeting the Commission's
    technology needs.
        With the advent of alternative trading systems that have grown from
    only a handful to over 60 today, and as a result of the Internet, the
    SEC also must consider what effect our regulatory actions and decisions
    have on the industry's use of technology. To respond to this need, we
    are seeking a Chief Technology Officer to provide the Commission with
    the technical expertise and advice necessary to improve the
    Commission's oversight of the markets. On February 4, 2002, I sent you
    a reprogramming request that lays out in detail the proposed activities
    of this office. Generally, this office will be responsible for ensuring
    that the SEC's regulatory, disclosure, examination, and law enforcement
    programs are implemented with the benefit of a state of the art
    understanding of technology. Through this process, the agency can be
    confident that what we implement or approve is technologically sound
    and cost effective to the private sector.
                               funding structure
        Last, I would be remiss if I did not take this chance to thank you
    for your support in helping enact the fee reduction/pay parity
    legislation that I discussed earlier in my testimony. This new law is
    extremely important to the SEC and the securities industry, which has
    consistently supported both fee reduction and pay parity. The new
    legislation not only reduces potential excess fees paid by investors
    and provides authority for pay parity for the Commission's staff, but
    also provides the SEC with a stable, long-term funding structure, which
    is consistent with the original fee structure implemented to fund the
    SEC.
        Under the fee reduction/pay parity legislation, the Commission is
    slated to collect a total of $1.33 billion in offsetting collections in
    fiscal 2003, $180 million more than this year's estimate. Even after
    funding pay parity and the additional positions described above, the
    Commission will still collect $772 million more in fees than its fiscal
    2003 budget request.
        The fee reduction/pay parity legislation requires the Commission to
    adjust fee rates on a periodic basis after consulting with the
    Congressional Budget Office and the Office of Management and Budget.
    While the fee rates are going to be higher than anticipated in the
    short term, due to changes in the economy and declines in market
    indices since CBO developed its original dollar volume estimates over a
    year ago, we firmly believe that over the longer term the fee reduction
    legislation will provide the investing public with the benefits and
    security it was designed to provide, in addition to benefiting the
    Commission and this Committee by providing a stable, long-term funding
    source.
                                   conclusion
        In conclusion, I want to observe that the SEC currently oversees
    our nation's securities markets with a modest staff and limited
    resources, operating in conjunction with the states and self-regulatory
    organizations. This cooperative structure enables the Commission to
    leverage its resources to fulfill its mission, but leverage can only go
    so far. Without knowing exactly where and how many, I can say with
    certainty that the SEC needs more staff; that is why I have recommended
    an immediate fiscal 2003 increase of 100 key professional staff and
    will be making a more thorough, agency-wide assessment over the next
    several months.
        The SEC regulates industries and markets that have grown
    enormously, in both size and complexity. The Commission currently
    oversees an estimated 8,000 brokerage firms employing nearly 700,000
    brokers; 7,500 investment advisers with approximately $20 trillion in
    assets under management; 34,000 investment company portfolios; and over
    17,000 reporting companies. The Commission also has oversight
    responsibilities for nine registered securities exchanges, the National
    Association of Securities Dealers, the National Futures Association, 13
    registered clearing agencies, and the Municipal Securities Rulemaking
    Board.
        I take quite seriously my stewardship responsibilities and the Oath
    of Office I took regarding the Commission and its resource needs. I
    hope that we can work together to make sure that the SEC has sufficient
    resources to ensure that our markets remain the envy of the world and
    are as fair and transparent to all investors as we can possibly make
    them. Thank you for the opportunity to testify today. I am pleased to
    respond to any questions the Subcommittee may have.

                                OPENING REMARKS

        Mr. Pitt. Let me say first that I appreciate the
    opportunity to testify on fiscal year 2003 appropriations for
    the Securities and Exchange Commission. This is my first
    appearance before this subcommittee since I became SEC Chairman
    6 months ago. I want to express my gratitude and that of the
    entire SEC for the bipartisan support this subcommittee and its
    staff have given the Commission over the years. And I look
    forward to continuing the strong and positive working
    relationship.
        The events of the past 6 months have tested the mettle and
    resiliency of our country, our capital markets, and the
    Securities and Exchange Commission. At the same time, they have
    put the investing public's confidence in our capital markets to
    a severe test. September 11th and the Enron tragedy demonstrate
    how critical the Nation's capital markets are to national
    security and economic growth.
        Because the agency I am privileged to chair is integral to
    the success of our capital markets, it is vital that the SEC
    have the resources it needs to fulfill its multiple missions.
    We need these resources even more if we are to restore the
    public's full confidence in our capital markets.
        The President's budget for fiscal year 2003 requests an
    appropriation of nearly $467 million for the Commission. It is
    clear to me from recent events, including the program the
    President is announcing this morning to improve and strengthen
    the duties of those whose conduct is at the core of our
    securities markets, that the SEC critically needs to receive
    additional money in fiscal year 2003 to fully fund pay parity
    and that we should be authorized to add additional staff to
    address some pressing immediate needs.

                      JUSTIFICATION FOR FUNDING PAY PARITY

        Let me address pay parity first. The Investor and Capital
    Markets Fee Relief Act, enacted this January, authorized pay
    parity for the employees of the Securities and Exchange
    Commission. Our Commission has been subject to extremely high
    attrition, with the principal reason being the fact that our
    employees earn substantially less than their counterparts in
    the other financial service regulatory agencies, not to mention
    the private sector.
        The OMB-proposed funding level, $467 million, did not
    provide any money to implement pay parity, a disappointment to
    our most valued employees. We estimate that an additional $76
    million is needed to provide for a modest implementation of pay
    parity for the agency in fiscal year 2003.
        At this critical time to the Nation's financial markets, we
    must rely on our most experienced, talented, valuable, and
    productive employees. The only way to do that is for us to be
    able to provide our staff with pay parity at levels comparable
    to those received by colleagues with whom they regularly work
    at the other Federal financial regulatory agencies.
        If we receive funding for pay parity, I can assure you that
    the Commission intends to make responsible increases in staff
    salaries and benefits, with a significant component of the
    increases subject to true merit pay.

                           INCREASED STAFFING REQUEST

        In addition to the absence of funds to implement pay
    parity, we were originally given a no-growth budget, which
    means that we were not going to add any new personnel. Indeed,
    under current funding levels for 2002, we are effectively
    precluded from hiring any new personnel. I do not believe that
    the solution to every problem starts and ends with larger and
    more expensive Government. I am committed to doing a thorough
    review of our deployment of personnel to see whether and how we
    can effectuate meaningful efficiencies.
        But the events of 9/11 and the tragedy of Enron have made
    any contemplative review of our needs impossible. Given the
    enormous surge in our enforcement activities, the desire to do
    a better job than has been done previously in reviewing public
    company filings and overseeing a restructured accounting
    profession, even before looking for efficiencies, I must
    request that SEC staffing be increased by 100 positions in
    fiscal year 2003. These are the minimum staffing levels I
    believe we require to deal with our immediate post-Enron needs.
        Under a pay parity system, this increased staffing level
    would require an additional $15 million. This additional staff
    will start helping us meet our immediate enforcement needs as
    well as address initiatives we are undertaking to improve
    financial reporting and disclosure.
        I might add that the Commission has not received a staffing
    increase in the last 2 years, despite additional
    responsibilities the agency has received as a result of the
    Commodity Futures Modernization Act and the Gramm-Leach-Bliley
    Financial Services Modernization Act.
        A staffing increase is even more critical in light of
    recent events. I am very happy to be able to say that yesterday
    I spoke with OMB Director Daniels, who advised me that OMB is
    receptive to our request for additional staff and will work
    with us to meet our resource needs.
        In the coming months, I will be examining closely our need
    for resources throughout the agency in preparation for the
    fiscal year 2004 budget, with the goal of identifying
    efficiencies we can employ. However, given current events, it
    is very likely that we will have to come back and ask for
    resources over and above what I have requested here today.
        If there is one message that I can leave you with today, it
    is, please, please, fully fund pay parity for the SEC in fiscal
    year 2003.
        I thank you for this opportunity to testify, and I look
    forward to trying to respond to any questions the subcommittee
    may have.

                  SEC STAFFING LEVELS AND COMMISSION WORKLOAD

        Senator Hollings. Well, I thank you for talking to Mitch
    Daniels. I noticed in the morning's paper that evidently the
    head of the Corps of Engineers didn't, and he is gone. You ask
    for $76 million more in your statement than OMB gave for pay
    parity, and $15 million more for increased staff. Let the
    record show that this subcommittee approved yesterday the
    reprogramming request of $24 million to pay for pay parity this
    fiscal year.
        Yes, I will agree, and I take it my distinguished colleague
    will also, on both pay parity and the additional personnel,
    because we received the GAO report that came out yesterday
    which states that over the last decade corporate filings have
    increased 60 percent, and related review staff has only
    increased by 29 percent. The number of complaints and inquiries
    received increased by 100 percent while the staff dedicated to
    investigate complaints and other matters increased by only 16
    percent. Thereby the imbalance between workload and resources
    has resulted in the Securities and Exchange Commission taking
    longer to process filings, issue guidance, and review
    applications. These delays could affect industry competition
    and efficiency.
        And the imbalance between workload and resources has raised
    concerns that the Securities and Exchange Commission cannot
    properly carry out its enforcement role. The number of cases
    pending as of the end of the year increased 77 percent from
    1991 to 2000.
        So those are the two things that concern me, Chairman Pitt,
    and I wanted to make sure that we support your agency's efforts
    because we know the Securities and Exchange Commission
    generally is highly respected and is working around the clock,
    and it is Congress who has tried to give even more than the
    President asks for every year, more than OMB would allow. So I
    am glad you have ironed out these issues with the Office of
    Management and Budget.
        Senator Gregg.
        Senator Gregg. Mr. Chairman, I want to second your
    comments. I think they are right on point, and I appreciate the
    Chairman testifying today about the needs of the SEC.
        This committee has been sensitive to that need for a long
    time. We fought the battle for pay parity. It was a fight that
    required us to go up the hill a number of times. It was
    successful. Now it needs to be funded. There is no question
    about that. And I appreciate the chairman's commitment to do
    that.
        The additional personnel is also obvious in the present
    climate. I hate for us to have to work late until the next
    appropriations cycle. I would hope that we could put all this
    in the supplemental, and since you have already signed on Mr.
    Daniels, I would hope that you would have signed him on for
    that exercise also. But, in any event, I will certainly support
    the chairman in however he wants to pursue this funding, and
    aggressively pursue it, because we all understand that the
    cornerstone of our capital markets is transparency and the
    integrity of the numbers, and that comes down to the SEC's
    disciplining of the marketplace and the accounting firms that
    are responsible for producing those numbers. And if we don't
    have strong capital markets, we don't have a strong economy and
    we don't have prosperity because we don't have creation of
    economic activity and jobs.
        So you could argue that the essence of our prosperity
    starts with having a strong SEC. So we certainly want to
    support you in this effort.

                PRESIDENT'S PROPOSED APPROACH TO ADDRESS ISSUES

        I would be interested to hear your analysis of the
    President's proposal relative to the new responsibilities that
    they are suggesting that the operating officers and executive
    officers of corporations have, almost putting them in a
    fiduciary position, if not actually putting them in a fiduciary
    position. Do you feel that is an appropriate step?
        Mr. Pitt. I think our President has laid out this morning a
    very serious and substantive and thoughtful approach to the
    problems that we are seeing or have been witnessing. I think
    that one of the concomitant factors with the President's
    proposals is that we intend to sit down and analyze those
    proposals and move just as quickly as we can to implement those
    elements of the proposal that are within our power to
    implement. And I believe most of them are within our power and
    we will be anxious to bring them to fruition and reality.
        I think that what he has outlined is sort of a tripartite
    approach to the problems we have witnessed. The first is to
    improve the functioning and dedication and loyalty of corporate
    offices and executives and directors to the investing public,
    who are, after all, the true owners of every corporation.

                        GREATER RESPONSIBILITIES ON CEOS

        This proposal that the President has put forth would place
    greater responsibility on chief executive officers, and one of
    the things that runs throughout the President's announced
    program is the fact that people who think that they can get by
    or get away with mere technical compliance, and aren't truly
    committed to the functions their offices require them to serve,
    will be sorely disappointed.
        In terms of our own enforcement efforts, we intend to make
    that a reality, and we will start as soon as we can looking at
    companies where executives have profited from illusory or sham
    earnings that ultimately get restated, where the shareholders
    wind up holding an empty bag and the executives walk away with
    millions and millions of dollars. We will go into court, and we
    will seek the return of those moneys to the corporation and
    those investors, as the President has suggested.

                        IMPROVING THE DISCLOSURE SYSTEM

        The second prong of the President's proposal addresses the
    disclosure process in general. Here I think we have the
    unfortunate occurrence of a statute which is almost 70 years
    old and has not been revitalized in most of that time frame in
    terms of its disclosure obligations. So it is approaching many
    of the issues today the way they were approached in 1934 when
    we didn't have the kind of technology and communications that
    we have today.
        In my view, many of the problems which the Enron situation
    have evidenced have been evident for 5 to 10 years, and they
    have not been dealt with. It is our intention and the President
    has made it clear that he expects of us that we will, in fact,
    turn our attention to that. We need to improve the disclosure
    system not so that shareholders are just given detail on detail
    on detail, many of which, at least speaking for myself when I
    read corporate filings, appear to me to be designed to avoid
    liability rather than being designed to inform.
        We have a very committed approach to revitalizing
    disclosure in this country and giving shareholders the same
    view of the companies they own as the people who manage and run
    those corporations.

                    REVIEW AND REFORM OF ACCOUNTING INDUSTRY

        And his final area, which is quite significant, is dealing
    with the accounting profession. The accounting profession has
    very noble origins in this country, and it performs an
    incredibly important public service. At some point it is
    required, I guess, that we step back and make sure that
    everyone in the profession and everyone who depends on the
    profession is assured that the profession is acting in the
    public interest and not self-interest.
        I believe that we have the capacity and we have the
    inclination and the commitment to develop a strong private
    sector regulatory system that will provide, for the first time,
    meaningful regulation of the accounting profession from outside
    the profession, which is what the President has suggested.
        In addition, we will seek to reform the way in which
    accounting standards are articulated, and we will seek to
    provide for shareholders not just the protection of the law,
    not just the avoidance of illegal acts, but the establishment
    of the highest ethical and competence standards which will be
    enforced by a truly independent body that will have the
    authority to make certain that individual accountants and
    entire accounting firms live up to their public
    responsibilities.

                             NEW LEGISLATIVE NEEDS

        Senator Gregg. To what extent are you going to need
    legislative action to pursue those three goals?
        Mr. Pitt. I am sorry, sir?
        Senator Gregg. To what extent are you going to need
    legislative action to pursue those three goals?
        Mr. Pitt. I do not believe that we need legislative action
    to pursue those. We have been working closely in both Houses of
    Congress and on both sides of the aisle to lend our expertise
    because we understand that some Members of Congress believe
    that legislation is the appropriate way to go, and I have made
    clear that we will work to support whatever Congress believes
    is the appropriate approach.
        But I think the needs we have are pressing, and I believe
    it is imperative that we not spend excessive amounts of time
    worrying about how this will be done, but instead work together
    to try and get it done. And so we are in the process of
    soliciting views from the public. We will put out some
    proposals which we will discuss with Congress and our oversight
    committees before we ever put them out, and we will work with
    the Congress to come up with a package that I think lives up to
    the President's challenge.
        Senator Gregg. Thank you.

                     EFFECTIVENESS OF REGULATORY PROTECTION

        Senator Hollings. Chairman Pitt, your testimony is strongly
    supportive of regulatory protection outside the industry. We
    see in Business Week and other headlines that the regulatory
    protection that you have considered so far is weak: SEC
    prescribes weak cures for accounting industry's ills. I think
    there are three authorizing bills that are being discussed
    today, however, they wouldn't tell me the cost because they are
    having their own news conferences while you and I are
    testifying. I will look into these proposals, once made public,
    because this subcommittee of appropriations will have to
    respond to the authorization levels based on what is worked
    out.
        But, mind you me, the problems we see are not due to a lack
    of laws. The chief executives and those in charge are all
    coming up to Congress either taking the Fifth Amendment or they
    can't remember anything. But, of course there is no law to make
    everybody remember. It is very, very unfortunate because there
    has been a sort of weak operation all the way around with
    respect to the accountants also being the consultants, as you
    have already indicated in some of the comments that you have
    made. So that has got to be corrected, and it has got to be--
    and I would emphasize that, too--regulated outside the industry
    and supported by fees. We want to make sure that whatever
    regulatory body is created is not beholden to industry, and is
    therefore fully supported by fees.

                              subcommittee recess

        Chairman Pitt, we thank you for your appearance here. The
    subcommittee record will stay open for any further questions.
    Thank you very much.
        Mr. Pitt. Thank you.
        [Whereupon, at 11:16 a.m., Thursday, March 7, the
    subcommittee was recessed, to reconvene subject to the call of
    the Chair.]

    DEPARTMENTS OF COMMERCE, JUSTICE, AND STATE, THE JUDICIARY, AND RELATED
                  AGENCIES APPROPRIATIONS FOR FISCAL YEAR 2003

                                  ----------

                            TUESDAY, MARCH 12, 2002

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 10:03 a.m., in room SD-138, Dirksen
    Senate Office Building, Hon. Ernest F. Hollings (chairman)
    presiding.
        Present: Senators Hollings, Inouye, Mikulski, Leahy, Reed,
    Gregg, Domenici, and Campbell.

                              DEPARTMENT OF STATE

                            Office of the Secretary

    STATEMENT OF HON. COLIN L. POWELL, SECRETARY OF STATE

                               prepared statement

        Senator Hollings. Welcome, and we appreciate very much your
    appearance here this morning because you have more places to be
    than most any. We will be glad to receive your statement in its
    entirety at this time or you can highlight it, as you wish. It
    will be made part of the record.
        Secretary Powell. Thank you, Mr. Chairman.
        [The statement follows:]
                     Prepared Statement of Colin L. Powell
        Mr. Chairman, members of the subcommittee, I am pleased to appear
    before you to testify in support of President Bush's budget request for
    fiscal year 2003.
        Let me say at the outset, Mr. Chairman, before I go into the
    specifics of the budget request for the State Department and Related
    Agencies, that President Bush has two overriding objectives that our
    foreign policy must serve before all else. These two objectives are to
    win the war on terrorism and to protect Americans at home and abroad.
    This Administration will not be deterred from accomplishing these
    objectives. I have no doubt that this subcommittee and the Congress
    feel the same way. As you will see when I address the details of the
    budget request, a sizeable part is related to accomplishing these two
    objectives.
        As many of you will recall, at my first budget testimony to this
    committee last May, I told you that what I was asking for at that time
    was really just the first fiscal step in our efforts to align both the
    organization for and the conduct of America's foreign relations with
    the dictates and demands of the modern world.
        And I told you that as Secretary of State, I really wear two hats.
    By law, I am the principal foreign policy advisor to the President of
    the United States. But I am also the leader, the manager, the CEO of
    the Department of State, and I take that role and that charge very,
    very seriously. And to be successful in both roles, I have to make sure
    that the Department is properly organized, equipped and manned to
    conduct America's foreign policy, as well as formulate good foreign
    policy in the name of the President and the American people.
        And you heard my testimony as CEO and you responded, and we are
    grateful.
        Because of your understanding and generosity, we have made
    significant progress. We will make even more in fiscal year 2003.
        The President's discretionary request for the Department of State
    and Related Agencies for fiscal year 2003 International Affairs is $8.1
    billion. These dollars will allow us to:
      --Continue initiatives to recruit, hire, train, and deploy the right
            work force. The budget request includes $100 million for the
            next step in the hiring process we began last year. With these
            dollars, we will be able to bring on board 399 more foreign
            affairs professionals and be well on our way to repairing the
            large gap created in our personnel structure and, thus, the
            strain put on our people by almost a decade of too few hires,
            an inability to train properly, and hundreds of unfilled
            positions. By fiscal year 2004, we hope to have completed our
            multi-year hiring effort with respect to overseas staffing--to
            include establishing the training pool I described to you last
            year that is so important if we are to allow our people to
            complete the training we feel is needed for them to do their
            jobs. Next March, I will be back up here briefing you on the
            results of our domestic staffing review.
      --Continue to upgrade and enhance our worldwide security readiness--
            even more important in light of our success in disrupting and
            damaging the al-Qaida terrorist network. The budget request
            includes $553 million that builds on the funding provided from
            the Emergency Response Fund for the increased hiring of
            security agents and for counterterrorism programs.
      --Continue to upgrade the security of our overseas facilities. The
            budget request includes over $1.3 billion to improve physical
            security, correct serious deficiencies that still exist, and
            provide for security-driven construction of new facilities at
            high-risk posts around the world. Mr. Chairman, we are right-
            sizing, shaping up and bringing smarter management practices to
            our overseas buildings program, as I told you we would do last
            year. The first change we made was to put retired General Chuck
            Williams in charge and give him assistant secretary equivalent
            rank. Now, his Overseas Building Operations (OBO) has developed
            the Department's first long-range plan, which projects our
            major facility requirements over a five-year period.
          The OBO is using best practices from industry, new embassy
            templates, and strong leadership to lower costs, increase
            quality, and decrease construction time.
          As I told you last year, one of our goals is to reduce the
            average cost to build an embassy. I believe we are well on the
            way to doing that.
          And General Williams is making all of our facilities, overseas
            and stateside, more secure. By the end of fiscal year 2002,
            over two-thirds of our overseas posts should reach minimal
            security standards, meaning secure doors, windows, and
            perimeters.
          We are also making progress in efforts to provide new facilities
            that are fully secure, with 13 major capital projects in design
            or construction, another eight expected to begin this fiscal
            year, and nine more in fiscal year 2003.
      --Continue our program to provide state-of-the-art information
            technology to our people everywhere. Because of your support in
            fiscal year 2002, we are well on the way to doing this. We have
            an aggressive deployment schedule for our unclassified system
            which will provide desktop Internet access to over 30,000 State
            users worldwide in fiscal year 2003 using fiscal year 2002
            funds. And we are deploying our classified connectivity program
            over the next two years. We have included $177 million in the
            Capital Investment Fund for IT requirements. Combined with $86
            million in estimated Expedited Passport Fees, a total of $263
            million will be available for our information technology and
            communications systems initiatives. Our goal is to put the
            Internet in the service of diplomacy and we are well on the way
            to accomplishing it.
      --Continue to meet our obligations to international organizations--
            also important as we pursue the war on terrorism to its end.
            The budget request includes $891.4 million to fund U.S.
            assessments to 43 international organizations, active
            membership of which furthers U.S. economic, political,
            security, social, and cultural interests.
      --Continue to meet our obligations to international peacekeeping
            activities. The budget request includes $726 million to pay our
            projected United Nations peacekeeping assessments--all the more
            important as we seek to avoid increasing even further our U.N.
            arrearages. And, Mr. Chairman, I ask for your help in getting
            the cap on our assessments lifted so that we can eventually
            eliminate all our arrearages. These peacekeeping activities
            allow us to leverage our political, military, and financial
            assets through the authority of the United Nations Security
            Council and the participation of other countries in providing
            funds and peacekeepers for conflicts worldwide.
      --Continue and also enhance an aggressive effort to eliminate support
            for terrorists and thus deny them safe haven through our
            ongoing public diplomacy activities, our educational and
            cultural exchange programs, and international broadcasting. The
            budget request includes $287 million for public diplomacy,
            including information and cultural programs carried out by
            overseas missions and supported by public diplomacy personnel
            in our regional and functional bureaus. These resources help to
            educate the international public on the war against terrorism
            and America's commitment to peace and prosperity for all
            nations. The budget request also includes $247 million for
            educational and cultural exchange programs that build mutual
            understanding and develop friendly relations between America
            and the peoples of the world. These activities help build the
            trust, confidence, and international cooperation necessary to
            sustain and advance the full range of our interests. Such
            activities have gained a new sense of urgency and importance
            since the brutal attacks of September. We need to teach more
            about America to the world. We need to show people who we are
            and what we stand for, and these programs do just that.
            Moreover, the budget request includes almost $518 million for
            International Broadcasting, of which $60 million is for the war
            on terrorism to continue increased media broadcasts to
            Afghanistan and the surrounding countries and throughout the
            Middle East. These international broadcasts help inform local
            public opinion about the true nature of al-Qaida and the
            purposes of the war on terrorism, building support for the
            coalition's global campaign.
        Mr. Chairman, on the subject of public diplomacy let me expand my
    remarks.
        The terrorist attacks of September 11 underscored the urgency of
    implementing an effective public diplomacy campaign. Those who abet
    terror by spreading distortion and hate and inciting others, take full
    advantage of the global news cycle. We must also use that cycle. Since
    September 11, there have been over 2,000 media appearances by State
    Department officials. Our continuous presence in Arabic and regional
    media by officials with language and media skills, has been
    unprecedented. Our international information website on terror is now
    online in seven languages. Internet search engines show it is the
    hottest page on the topic. Our 25-page color publication, ``The Network
    of Terrorism'', is now available in 30 languages with many different
    adaptations, including a full insert in the Arabic edition of Newsweek.
    ``Right content, right format, right audience, right now'' describes
    our strategic aim in seeing that U.S. policies are explained and placed
    in the proper context in the minds of foreign audiences.
        I also serve, ex officio, as a member of the Broadcasting Board of
    Governors, the agency that oversees the efforts of Voice of America and
    Radio Free Europe/Radio Liberty to broadcast our message into South
    Central Asia and the Middle East. With the support of the Congress, our
    broadcasting has increased dramatically since September 11. We have
    almost doubled the number of broadcast hours to areas that have been
    the breeding grounds of terrorists. The dollars we have requested for
    international broadcasting will help sustain these key efforts through
    the next fiscal year.
        Mr. Chairman, we are working closely right now with OMB to examine
    our overall requirements. We believe that there are valid fiscal year
    2002 needs that cannot wait until fiscal year 2003. The Administration
    will bring the specific details of this supplemental request to the
    Congress in the near future. We have not quite finished our review at
    this point, but it should not take much longer.
        Mr. Chairman, all of these State Department and Related Agencies
    programs and initiatives are critical to the conduct of America's
    foreign policy. Some of you know my feelings about the importance to
    the success of any enterprise of having the right people in the right
    places. If I had to put one of these priorities at the pinnacle of our
    management efforts, it would be our hiring efforts. We must sustain the
    strong recruiting program we began last year--with your support and the
    support of the Congress as a whole.
        Last year, in new hires for the Foreign Service, we made great
    strides. We doubled the number of candidates for the Foreign Service
    Written Examination--and this year we will give the exam twice instead
    of just once. Moreover, our new recruits better reflect the diversity
    of our country with nearly 17 percent of those who passed last
    September's written exam being members of minority groups. For example,
    we tripled the number of African-Americans and doubled the number of
    Latino-Americans.
        We have also improved Civil Service recruitment by creating new
    web-based recruiting tools and by vigorously asserting the truth. The
    truth, Mr. Chairman, that we are a team at State and that the Foreign
    Service and the Civil Service are each very important team members.
    Both are vital to our mission. And now both know it.
        Another improvement is that once we identify the best people we
    bring them on more quickly--a great boon to hiring the best. For
    Foreign Service recruits, for instance, we have reduced the time from
    written exam to entry into service from 27 months to less than a year.
    We are going to reduce it even further.
        We are also working with OMB to create extensive new performance
    measures to ensure that the people we hire remain the best throughout
    their careers.
        Mr. Chairman, all of these activities have improved morale at the
    State Department. Our people see things happening, things that enhance
    their quality of life, their security, their ability to do their jobs.
    Things like our interim childcare center at the National Foreign
    Affairs Training Center. It opened on September 4 and can handle a full
    complement of 30 infants and toddlers.
        This idea of teamwork, this idea of family and the quality of life
    that must always nourish it even in the remotest station, is uppermost
    in our minds at the Department. While we concentrate on the nation's
    foreign affairs we must also focus on taking care of those Americans
    who conduct it, as well as the many thousands of Foreign Service
    Nationals who help us across the globe.
        These are an extraordinary group of people, Mr. Chairman. For
    example, our sixty Afghan employees in Kabul worked diligently to
    maintain and protect our facilities throughout the 13 years the Embassy
    was closed. They worked at considerable personal risk and often went
    months without getting paid. They even repaired the chancery roof when
    it was damaged by a rocket attack. This is the sort of diligence and
    loyalty that is typical of our outstanding Foreign Service Nationals.
        Our whole team at State is vital to mission accomplishment--Foreign
    Service, Civil Service, and Foreign Service Nationals. The dollars you
    helped to provide us last year allowed us to make our team more
    cohesive and more effective. We want to continue that process.
        Mr. Chairman, one message that the tragic events of September 11th
    and the days that followed have made very clear is that American
    leadership in international affairs is critical. Out on the front lines
    of diplomacy, we want a first-class offense for America. As a soldier,
    I can tell you that quality people with high morale, combined with
    superb training and adequate resources, are the key to a first-class
    offense.
        So as the State Department's CEO, let me thank you again for what
    you have done to help us create such a first-class offense--and I want
    to ask you to continue your excellent support so we can finish the job
    of bringing the Department of State and the conduct of America's
    foreign policy into the 21st century. I ask for your important support
    in full committee and in the Senate as a whole, both for the $8.1
    billion we are requesting for the Department and related agencies and
    for the $16.1 billion we are requesting for foreign operations. In
    addition, I ask for your help with whatever supplemental request we
    present in the near future. With your help, and the help of the whole
    Congress, we will continue the progress we have already begun.
        Thank you and I will be pleased to take your questions.

        Senator Hollings. Go ahead. You are on.
        Secretary Powell. Well, thank you for that very effusive
    and long introduction. It is a great pleasure----
        Senator Hollings. Yes, siree.

                     OPENING STATEMENT OF SECRETARY POWELL

        Secretary Powell. This is my seventh hearing in the course
    of hearings this year, and I appreciate the opportunity to get
    right into it.
        Mr. Chairman, it is a pleasure to once again be before the
    committee, and thank you for accepting my testimony in its
    fullness and making it a part of the record. I would like to
    give an abbreviated statement and then get right to your
    questions.
        As many of you will recall, at my first budget testimony to
    this committee last May, I told you that what I was asking for
    at that time was really just the first fiscal step in our
    efforts to align the organization for the conduct of America's
    foreign policy, with the dictates and the demands of the modern
    world and that there were more fiscal steps to come.
        I told you that, as Secretary of State, I really wear two
    hats. By law, I am the principal foreign policy advisor to the
    President of the United States, but I am also the leader, the
    manager, the CEO of the Department of State, and I take that
    role and that charge very, very seriously. To be successful in
    both roles, I have to make sure that the Department is properly
    organized, equipped, and manned to conduct America's foreign
    policy, as well as to formulate good foreign policy in the name
    of the President and in the name of the American people.
        You heard my testimony last May, and you responded, and we
    are grateful. Because of your understanding and the generosity
    of the Congress, we have made significant progress, and now I
    am here to tell you about the second fiscal step, so we can
    continue to make progress in fiscal year 2003.
        The President's discretionary request for the Department of
    State and related agencies for fiscal year 2003 is $8.1
    billion. These dollars will allow us to continue initiatives to
    recruit, hire, train and deploy the right workforce.
        The budget request includes $100 million for the next step
    in the hiring process we began last year. With these dollars,
    we will be able to bring on board into the Department 399 more
    foreign affairs professionals, as well as other technical
    experts, and be well on our way to repairing a large gap in our
    personnel structure. This gap has put enormous strain on our
    people as they have had to deal with a decade of too few hires,
    an inability to train properly, and hundreds of unfilled
    positions.
        By fiscal year 2004, we hope to have completed our multi-
    year effort with respect to overseas staffing to include
    establishing the training pool I described to you last year.
    The training pool is important so we have some flexibility in
    the system to send people to school without keeping them out of
    jobs they need to be doing, a ``schools account,'' so to speak,
    and next March, I will be back up here briefing you on the
    results of our domestic staffing review.
        In addition to getting more people on board, we will
    continue to upgrade and enhance our worldwide security
    readiness, even more important in light of our success in
    disrupting and damaging the al Qaeda terrorist network. The
    budget request includes $553 million for worldwide security
    upgrades. It builds on the funding provided from the emergency
    response fund for the increased hiring of security agents and
    for counterterrorism programs.
        We will also continue to upgrade the security of our
    overseas facilities. The budget request includes over $1.3
    billion to improve physical security, correct serious
    deficiencies that still exist, and provide for security-driven
    construction of new facilities at high-risk posts around the
    world.
        Mr. Chairman, we are right-sizing, shaping up, and bringing
    smarter management practices to our overseas building program,
    as I told you we would do last year. The first change we made,
    as you well know, sir, and members of the committee, was to put
    retired Major General Chuck Williams in charge and give him
    Assistant Secretary-equivalent rank and a more direct reporting
    chain up to the top. Now his Office of Overseas Building
    Operations has developed the Department's first long-range
    master plan, which projects our major facility requirements
    over a 5-year period.
        Mr. Chairman, I know that General Williams briefed you in
    mid-February. He told you how the OBO is using best practices
    from industry, new Embassy templates, and strong leadership to
    lower costs, increase quality, and decrease construction time.
    Those are not just words. We are actually seeing results
    against those standards.
        As I told you last year, one of our goals is to reduce the
    average cost to build an Embassy, and I believe we are well on
    our way to doing that.
        General Williams is making all of our facilities overseas
    more secure. By the end of fiscal year 2002, over two-thirds of
    our overseas posts should reach minimal security standards,
    meaning secure doors, windows, and perimeters. We are also
    making progress in efforts to provide new facilities that are
    fully secure, with 13 major capital projects in design or
    construction, another 8 expected to begin this fiscal year, and
    9 more in fiscal year 2003.
        With this budget, Mr. Chairman, we will also be able to
    continue our program to provide state-of-the-art information
    technology to our people everywhere. Because of your support in
    2002, we are well on our way to doing this. We have an
    aggressive deployment schedule for our unclassified system
    which will provide desktop Internet access to over 30,000 State
    users worldwide in fiscal year 2003, using fiscal year 2002
    funds. I am determined to see this happen. I am determined to
    use the power of the Information Technology Revolution to serve
    America's foreign policy interests.
        When President Bush gave his State of the Union address a
    few weeks ago, as the last word was coming out of the
    President's mouth, it was being translated into six different
    languages, being broadcast around the world, and being
    downloaded over the Internet at all of our Embassies. Thirty
    minutes after completion of the speech, transcripts of the
    speech in seven different languages were being downloaded over
    the Internet at our Embassies all around the world.
        It is that speed, that agility, that quickness of response,
    that we have to get throughout the Department, not just in
    delivering speeches, but in communicating with each other,
    connecting with one another, responding to the 24-hour-a-day
    news cycle that we now have, and making sure that we are on the
    cutting edge of diplomacy. We are the front line, the offensive
    line, of our foreign policy efforts around the world.
        We have included $177 million in the Capital Investment
    Fund for IT requirements. Combined with the $86 million in
    estimated expedited passport fees, we will have a total of $263
    million for our IT initiatives. Our goal, as I said, is to put
    the Internet fully in the service of diplomacy.
        Mr. Chairman, we want to continue to meet our obligations
    to international organizations--also more important as we
    pursue the war on terrorism to its end. We are very proud of
    the work that has been done by our coalition partners in this
    campaign against terrorism. You saw it yesterday, when the
    President was speaking to all of those Ambassadors on stage
    representing the coalition, and the three Ambassadors who spoke
    so movingly of how they were with us in this campaign.
        We have to be with them as well in the international
    activities that we have committed ourselves to. So the budget
    request includes $891 million to fund U.S. assessments to 43
    international organizations. Our active membership in these
    organizations furthers U.S. economic, political, security,
    social, and cultural interests. We also want to continue to
    meet our obligations to international peacekeeping activities.
        The budget request includes $726 million to pay our
    projected United Nations peacekeeping assessments--all the more
    important as we seek to avoid increasing even further our U.N.
    arrearages. Mr. Chairman, I ask for your help in lifting the
    cap on our peacekeeping assessments so that we can eventually
    eliminate all of our arrearages and not let them continue to
    build up. These peacekeeping activities allow us to leverage
    our political, military, and financial assets through the
    authority of the United Nations Security Council and the
    participation of other countries in providing funds and
    peacekeepers for conflicts worldwide.
        We will also continue and enhance an aggressive effort to
    eliminate support for terrorists and thus deny them safe haven
    through our ongoing public diplomacy efforts, our educational
    and cultural exchange programs and through international
    broadcasting. The budget request includes $287 million for
    public diplomacy, including information and cultural programs
    carried out by our overseas missions and supported by public
    diplomacy personnel in our regional and functional bureaus.
        These resources help to educate the international public on
    the war on terrorism and America's commitment to peace and
    prosperity for all nations. As we have seen in recent weeks and
    months, Mr. Chairman, we have not been doing a good enough job
    in taking our case to the people of the world, and we are going
    to do a better job. Our new Under Secretary for Public
    Diplomacy, Charlotte Beers, comes with great experience from
    the civilian world in marketing, getting a message out, and
    moving a product out. We have got a great message. We have got
    a great product, the humanitarian values upon which this Nation
    is founded. We have got to do a better job of reaching out.
        The budget request also includes $247 million for
    educational and cultural exchanges, where we take people from
    other lands, bring them here, let them go to our schools, and
    let them participate in activities with our families and with
    our communities. Then they return home and take those values
    back with them. It is a long-term investment in a better
    future.
        These activities help build the trust, confidence, and
    international cooperation necessary to sustain and advance the
    full range of our interests. Such activities have gained a new
    sense of urgency and importance since the brutal attacks of
    September 11th. We need to teach more about America to the
    world. We need to show people who we are and what we stand for,
    and these programs do just that.
        Moreover, the budget request includes almost $518 million
    for international broadcasting, of which $60 million is for the
    war on terrorism to continue increased media broadcasts to
    Afghanistan, the surrounding countries and throughout the
    Middle East. These international broadcasts help inform local
    public opinion about the true nature of al Qaeda and the
    purposes of the war on terrorism, building support for the
    coalition's global campaign.
        Let me just say a bit more about public diplomacy. These
    attacks underscore the urgency of implementing this public
    diplomacy campaign in the Middle East. Since September 11th,
    over 2,000 media appearances have taken place by State
    Department officials. Our continuous presence in Arabic and
    regional media is necessary, and we are determined to do more
    of it.
        We are looking for unusual ways of getting our word out. My
    staff said to me, ``Well, why do you not go on MTV and speak to
    the MTV audience, 17 to 25 years of age all around the world,
    33 different MTV channels that touch something like 146
    countries?'' And so I did it, and they gave me an hour to go on
    and talk to young people assembled in six different locations
    around the world, as well as in the studio.
        I was here in Washington and went for 60 minutes, and it
    was going well, so they did it for 90 minutes--90 straight,
    uninterrupted minutes talking to 346 million households in 146
    countries through 33 MTV stations, and we talked about
    everything. Kids are not like adults. They will ask you what is
    on their minds. They will call it out. They will take you to
    account, and they do not want to hear ``snowy'' answers. It is
    the kind of exposure our officials should be doing more and
    more of.
        Now I happened to make news in an area that I had not
    intended to make news. Be that as it may.
        Senator Hollings. You have been explaining it to the adults
    back here ever since, I think.
        Secretary Powell. But, nevertheless, as you know, I do not
    step back 1 inch from what I said because it was the right
    thing for those young people to hear around the world. But they
    also heard about the American value system. They also heard why
    we are not the Satan of the world; we are the protector of the
    world. They also heard that America, over the last 10 years,
    has rescued Muslims in Kuwait, rescued Muslims in Kosovo, and
    rescued Muslims in Afghanistan. We go to no nation to take
    land. We go to no nation to oppress people, and that is a
    message they need to hear as well.
        So it is those kinds of opportunities we are seeking in the
    Department that take us out of the old tried and true methods
    into new methods and new ways of communicating, without
    abandoning the tried and the true.
        The budget requests I have just outlined for you deals with
    our overall requirements for fiscal year 2003. There are also
    some valid requirements that we have in fiscal year 2002 that
    cannot wait for fiscal year 2003. And so as you might well
    imagine, we are working with OMB on a supplemental request that
    will be coming to the Congress in due course, and the specific
    details are not yet available.
        Mr. Chairman, all of these State Department and related
    agency programs and initiatives are critical to the conduct of
    America's foreign policy. Some of you know my feelings about
    the importance of putting the right people in the right place
    at the right time, and that remains my number one objective
    with respect to the management of the Department--bring new
    people in.
        We had a two-fold increase, 100-percent increase, in the
    number of people applying for the Foreign Service exam last
    September, three times as many minorities as ever before. We
    will bring in more minorities in this next tranche of
    youngsters coming into the Department than ever before, and we
    are going to keep doing that until we have a State Department
    that is fully staffed with people who are well motivated,
    morale is high, and a State Department which looks like all of
    America. That is our greatest strength, that of diversity, and
    I want that diversity to be reflected throughout the State
    Department, so we can be an example to the rest of the world.
        Mr. Chairman, I want to close by thanking you and the
    members of the committee and, frankly, the entire Congress, for
    the support that you have provided to me and to the Department
    during my first year of service as Secretary of State. I hope
    that we will continue to enjoy your strong support, and I hope
    that you will continue to reward our stewardship of the
    Department. Stewardship means a lot to us. We want to take care
    of the people entrusted to our care, make sure we are
    accomplishing what the American people want us to accomplish,
    and make sure that we are good stewards of the resources
    provided to us by the American people through their Congress.
        Thank you, Mr. Chairman.

                                   PERSONNEL

        Senator Hollings. Thank you, Mr. Secretary. The committee
    thanks you for your stewardship. There is no question that the
    morale is up in the Department of State. I just recently
    traveled with the intelligence group to Brussels, Berlin,
    Leipzig, Prague, Budapest, Vienna, London, and otherwise. I
    credit you with the morale that has improved materially in the
    Department of State, and I say that advisedly because I have
    been doing this job now 35 years.
        Otherwise, on talking about personnel, you gave us a good
    man on property. Who handles the personnel?
        Secretary Powell. We have a number of people. The person
    directly in charge of personnel----
        Senator Hollings. Can you not give me a General Williams
    that I can talk to?
        Secretary Powell. Yes, Ruth Davis is the Director General
    of the Foreign Service and our Director of Human Resources. She
    is a Career Ambassador of the Foreign Service, and she has day-
    to-day management responsibility for our personnel system. You
    can also speak to the Under Secretary of Management, Mr. Grant
    Green, who works with Ambassador Davis, but if you ever have a
    personnel question, please feel free to come directly to me or
    to Deputy Secretary Armitage because we are the top personnel
    managers of the Department. There is not a day that goes by we
    do not talk about people.
        Senator Hollings. The question is then, you know, we
    supported the 749 additional positions last year. I want to
    support the request for 631 this year. On the other hand,
    checking there in Germany, we have 590 State Department
    personnel in Germany. That is a lot of people.
        Secretary Powell. We have a lot of people----
        Senator Hollings. And----
        Secretary Powell. Yes, sir?
        Senator Hollings. And 390 down in Mexico, 374 in Japan, 381
    in Vietnam, and I know Saigon or Ho Chi Minh City well, and up
    at Hanoi, I have been there, but what are we going to do with
    almost 400 people in Vietnam? I mean, they have not gotten back
    yet? We did not leave them there, did we?
        Secretary Powell. No, these are new hires. They brought me
    home some years ago.
        Senator Hollings. Yes, sir.
        Secretary Powell. We are constantly reviewing the overseas
    presence of each one of our missions. In some of our missions,
    our more complicated missions, such as Germany, and France, and
    the United Kingdom, we have a variety of programs that have to
    be managed and supervised and a lot of new activities taking
    place: FBI activities, legal assistance activities, and a lot
    of economic consular activities that might not have been there
    in the past. So these have all grown.
        Senator Hollings. I know you are the landlord for all of
    those, but we are talking just about State Department
    personnel.
        Secretary Powell. Well, there has also been an increase in
    the security requirements in a lot of these places.
        Senator Hollings. Right.
        Secretary Powell. But with any one of them, I would be more
    than pleased to sit with you or members of your staff, Mr.
    Chairman, and justify them, and if I cannot justify them, let
    us cut them.

                       VICTIMS OF TERRORISM COMPENSATION

        Senator Hollings. Looking over the personnel, an item came
    to our attention last year with a case with respect to the
    Iranian hostages and working with the Department of State on
    the House side we said, in language in the bill itself, that
    what we needed was a comprehensive and equitable solution that
    would provide an appropriate level of compensation for all U.S.
    victims of terrorism. We have got to look out for our people.
    We were thinking about not only Nairobi, and Dar es Salaam, the
    U.S.S. Cole, but specifically sort of the beginning of it, in a
    sense, in a way the most egregious in this Senator's opinion,
    was in Tehran, the 444 days there. The court was ready to act,
    and we were ready to act, but then we said let us get a
    comprehensive plan submitted by the Department of State in this
    budget request, and we do not have it.
        What are your comments?
        Secretary Powell. We have developed a comprehensive plan
    for victims of terrorism, and we submitted our plan to OMB and
    to the White House, but they have not completed their review of
    the plan in time for submission with the budget. But, yes, we
    took your guidance and direction very much to heart, and a plan
    has been prepared. I am sure that as soon as OMB has completed
    its review of it, it will be forwarded to the Congress. Whether
    it will be in time for action on this bill or in this session,
    I do not know, but I will certainly try to find out.
        Senator Hollings. That is good, and I do appreciate the
    fact that you recognize that bill language because I think the
    lawyer, maybe it was not for the Department of State, the
    Attorney General's office said, ``Well, that was only report
    language that we put in, and that was not law, and therefore it
    ought to be ignored,'' but it is not your position that it be
    ignored.
        Secretary Powell. I always follow the law and listen to
    report guidance.
        Senator Hollings. With respect to--yes, sir?
        Senator Gregg. That is one of those ``snowy'' answers.
        Secretary Powell. But accurate.
        [The information follows:]

        As Secretary Powell indicated at the hearing on March 12,
    the State Department responded immediately to the provision in
    the Fiscal Year 2002 Commerce, Justice, State Appropriations
    Act, and crafted draft legislation establishing a comprehensive
    federal program to compensate U.S. victims of international
    terrorism. This draft legislation was submitted in December,
    2001 to the Office of Management and Budget for inter-agency
    review and clearance. Departmental representatives have had
    several discussions with OMB and the White House concerning the
    proposal. We are hopeful that the inter-agency review will be
    completed shortly, and that the Administration will submit a
    legislative proposal to the Congress this session.

                             FACILITY IN MADAGASCAR

        Senator Hollings. With respect to facilities, let me
    mention Madagascar. Just write it down there because I have got
    a good source that they have had discord, some violence, and
    the facility that we have in the capital of Antananarivo is not
    secure, and it ought to be double-checked. I mentioned it to
    General Williams, but you sent him out of town this morning.
        Secretary Powell. We keep him on the road, sir.
        Senator Hollings. Yes, I was looking forward to seeing him,
    though, and see if he had an answer on it, but you can find out
    for the committee.
        Secretary Powell. Yes.
        [The information follows:]

        Secretary Powell has asked me to respond further to your
    inquiry made during the March 12, 2002 hearing regarding
    security at our embassy in Antananarivo, Madagascar. We
    appreciate the opportunity to provide updated information on
    the Department's $600,000 effort to enhance security at Embassy
    Antananarivo, Madagascar.
        Our chancery in Antananarivo is overcrowded but habitable.
    Like many of our existing embassies, it lacks proper security
    setback and is located on a busy and crowded downtown street.
    In light of recent developments, the Department has moved the
    planned design and construction of a New Office Building from
    fiscal year 2007 to fiscal year 2006. In the interim, the
    Department continues to provide substantial security upgrades
    to support our facilities in Antananarivo.
        After the embassy bombings in East Africa in 1998, many
    security enhancements were made to Embassy Antananarivo and
    continue today. Immediately after the bombings, $290,000 was
    made available for forced entry/ballistic resistant (FE/BR)
    doors; shatter resistant window film (SRWF); jersey barriers;
    anti-ram drop arm vehicle barriers; and related shipping and
    installation costs. Since then, an additional $305,000 was
    provided to purchase and install three hydraulic anti-ram
    vehicle barriers and three FE/BR-rated guard booths to replace
    the non-rated locally constructed units.
        Within our resource constraints, the Department continues
    to be vigilant in providing safe and secure facilities for our
    overseas employees. Using our business case approach, we
    continue to pursue ways to not only cut costs, but also to
    expedite the improved security posture of our embassies.

                              EMBASSY CONSTRUCTION

        Senator Hollings. In construction, we have a list of
    several facilities that really go up, up and away as to the
    cost. For example, down in Panama City, we were looking at that
    carefully, and we had a list that in Panama City, for example,
    $145 million. I know you, Mr. Secretary, and I know me, that is
    expensive. You know, Kazakhstan, I do not want to make the
    smart remark that I thought you could buy these places for that
    much, much less just build a building, but Kazakhstan, $92
    million.
        Look at those and have General Williams look. I do not know
    how you would spend $145 million in Panama City.
        Secretary Powell. General Williams is looking at all of
    these, and his report to me was that he thinks in our first
    year he has been able to reduce the overall cost of these
    facilities by some 20 percent. He is taking a particular look
    at some of the very, very expensive ones that we found when we
    came in last year, such as in Beijing, and he has been able to
    reduce the cost.
        One of the problems with our facilities is that they are
    done to rather high standards. You just do not go into
    Kazakhstan and throw up a cinder-block building. In many cases,
    our facilities are done with equipment, materials, and workers
    that are brought in from the United States; the security
    requirements drive the cost as well. And so it is not quite the
    same as just building an average office building in those
    cities. They are rather unique facilities, and that drives the
    cost considerably.
        Senator Hollings. You know, you have personnel in trailers
    in Kiev and several other places around, that has to be looked
    at because we want to look out, as you do, for your personnel,
    and why have the State Department personnel in trailers and
    then down in Panama, $145 million buildings, that kind of
    thing. We are looking at that very closely.

                              BERLIN EMBASSY SITE

        With respect to the Berlin situation, right there in the
    city next to the Brandenburg Gate, it is only a 3-acre
    proposition, and there are streets on three sides, but it is
    right next to an apartment building, the wall there. Of course,
    General Williams said he can make the wall as secure as he can
    make it, but is that secure enough where somebody cannot just
    ``rent'' terrorists and come into the apartment building that
    confronts it and just blow up our wall too? I mean, if that is
    the case, what I am getting at is then why the 100-foot setback
    requirement of security? See what I am saying?
        Secretary Powell. Yes, sir. I am very familiar with the
    Berlin site. I have been there myself and have seen it and
    looked at it. I have spent a lot of time looking at the maps,
    looking at aerial photographs, and I recognize that there is
    some additional danger associated with that condominium next
    door, but I believe we have minimized that danger. It is
    perhaps the safest square anywhere in Christendom, when you
    consider that the United States Embassy, the British Embassy,
    the French Embassy, the Russian Embassy, and the head of the
    German Government are all located right there.
        I thought the symbolic, absolute symbolic necessity of the
    United States being in the heart of Berlin, in the heart of
    Germany, with our friends and allies and with the German
    Government, was so important that we could deal with whatever
    additional, slight additional, threat that might be presented
    by the location of the condominium.
        After General Williams went and made an in-depth analysis
    of it as well, I felt rather comfortable in approving it and
    making some waivers. The German Government and the Berlin
    police authorities have been especially forthcoming in requests
    we have made to them with respect to the routing of traffic.

                            MUSLIM CENTER IN VIENNA

        Senator Hollings. I want to limit myself, and we are not
    going to use the clock. I appreciate the wonderful attendance
    we have here this morning. There is one other thing, Secretary
    Powell, I wish you would look at. When I was in Vienna talking
    to the Chancellor, they have an ongoing relationship with the
    Muslim world, in the sense that they have got a Muslim-
    Christian center. He talks to the Ayatollah Khomeini once a
    week at least and more.
        I have the feeling terrorist martyrs are being created
    faster than I can get rid of them, and we cannot invade every
    land. That goes to the peacekeeping thing. We had 13, and now
    we are adding Georgia, and Afghanistan, and we are adding the
    Philippines, and we are adding Yemen, and we cannot just use a
    military response. We have to get, as you indicated in your
    statement, a better relationship and understanding of the
    United States.
        The East-West Center in Hawaii has worked extremely well,
    the North-South Center in Miami has worked extremely well. Look
    into that and let us see if we cannot put some money there and
    get a sort of civilian-type or State Department, diplomatic-
    type endeavor like an East-West Center for the Muslim world
    there in Vienna.
        We have got one that is ongoing, and he was pretty proud of
    it and indicated that we ought to give it greater support. It
    sounded good to me, and I would like to have your comment.
        Secretary Powell. I will take a look at it, Mr. Chairman.
        Senator Hollings. Thank you very much.
        [The information follows:]

        I am writing to follow up on your proposal at the March 12
    hearing to consider supporting a center for the Muslim world in
    Vienna, along the lines of the East-West Center in Hawaii, to
    deal with Muslim cultural issues and to foster a better
    relationship and understanding of the United States. The East-
    West Center is a highly respected institution, and we have been
    pleased to work with them for over forty years in the effort to
    build stronger ties and cooperation between the United States
    and the Asia-Pacific region.
        We appreciate your interest in expanded educational and
    cultural exchanges with the Muslim world. The Department of
    State's Bureau of Educational and Cultural Affairs has a wide
    range of existing programs to engage Muslim audiences in all
    world regions. Since last fall, we have increased the number of
    Fulbright scholarships, professional exchanges, and cultural
    programs with the region. We are also developing thematic
    initiatives involving media, young people, Afghan women, and
    other critical groups.
        We believe that the most effective approach to reaching the
    Muslim world is to build on the proven successes of Fulbright
    and other Bureau exchanges, while at the same time refining our
    methods to reach broader, deeper, and more diverse audiences.
    We plan to implement most of our programs through grant awards
    to qualified U.S. non-profit organizations, in order to
    maximize the involvement of the American exchanges community,
    which is strongly committed to improving our relations with the
    region. These programs will primarily take place either in the
    United States or in the countries of the Muslim world, and will
    provide a ``total immersion'' experience that maximizes
    learning about the other culture.
        While we applaud the initiative of the Austrian Chancellor
    in developing a Muslim-Christian Center, we believe that U.S.
    interests can best be served by supporting a range of American
    institutions to carry out specific exchange activities,
    allowing us the flexibility to work with those best suited to
    conduct particular projects.
        We would be pleased to discuss further our educational and
    cultural programs for the Muslim world or to provide additional
    information. Thank you again for your support for these
    important activities.

                          WINNING THE WAR ON TERRORISM

        Senator Gregg.
        Senator Gregg. Thank you, Mr. Chairman. We appreciate your
    being here, Mr. Secretary, and I want to begin by
    congratulating you for the extraordinary job you and the
    administration are doing in building the coalition to fight
    terrorism.
        I had the opportunity to participate in yesterday's
    ceremony, and it was extremely impressive, to say the least. It
    looked like there were over 100 members of the foreign
    delegation there supporting our coalition and expressing a
    commitment to fighting on behalf of civilization against forces
    which essentially want to bring down civilization. So I
    congratulate you for what I think is an exceptional job.
        I am interested both on a philosophical level and on a
    practical level. There has been some representation that
    catching bin Laden is the defining moment as to whether we win
    this effort or not. I am not sure that it is, but I am
    interested in hearing what you believe is the defining moment.
    How do we get our hands around a movement which appears to be
    based in a culture, and a religion, and a perversion of that
    religion, regrettably, for those who follow this terrorist
    movement? Where do you see the light at the end of the tunnel?
        Secretary Powell. With respect to al Qaeda, I think we have
    struck a very serious blow with what we did in Afghanistan. I
    mean, he cannot really function in Afghanistan any longer. Even
    though there are some al Qaeda members and Taliban members
    remaining in the country looking to make trouble, I think that
    it is a controllable, manageable situation.
        We have hit them in other places in the world, and more and
    more nations are making it inhospitable for al Qaeda or its
    cells to be located in those countries, to try to do financial
    transactions in those countries, or to avoid the police or
    avoid intelligence services in countries around the world.
        As Senator Hollings mentioned a few moments ago, in some
    countries, we have gone beyond that, and we are going to help
    them go after al Qaeda-oriented cells, such as in Yemen or in
    the Philippines or in Georgia. But in these instances, we are
    not planning to send U.S. troops in there to stay. What we are
    doing is using our military forces for something they are so
    good at, training others to do the job, so that the Georgians
    can deal with their threats, so that the Filipinos can deal
    with their threats, so the Yemenese can deal with their
    threats.
        I do not think a day will ever come when somebody can come
    up to you and say, ``Well, it is over. There is no longer a
    terrorist threat facing the United States or its friends and
    allies, and we have gotten rid of every last al Qaeda
    individual or cell in the world.'' They will keep trying. It is
    a false religion that they are practicing. They are hiding
    behind their religion, as you indicated, Senator Gregg.
        But I do think that we can reach a point where we can be
    less fearful of their ability to strike at us. We are doing a
    much better job than we had been doing in the past with respect
    to tearing up their networks, understanding how they operate,
    going after them through intelligence efforts, as well as
    through law-enforcement efforts, through counterintelligence
    efforts, through protecting our borders and through homeland
    security activities. Therefore, we are making it a lot harder
    for them to do their evil work, and by so doing, we are
    bringing more security to our society.
        So things are going to get better, but at the same time,
    there will continue to be dangers, dangers that I think we are
    up to the task of dealing with.

                    TERRORIST TRAINING CAMPS IN AFGHANISTAN

        Senator Gregg. Do you have an estimate of how many people
    went through those terrorist training camps in Afghanistan?
        Secretary Powell. The number is in the thousands. I have
    seen a variety of estimates. I would say the numbers are in the
    tens of thousands. How many of them left those training camps
    and are card-carrying terrorists who are meaning us ill or how
    many of them went back into their societies and may be
    disgruntled, but are not participating in any activities that
    may be harmful to us? That is a question that I cannot answer,
    nor do I think anybody else can.

                           STATE AND INS COORDINATION

        Senator Gregg. In that area, to get specific, we have got
    an issue of people coming into our country, which we obviously
    want. We want to remain an open society, which allows people to
    visit us regularly, especially people who are coming here to
    learn.
        I am wondering what sort of progress you, in a joint effort
    with the INS, are making, number one, in getting your houses
    coordinated, and number two in the area of biometric
    identification for people applying for visas?
        Secretary Powell. We are working very closely with the INS,
    with Customs Service, with Governor Ridge and his efforts, and
    I think we are making considerable progress. We have a lot of
    work going on with the Canadians and the Mexicans because those
    were sources of easy access to the United States previously. We
    are going to do a better job of controlling our borders, and
    this will be a subject of President Bush's discussions with
    President Fox in Mexico next week.
        We are doing a better job rationalizing our databases so
    that when somebody first surfaces at an American Embassy or an
    American consulate office somewhere overseas and applies for a
    visa, that information comes back and is not just held in State
    Department channels. It goes everywhere to see whether anybody
    has information on this person.
        We tried a new technique during the Olympics in Salt Lake
    City that showed considerable promise that we are getting on
    top of this issue of how to make all of our databases talk to
    one another.
        With respect to biometrics, we are looking at that and
    seeing how best to integrate that into our passport system and
    into our other identification systems. One way we are going to
    be looking at it, frankly, is with some of the detainees we
    have. They are going to be ``biometricked.'' So, for any of
    those we are unable to hold, we will always be able to track
    these people in the future. If they ever try to get back into
    our country, we will know a great deal about them, and that
    should give us some experience with respect to the use of
    biometric measures and biometric identification techniques.

                            BIOMETRIC IDENTIFICATION

        Senator Gregg. Is it reasonable to ask that we have
    biometric identification for someone who is visiting our
    country as a student, a card or something, whether it is a
    fingerprint or retinal scan, and also to track where they are
    using that identification?
        Secretary Powell. I do not think it is unreasonable to ask
    people coming into the country to give us a reliable measure of
    their identification of who they are. I am not sure I am yet
    persuaded what the best way to do that is, whether it is with
    just fingerprints and photographs or whether it is a visual
    scan or other biometric techniques that are being looked at.
        It is much more difficult once they are in the country, and
    as you know, there are hundreds of thousands of people in the
    country that we can no longer track. Unless they surface
    somewhere and identify themselves either through a biometric
    measure or some other measure, they can just stay within the
    country and be very hard to find because we do not have the
    means to do it. It is essentially a local law enforcement
    problem and beyond the capacity of the INS to track everybody
    within the country.
        But these are the kinds of issues that Governor Ridge is
    working on under his homeland security charter, and I know that
    the Attorney General is hard at work at it as well because, at
    that point, it is not a State Department problem, but an INS
    and Homeland Security problem. How do we keep track of those
    people who have entered our country under acceptable, legal
    documentation, and how do we make sure that they do not
    overstay their welcome, and they do not overstay their
    documentation? How do we find them, how do we locate them, how
    do we deal with them, how do we get them out of the country, or
    how do we revalidate their entry documents? It is an issue of
    high priority for the administration.

                           PEACEKEEPING IN THE CONGO

        Senator Gregg. On the subject of the Congo peacekeeping
    mission, former Ambassador Holbrook laid out what we would
    require before the United States would support the peacekeeping
    mission to the Congo. I am wondering what the policy of the
    State Department is, whether the Holbrook understanding is
    still the position of the State Department.
        Secretary Powell. Which understanding are you referring to,
    sir?
        Senator Gregg. He basically set out a series of conditions
    for when we would support the Congo peacekeeping mission.
        Secretary Powell. Our principal participation is through
    financing, and as you know, the amount we are asking for has
    gone up considerably over the last couple of years because the
    U.N. peacekeeping force is actually now being deployed and
    growing in number. But we have no plans, at the moment, to
    deploy any U.S. troops into DROC peacekeeping activities.
        Senator Gregg. Do we have plans not to give them money
    unless it is being done pursuant to the policy which we
    outlined? My point here is that we were funding, in Sierra
    Leone, for a number of years a program which was facilitating
    the RUF, terrorists, through the United Nations. Now that has
    been adjusted, and there is progress being made in Sierra
    Leone. I do not want the same thing to happen in the Congo. I
    do not want to see us end up funding a mission which is not
    consistent with U.S. policy.
        Secretary Powell. I think you are quite correct, Senator,
    and you can be sure that the money that we will provide to the
    United Nations for this peacekeeping effort will be consistent
    with our policies. We are in touch with President Kabila and
    other individuals in the region, trying to get the peace
    process moving along. I have met with President Kabila on two
    occasions, and Secretary General Annan and I discuss the Congo
    on a regular basis. They understand that we are looking for
    progress that will protect human rights, and end illicit
    trading in people and commodities such as diamonds. So we
    remain committed to those kinds of principles as we provide the
    peacekeeping monies needed to put in place the force that will
    provide some hope for this country.
        Senator Gregg. I hope you will take a hard look at it
    because I think we are heading down the wrong road again.
        [The information follows:]

        Secretary Powell has asked me to follow up with you on his
    response to your question at the March 12 CJS Hearing about the
    U.N. Mission in the Democratic Republic of the Congo (MONUC).
    In your question, you asked if the Administration continues to
    follow the policy laid down by former U.N. Ambassador Holbrooke
    when the U.N. expanded its mission in the Congo in February
    2000.
        The conditions outlined at that time by former Ambassador
    Holbrooke for the successful deployment of MONUC generally have
    been met since early 2001: Combatants withdrew in the first
    half of 2001 to lines specified in the Kampala and Harare
    Disengagement Plans of April and December of 2000,
    respectively. A cease-fire has generally held since January of
    2001, and the signatories of the cease-fire agreement have
    permitted MONUC access to areas under their control.
        While recent fighting at Moliro and occasional obstruction
    of MONUC deployment by the Rally for Congolese Democracy's Goma
    faction have caused concern, we expect that all parties to the
    Lusaka Agreement will continue to respect its provisions.
    MONUC's continuation remains conditioned on their doing so.
        In your question you express concern that MONUC may stray
    from its original purposes outlined in its mandate, which the
    U.S. supported. We are working closely with the U.N. to make
    sure that MONUC carries out the tasks assigned to it by the
    Security Council, with the goal of bringing this terrible war
    to an end. We do not see MONUC as an open-ended commitment. Any
    decision to support changes in the mission's mandate or size
    will, of course, be notified to Congress.

                           OVERSEAS BUILDINGS PROGRAM

        Senator Gregg. I want to reinforce what the chairman said
    about buildings. I know we have all talked about this. This is
    an ongoing issue with this committee and I appreciate your
    bringing on General Williams who is doing such a good job
    there, but the fact is the price tag is not going down.
        I am interested in knowing whether there is not some
    structural change we need to make. In other words, do we have
    to use, for every building, the same standards of American
    labor, American parts, and American facilities. Or are there
    some places like Panama, for example, which is in this
    hemisphere, where we could possibly build it for less by not
    having the stricture of levels of conditions relative to
    construction that we have today.
        Secretary Powell. I am sure that that is the case, Senator,
    but I think we have tried to be faithful to the guidance we
    have received from the Congress and the work that was done by
    previous commissions that looked into Embassy security, Admiral
    Crowe's work, and Admiral Inman's work. We have to be sensitive
    to the very practical considerations that if we find a problem
    in one of our Embassies with respect to security, there will be
    a big investigation, and the questions will be: why did you
    allow local artisans or workers to do this when you knew it
    could be a compromising situation?
        So we are always trying to find the right balance between
    those things that we really have to do ourselves, with American
    contractors and equipment that are subject totally to our
    control, with perhaps a fence or other work arounds that can
    still permit work to be done at an Embassy very efficiently at
    the local level.
        I think General Williams understands that this has to be
    looked at with a very, very skeptical eye to try to get the
    costs down. The costs are significant. I cannot deny that fact,
    but I think that Chuck Williams has done a pretty good job of
    reducing the overall costs and continues to look for ways to do
    that; templating, using standard furnaces, and heaters, and
    standardizing windows and all of the other things that are used
    in civilian construction to try to minimize cost-growth
    escalation and get the overall costs down.

                      FIVE-YEAR EMBASSY CONSTRUCTION PLAN

        Senator Gregg. Thank you. I appreciate that answer.
        My last question in this area goes to you say you are going
    to have this 5-year Embassy construction plan. Are you going to
    build that around the model that you used at DOD, where you
    tied it to your money or is it going to be irrelevant?
        Secretary Powell. Well, that is not the way I did it in
    DOD, Senator.
        Senator Gregg. There was theoretically a cash-flow stream
    that it was tied to.
        Secretary Powell. I do not know all of the assumptions that
    General Williams has in it, but the guidance he has is to put
    together a plan that represents some sense of reality of what
    is likely to be the out-year funding stream. But to do what I
    think we need to do around the world, with our facilities, and
    to represent the American people well, to protect our people
    who are out there, to make sure that their quality of life and
    their quality of workplace are adequate, and to make sure they
    are secure, is going to take a significant amount of money for
    a fairly extended period of time.
        We have got a lot of work that needs to be done, as
    evidenced by the fact that we still see trailers, and we still
    see other things that are desperately in need of repair. It was
    a lot easier before the cold war ended, when we did not require
    the same kind of presence in all of the countries that we now
    require presence in, places such as Vietnam. So it is going to
    be a long-term proposition, but I know that General Williams is
    trying to do it in not just a completely ``blue sky'' fashion,
    where his work and the master plan bears no reality to the
    likely resources that will be available.
        Senator Gregg. This committee is very strongly committed to
    rebuilding the facilities and the technology capabilities of
    the Department, but we would like it to be in the context of
    a----
        Secretary Powell. I hope that in your review of the master
    plan, and it was done so that you could see what we are doing,
    but I hope that you will be critical of it, constructively and
    destructively, as the case might be. I need your help. I need
    your guidance. I need your sense of what the possible is, what
    the achievable is.
        Senator Gregg. Thank you.
        Thank you, Mr. Chairman.
        Senator Hollings. Thank you.
        My list shows Leahy, Campbell, Reed, Mikulski, Inouye,
    Domenici.
        Senator Leahy.

                              EMBASSY CONSTRUCTION

        Senator Leahy. Thank you very much, Mr. Chairman.
        To follow up on what my friend and neighbor from New
    Hampshire was saying on the construction of buildings, there
    are ways it could be done very well. I am very impressed with
    the Embassy we have in Ottawa. Here we were given a choice
    location, as the Canadians were on Pennsylvania Avenue, and we
    utilized it very well to build a modern building surrounded by
    architecturally beautiful, old, significantly historical
    buildings, used a lot of Canadian materials, sensitive to the
    wishes of the people, and came out with something very
    beautiful. When you compare that with the horrible, ugly,
    disgraceful, eyesore of our Embassy in London, for example,
    something that makes about as much sense as putting a garbage
    truck in the middle of a Rolls Royce parking lot, the one in
    Ottawa is very good.
        I am glad to see you here, Mr. Secretary, because you have
    been a voice of reason and balance in not only this
    administration, but each administration you have served in, and
    you are going to be before our Subcommittee on Foreign
    Operations, so I will not go into too much on that.

                                 BUDGET ISSUES

        Just on some of the budgetary things, I think it is great
    you have selected Lorne Craner to head up the Bureau for
    Democracy, and Human Rights and Labor. I hope we can give them
    an adequate budget. That budget has been sort of ignored by
    administrations in both parties for 25 years. Even though there
    is a modest increase requested this year, we actually need
    more.

                                 CURRENT EVENTS

        Colombia, I hope you are looking at very closely. We all
    want to help Colombia. We want to help President Pastrana
    before he leaves, but as we rush to expand our presence there,
    I hope we are extremely careful what we are doing so that we do
    not end up doing more harm than good and something that not
    only this administration, but subsequent administrations, will
    have to deal with.
        I know you are going to accompany the President to the
    United Nations Conference on Financing for Development to be
    held in Monterrey, Mexico, next week. I am glad you are going.
    I am glad the President is going. I am very disappointed that
    the administration continues to oppose the plan put forth by
    the British, after all, our closest ally on the war on
    terrorism, for industrialized countries to significantly
    increase spending on foreign aid.
        There is a huge shift, a bipartisan shift, in the Congress
    and a willingness to spend money on foreign aid, above and
    beyond what you are going to request for Afghanistan, and I
    hope the administration will make a request for more, as a
    nation as rich and powerful as we are, it is in our security's
    best interests to have democracies around the world. Certainly,
    it is also in our moral best interests to help eradicate
    disease and to do all of the things necessary.
        I am glad General Zinni is going back to the Middle East.
    Some would feel a pox on both the sides there, and of course we
    cannot do that. We need to do more to condemn and discourage
    the Palestinian suicide attacks which are targeted at innocent
    civilians and locations to cause death, but at the same time,
    we cannot ignore the Israelis using high-powered U.S. military
    equipment, including F-16s and Apache helicopters to strike at
    targets in densely populated civilian areas, and we end up
    getting blamed for that.

                              FOREIGN AID FUNDING

        Let me ask you on the funding for foreign aid. The
    President has said we will defeat the terrorists by destroying
    their networks wherever they are found. We will defeat the
    terrorists by building an enduring prosperity that promises
    more opportunity and better lives for all of the world's
    people. I completely agree with the President on that.
        I would also say that 41 Senators are now on record
    supporting an increase in foreign aid. That is more than at any
    time I can remember in my 27 years here.
        You recently testified that the idea of doubling foreign
    aid is not a bad idea, and you would like to triple it. When
    are we going to follow up? The rhetoric is all in the right
    place. We are going to add $48 billion for the Defense
    Department. I am sure they can use it, but foreign aid is also
    about national security. If we spend less than 1 percent of our
    budget to build democratic allies and promote market economies
    around the world, that is nowhere near enough. Can we not do
    better?
        Secretary Powell. Senator Leahy, I would like to do a lot
    better, and I have testified last year and this year that I am
    pleased the President was able to find increases in both years
    for our foreign assistance accounts. The need is much greater,
    and I hope that we will be seeing additional help in the
    supplemental request for fiscal year 2002. The President, I,
    and my other colleagues in the administration are already hard
    at work seeing how much better we can do for fiscal year 2004.
        I think this year, in light of the new demands that were
    placed on the budget by the recession that we are now coming
    out of, the fact that a surplus has turned into a deficit, the
    fact that the military needed a big infusion to deal with the
    campaign against terror, and the new demands placed on the
    budget by homeland security, I am pleased that we were able to
    get an increase. But would I like to see more? Yes. Will I be
    arguing for more? Yes.
        The specific number that our British colleagues had put
    down, a doubling of foreign aid as a percentage of GDP, was a
    bit more than we could sign on to. We are looking at other ways
    of doing it, whether it be by development assistance or grant
    aid or other techniques and methods that might be more
    appropriate.
        At the end of the day, what we really need in most of these
    countries is trade, even more so than aid, and I spend a lot of
    my time talking to them about what they have to do to change
    their societies, not just to draw more aid, but really to
    create conditions that draw trade.

               U.S. LONG-TERM COMMITMENT TO DEVELOPING COUNTRIES

        Senator Leahy. Of course, they have to do more, but there
    also has to be a long-term commitment on our part. I mean,
    trade by itself is not going to do away with river blindness
    and is not, by itself, going to help with the AIDS epidemic in
    Africa. It is not going to help in countries where our children
    cannot go to school, especially girls cannot. Boys might be
    able to if there are schools, but girls cannot. All of those
    things and microenterprise, which would take a relatively small
    amount--we sometimes can go very hard on the big-ticket item,
    but I look at the areas. I mean, one example we use I am very
    proud of the War Victims Fund, and I appreciate the fact that
    my Republican colleagues renamed it the Leahy War Victims Fund.
    That is something that touched me more than just about anything
    here. We spend money on that for land mine victims. I will not
    go into the issue of land mine banning, but one of the things I
    found in one place we went, my wife is a nurse, and she is
    helping to care for a little boy in one of these countries in
    one of the land mine victim hospitals, badly crippled. When
    they were bathing the little boy, she said, but there are no
    scars on him. No, it is from polio. In this case, they could
    not get the polio vaccine to the village because of the land
    mines around it, but there are whole areas where there is no
    vaccine.
        Now you are now a grandfather, as am I. Your grandchildren,
    when the pediatrician says, ``And this is the day you get your
    polio vaccine,'' of course, you just mark it down and do it.
    You take it for granted. When you and I were youngsters,
    swimming pools and everything else would close because it was
    polio season. We do not have to worry about that. This is
    something we could eradicate. Tuberculosis could be eradicated.
    A third of all of the tuberculosis cases we see here in this
    country come from abroad. We could eradicate that, but it is
    going to take a long-term and fairly expensive up-front
    commitment. The long-term aspects are great.
        I mention that, Mr. Secretary, and I know I preach to the
    converted, but it is going to take money, and it is going to
    take a lot more money than we have, and ultimately the amounts
    of money that we have to spend, and none of us begrudge the
    money we have to spend to defend against terrorism, maybe some
    of that would not be necessary if we did more at the front end.
        Secretary Powell. I totally agree with you, Senator, and I
    will continue to make that case within the administration. The
    President, I think, has been generous in the first two budget
    submissions, and I hope he will be able to do even more in the
    supplemental and in the next year's budget submission. I do
    also appreciate the fact that there seems to be a growing
    understanding within the Congress of the importance of this
    account, and I am very pleased that it is bipartisan and in
    both bodies.
        Senator Leahy. Senator McConnell and I have worked very
    hard, as you know, and worked together to do that in our
    Appropriations Subcommittee. I have asked a number of other
    questions that, as we have a vote coming up, I will submit for
    the record.

                             SITUATION IN COLOMBIA

        Secretary Powell. If I may say a word on Colombia. With the
    end of the safe havens, of course, the Colombians have come to
    us with new requests, increased intelligence sharing and other
    support we might be able to provide them. They are not asking
    for U.S. troops, nor do I see U.S. troops going to Colombia,
    but we do believe we should help this democracy that is being
    threatened by narco-traffickers and terrorists. Therefore, we
    will be sending up, in the not-too-distant future, language
    which would give us greater flexibility with respect to the
    kind of support we can provide, while at the same time being
    very, very mindful of human rights, particularly other
    legislation named for you dealing with human rights. We will
    not, in any way, do anything that would undercut our commitment
    to making sure that as we support Colombia, we hold them to the
    highest standards of human rights performance on the part of
    their military and their police forces.
        Senator Leahy. I have a lot of questions on that. The
    Colombians have talked to me at length about what they request.
    I have not heard anything from the administration about what
    they are hearing, and I know that you are all very busy, but if
    you can turn somebody loose to possibly, I have a listed
    telephone number.
        Secretary Powell. It is mostly intelligence, and as you
    know, we have a proposal on the pipeline security.
        Senator Leahy. I read in the paper, but some of this may
    end up coming before my committee, if somebody could take the
    time to see what the Colombians have and let me know what they
    think about it. I am always happy to hear from you.
        Secretary Powell. Thank you, sir.
        Senator Leahy. Thank you.
        Senator Inouye [presiding]. Senator Campbell.
        Senator Campbell. Thank you, Mr. Chairman.
        I understand we are going to vote in just a few minutes, so
    I would ask unanimous consent to put my complete statement in
    the record.
        Senator Hollings. Without objection.
        [The statement follows:]
             Prepared Statement of Senator Ben Nighthorse Campbell
        Mr. Chairman, I appreciate this opportunity to make a few brief
    remarks this morning drawing on my work as Chairman of the Helsinki
    Commission. The Organization for Security and Cooperation in Europe
    (OSCE) can serve as a valuable tool for promoting human rights and
    democratic development and advancing U.S. interests in the expansive
    OSCE region, covering 55 countries.
        In the aftermath of the terrorist attacks of September 11, it is
    crucial that we redouble our efforts to advance the fundamental
    principles of democracy, human rights and the rule of law throughout
    the OSCE region even as we pursue practical cooperation aimed at
    rooting out terrorism.
        During my chairmanship, the Commission has paid increasing
    attention to the multidimensional threats posed by corruption and
    international crime as well as the strong nexus between them and
    terrorism.
        The OSCE provides an excellent framework for advancing these vital
    and complementary objectives. My hope is that ``Operation Enduring
    Freedom'' will bring enduring freedom to people throughout the OSCE
    area, including those in the five nations of Central Asia.
        Erosion of our common commitment to human rights would only lead to
    greater instability, not less. It is essential that we communicate to
    every corner of the world, the U.S. commitment to the preservation of
    democracy and human rights. To do otherwise would imperil the very
    values and principles which terrorists seek to destroy. Paying lip
    service to human rights will not suffice.
        I note that the President of Uzbekistan is in Washington today and
    will be interested in Secretary Powell's assessment of the state of
    human rights and democracy in that country. A decade after Uzbekistan
    joined the OSCE, the gap between word and deed in these areas remains
    enormous.
        Egregious human rights violations continue in Chechnya as
    international attention is directed elsewhere and Russian officials
    attempt to clamp down further on journalists who attempt to report on
    developments in that war torn region of Russia.
        I am also concerned over continued repression in the Republic of
    Belarus the last surviving dictatorship in Europe. Fundamentally flawed
    presidential and parliamentary elections there leave that country
    without legitimate leadership and have led to its self-imposed
    isolation.
        Finally, there are important parliamentary elections coming up in
    Ukraine later this month. I have introduced a resolution urging the
    Government of Ukraine to ensure a democratic, transparent, and fair
    election process leading up to those elections. Congressional interest
    in the elections, and, for that matter, U.S. interest, is because an
    independent, secured, democratic, economically stable Ukraine is
    important, and we want to encourage Ukraine in realizing its own goal
    of integration into Europe.
        Thank you, Mr. Chairman. I look forward to the testimony and
    comments from Secretary Powell.

                                ROLE OF THE OSCE

        Senator Campbell. And I would ask the Secretary if he would
    answer some of the questions I am going to pose in writing
    because we are going to simply run out of time.
        I would tell, Mr. Secretary, I was happy to hear you talk
    about the war effort in national security, the war effort on
    terrorism and the multidimensions of it. You alluded to the
    cultural, the educational, the public information and the
    diplomatic efforts that need to be made, and I absolutely
    agree. It seems to me if we do not redouble our efforts to
    advance fundamental principles of democracy and the rule of
    law, we are just destined to fight more battles on the battle
    fields, whether it is one country or another.
        I am particularly interested in one area that I am involved
    in, and that is the OSCE. I am sure you are familiar with that.
    If you go anywhere in Europe, almost everybody knows what the
    OSCE is. They talk about it in the United States, and everybody
    kind of goes blank. Apparently, we are not doing a very good
    job of telling the people of the importance of the OSCE, but
    you know as well as I do that it is.
        Let me ask you about it in particular. As you know, there
    are 55 member nations and a number of observer nations too.
    Some of the observers have suggested that the human rights
    situation in some countries, such as Turkmenistan and several
    others, is so bad that they ought to be suspended from the
    OSCE, the way Yugoslavia was in 1992.
        I would ask you if there is a point where the OSCE does not
    play a constructive role or, to the contrary, is it used
    inadvertently by some brutal regimes to give them some
    legitimacy?
        Secretary Powell. The OSCE does a fine job, and I certainly
    know what the organization is and what it does and have worked
    with it for many years. I am sure there are nations whose human
    rights performance we do not approve of that might well be
    trying to use the OSCE to give them some legitimacy or cover. I
    would rather provide an answer for the record as to whether or
    not the rules, regulations, and basic principles, which govern
    the OSCE, should be looked at to see whether these nations
    should or should not be suspended, and which ones.
        Senator Campbell. I appreciate that, if you would answer
    that to your best ability in writing.
        [The information follows:]

        The OSCE has not relaxed its human rights expectations for
    the Central Asian republics or other participating states.
    Through its missions in Central Asia, the Permanent Council in
    Vienna, and around the world, the OSCE continues to raise the
    issue of ongoing human rights abuses and lack of democratic
    institutions in the region. It is therefore important for the
    OSCE to continue to engage these countries. The process of
    having OSCE participating states remind each other of their
    commitments, complemented by recommendations for improvements,
    is essential to building a more democratic, prosperous, and
    secure future for the region.
        In the case of Turkmenistan and several other Central Asian
    states, it is through its engagement in the region that the
    OSCE is able to improve faltering human rights and foster
    democratic development, while at the same time addressing
    urgent security, environmental and economic needs.
        We do believe that suspending participation in the OSCE
    should always remain an option should a government commit
    egregious human rights violations, such as those of the former
    regime in Yugoslavia. However, this option should be weighed
    carefully against the costs of disengaging a country from the
    OSCE process.
        The OSCE continues to be an important forum to discuss
    human rights issues and promote steps toward democracy in
    Central Asia and elsewhere. There is still a need to address
    human rights along with security interests. In order to combat
    terrorism and defeat extremist insurgencies in the region, we
    need to encourage the development of democratic governments
    that respect human rights.

                             OSCE AND HUMAN RIGHTS

        Senator Campbell. Russia, along with a small number of
    former Soviet states have complained that the OSCE is
    unbalanced, that we put too much emphasis on the human
    dimension. Those countries have also complained about that
    there is too much attention focused on former Communist
    countries that were once part of the Soviet Union. Do you think
    there is any merit to that?
        Secretary Powell. No, I think it is quite appropriate that
    the OSCE should focus on human rights. All of these various
    organizations flow back to the Helsinki Final Act on the Rights
    of Men and Women, something President Ford signed back in the
    mid-seventies, and it was a remarkable occasion and document
    when he signed it. There was quite a disagreement as to whether
    he should, but he did. And by aligning the United States for
    human rights, that essentially, I think, helped bring down the
    Soviet Union because they could not ignore this international
    standard of human rights performance that was put in front of
    them to deal with. We should continue to do that.
        Some of the former republics of the Soviet Union do not
    have good human rights records, and I am meeting with the
    leaders of Uzbekistan today. They have been very supportive of
    our efforts during the war. President Karimov has been a solid
    coalition partner, but, at the same time, there are problems
    with respect to human rights in Uzbekistan, and we will not
    shrink from discussing them with the president of Uzbekistan.
        If I could draw your attention to our annual Human Rights
    Report, which we issued last week, you will see a very long
    section on each one of these republics. We call it the way it
    is. Even though we need their cooperation and security in other
    areas, we believe it is in their interests for us not to hold
    back on human rights problems that they have. If they really
    want to be a participating nation in the 21st century in a
    coalition that rests on democracy, human rights, free-market
    activity, and if they want assistance from the United States,
    development assistance or economic assistance, then they have
    to move in this direction. We are not shrinking from that
    standard, and we are not holding back.

                         UNITED STATES-RUSSIA RELATIONS

        Senator Campbell. I appreciate that answer. Uzbekistan is
    one of the countries that has the sort of mixed approaches,
    where they are allied with us, and yet their human rights
    violations are renowned. Also, Russia itself, we now have some
    people that are going to be going into Georgia, and I
    understand, that Russia does not agree with that. They look at
    us with the view that they are fighting terrorists in Chechnya,
    and yet we are condemning what they are doing in Chechnya while
    we are fighting terrorists too.
        I know it is terribly complicated. I just want to tell you
    that I understand that and wish you well in trying to find a
    solution.
        Secretary Powell. It is very complicated. In the case of
    our willingness to help the Georgian Armed Forces become more
    proficient to deal with terrorists in the Pankisi Gorge, even
    though some Russian officials said they were not happy with
    that, President Putin understands it and appreciates the fact
    that we are working with President Shevardnaze. So it is one of
    those cases where we have a common goal, and that is to defeat
    terrorism.
        Throughout Central Asia, people said the Russians will not
    let you do things in Tajikistan, Turkmenistan, Uzbekistan, and
    Kazakhstan. But quite the contrary, they are cooperating with
    us because it is a common enemy. It is not the United States
    versus Russia, but it is the United States and Russia working
    against terrorism, fundamentalism, smuggling, drug running, all
    of those things that are a greater threat to Russia than they
    are to us.
        So we have found new ways to cooperate that would have been
    unthinkable 2 years ago.
        Senator Campbell. I am glad you mentioned the drug
    component, too, because the fact is that some of the terrorists
    finance their activities through drug sales.
        Secretary Powell. Yes, sir.

                       POLICE TRAINING IN OSCE COUNTRIES

        Senator Campbell. Let me ask just one final one so I can
    leave a little time for my colleagues before we go vote, and
    that is on the police activities. I visited the police academy
    in Kosovo some time ago, and I know that in Serbia and
    Macedonia there are some efforts to developing police training.
    I think it is very effective, frankly.
        I just want to know about the State Department. Are you
    considering efforts to support expanding police training
    activities in the OSCE countries?
        Secretary Powell. Yes. The real solution to many of the
    problems that exist is inadequate police forces, police forces
    that are not up to the kinds of standards we would expect here
    in the United States, particularly in places like Bosnia, and
    Macedonia, and Kosovo. So, yes, we are looking, and we are
    working with the Justice Department and other organizations,
    including international police organizations, to do everything
    we can to stand up more competent police forces in OSCE and
    other nations.
        Senator Campbell. Thank you, Mr. Secretary.
        Thank you, Mr. Chairman.
        Senator Inouye. Thank you.
        Senator Reed.

                    LIBERIAN IMMIGRANTS IN THE UNITED STATES

        Senator Reed. Thank you, Mr. Secretary, for your testimony
    today, and let me also thank you for your understanding and
    sensitivity with respect to the Liberian population here in the
    United States.
        As you know, for more than a decade, we have had a
    significant number of Liberians here, first, under temporary
    protective status and now under DED, and it is an annual rite
    where they face the process of deportation. I thank you, and
    the Attorney General last year, you extended DED once again,
    but I believe it is time now for some type of permanent
    solution, and I would like to work with you and the Attorney
    General to, this year, avoid the last-minute reprieve and give
    these good people a sense of permanency here in the United
    States that they want.
        Secretary Powell. I am pleased to look at it, Senator.
        Senator Reed. Thank you, Mr. Secretary.
        [The information follows:]

        We recognize that many Liberians have lived in the United
    States with temporary protection from removal for an extended
    period of time. As you know, only the Congress has the
    authority to grant lawful permanent resident status to this
    group. We will be exploring with the Immigration and
    Naturalization Service and others in the Administration whether
    there is an appropriate way to address this issue.

                                  ARMS CONTROL

        Senator Reed. Mr. Secretary, last weekend the Los Angeles
    Times described the Nuclear Posture Review, which represents a
    profound shift I think in our thinking about arms control and
    will complicate your job immensely as you go about the world
    trying to explain it and defend it.
        From the reports in the Los Angeles Times, the indication
    is that we are beginning to target countries like Libya and
    Syria who, to my knowledge, do not possess nuclear weapons,
    that we are at least suggesting the preemptive use of nuclear
    weapons, that we are preparing to develop new classes of
    weapons which would penetrate deep underground, and this raises
    quite a few questions. I must say, as an aside, one of the
    subtexts in the discussion of the ABM Treaty has been the
    immorality of using nuclear weapons as a balance of terror, but
    it seems that such moral objections did not infuse this Nuclear
    Posture Review.
        But getting to the more specific points. It seems to me
    that we are turning away from what was our traditional approach
    to arms control, which was a very deliberate, concerted,
    consistent effort to limit the use of nuclear weapons, not to
    expand their use.
        Second, with the discovery of these new targets, it seems
    to me that the hope of many sides that we could reduce the
    number of warheads and launches might be frustrated by the
    simple increase in targets in these different countries.
        Finally, the proposal or discussion to develop new classes
    of nuclear weapons raises the issue of nuclear testing. Why do
    you not comment in general on these issues and specifically
    whether you would anticipate that we would begin to test
    nuclear weapons to develop this new class of systems.
        Secretary Powell. With pleasure, Senator.
        Senator Reed. Thank you, Mr. Secretary.
        Secretary Powell. After reading the articles over the
    weekend and the continued commentary today, I had to go back
    and read the report again because the articles did not comport
    with my understanding of the report.
        Let me answer it this way: When I was Chairman of the Joint
    Chiefs of Staff, the first day I took over, October 1, 1989, we
    had 29,000 nuclear weapons in our operational inventory. I was
    responsible to the President and the American people as to how
    they might be used. Now, some 13 years later, that number is
    well, well under 10,000. We have removed from our operational
    inventory two-thirds of the weapons that were there when I was
    Chairman.
        We have gone from a situation where we had day-to-day alert
    targeting on specific targets all over the Soviet Union and
    other nations of the Warsaw Pact, to a situation today where
    not a single country in the world is on a day-to-day target
    list. We are working with the Russians for further reductions.
    We have said in this report, the Nuclear Posture Review, that
    we do not really view Russia as an enemy the way we used to
    view Russia as an enemy, and therefore, we can make even more
    significant reductions in our nuclear forces.
        The President has gone so far as to say, ``Look, President
    Putin, we do not even need a treaty for this because I am going
    down whether you are or not. I do not need as many nuclear
    weapons as we used to have.''
        So, quite the contrary, the philosophy of President Bush,
    the philosophy of this administration, is to continue driving
    down the number of nuclear weapons.
        I was pleased to be the Chairman of the Joint Chiefs of
    Staff in 1991, or early 1992--the year escapes me as I get
    older, Senator Reed. I will have to go back and check my
    records--but when I went to the President of the United States
    with my boss, Secretary of Defense Cheney, and said to former
    President Bush, ``We no longer need any nuclear weapons in the
    Army. They are all gone. The marines have gotten rid of theirs.
    We no longer need any tactical nuclear weapons in the United
    States Navy. They are all gone. We still have the ballistic
    missiles in the Navy. And we need many fewer nuclear weapons in
    the Air Force.''
        And so, frankly, we have gone down significantly, and we
    will continue to go down. That is point one. So, even though
    traditional arms control has changed, the drive to reduce the
    number of nuclear weapons has not changed; it is accelerating,
    even in the absence of traditional arms control kinds of
    negotiations.
        With respect to reports that somehow we are thinking of
    preemptively going after somebody, or that, in one editorial I
    read this morning, we have lowered the nuclear threshold, we
    have done no such thing. There is no way to read that document
    and come to the conclusion that the United States will be more
    likely or will more quickly go to the use of nuclear weapons.
    Quite the contrary. We have now an overwhelming conventional
    non-nuclear capacity, even greater than it was 10 years ago.
        The discrepancy in conventional capability between the
    United States and any other nation or combination of nations is
    greater than it was 10 years ago. So we are not fools. We are
    not going to suddenly say let us more quickly go to nuclear
    weapons, when we have such conventional capability.
        What we have done in this report, quite sensibly, is to say
    the American President has to have all of the options that are
    available to him, alive and well, and thought through. And so
    when we look at the dangers that are out there and when we look
    at nations that might be developing weapons of mass
    destruction, it is prudent, commonsensical, and good thinking,
    politically and militarily, to consider these nations and to
    consider what range of options the President should have.
        Nuclear weapons have not gone away from the face of the
    Earth. I wish they were. I wish there was not a single nuclear
    weapon in the world, but there are. I am pleased to have been
    part of several administrations that have driven the number
    down. I do not know if I will still be around when they are all
    gone, but I hope they will be some day. But as long as we do
    have nuclear weapons and as long as there are nations that
    continue to move in this direction, the security of the
    American people, the security of our Nation, and the security
    of our friends requires us to think the unthinkable.
        But nothing in this Nuclear Posture Review seems to me to
    represent a major departure in thinking from previous
    administrations, in terms of continuing to go down and
    continuing to find new ways of stability in our strategic
    framework. That is why we are so committed to missile defense.
    Missile defense does not kill a single individual. Missile
    defense protects people from offensive weapons of the kind we
    are trying to get rid of. It is offensive weapons we are trying
    to get rid of that kill people.
        With respect to the development of new nuclear weapons, we
    are examining whether or not, within our inventory,
    improvements can be made or there are new things which we
    should be looking at that are sensible. But in looking this
    over the weekend, after the stories broke, the report I have
    from the Pentagon states just that, we are looking at it. There
    is no new design out there or new nuclear weapon about to be
    commissioned into production that would require testing. We
    remain committed to a moratorium on testing. Even though we are
    not in the CTBT, the President remains committed to a
    moratorium on testing.
        So there is no testing breakout coming. There is no new
    escalation in the kinds and types of nuclear weapons we wish to
    have. There is no change in the threshold that people like to
    talk about. There is no more intention to preempt than there
    might have been in some previous administration. What we are
    doing is taking a look at the world that is out there right
    now. And for those nations that are developing these kinds of
    weapons of mass destruction, it does not seem to us to be a bad
    thing for them to look out from their little countries and
    their little capitals and see a United States that has a full
    range of options and an American President that has a full
    range of options available to him to deter, in the first
    instance, and to defend the United States of America, the
    American people, our way of life and our friends and allies.
        Senator Reed. Thank you, Mr. Secretary. The thoughtfulness
    and thoroughness of your answer suggests the seriousness of
    this topic, and I suspect this will not be the last exchange
    you have with the Congress----
        Secretary Powell. I am sure not.
        Senator Reed [continuing]. Nor your fellow foreign
    ministers around the globe. This is a very important issue.

                           MISSILE DEFENSE AND RUSSIA

        Secretary Powell. It is, and I can assure you, for example,
    my Russian colleague, Foreign Minister Ivanov and I, we discuss
    this constantly. Sergei Ivanov, the Russian Minister of
    Defense, is in town today to have similar discussions with
    Secretary Rumsfeld. The Russians want the reductions to be
    legally binding. We have agreed to that because they felt it
    was so important because they wanted predictability about the
    future. Who knows who the next President is going to be in
    Russia and in the United States, so let us put it in
    international law. We understand that. But the President, while
    willing to do this, is just as willing to say, and has said
    across the table to President Putin, in my presence more than
    once, ``Mr. President, we are no longer enemies. You have what
    you think you need to protect yourselves, and we will have what
    we think we need to protect ourselves, and we are going down. I
    am cutting. So, if you want to cut, fine.''
        President Putin said, ``Yes, I want to cut, but I really
    need predictability in the future. Therefore, let us make it
    legally binding.''
        ``If that is what you need, we will try to accommodate you,
    but we are going down anyway.''
        Senator Reed. Thank you, Mr. Secretary.
        Senator Hollings [presiding]. Thank you.
        Senator Inouye.

                           CONSULTATION WITH CONGRESS

        Senator Inouye. Thank you very much, Mr. Secretary. It is
    always a pleasure to be in your company and to listen to your
    testimony, either as Chairman of the Joint Chiefs or Chairman
    of America's Promise or Secretary of State.
        As you may recall, Mr. Secretary, several years ago a few
    Members of Congress received calls from the White House to
    report to the Cabinet room to meet with the President on a
    special problem, and we gathered early in the morning the
    following morning, and we, when the President called the
    meeting to order, his announcement was very simple. ``At this
    moment, our troops are landing on the Island of Grenada.''
        I can tell you that not all of us were advised of this
    military action. However, Grenada was a small island country,
    weak, and so very few Members of Congress took any note of
    that. But since 9/11, our front pages, magazine covers have
    been filled with attacking Iraq, attacking Yemen, attacking
    Somalia. My question is, if this country is seriously
    considering attacking one of these countries, I would hope that
    the Congress of the United States would be brought into and at
    least consulted or discussed, carry on a dialogue, get our
    views, because I would hate to see another repetition of
    Grenada, and Grenada is not Iraq.
        Do you have any thoughts on that?
        Secretary Powell. Yes, I do, Senator. I remember Grenada as
    well. It was a sudden crisis that suddenly sprung on the scene
    over a terrible weekend that also included the weekend of the
    Beirut bombing, as you will recall, back in 1983. It just was
    something that had to be done quickly, and nobody could even
    find Grenada on most maps without a little bit of coaching at
    that time. And so President Reagan was faced with an immediate
    crisis, and because of problems of operational security, he
    found it necessary to bring Congress in just as the invasion
    and operation were taking place.
        With respect to the current situation we are in, the
    President has no plans on his desk and no recommendations from
    his national security advisors to undertake military action
    against any country. In a couple of the ones you mentioned,
    say, Yemen, it is not a matter of sending armed forces into
    combat in those countries but a question of the Armed Forces of
    the United States assisting the governments of those countries
    in dealing with the threats they are facing from terrorist
    activities that have found haven in those countries.

                              U.S. POLICY ON IRAQ

        With respect to Iraq, our policy remains as it has been for
    some time. One, we are working in a multilateral organization,
    the United Nations, to make sure that Iraq abides by the
    conditions of the end of the gulf war, saying you cannot
    develop weapons of mass destruction, and inspectors, a U.N.
    inspection team, will determine whether you are or you are not.
    Iraq, apparently, has once again refused, rather strongly in
    recent days, to allow the inspectors back in. Therefore, the
    sanctions must remain, and the Oil-for-Food program must
    control roughly 80 percent of the money that goes to the Iraqi
    regime, so we know what they are spending it on.
        But the United States also believes that the Iraqi people,
    the region, and the world would be better off if that regime
    were changed, if it were no longer there. We are in
    consultation with our friends and allies, and the President
    speaks to Members of Congress, the leaders of the Congress, on
    a regular basis as to what his thinking is. But he has made no
    decisions with respect to any changes in the way we are
    approaching this problem.
        We examine our options, we work with Iraqi opposition
    groups to see how they can be made more effective, and as you
    know, I consult on a regular basis with my foreign minister
    colleagues around the world. Vice President Cheney is on a trip
    now to talk about many things, including the Middle East peace
    process, energy plans, energy programs, and the campaign
    against terrorism, and I am sure in the course of his 10 nation
    visit, he will also talk about the problem associated with
    Iraq, as well as Iran's situation, their support for terrorist
    activities, and their efforts to develop a nuclear capability.
    But I am sure the President understands, I know he understands,
    that Congress is terribly interested in this issue, and he will
    continue his discussions and consultations with the leadership.
        Senator Inouye. Thank you very much.
        Mr. Chairman, I have questions I would like to submit,
    questions such as--they are regional types, Mr. Secretary.
        Secretary Powell. Yes, sir.
        Senator Inouye. East-West Center, Coral Bed ecosystem,
    Pacific Northwest long line fishing, that type.
        Secretary Powell. Yes, sir.
        Senator Inouye. So, if I may----
        Secretary Powell. By all means, sir.
        Senator Hollings. Very good.
        Mr. Secretary, Senator Domenici has definitely some
    questions, and he is racing back right now, but you can see
    from the tone of questioning and the concern that maybe Ms.
    Charlotte Beers, is she Deputy Secretary? You ought to assign
    her not necessarily to get the American message of freedom and
    individual rights and peace out to the world around, but get
    her over to the Defense Department that you headed up and
    coordinate the administration's message because you get this
    ``axis of evil,'' and then the next thing you know we have the
    threat of limited nuclear attacks, adding two more countries to
    the ``axis of evil.'' Then there are all these questions about
    what is going on, and you have to explain to a committee, to
    all people, to us, the Congress, that there is no change in
    nuclear disposition or use or whatever it is.
        But right to the point, tell Karl Rove to cool it. I know
    he is trying to keep the war fires burning until November, but
    that is not helping you out at all. How can you get diplomacy
    in State, and friends, and influence, and bring about peace?

                             SITUATION IN COLOMBIA

        Incidently, Colombia, we went down there last year, and the
    Government itself had not seemed to make up its mind to get rid
    of the FARC and everybody else occupying that area down there.
    They were trying to modulate more peace, and draw lines, and
    everything else. It reminded me of the time, with Ben Gurion
    and the early Prime Minister behind him, they had a boatload of
    weaponry coming in, and--Menachem Begin--and Ben Gurion had
    already agreed with the United Nations to withhold any kind of
    military activity, being recognized as a country, and he had to
    of course call Begin down on that boatload of arms that he
    continued to use on the premise he said that in a country there
    can be only one military force, and that has got to be in the
    hands of the Government.
        Similarly, down there in Colombia tell them or maybe you
    can get Pastrana to Israel and Sharon to Colombia. Maybe that
    swap would really get us going somewhere.
        I see you do not want to comment, but----
        Secretary Powell. No, sir.

                       EXPANSION OF THE WAR ON TERRORISM

        Senator Hollings. Well, you get down there, you get the
    training. I thought I was back in Vietnam. We had the colonels
    get all around the table and give us all a briefing. We are
    ready to go, and we are moving there and everything else like
    that. Then there is Georgias where we have just trainees, but
    sometimes the trainers accompany the trainees, and then they
    come under fire, and then they get engaged, and then we have to
    send in reinforcements, the same old Vietnam situation.
        So as we get into the Philippines, and Yemen or Georgia and
    these other places, you are a product of it. You understand it
    better than any, and let us watch it as closely as you possibly
    can.
        Secretary Powell. We certainly will, Mr. Chairman, and I do
    not think the models there really compare back to Vietnam.
        The FARC is a terrorist organization, and the ELN is a
    terrorist organization. They can damage Colombia's democracy.
    They cannot really destroy the nation or take it over, but they
    cause a great deal of disturbance throughout the society with
    their terrorist acts, with their acts of violence, and with
    their connection to narco-trafficking. I think it is very
    reasonable for us to help them. There is no request for United
    States military troops, even as trainers accompanying advisers
    and the kind of problem you mentioned. I am very aware of that
    and very sensitive to it because I was one of them some 40
    years ago this year. So we are very sensitive to that.
        I also think that is the case in the Philippines, where the
    Abu Sayyaf group, with its al Qaeda connections, cannot bring
    down or overtake the Government of the Philippines. But it is a
    threat to the democracy of the Philippines, and therefore it is
    quite legitimate for us to assist those nations. But neither
    nation has indicated they want U.S. troops to come in, and I do
    not think we will slide down that slope.
        Senator Hollings. Very good.
        Senator Domenici.
        Senator Domenici. Thank you very much, Mr. Chairman.
        Mr. Secretary, it is good to see you.
        Secretary Powell. Good to see you, sir.

                      MICRO LENDING PROGRAM IN AFGHANISTAN

        Senator Domenici. I want to open with the idea that I have
    raised with you on one occasion on the telephone and put it on
    the record here.
        You know, obviously, for Afghanistan to stabilize, at some
    point people are going to have to be in business, big business,
    little business, many businesses. I wonder if you would
    consider doing some evaluation as to whether the micro lending
    that has been successful in underdeveloped countries might be
    suitable in Afghanistan. Micro lending has turned into a hugely
    successful banking operation, but it is not really banking. It
    is just fundamentally that you do not have to worry about
    security, you do not have to worry about checking people's
    credit.
        What you do is lend them small amounts, $100, $300, $500,
    for a particular little business that they have got. The
    relationship is kind of personal with the lender. We found
    across the land and, in fact, in the United States, micro
    lending is about as secure as any kind of lending around. Those
    kinds of enterprises pay their bills.
        I would think that, while we are busy worrying about from
    where the other kind of financing is going to come, that we
    might do well to experiment with micro lending for the Afghani
    people. In the United States, I might say in some of our
    States, women, as part of the initial setting up of women's
    business advocacy groups, have taken on micro lending to get
    started and found it to be hugely successful. The dollar amount
    here is higher. I think we tried it in Mexico with success. I
    wonder if you could comment on it, and then later we will talk
    with the chairman and ranking member about doing something to
    authorize it.
        Secretary Powell. I think micro lending is a great idea. I
    have had some experience with it. Before I came back into
    Government, I made a trip to India, and I went into one of the
    poorest neighborhoods in Mumbai. I saw what some women had been
    able to do with micro lending programs in their community and
    how they were saving the profits that they were already making
    in order to pay back the micro lending facility. In the local
    community, a micro lending facility had been set up. And so it
    is a good way to get people back into business, back into
    commerce.
        As Chairman Karzai, the Interim Authority head in Kabul,
    said to me when I was there, ``Afghanistan will not be
    successful until we are generating our own revenue, and until
    our economy starts to work, we will not be successful. We do
    not want aid. We want our own economy functioning. We want to
    support ourselves. We do not want aid. We want investment.''
    Micro lending certainly lends itself to that.
        I think we will need a little more time to see the country
    stabilize a bit more and to have greater confidence in the
    banking and financial system, in order to support any kind of
    lending, to include micro lending. But I certainly would
    encourage anything that moves us in that direction, Senator.
        Senator Domenici. Mr. Chairman, I wonder if we might
    explore this with your staff. I do not know if it needs
    specific authorization. I do not think so. I think it could be
    part of our foreign aid provision in this or another bill. I,
    personally, would hope that I could get your support. That
    would make it for sure, and I think it is worthy of us starting
    that.
        Senator Hollings. If you have it, we will work on it, and
    get Secretary Powell's approval here of our language.
        Senator Domenici. Very good.
        Senator Hollings. Good.
        [The information follows:]

        As Secretary Powell indicated on March 12, he is a strong
    supporter of microfinance, especially as Afghanistan
    stabilizes. The U.S. Agency for International Development
    (USAID) is currently exploring both the multilateral and
    bilateral options available to us for supporting a microfinance
    development program in Afghanistan.
        On the multilateral front, USAID is working closely with
    the Consultative Group to Assist the Poorest (CGAP), a
    consortium of 28 donors housed in the World Bank, to establish
    a common framework for the development of an Afghan
    microfinance sector. USAID, which partially finances CGAP, is
    working with the consortium to undertake a national
    microfinance framework review planned for May 2002. USAID has
    publicly indicated its willingness to co-host a donor meeting
    to discuss the review findings.
        As this longer-term strategy unfolds, USAID is also
    examining possible shorter-term bilateral investment options.
    Choices will not be easy. Strict interpretations of Islamic law
    with respect to interest earnings, the level of indebtedness of
    rural Afghan families, and the limited capacity of local
    microfinance organizations represent unique challenges that
    USAID will have to take into account. One option USAID is
    considering is the creation of a nongovernmental organization
    competitive grants program to support microfinance start-up
    activities.

                  INTERNATIONAL LAW ENFORCEMENT ACADEMY [ILEA]

        Senator Domenici. Mr. Secretary, on a parochial note, we
    have a law enforcement academy in Roswell, New Mexico, that is
    known as ILEA, I-L-E-A, facilities. I have a few questions
    about where that program is going, but I wanted to share with
    you that the initiation of this program in Roswell, New Mexico,
    went extremely well.
        Secretary Powell. Yes.
        Senator Domenici. That the first group of foreigners that
    came were from a very poor country, and they were very, very
    impressed that the United States would take this opportunity to
    help them with law enforcement, the appreciation of it and the
    fundamentals. I would like to make sure that because our
    emphasis seems to be moving in other directions, either toward
    the drug war or against terrorism, that we will not shirk this
    because this is fundamental training. None of the other kinds
    of law enforcement are going to work if we shirk this one.
        Would you mind looking into this and answering in the
    record as to what your position is, what the State Department's
    position is on ILEA's?
        Secretary Powell. I would be delighted to, sir. I am very
    familiar with the facility. I have even seen some tapes of the
    facility. It looks like a very professionally run organization.
        Senator Domenici. I am going to put about 10 questions in
    the record because it is getting late.
        [The information follows:]

        The Department, through the Bureau for International
    Narcotics and Law Enforcement Affairs, intends to continue its
    support for the ILEAs. These institutions are recognized as key
    elements in the international response to drug trafficking and
    other criminal activity.
        Now more than ever, the Academies will play a significant
    global role in combating not only criminality, but the
    terrorist elements who often use criminal enterprises to
    accomplish their goals.

                          VISA AND PASSPORT ACTIVITIES

        Senator Domenici. I just wanted to take one last issue and
    talk with you about it.
        You know the visa and passport activities of your
    Department are very, very important. We all know how important
    it is because our constituents probably talk to us about visa
    situations as much as any other foreign policy issue because
    passports take too long to process or they get mixed up. So we
    all get a taste of it in a pretty good way, and I just want to
    comment that visa fraud and the whole issue is very important
    in the war on terrorism. I would hope that there is a real
    effort to work your innovations and improvements into what the
    other Departments have to do with reference to border
    functioning.
        Are you going to be working together, with reference to the
    implementation?
        Secretary Powell. Yes, I must say the events of 9/11 have
    made it clear that a higher level of coordination and
    cooperation between the various Departments is needed.
    Assistant Secretary Mary Ryan, who heads Consular Affairs for
    us and deals with all of these kinds of issues, is working
    closely with INS and others as part of the homeland security
    work of Governor Ridge.
        Senator Domenici. The rest of my questions will be
    submitted in writing to be answered whenever the chairman sets
    the time.

                             FUTURE OF AFGHANISTAN

        I just want to close where I should have begun, by
    complimenting you on the effort of the President, the Secretary
    of Defense, yourself and all of those who are part of America's
    most, most successful effort to combat terrorism. I leave you
    with one question that you might answer for us.
        In Afghanistan, what do you see as the next step in
    governance there based upon your experience and knowing the
    people? When this very interim situation is up, what do you
    think the next governance----
        Secretary Powell. I am very pleased at how well the Interim
    Authority has done. It has certainly got a lot of work ahead of
    it, but when you consider where we were a couple of months ago,
    wondering if we could ever get this thing started, I think
    Chairman Karzai is off to a great start. The next thing that
    will happen is later this spring, when there will be a grand
    assembly and another government will be selected, and then in 2
    years' time, there will be an election. All of that seems to be
    progressing rather well, with the assistance of the United
    Nations.
        Chairman Karzai's real challenge now is to make sure that
    he can put in place a national army and a police force to
    guarantee security throughout the country and tamp down the
    ambitions of various warlords, so that it does not go back to
    old Afghanistan, but new Afghanistan.
        And then I think one of the biggest challenges they are
    going to have, Senator, is just putting in place some of the
    fundamental administrative systems and processes that we take
    for granted. The ability to write a government check does not
    exist yet, and neither does the ability to talk to one another
    from office to office, or to communicate with computers. Unless
    you have these basic administrative systems down, it is hard to
    run a country in the 21st century. That is going to be a major
    challenge for him, as will be putting in place a cabinet and
    sub-cabinet-level government that will represent competent
    people, committed people, educated people, so we do not get
    into the business of cronyism or paying off one warlord with a
    position and another warlord with a position. It is those basic
    administrative systems, noncorrupt and transparent, that will
    allow this government to start to act like a government.
        Senator Domenici. Might I follow up with one comment?
        Senator Hollings. Surely. Go ahead.

                                   CAPITALISM

        Senator Domenici. Mr. Secretary, I am a bit concerned. We
    all learned up here over the past decade to say that what we
    really were proud of was that the world was moving toward
    democracy, toward freedom, and then we always added and toward
    free enterprise or capitalism. So we were saying the world is
    now moving toward capitalism as a form of economic policy, and
    freedom, and liberty and democracy as the underpinning.
        There seems to have grown up here a group of Americans who
    do not agree with the capitalism part of this because they talk
    about it being too big, and the corporations have taken over.
    On the other hand, in some of these countries their banking
    system failed after they were well along and left some very bad
    connotations about whether capitalism will work to move a
    country from a very poor and underdeveloped stage on through to
    growth and prosperity.
        Does it concern you that there have been some failures that
    are very visible to the world? And, if so, what do we do about
    underpinning those governments more? Do we involve ourself more
    in their basic economic policies so they will not make mistakes
    like Mexico made. Had they not been as strong and had such a
    powerful neighbor, their mistake would have taken the country
    down.
        Secretary Powell. I think capitalism still remains the
    model of choice. Nothing else really works effectively in the
    21st century. Globalization is here to stay. Whether people
    like it or not, it is an integrated world. We have seen
    countries such as China and Russia moving in this direction
    because it works for them. They have accumulated a level of
    wealth they could have never dreamed of previously.
        Have there been failures? Have there been mistakes? Yes,
    when you look at the Asian financial crisis of, say, 5 or 6
    years ago, and when you look at what happened in Mexico. But it
    is interesting; the system adjusted and learned from those
    early errors, those early catastrophes, the Russian bankruptcy
    of the middle 1990s. People have learned, so that when we now
    have crises, let us say in Argentina and some challenges in
    Turkey, contagion is not as big a problem as it was 5 or 8
    years ago. People have learned how to deal with this.
        Even with a system as advanced and developed as ours, we
    have demonstrated rather vividly in recent months that we can
    still have catastrophic failures that are unimaginable. But
    they happen. And what people have to learn is that capitalism
    means risk. Capitalism means the destruction of organizations
    that are no longer relevant or are no longer responding to the
    market or have been run ineptly. As long as you understand that
    capitalism is constructive, but it also has a necessary
    destructive element to it, then I think we can keep the world
    moving in the right direction.
        Senator Domenici. Thank you very much.
        Thank you, Mr. Chairman.

                                     MEXICO

        Senator Hollings. Now, when we get into, well, let us say,
    first, Mexico, at the time, Mr. Secretary, when we were getting
    into NAFTA, we had a wonderful witness. He was on the
    satellite. His name was Vicente Fox, and he was attesting,
    along with other witnesses from Mexico City, what we really
    needed was a sort of common-market, rather than a free-market,
    approach. ``Over here capitalism, Senator, is very good if you
    have got an open-market market, you have got a respected
    judiciary, you have got labor rights,'' and you can go right on
    down the list.
        And we found in Europe that you could not have that, under
    the free-market approach, so the European community taxed
    themselves for 5 years to the tune of $5 billion before they
    allowed Greece and Portugal into the common market. Instead we
    use the free market. I am for free market. I voted for free
    trade with North America because we have the same standard of
    living between Canada and the United States, not so with
    Mexico.
        And so when you begin to talk of capitalism, we have got to
    help Mr. Fox out down there on the one hand. I had asked last
    year, and maybe you can answer, about the coordination perhaps
    of establishing an FBI school down there, because they would
    not allow it before, but if we can train their law enforcement,
    and he is trying to beef it up, Jorge Castanedo, the Foreign
    Minister, is ready to go. See if you can do that, and otherwise
    work out a little Marshall Plan for Mexico. Because all we did
    in NAFTA was send down $12 billion, and it went through the
    banks. Now they owe it to Deutsche Bank, and the money went
    back up to Wall Street, and nothing happened, and he is having
    a heck of a struggle happening, bringing it into capitalism and
    all of those things. So we can help with law enforcement.
        But if you really want to take our neighbor and not worry
    about Yemen or what might be happening down in East Timor, I am
    worried about what is happening in Mexico, and I would like to
    see this fellow succeed, but he needs help, not just meetings
    and headlines. We have got to start making some headway.
        I would vote tomorrow morning or this afternoon for a $12
    billion Marshall Plan for Mexico and just have the stated
    things that must be developed and must occur before the money,
    in increments, is divvied up, otherwise, see, I speak feelingly
    because I have lost 50,900 textile jobs to Mexico already since
    NAFTA passed. In other words, as Senator Domenici and Senator
    Hollings stated, before you open up Powell Manufacturing, you
    have got to have a minimum wage, clean air, clean water, Social
    Security, Medicare, Medicaid, plant closing notice, parental
    leave, safe work in place, safe machinery, OSHA. I can keep
    going down the list, but you can go for 58 cents an hour and
    none of that.
        And so if your competition moves, you have got to go or you
    are going out of business, and they are all Republican anyway,
    Secretary Powell, so I am not too worried about them.

                         GLOBALIZATION AND COMPETITION

        But they are all gone now. We have lost 670-some-thousand
    jobs in steel, and what you have is the enemy within. They have
    moved, Senator Domenici, their production, these
    multinationals. They call it globalization, globalization, and
    people have got to realize it, and understand, and we have got
    to live with it whether they like it or not. Well, they are
    moving their manufacturing into protectionism of Mexico,
    Malaysia, Japan, Korea, China. You are guaranteed a profit when
    you go to China. Oh, yes, sir. Yes. They are moving their
    production to protectionism, and they are babbling at me free
    trade, free trade, fast track, fast track.
        Do not worry about all of that. Let us get into the real
    world of the so-called globalization and competition. The only
    way you are going to remove these barriers is to raise a
    barrier and then remove them both. I mean, we are all for the
    Marshall Plan, and capitalism has defeated communism because we
    gave away a good bit of our production, there is no question,
    but as has been stated long ago, our security is like a three-
    legged stool, your values, unquestioned; your defense,
    unquestioned; but your economic security has been fractured
    over the past 50 years. And as hard as you can work, we are
    going out of business unless we begin to compete on capitalism.
        Senator Domenici. Mr. Chairman, I raised the issue, and I
    certainly stayed to make sure that I heard your views.
        Senator Hollings. Yes.
        Senator Domenici. I think you know that I would not agree
    with all of them, clearly, but I would say that when the
    Mexican banks had their problems, it was quite obvious that the
    United States could not be part of helping a country and then
    have no standards, with reference to their banks, of the kinds
    of things that everybody knows you would have to have in order
    to maintain viability.
        I understand that after that event some work was done
    jointly by the United States private sector and the Government
    to establish some new kinds of rules, like transparency, which
    obviously means that they cannot hide so many of the
    transactions and/or relationships of the bank from individuals,
    businesses and the international markets, and a few other basic
    principles.
        I think it would be interesting and, perhaps without
    burdening you all too much in your response, maybe you might
    furnish us with a little summary of what the United States has
    done with reference to the changes that we expect as part of
    the capitalist systems that we help because there is more than
    just transparency.
        You remember this situation. I think you were out of
    Government during that period; is that correct?
        Secretary Powell. Yes, I believe that is correct.
        Senator Domenici. I think so. Well, in any event, would you
    do that for us?
        Secretary Powell. We will take a look at it. I have people
    who are competent to do that.
        Senator Domenici. Thank you.
        [The information follows:]

        The United States, led by the Department of the Treasury,
    has strongly supported International Monetary Fund (IMF)
    initiatives to strengthen surveillance and crisis prevention
    measures. With U.S. government support, the IMF and World Bank
    initiated the Financial Sector Assessment Program in 1999 to
    assess members' financial systems and the regulatory and legal
    framework underlying their operations. The results are
    incorporated into the IMF's reviews of national economies.
        Spearheaded by the Asian financial crisis, the IMF's
    standards and codes initiative promotes the development and
    dissemination of codes of good practice in the financial
    sector. Reports on the Observance of Standards and Codes
    (ROSCs) summarize the extent to which countries observe
    international norms in a number of areas crucial to the health
    of financial systems. Reports are used for official
    discussions, as well as for risk assessment by rating agencies
    and the private sector.
        The United States has supported efforts to improve dialogue
    among market participants, the International Financial
    Institutions, and sovereign governments. In June, 2001, the IMF
    created an International Capital Markets Department as part of
    an initiative to strengthen the international financial
    architecture. The Department serves as a liaison with the
    private sector and enables the IMF to conduct more effective
    surveillance.
        At the urging of the United States and its G-7 partners,
    the Financial Stability Forum (FSF) was established in 1999 to
    improve cooperation in financial surveillance and supervision.
    The FSF is comprised of finance ministry and regulatory
    officials, as well as International Financial Institutions and
    international banking representatives. The FSF encourages
    implementation of measures to improve the health of financial
    systems, including improved disclosure practices, deposit
    insurance programs, accounting standards, and counter-party
    risk management.
        The Basel Committee on Banking Supervision is playing a
    fundamental role in strengthening the safety and soundness of
    the international banking system. Chaired by New York Federal
    Reserve President William McDonough, the Committee is revising
    the Basel Capital Accord to redefine minimum capital
    requirements, improve supervisory review standards of internal
    bank assessment processes, and ensure effective disclosure
    standards to encourage sound banking practices.
        The Committee on Banking Supervision and the Bank for
    International Settlements jointly created the Financial
    Stability Institute in 1999 to help bank supervisors improve
    financial systems worldwide. The Institute organizes seminars,
    regional workshops, and informational programs on bank
    supervision issues. Upcoming seminars in Muscat, Khartoum,
    Lusaka, Bangkok, and Vilnius are indicative of the worldwide
    scope of its efforts to improve banking standards.
        Finally, the United States is working on a bilateral basis,
    where appropriate, to address areas of concern. The Treasury
    Department's technical assistance team and USAID's banking and
    capital market reform team have worked with governments in
    Asia, Eastern Europe, South America, Africa, and the Middle
    East on a wide range of bank reform issues.
        An appropriate financial policy framework facilitates the
    mobilization of capital and is a critical condition for stable
    economic growth. As the United States works with its partners
    to promote the spread of market-based economies, efforts to
    strengthen the financial and banking sectors will remain a
    priority.

                         ADDITIONAL COMMITTEE QUESTIONS

        Senator Hollings. Mr. Secretary, we are lucky to have you,
    and the record will stay open for the questions by the members
    who got disrupted here by the rollcall. But thank you very,
    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 Daniel K. Inouye
                         hawaiian-based fishing fleets
        Question. Longline vessels operating out of Hawaii are banned, by
    judicial order, from swordfish fisheries in the Pacific Ocean due to
    the unintended bycatch of endangered turtles. Foreign fleets, however,
    are allowed to fish in the same waters our domestic fishing fleet is
    prohibited from utilizing. The foreign fleets have been able to take
    advantage of the unmet demand in the U.S. swordfish market caused by
    the swordfish fishing ban placed on Hawaii-based longliners. The
    foreign fleets are able to freely export their swordfish catch to the
    United States, although they are believed to have higher sea turtle
    interaction rates and to inflict greater levels of harm than the
    Hawaii-based fishing fleet. What meaningful measures is the State
    Department taking to address this problem?
        Answer. The issue of addressing the bycatch of sea turtles in
    longline fisheries in the world's oceans is both challenging and
    complex. As noted in the Department's report to Congress earlier this
    year, the Department of State has been working closely with the
    National Marine Fisheries Service (NMFS) to understand how technical
    solutions might be implemented in a practical, verifiable, and
    enforceable manner throughout the fisheries, where longline and sea
    turtle interactions occur. Once such technical gear or management
    solutions have been developed and demonstrated to be effective for
    long-term resolution of this problem, the Departments of Commerce and
    State will look for ways in which such a solution could be implemented
    throughout the world's fleets.
        In the meantime, the Department and NMFS will work to bring U.S.
    concerns about sea turtle bycatch in pelagic longline fisheries to the
    attention of other countries and entities engaged in these fisheries,
    as well as the relevant international fisheries bodies, including the
    International Commission for the Conservation of Atlantic Tunas
    (ICCAT), the Inter-American Tropical Tuna Commission (IATTC), the soon-
    to-be-established Western and Central Pacific Fisheries Commission
    (WCPFC), the APEC Fisheries Working Group, and others. Through these
    contacts, we will seek both information relating to the nature and
    extent of sea turtle bycatch (which to date is incomplete for all
    fisheries and fleets involved), as well as consideration of any
    appropriate mitigative management measures.
        One area where the United States will make particular efforts is in
    the Asia-Pacific Economic Cooperation forum (APEC). The United States
    has the position of lead shepherd in the Fisheries Working Group (FWG)
    of APEC, and NOAA Administrator Lautenbacher will attend the APEC
    Oceans Ministerial on behalf of the United States in April 2002. The
    Department is also working with the Western Pacific Fisheries
    Management Council on preparations for the second International
    Fisheries Forum (IFF 2), which will address sea turtle and seabird
    bycatch issues. IFF 2 is tentatively scheduled to be held in November
    2002 in Honolulu.
                                 net fragments
        Question. Nets from Russian, Asian and U.S. trawling vessels, which
    are lost or discarded, float around the North Pacific Ocean and
    ultimately wash up in the Northwestern Hawaiian Islands. These net
    fragments trap and drown or injure endangered Hawaiian monk seals and
    severely damage the unique coral reef ecosystem of the Northwestern
    Hawaiian Islands, which accounts for approximately 70 percent of all
    coral reefs in U.S. waters. What has the Department of State done to
    work with other nations to identify the sources of these derelict net
    fragments and to minimize the volume of derelict net fragments in the
    Pacific Ocean?
        Answer. The Department of State recognizes the magnitude of the
    current problem in Hawaii and is seeking ways to raise awareness of the
    issue in the international arena and to engage in a productive dialogue
    with other nations. To this end, the Department of State participated
    in the International Marine Debris Conference, held in Honolulu, HI in
    August 2000, and plans to submit an Asian Pacific Economic Cooperation
    (APEC) proposal to the APEC Fisheries Working Group designed to create
    a dialogue between all stakeholders, in accordance with priorities of
    the APEC Osaka Action Agenda. The proposal outlines an outreach seminar
    that would (1) provide participants with technical and scientific
    information on the problem of derelict fishing gear and related debris
    and its impacts, particularly the oceanographic variables that
    exacerbate the problem in the Pacific, in order to highlight the
    economic, financial, environmental, and marine hazard aspects of the
    problem; (2) provide a forum to examine ways in which derelict fishing
    gear and related debris actually occurs and allow policy-makers,
    industry leaders, and fishermen to exchange best practices and
    practical experience to explore possible options to minimize net and
    gear loss; (3) provide the opportunity to review regulatory and
    infrastructure mechanisms pertinent to gear loss or disposal to
    determine the international policy and legal frameworks that are in
    place, if any, to address disposal or accidental loss and identify
    potential forums and mechanisms to address this issue; and (4) identify
    potential gaps or obstacles to mitigating gear loss and ways to ensure
    proper disposal.
     convention on the elimination of all forms of discrimination against
                                 women (cedaw)
        Question. On March 8, 2002, the world celebrated International
    Women's Day. You attended an event in honor of International Women's
    Day and pledged to continue to advocate the rights of women throughout
    the world. In furtherance of women's rights in 1979, the United Nations
    General Assembly adopted the Convention on the Elimination of All Forms
    of Discrimination Against Women which was ratified in 1981. More than
    160 countries have ratified this important treaty, but the United
    States remained only a signatory to the treaty since 1980. Does your
    pledge to advocate for women's rights include advocating for the
    ratification by the United States of the Convention on the Elimination
    of All Forms of Discrimination Against Women and what steps have you
    taken toward that end?
        Answer. The Administration is very supportive of women's equality.
    Women and men must be able to exercise and enjoy their human rights and
    fundamental freedoms on a basis of equality and without discrimination.
        The Convention on the Elimination of All Forms of Discrimination
    Against Women (CEDAW) is in category three of the Administration's
    treaty priority list. That is the category of treaties the
    Administration believes are generally desirable and should be approved.
    We will need to fully assess the implications of ratification on
    domestic law. Not only must we review the package of reservations,
    understandings, and declarations submitted to the Senate in 1994, but
    we must also update the legal analysis that was submitted at that time.
                                public diplomacy
        Question. How can State better carry out its Public Diplomacy since
    September 11? Do you view the Public Diplomacy mission differently
    because of September 11?
        Are you integrating your Public Diplomacy efforts with DOD and the
    Broadcasting Board of Governors?
        Answer. No other event in our history demonstrates the tragic
    consequences of misperceptions of the United States, its values, and
    its society more than the September 11 attacks.
        Well before September 11, I committed the Department to a program
    to develop an aggressive, effective Public Diplomacy program. I asked
    Charlotte Beers, one of the most dynamic and recognized advertising
    executives in the United States, to become Under Secretary for Public
    Diplomacy and Public Affairs, I fought to ensure that Public Diplomacy
    resources were increased after twelve years of continuous reductions.
        The nature and challenges of Public Diplomacy have not changed
    since September 11, but their urgency has increased geometrically. We
    are engaged as much in a struggle of ideas and values as we are in a
    war against terrorism. We must reach out to wider, broader, and younger
    audiences throughout the world and in particular, in Muslim majority
    nations. We must convince them that the democratic and open values that
    we offer and espouse are a road map to a peaceful and prosperous
    future.
        As resources and personnel allow, we are addressing these critical
    issues. The Bureau of Educational and Cultural Exchanges has developed
    specific programs to work closely with Muslim majority states to create
    new exchange programs, develop modern and objective curricula in these
    regions, and increase exposure of young professionals and educators to
    the United States. The Office of International Information Programs has
    created numerous outreach materials, creative websites, and speaker
    programs to bring our message to millions. Public Affairs (PA) has done
    a tremendous job with its Foreign Press Centers in Washington, New
    York, and Los Angeles. Its television Co-Operative programs with
    foreign broadcasters have changed the vision many have of the United
    States since September 11. All of these initiatives have been executed
    by the outstanding work of our Embassies abroad.
        Under Secretary Beers is working with the White House and other
    agencies, as well as private and public institutions, to develop
    approaches that will allow the United States to enter a broader
    dialogue with crucial audiences in critical regions. We coordinate
    regularly with Defense, the NSC, and other agencies to develop a
    cogent, coherent message from the United States to foreign audiences.
    We believe a formal structure is needed, however, and are working with
    the White House and the NSC to establish an appropriate mechanism.
        I am a member of the Broadcasting Board of Governors and take an
    active and close interest in its program. Under Secretary Beers is my
    representative to the Board. She and her staff are in daily contact
    with the Board, the broadcasting services (VOA, RFE/RFL and Radio Free
    Europe), and the International Broadcasting Board (IBB).
                                     ______

               Questions Submitted by Senator Barbara A. Mikulski
                                  afghan women
        Question. Afghanistan cannot rebuild without the participation of
    its women. Last year, I joined with Senator Hutchison and the other
    women of the Senate in introducing the Afghan Women and Children Relief
    Act. That legislation, signed into law last December, authorized
    education and healthcare assistance to women and children in
    Afghanistan and Afghan refugees.
        What are we doing to help the women and children of Afghanistan
    overcome decades of war and Taliban oppression?
        What programs are underway and what funds have been dedicated to
    implement the Afghan Women and Children Relief Act?
        What has this effort accomplished so far in education? in
    healthcare?
        Are we working with Afghan and international NGOs to provide this
    aid?
        Answer. The worldwide advancement of women's issues is not only in
    keeping with deeply held values of the American people; it is strongly
    in our national interest as well. Peace, prosperity, and stable
    governance cannot exist in the long term in societies where women are
    denied basic human rights and dignities. The United States opposed the
    Taliban's treatment of women for years. The war on terrorism and the
    overthrow of al-Qaida and Taliban forces in Afghanistan have given the
    women of Afghanistan an unique and unanticipated opportunity to reclaim
    their futures. The Bonn agreement signed by Afghan representatives last
    December underscores the centrality of democratic principles and human
    rights in its provisional arrangements, including the protection of the
    rights of women.
        Our delegation to the Commission on the Status of Women sponsored a
    Resolution on women in Afghanistan, cosponsored by 46 other countries,
    welcoming the positive steps the Afghan government has taken to include
    women in the recovery and reconstruction process, but also urging that
    this progress continue and expand. Since the Taliban's defeat, the
    situation of Afghan women has greatly improved. Women are now able to
    travel more freely in the cities, they are beginning to return to work,
    and schools for boys and girls have just reopened. Women now are
    receiving health care deprived to them for years.
        The United States has contributed significant assistance to the AIA
    and the Women's Ministry, contributing $4 million to the UNDP
    Afghanistan Interim Authority Fund (AIAF) to cover the Interim
    Administration's start-up costs for all Afghan ministries.
        With the strong encouragement of the United States, two women were
    appointed to the Afghan Interim Authority: Sima Samar, Vice Chair and
    Minister of Women's Affairs, and Suhaila Siddiq, Minister of Public
    Health. In addition, three women have been appointed to the 21 member
    Commission organizing the Emergency Loya Jirga. Today, Afghan women and
    men are working together as political decision-makers, recovery
    planners, program implementers, opinion leaders, and community
    organizers.
        The Women's Ministry and its Minister, Dr. Sima Samar, now have a
    rehabilitated office space, in a building that once housed the Women's
    Institute. I am happy to give a detailed breakdown of U.S. assistance
    to the Women's Ministry. A percentage of our contribution to the UNDP
    Afghan Interim Authority Fund provided the Ministry of Women's Affairs
    with 2 computers, a satellite phone, office furniture and supplies, and
    a vehicle. It also helped rehabilitate the Ministry's offices and
    assisted in the preparation of the payrolls so that its staff can be
    paid.
        In addition to providing funds for the Women's Ministry through the
    UNDP, the United States has contributed directly to the Ministry's
    refurbishment through the Agency for International Development (AID).
    AID has provided $64,000 towards the renovation of the building,
    including office equipment and technical advisers. Minister Samar is
    now working out of the building. In a meeting on February 19 with U.S.
    Charge Ryan Crocker, Minister Samar noted her pleasure that Women's
    Affairs is the first ministry in the AIA to receive a grant from the
    United States government. Significant renovations were completed by
    March 8, in time to host ceremonial meetings in Kabul on the occasion
    of International Women's Day. Furthermore, I am informed that the
    Government of Belgium has just put $500,000 into the AIA Fund,
    earmarked for the Women's Ministry. The Administration, together with
    the international community, will continue to consider requests for
    assistance from all the Ministries of the Interim Authority.
        Consistent with the provisions of the 2001 Afghan Women and
    Children Relief Act, the United States has provided funds for education
    and health. A significant amount of these funds have been channeled
    through NGOs. On March 23, schools for girls reopened for the first
    time in many years. Many girls and boys entered the classroom for the
    first time.
        To assist in the opening of schools, the United States spent $6.9
    million for almost 10 million Dari and Pashto textbooks for science,
    math, and reading to grades 1-12 and 4,000 teacher-training kits. Five
    million of these books arrived in time for the March 23 opening of
    schools. Working with Vital Voices, an NGO, we have sent fabric and
    sewing machines so that Afghan women can make uniforms for girls to
    wear at school. $200,000 has been obligated to send teams of teacher
    trainers and educators to develop curricula. The United States has also
    provided funds and staff to support UNICEF's vaccination campaign,
    targeting 2.26 million boys and girls. In addition, we have contributed
    $68,000 towards the refurbishment of the women's dormitory at the
    University of Kabul, which will allow women to remain on campus, in a
    secure environment.
        The Department of Labor has approved $1.5 million to assess women's
    skills and provide vocational training to women and $300,000 for
    training and start up wages for women working on the girls' uniforms
    project. USAID is providing $5 million to support the Ministry of
    Health and expand health services nationwide, including maternal and
    child health care services, using local and international NGO partners
    on the ground. American boys and girls, through the Fund for Afghan
    Children, have contributed over $4 million--dollar bill by dollar
    bill--to pay for food, shelter, clothing, healthcare, and toys for
    Afghan boys and girls.
        The Administration has forwarded a request to Congress for
    supplemental funds which would provide additional programs to assist
    women, both directly and indirectly, including for the following:
    Education:
        The United States is encouraging education through support for food
    distribution programs. If supplemental funds are approved, children who
    attend school regularly will not only receive meals during the school
    day, but also will receive take-home rations for good attendance. These
    funds will also ensure that the Afghan government will be able to pay
    teachers from the UNDP Afghan Interim Authority Fund. If approved,
    funds would facilitate Fulbright program exchanges to provide
    scholarships for students and exchanges for educators and
    administrators; to partner U.S. colleges and universities with their
    Afghan counterparts; and for English language training. In addition,
    there would be funding for NGOs for education, including encouraging
    literacy.
    Health:
        Supplemental funds would enable the Department of State, USAID and
    the Department of Health and Human Services, to assist in restoring
    primary health care services, including maternal health and child care
    services, and train health care providers to ensure that Afghan women--
    who have one of the highest maternal mortality rates in the world--once
    again have access to child-birth services and maternal care. Funds
    would also provide for the rehabilitation and integration of land mine
    victims, for polio vaccinations; and for training in nutrition
    surveillance and education.
    Economic Participation:
        These funds would allow us to continue and expand a program in
    which we send wheat to bakeries run by widows. These bakeries help feed
    a quarter of Kabul's population. If additional funding is approved,
    funds would be used to provide access to micro-credit; finance small
    women-led businesses; provide vocational training for the disabled,
    including women; assess women's needs and provide women with management
    skills.
    Political Participation:
        If Congress approves this request, funds will be available to
    strengthen women's political leadership skills, and to provide training
    in conflict resolution and women's advocacy.
    Refugees:
        From fiscal year 2001 through March 1, 2002 we have spent $92.7
    million for Afghan refugees in Pakistan and elsewhere: to build NGO
    capacity, to support female education, provide drought relief, health
    care, including maternal health care, and provide nutrition, water and
    sanitation, mine awareness, civic programs, and teacher training. In
    addition, $52 million will be used to facilitate the repatriation and
    reintegration of refugees and internally displaced persons, and many of
    the programs listed above will be replicated in Afghanistan.
    United States-Afghan Women's Council:
        Some of these funds would be used to leverage private support for
    projects which would be undertaken by the United States-Afghan Women's
    Council. The Council will facilitate partnerships between United States
    and Afghan institutions and will mobilize private resources to advance
    women's interests. Initially, the Council will focus on education and
    health programs and micro-credit for women, and encourage women's
    participation in the political and economic sectors.
                    peacekeeping and security in afghanistan
        Question. The people of Afghanistan need security to overcome
    decades of war and oppression. Training and equipping Afghan forces--
    which tend to be regional and factional and undependable in their
    loyalties--may contribute to the problem rather than solving it.
    Interim Afghan Administration Chairman Hamid Karzai has sought
    increased international forces to provide security as his country
    recovers from decades of war and Taliban rule. Why has the United
    States resisted Karzai's calls for an expanded international security
    presence, even though other nations are prepared to take the lead in
    this peacekeeping mission?
        Answer. There are at least three reasons for the USG's decision not
    to support ISAF expansion at this time. First, information from U.S.
    military and intelligence sources indicates that there is not currently
    a need to expand the international security presence in Afghanistan.
        Second, it is important to realize that the United States and its
    coalition allies already have a military presence in several locations
    around the country, including at least a small detachment in every
    major city. In the course of conducting their primary missions, the
    presence of these forces has a secondary, stabilizing, effect on
    regional security. Thus, to expand ISAF to these same areas would be in
    many ways redundant, and potentially even disruptive to co-located OEF
    forces.
        Third, other nations have not expressed any willingness to lead an
    expanded ISAF peacekeeping mission. Turkey is the most obvious
    candidate to take over ISAF command from the British, having indicated
    its interest in this role several months ago. Nevertheless, the Turkish
    government has yet to make a definitive decision to command ISAF. One
    of the legitimate issues weighing on Turkish deliberations is concern
    over the possible geographic expansion of the mission. To address these
    concerns, we have assured the Turks that their commitment would be only
    to Kabul.
        Question. Why has the United States opposed making the
    International Security Assistance Force (ISAF) a United Nations
    peacekeeping operation? Who is paying for it, since it's not an
    assessed U.N. peacekeeping operation?
        Answer. In order to prosecute the war on terrorism with the
    greatest possible efficiency and success, the USG believes that CENTCOM
    should have operational authority over ISAF for the purpose of de-
    conflicting ISAF and OEF operations in Afghanistan. The USG believes it
    would have been very difficult for the U.N. to place a peacekeeping
    operation under U.S. authority in this manner. Therefore, the USG
    favored establishing ISAF as a non-U.N. force. Other key U.S. allies
    agreed with this reasoning.
        The current participants in ISAF are operating on a self-financing
    basis. A U.N. trust fund has been established, however, to accept
    contributions that would pay the operational costs of any future
    participants who cannot finance themselves.
        Question. How will we help Afghanistan's leaders overcome tribal
    conflicts between Afghan forces which appear to be a primary threat to
    stability and security in Afghanistan?
        Answer. The USG is helping Afghanistan's leadership address the
    security problem posed by tribal conflict in several ways. First, we
    are acting on the President's commitment to help the Afghans build a
    new military that will be loyal to the central government. U.S. forces
    will begin training the first elements of a new Afghan army in about a
    month. As it grows in size, equipment, and proficiency, this force will
    enable the Afghan government to broker and enforce the resolution of
    tribal conflicts from a position of strength.
        A second related initiative is the financial support we are giving
    to demobilization programs. These plans, which are being developed by
    the U.N.'s International Organization for Migration (IOM), will combine
    education, training, job creation, and other benefits to encourage the
    soldiers in tribal armies to return to civilian life. This will reduce
    the potential for violent conflict between tribal leaders.
        Third, the United States, along with many other members of the
    international community, is channeling financial assistance to the
    Afghan central government. This support strengthens Afghan government
    ministries, enhances the country's capacity to manage its own internal
    affairs, and gives the central authorities added financial influence
    over regional leaders.
        Finally, the United States supports the Afghan national leadership
    through political and diplomatic means. The USG has given high profile
    public support to members of the Afghan central government in its
    diplomatic exchanges, and insists upon the political prerogatives of
    central administration officials over regional leaders. These actions
    enhance the influence that Afghanistan's national leaders wield over
    tribal power brokers and strengthen the government's hand in cases of
    tribal conflict.
                          nuclear posture review (npr)
        Question. The contents of the Nuclear Posture Review, provided to
    Congress January 8, have recently become public.
        Why does the list of target countries include Russia, which
    President Bush says is now our friend?
        Answer. You are correct that Russia is no longer our adversary, as
    President Bush has stated on numerous occasions. For the first time,
    the NPR reflects that we are no longer in the Cold War. The NPR directs
    a major shift in strategic policy: the United States will no longer
    plan, size, or sustain its forces as though Russia presented merely a
    smaller version of the threat posed by the former Soviet Union. The NPR
    makes it clear that treating Russia as if it were the Soviet Union is
    inconsistent with today's realities and the desire to develop a new
    strategic relationship. Characterizing Russia as a ``potential''
    contingency is a significant step toward a more cooperative
    relationship while still recognizing that the United States still has
    concerns with Russia and its formidable nuclear forces and uncharted
    future. While the NPR deems conflict with Russia extremely unlikely in
    the foreseeable future, it is also true that Russia is the only other
    country in the world with nuclear force levels comparable to that of
    the United States. Prudent planning dictates that we take that fact
    into account in the event of currently unforeseen changes in political
    circumstances in Russia.
        Question. How would we react if Russia decided to put nuclear
    warheads taken out of service into storage rather than destroying them?
        Answer. In essence, this is what we and Russia both did when
    implementing the INF and START Treaties, since INF and START did not
    seek to require destruction of the nuclear payloads on INF and START
    missiles. It is important to note that no arms control agreement
    between the United States and Russia has ever called for the
    destruction of warheads or limits on either nation's nuclear
    stockpiles. Beyond that, the United States and Russia have vastly
    different practices when handling nuclear warheads. The United States
    has no weapons production capability and must rely on its stockpile to
    respond to potential contingency and to maintain its forces, i.e., to
    provide insurance against a problem of safety and reliability of an
    entire class of warheads.
        Russia, on the hand, has a large, active production complex and
    builds nuclear warheads to replace those that have reached the end of
    their relatively shorter service life. Russia has thousands of warheads
    that are currently in storage, and a large number of them awaiting
    elimination. In fact, the United States is assisting Russia in
    strengthening the security of its nuclear weapon storage sites.
        Question. Why does the list of target countries include states
    which we do not believe have nuclear weapons?
        Answer. It is important to note that the NPR is not a targeting
    document, nor does it provide operational guidance on nuclear targeting
    or planning. What the NPR does, however, is shift the planning of
    America's strategic forces from a threat-based to a capabilities-based
    approach. In light of terrorists or rogue states armed with weapons of
    mass destruction, whether they be nuclear, chemical, or biological, we
    will need a range of capabilities to assure friends and foes alike of
    U.S. resolve. The new U.S. strategic posture will consist of nuclear
    and nonnuclear offensive systems, active and passive defenses, and a
    revitalized defense infrastructure. U.S. forces must pose a credible
    deterrent to potential adversaries who have access to modern military
    technology, including NBC weapons and the means to deliver them. Also,
    while this NPR focuses more sharply on WMD threats posed by rogue
    states than have past reviews, the record is clear that past
    Administrations have recognized the need for deterrence to apply to
    such states.
        Question. Are we really treating nuclear weapons--normally
    considered weapons of mass destruction--as just another form of
    conventional warfare? Don't you think it's important to maintain a
    clear dividing line between conventional weapons and nuclear weapons?
        Answer. Political leaders and military planners alike understand
    nuclear weapons to be qualitatively different from conventional
    weapons. By outlining a defense strategy that increases the role of
    advanced conventional strike forces, missile defenses, and intelligence
    capabilities, the NPR places emphasis on alternatives to relying upon
    nuclear weapons alone for deterrence. It is designed to provide the
    President with a broad array of options to address a wide range of
    contingencies, and paved the way to his decision to deeply reduce the
    number of operationally deployed U.S. strategic nuclear weapons.
        Question. The Nuclear Posture Review talks about the possibility of
    using nuclear weapons ``in the event of surprising military
    developments.'' What does that mean?
        Answer. The NPR deals with planning our future strategic forces and
    their capabilities. It is not a targeting document, nor does it provide
    operational guidance on possible nuclear use. Thus, the section of the
    NPR to which you refer is discussion about the contingencies against
    which we must maintain nuclear capabilities. Its point is to emphasize
    the uncertainties of today's world by underlining that some dangers are
    immediate and well-recognized; some are plausible, but not immediate;
    and some are unpredicted, but ones that could arise suddenly. The
    conclusion drawn by that section is that present capabilities need to
    be maintained against immediate dangers, along with a small margin in
    the event of a surprise development. However, dangers that do not pose
    an immediate threat do not require immediate capabilities, and
    therefore would require only a responsive capability to augment the
    operational force over a period of weeks, months or years. This
    approach allowed the NPR to lower the size of our operational
    requirements and supported the President's goal of reducing our nuclear
    requirements to the lowest possible level consistent with our needs.
        Question. What is Administration policy on first use of nuclear
    weapons? Wouldn't the development of new, smaller nuclear weapons
    suggest a readiness to use them in conventional conflicts?
        Answer. The long-standing policy of the United States has not
    changed regarding the first use of nuclear weapons. There has been no
    change in U.S. negative assurances policy toward non-nuclear weapon
    states to the NPT. The United States will do whatever is necessary to
    defend America, our forces abroad, as well as our friends and allies.
    While the NPR does direct attention to deficiencies in our nuclear
    warhead infrastructure, the NPR does not call for the development of
    new nuclear weapons design.
        Question. How would the United States react if other countries--
    like Russia or China--would adopt a similar policy, with the United
    States on its list of targets?
        Answer. The question assumes that Russia and China are on a United
    States ``list of targets.'' As the Administration has made clear, we,
    like our predecessors, do not target any country on a day-to-day basis.
    The NPR focuses U.S. nuclear force planning requirements on needed
    capabilities for deterrence and defense rather than on assumptions
    about specific threat countries.
        Obviously, Russia and China have, for many years, possessed the
    forces and, we assume, other technical capabilities needed to strike
    the United States with strategic nuclear weapons. Nonetheless,
    regardless of whether the United States is targeted by other countries,
    the conclusions of the NPR remain valid. What is important, as
    President Bush has made clear, is that his Administration will pursue
    policies that reflect today's world and that put behind us the hostile
    relationships based on mutual assured destruction of the Cold War.
        Question. Won't this Nuclear Posture Review hinder cooperation
    among member states to prevent non-state actors--terrorist groups like
    Al Qaida--from acquiring and using weapons of mass destruction?
        Answer. We believe that the four goals of the NPR will help ensure
    that such a scenario will not happen, The goals of the NPR are to: (1)
    assure allies and friends of our continued cooperation in maintaining
    our military commitments; (2) dissuade adversaries that could threaten
    U.S. interests; (3) deter threats against the United States and its
    allies; and (4) defeat any adversary and defend against attack should
    deterrence fail. We view these goals as completely complementary with
    and mutually supportive of diplomatic, political and other coalition
    efforts to prevent or dissuade states or terrorist entities from
    acquiring or using WMD.
                              peacekeeping funding
        Question. The fiscal year 2003 budget request significantly reduces
    funds for U.N. Peacekeeping.
        In the present international environment, does it make sense to
    assume that there will be no new U.N. peacekeeping operation in fiscal
    year 2003?
        Is it realistic to assume to predict that all but 2 ongoing
    operations will be reduced in size and cost?
        If these assumptions prove unrealistic, will the Administration
    block U.N. Security Council authorization for new or expanded
    peacekeeping operations? Or will you seek emergency supplemental
    appropriations?
        Answer. We believe it is realistic that costs will decrease from
    fiscal year 2002 to fiscal year 2003. UNMIBH (Bosnia) is projected to
    be completed with fiscal year 2002 funding, while UNTAET (East Timor)
    and UNAMSIL (Sierra Leone) are projected to downsize in fiscal year
    2003. Further, the U.N. peacekeeping assessment rate for the United
    States will decrease by a small amount and we estimate that there will
    be small increases in efficiency.
        We have not attempted to project all possible new missions that
    could come along or ones that suddenly and unexpectedly begin to
    significantly expand. Should these things occur, we would notify
    Congress.
                         resynchronization of u.n. dues
        Question. The United States always pays its United Nations dues
    late. This delay is reflected as U.S. arrears to the U.N., which have
    contributed to opposition to U.S. positions.
        Last year, this Subcommittee--thanks to Chairman Hollings'
    leadership--provided the funds for the United States to resynchronize
    payment of dues with the U.N.'s calendar assessment schedule.
    Unfortunately, we were not able to sustain that funding in Conference.
        Wouldn't it help achieve a better relationship with the U.N. and
    other member states for the United States to pay its dues on time?
        Why doesn't the budget request include any funds toward dues
    resynchronization?
        Answer. We believe we would achieve a better relationship with the
    U.N. and other member states were we to pay our assessments to the U.N.
    on time. The same holds true for the eight other fully deferred
    organizations. Our budget request does not include funds to
    resynchronize our payments as that would add over $600 million to our
    request. For the U.N. alone it would cost some $280 million in fiscal
    year 2003 to reverse the deferred payment. We hope to address this
    situation in a future budget.
                     united nations population fund (unfpa)
        Question. The United Nations Population Fund provides critical
    family planning assistance. Could you assure us that the Administration
    will contribute to the United Nations Population Fund (UNFPA) the full
    $34 million allocated by Congress in the fiscal year 2002 Foreign
    Operations bill? Why has this been delayed?
        Answer. The Administration continues to broadly support the work of
    UNFPA and specifically, its response to the emergency needs of
    vulnerable populations, such as in Afghanistan. However, we remain
    mindful of our obligations under the Kemp-Kasten amendment to the
    annual Foreign Operations, Export Financing and Related Programs
    Appropriations Act. This legislation provides that no U.S. funds can go
    to an organization that supports or participates in the management of a
    program of coercive abortion or involuntary sterilization.
        In light of recent allegations of the Fund's complicity in coercive
    family planning practices in China, the Administration is reviewing the
    issue of UNFPA funding. While we are aware of UNFPA's response to these
    allegations that it is not involved in coercive practices and is, in
    fact, supporting a program that stresses the importance of voluntarism
    and non-coercion, it is incumbent upon us to review the allegations.
    The State Department is expediting the launch of an assessment team to
    China to look into the matter.
                            arabic voice of america
        Question. Arab Public Opinion about the United States is often
    rooted in beliefs learned from biased and inaccurate press reports. We
    need to stop broadcasts, which incite violence, replace hate with
    reliable, unbiased information, and provide a forum to formally present
    U.S. policy directly to the people.
        How do you plan to improve our communication with the Arab world?
        What progress has been made in expanding and improving Arabic VOA
    broadcasts?
        Could you assure the Committee that dedicated VOA personnel in
    Washington won't lose their jobs as Arabic VOA broadcasts are
    strengthened?
        Answer. Well before September 11, we recognized that we had lost
    crucial audiences in Arab and many Muslim majority states. The
    Department began working last year to rebuild outreach programs and
    avenues to these audiences. Since September 11, this program has become
    even more critical.
        U.S. officials and experts appear on Arab media with greater
    frequency; we have extended our public diplomacy outreach programs
    throughout the Arab world, often with impressive results. The
    Department is preparing to launch expanded scholarship, professional
    training, and other exchange initiatives, and we are increasing our
    public diplomacy budgets and personnel in the Middle East to the extent
    that resources allow.
        We have carried out extensive research into attitudes and
    perceptions in the Middle East and other Muslim majority states, such
    as Indonesia. We are engaged in a major effort to understand how the
    United States is perceived and what steps we must take to moderate
    attitudes and convey an objective vision of American values and
    society. Under Secretary of State for Public Affairs and Public
    Diplomacy, Charlotte Beers, is working with the White House and other
    agencies, as well as public and private institutions, to develop
    approaches that will allow the United States to establish a wider
    dialogue with younger, broader audiences.
        VOA Arabic service has done well since September 11. It expanded
    broadcasts to eleven hours per day and brought our message to millions.
    However, transmission difficulties and format constraints limit its
    audience. The Department has supported the new format, AM and FM
    transmitted, Middle East Radio Network (MERN) now undergoing trials. We
    believe that the MERN can be an instrument that will reach the broader,
    younger audience that is crucial to our current and future
    relationships in the region.
        Regarding the establishment of the MERN and the future employment
    status of current VOA Arabic service employees, it is beyond my mandate
    to give the Committee a final assessment of these concerns. I know that
    VOA Director Robert Reilly has taken energetic steps to address these
    anxieties.
                   funding for the fight against global aids
        Question. Last year, the President pledged a $200 million ``down
    payment'' to the global fight against AIDS. In the meantime, AIDS has
    surpassed malaria as the leading cause of death in sub-Saharan Africa,
    and it kills many times more people than Africa's armed conflicts.
    UNAIDS estimate that in the last year, 3.4 million new HIV infections
    have occurred. Why has President Bush not proposed a greater increase
    in funding for the fight against Global AIDS?
        Answer. The United States is the global leader in the fight against
    HIV/AIDS. In fiscal year 2002, the Bush Administration will dedicate
    nearly $1 billion to the international fight against HIV/AIDS, roughly
    one-third of all international spending against the disease. This does
    not include the amount dedicated to domestic research and development
    programs, programs that have direct benefits for the international
    community in the form of new drugs and other medical and scientific
    advances. The fiscal year 2003 budget request of $1.1 billion
    represents a 53.9 percent increase over fiscal year 2001 spending on
    international AIDS.
        The majority of these funds are channeled through bilateral
    programs. President Bush pledged $200 million and Congress appropriated
    an additional $100 million for the new Global Fund to Fight AIDS,
    Tuberculosis and Malaria. This represents over a third of the funds
    pledged for 2001-2002 and demonstrates U.S. leadership in the global
    fight against these diseases. President Bush has requested an
    additional $200 million for the Fund in his fiscal year 2003 Budget,
    bringing the total U.S. pledge to $500 million. In a speech to the
    Inter-American Development bank in March 2002, President Bush said that
    he will work with Congress to increase the U.S. commitment to the Fund
    as it finalizes its organization, develops a strategy, and shows
    success.
        Question. How do you expect the international community to come up
    with the $10 billion or even $20 billion per year public health experts
    estimate addressing HIV/AIDS, malaria and TB will cost if the United
    States doesn't contribute its share?
        Answer. While there have been varying estimates about the amount
    needed to address HIV/AIDS, malaria and TB, there has never been an
    expectation that the Global Fund to Fight AIDS, Tuberculosis and
    Malaria would represent the only funding mechanism. Most estimates
    assess the need for increased global spending, which includes resources
    from both developing and developed countries. Much help will continue
    to flow through already existing bilateral and multilateral mechanisms.
    The Fund is uniquely placed to leverage further contributions,
    including those from the private sector.
                                 global hunger
        Question. The U.N. Food and Agriculture Organization estimates that
    815 million people, mostly in developing countries, suffer from hunger
    and malnutrition. 24,000 people die each day of hunger-related causes.
    Yet the Administration's budget request effectively reduces the total
    amount of food aid America will provide. Why are we cutting back in our
    fight against global hunger?
        Do you believe there is a reduced need for U.S. food aid, as one
    Administration official recently suggested?
        Answer. Reducing hunger around the world is one of this
    Administration's priorities, and the President is in fact proposing
    increases in key resources to meet this objective. The Administration's
    fiscal year 2003 request for food aid appropriations of $1.345 billion
    under Public Law 480, both Titles I and II, constitutes a $225 million
    increase over the fiscal year 2002 level of $1.120 billion. This
    increase will help offset a large decline in section 416(b) surplus
    food resources, which are unappropriated allocations, and
    inconsistently available historically. This shift toward a more
    sustainable, on-budget allocation of food aid resources, which Public
    Law 480 represents, and away from the commodity surplus driven
    alternative of section 416(b), will help ensure that the United States
    continues to do its part in meeting global needs for food aid.
        The United States consistently provides about 50 percent of food
    aid worldwide, far more than any other donor. The Administration
    remains committed to maintaining U.S. leadership in supplying food aid
    to vulnerable people. The Administration is proposing to adjust the
    delivery of international food aid programs. This plan will: (1)
    improve feeding effectiveness; (2) reform administration and reduce
    duplication; and (3) ensure more reliable food aid by reducing the
    year-to-year reliance on surplus commodities. Reducing the reliance on
    surplus U.S. commodities will increase the predictability of supply for
    hungry populations overseas and non-profit organizations that serve
    them. The fiscal year 2003 President's budget reflects a Public Law 480
    Title II discretionary funding request of $1.185 billion, $335 million
    greater than the original fiscal year 2002 enacted level. This will
    help offset decreased mandatory programs. The U.S. Department of
    Agriculture's (USDA) Bill Emerson Trust will be used to provide food
    aid if dire emergency needs.exceed programmed resources.
        USAID is also working to combat hunger and malnutrition through new
    agriculture and nutrition strategies. Policy reforms and agricultural
    research, including research in biotechnology, new information
    technologies, increased international trade and investments in
    sustainable agriculture, sound environmental management, along with
    better focused mother and child health and nutrition programming,
    present hope for addressing food problems worldwide. A continued
    emphasis on conflict prevention will also help to alleviate one of the
    principal causes of growing food insecurity.
        USAID has committed $30 million in fiscal year 2001 funds to launch
    ``Quick Start'' programs in Africa designed to boost agricultural
    development immediately. The fiscal year 2003 USAID Congressional
    budget justification, in recognition of the role that acute hunger and
    malnutrition play in exacerbating individual suffering and impeding
    economic development, calls for increasing agricultural development
    funds by 29 percent. Funding for agricultural development in the
    Development Assistance (DA) account alone is projected to rise to
    $260.5 million from $200.4 million in fiscal year 2002, as part of a
    proposed ten percent increase in the overall development assistance
    budget to $2.74 billion in fiscal year 2003.
        USAID is also pursuing a more aggressive strategy to expand basic
    education. Development Assistance funding for basic education will
    increase from $103 million in fiscal year 2001 and $150 million in
    fiscal year 2002 to $165 million in fiscal year 2003. These efforts,
    focused in large part on youth, will equip people with better farm
    skills and enable them to market their produce, earning higher incomes,
    and thereby reducing poverty and hunger.

                 BREAKDOWN OF TITLES I AND II OF PUBLIC LAW 480
                            [In millions of dollars]
    ------------------------------------------------------------------------
                                                                 Fiscal year
                                      Fiscal year    Increase/       2003
                                          2002       decrease      request
    ------------------------------------------------------------------------
    Title I.........................        175.0        (15.0)        160.0
    Title II........................        850.0        335.0       1,185.0
                                     ---------------------------------------
          Total.....................  \1\ 1,120.0        225.0       1,345.0
    ------------------------------------------------------------------------
    \1\ Includes $95 million from Emergency Response Fund Supplemental.

                                nato enlargement
        Question. The security and stability of the Baltic region is vital
    to the peace of Europe and the transatlantic community. Security and
    stability in the region is best achieved through Baltic membership in
    NATO. What progress are you making in building support among our NATO
    allies to reach consensus in inviting the Baltic States and other
    qualified countries to join NATO at the summit later this year?
        Answer. Our goal is to build a strong Allied consensus on specific
    candidates by Prague. The President has stated that he believes all of
    Europe's new democracies, from the Baltics to the Black Sea, should
    have the same chance to join the institutions of Europe as the older
    democracies.
        All Allies support further enlargement and a broad consensus is
    forming behind President Bush's vision of the most robust round
    possible, for all aspirants that are ready to assume the
    responsibilities of membership. We have encouraged Allies not to
    advocate specific candidates until we can develop an agreed Alliance
    consensus. Under Secretary Grossman will be travelling to many NATO
    capitals in Europe from April 15-19 to consult further on a common
    Allied approach to the upcoming Prague NATO summit. Enlargement will be
    a key focus of this trip.
        Allies have agreed that the question of ``who'' should be invited
    should not be addressed until after the May ministerial at Reykjavik.
    Instead, we are seeking to keep aspirant countries focused on meeting
    their reform goals through the Membership Action Plan and avoid early
    and conflicting commitments among Allies. The Baltic states have made
    impressive progress in their preparations for membership, and we have
    urged them to intensify these efforts to ensure their candidacies are
    as strong as they can be when decisions are made on new members next
    fall.
                                     cyprus
        Question. Last year, you told the Foreign Minister of Cyprus that
    the United States will also ``remain engaged in efforts to facilitate a
    just and lasting settlement of the Cyprus issue.'' Other than
    supporting the U.N. talks, how are we remaining engaged on this
    critical human rights issue? What are the prospects?
        Answer. We strongly believe that the current direct talks between
    the leaders on the island, which began on January 16 under the auspices
    of the U.N., are the best chance in a long time to reach a solution to
    the Cyprus problem. The prospects for success depend primarily upon the
    efforts of the two parties. Achieving a just and comprehensive
    settlement is the only way to resolve this longstanding issue, and
    therefore, we are focussed on providing diplomatic support to the
    direct talks on a number of fronts.
        First, we have strongly supported the U.N. Secretary General's Good
    Offices Mission, and its efforts to achieve a comprehensive settlement,
    through numerous U.N. Security Council (UNSC) resolutions and press
    statements.
        Second, through our Ambassador on the island, Donald K. Bandler, we
    are reiterating directly to the leaders and their delegations to the
    talks our support of the talks, and the importance of seizing this
    opportunity to reach a settlement.
        Third, through our Special Cyprus Coordinator Thomas G. Weston, we
    are reinforcing with the leaders on the island and the Governments of
    Greece and Turkey our interest in the success of the ongoing
    negotiations.
        Fourth, and also through our Special Cyprus Coordinator, we are
    working with the European Union and its member states to ensure that
    Cyprus's EU accession continues to be an incentive to a comprehensive
    settlement.
        Should a settlement be achieved, we would work with USAID to ensure
    that program activities funded by $15 million in fiscal year 2002
    Economic Support Funds support implementation of a settlement.
                                embassy security
        Question. The Department of State has stepped up security in our
    embassies and received security supplemental funds for security last
    year. This year's request includes $1.3 billion for fiscal year 2003
    embassy security measures.
        How will the State Department use these funds to ensure that we
    protect our men and women serving our country at embassies and
    consulates around the world?
        Answer. The key objectives of the original 1999-2000 Emergency
    Security Appropriation (ESA) were to quickly improve the security of
    our threatened embassies and consulates and to begin the longer-term
    objective of replacing those facilities that cannot be made adequately
    secure.
        The Department's fiscal year 2003 request of $1.3 billion includes
    $755.0 million in the Embassy Security Construction and Maintenance
    (ESCM) appropriation and $553.0 million in the Diplomatic and Consular
    Programs (D&CP) appropriation.
        The ESCM request includes $608.6 million in capital security
    funding for the design and/or construction of the next tranche of the
    most urgent, security-driven projects. The fiscal year 2003 projects
    will be chosen from among a list of potential projects that include:
    Astana, Kazakhstan (dependent on Congressional support to open a
    diplomatic office); Athens, Greece; Bamako, Mali; Beijing, China;
    Bridgetown, Barbados; Frankfurt, Germany; Harare, Zimbabwe; Kingston,
    Jamaica; Moscow, Russia; and Tirana, Albania. The $608.6 million also
    includes funding to acquire additional sites for which design and/or
    construction will begin in the outyears.
        The ESCM request also includes $146.5 million for compound security
    upgrades that include the construction of critical perimeter security
    projects and the installation of forced entry/ballistic resistant roof
    hatches, vault doors, and power-assisted vehicle barriers.
        While specific security measures vary by post, the $553.0 million
    in the D&CP appropriation will be used to continue activities designed
    to:
      --Enhance physical security at U.S. Missions with additional barriers
            and reinforced perimeter walls;
      --Install closed circuit TV cameras and video recording equipment;
      --Provide bomb detection equipment, armored vehicles, walk through
            metal detectors, and x-ray equipment;
      --Fund access card control systems and shatter resistant window film;
      --Install additional alarm and public address systems to alert
            personnel to impending emergency situations;
      --Facilitate mandatory inspections of all vehicles entering U.S.
            diplomatic facilities;
      --Increase host government security presence and support to our
            facilities worldwide;
      --Field aggressive surveillance detection programs at almost all of
            our diplomatic posts;
      --Expand training in the areas of Anti-Terrorism Assistance;
            Diplomatic Security Special Agents and Regional Security
            Officers; and crisis management;
      --Continue a chemical biological weapons countermeasures program
            based upon education, training, and equipment;
      --Strengthen our working relationship with the intelligence
            community;
      --Fund, hire, and train new Diplomatic Security special agents,
            security engineers, security technicians, diplomatic couriers,
            security officers, and civil servants.
        Fiscal year 2003 is the third year of the Department's multi-year
    plan to complete technical and physical security upgrades for stronger
    perimeter and compound security at our embassies and consulates
    worldwide. Additionally, armored vehicles, technical surveillance, and
    countermeasures equipment, which were sent out to the field following
    the East Africa bombings, need maintenance and eventual replacement.
        The U.S. Agency for International Development is requesting $82
    million in its fiscal year 2003 budget request for construction of
    collocated USAID facilities. Their request is contained in the fiscal
    year 2003 Foreign Operations budget request.
               compensation to victims of international terrorism
        Question. Victims of the September 11 attacks on America--at the
    World Trade Center, at the Pentagon, and on the flight which went down
    in Pennsylvania--will receive compensation allocated by a Special
    Master under legislation passed last year.
        Do you believe the American victims of the Embassy bombings in Dar
    Es Salaam, Tanzania and Nairobi, Kenya--victims of the same terrorist
    group, most of whom were serving their country--deserve similar
    treatment?
        Answer. The Administration is looking very closely at the entire
    issue of terrorism victims' compensation. Consistent with section 626
    of the fiscal year 2002 Commerce Justice, State Appropriations Act, the
    State Department has developed a draft legislative proposal to
    compensate all U.S. victims of international terrorism, including those
    who were killed or injured in the East Africa bombings. This draft
    proposal was submitted in November to the Office of Management and
    Budget for inter-agency review and clearance. Department
    representatives have had several discussions with OMB and the White
    House concerning the proposal. We are hopeful that the inter-agency
    review will be completed shortly and that the Administration will
    submit a legislative proposal to the Congress this session.
       center for antiterrorism and security training (cast) at aberdeen
                              proving ground (apg)
        Question. What are the benefits of establishing CAST for the
    training of Diplomatic Security officers and for the Antiterrorism
    Training Assistance (ATA) programs?
        Could you explain to the Committee the advantages of the Aberdeen
    Proving Ground site selected for the establishment of CAST?
        Would it contribute to our efforts to secure international
    cooperation against terrorism if the establishment of CAST at Aberdeen
    Proving Ground could be accelerated?
        Answer. Antiterrorism and security training is conducted at seven
    separate training locations nationwide, often using ad-hoc
    arrangements. The CAST would greatly help meet the demands for
    facilities to train additional foreign security officials required to
    counter the increased terrorist threat. Currently, some training
    courses are delayed for months because of a shortage of appropriate
    facilities. Additionally, the concept maximizes resource use by
    alternate scheduling of antiterrorism training and agent training at
    the same facility. The proximity to Washington, D.C. will permit use of
    presenters from multiple agencies and disciplines and trainee access to
    multiple resources in the area, which will pay additional dividends.
        The CAST will provide a state-of-the art facility, replacing
    inadequate or antiquated facilities; for example, it will include all
    weather small arms ranges; ``long gun'' ranges, tactical urban mock-up
    training facilities for counter-assault training; commercial aircraft/
    mock airport facilities; defensive/protective driving tracks;
    explosives demolition ranges; maritime security training, and chem-bio
    training facilities.
        The events of September 11 further expanded the focus of
    Antiterrorism Training Assistance (ATA) outreach to newly identified
    frontline nations and added course offerings in specific areas dealing
    with countering and responding to terrorist incidents. Presently ATA
    trains about 3,000 foreign law enforcement professionals annually. When
    fully operational, the CAST will accommodate as many as 7,000 foreign
    counterparts. The Department is making every effort to accelerate the
    CAST to contribute to our effort in preparing and securing
    international cooperation against terrorism.
        CAST will require a variety of dedicated training facilities,
    including as an example, munitions disposal training, large caliber
    weapons training, and defensive driving. Life-safety issues, as well as
    community residents' concerns, preclude such training being conducted
    near residential areas. The Aberdeen Proving Ground provides an
    environment and a footprint which will accommodate each of the
    program's requirements. Further, the APG has an existing infrastructure
    that would help bring CAST on line more quickly, as the Department
    moves to meet requests for training.
                                     ______

                Questions Submitted by Senator Patrick J. Leahy
                      colombia: human rights certification
        Question. Can you assure me that you will personally satisfy
    yourself that these conditions--the intent of our law--have been met,
    and that these human rights problems are being addressed far more
    effectively than they have been to date?
        Answer. Yes. As the legislation requires, I will personally review
    the conditions for certification. I have not yet made the certification
    that the Colombian Armed Forces have met the human rights conditions
    set forth in Section 567(a) of the Kenneth M. Ludden Foreign
    Operations, Export Financing, and Related Programs Appropriations Act,
    2002 (Public Law 107-115) (FOAA).
        The Department of State is now evaluating the information it has
    received on this subject, including data from human rights
    organizations which have been consulted by both the Department and our
    Embassy in Bogota, in order to provide a recommendation in the near
    future to me for my determination. The importance with which we view
    the question of human rights in Colombia is reflected in the recent
    travel to Colombia of Deputy Assistant Secretary Struble of the Western
    Hemisphere Affairs Bureau and Deputy Assistant Secretary Carpenter of
    the Bureau of Democracy, Human Rights and Labor for seeking additional
    information and discussing our concerns with senior leaders of the
    Colombian government and military.
        If I determine and report to Congress that the conditions
    established in the legislation have been met, based on the information
    presently under review, that report will also provide the background
    and justification upon which we would base such a determination.
        Human rights are and will remain central to our bilateral relations
    with Colombia. We will continue to engage the Government of Colombia on
    concrete measures it should take to improve its human rights
    performance, particularly the human rights record of the Colombian
    Armed Forces.
                                  middle east
        Question. At a hearing in the Foreign Operations Subcommittee last
    week, I asked Assistant Secretary Lorne Craner about Israel's use of
    U.S. military equipment.
        According to the State Department's human rights report, Israeli
    and Palestinian security forces have committed ``numerous serious human
    rights abuses.''
        I sent several letters to our Embassy in Israel asking if they had
    determined if these types of incidents involved units of security
    forces that received aid from the United States. I also asked the
    Embassy what steps have been taken to ensure that our aid is used
    consistent with the Leahy human rights law.
        Other than one reply that essentially said ``we're looking into it
    and we'll get back to you'', I have not received an answer to my
    letters. Since then, the situation has become far worse. I would
    appreciate your help in getting a response to my inquiries.
        It is my understanding that we do not provide any aid to the
    Palestinian Authority. Are you confident that the Leahy law is applied
    properly with respect to our military aid to Israel?
        Answer. President Bush and I have publicly criticized certain
    actions of the Israeli security forces. The 2001 Country Reports on
    Human Rights Practices notes ``numerous serious human rights abuses''
    perpetuated by Israeli security forces during the year.
        We share the goal of the Leahy Amendment to hold foreign security
    forces and governments accountable to international human rights
    standards. Our goal is to carry out security and other foreign
    assistance programs in a manner consistent with human rights standards.
    Embassy Tel Aviv has been operating under standing instructions to
    monitor possible human rights violations by Israelis and Palestinians
    and to report back daily to the State Department. For preparation of
    the annual human rights reports, the Embassy also reports information
    on alleged violations of human rights to the Department.
        In writing, the Department instructs posts worldwide on procedures
    to ensure appropriate compliance with the Leahy Amendment. We currently
    are in the process of updating and reviewing this standing guidance on
    implementation of the Leahy Amendment for posts worldwide, including
    ensuring that the procedures used serve the goals of transparency and
    accountability with respect to U.S. assistance to foreign security
    forces. Updated guidance will be sent to posts worldwide, including
    Embassy Tel Aviv, upon completion of the update and review process. The
    Department would be willing to brief you or your staff on these
    procedures once they are in place.
                                     serbia
        Question. March 31st is the deadline for Serbia to meet conditions
    in our law on compliance with the War Crimes Tribunal.
        Last year at this time, they arrested Milosevic. Since then, very
    little has happened. According to the Hague prosecutor, they are
    falling short in just about every respect. I know you care about this,
    but I don't want anyone to be surprised. We are not going to support
    continued aid to Serbia if they do not turn over these indicted war
    criminals and give the prosecutors access to documents and other
    evidence.
        A couple of weeks ago Senator McConnell and I sent Prime Minister
    Djindjic and President Kostunica a letter, spelling out what we believe
    to be the minimum that needs to happen to comply with our law. You
    should have a copy, and if you have not seen it I will get one to you.
    I hope you will used every bit of leverage and influence you have to
    impress upon these two leaders what needs to be done. Can you comment
    on where this stands?
        Answer. Although there has been progress over the past year in each
    of the areas required for certification, I have not yet made a decision
    on whether or not to certify Serbia under section 584. We have
    repeatedly made clear to Yugoslav and Serbian authorities that they
    have an international obligation to fully cooperate with ICTY and that
    the USG expects actions to meet those obligations.
        We will continue to press for full cooperation and to urge our
    European allies to look closely at the FRY's continuing record on these
    issues, including ICTY cooperation, as they consider Council of Europe
    membership, as well as Partnerships for Peace (PfP) membership.
                                     ______

                   Questions Submitted by Senator Judd Gregg
                              general state issues
        Question. Mr. Secretary, with all the advance in technology--
    particularly in the area of communications--have you considered whether
    certain core State functions could be brought back to Washington from
    our embassies abroad?
        Answer. The Department of State relies heavily on centralizing a
    variety of administrative, consular, and some policy functions (e.g.,
    Labor Attaches, science hubs) in the United States. Technology plays a
    critical role in this effort.
        We have the following U.S. regional centers:
      --The Fort Lauderdale Regional Center provides support services to
            U.S. posts throughout the Western Hemisphere.
      --The National Visa Center in Portsmouth, New Hampshire and the
            Kentucky Consular Center in Williamsburg, Kentucky both perform
            a variety of consular work traditionally carried out at
            individual posts.
      --The Charleston Financial Service Center is in the process of
            assuming functions for European and African posts formerly
            carried out at our Financial Service Center in Paris.
      --The Department will also begin in early April to shift routine
            passport production from overseas posts to U.S. domestic
            passport agencies in order to take advantage of the high
            security passport photodigitization process installed here in
            the United States.
        When relocation to the United States is not feasible, USG agencies
    (including State) use many embassies and consulates, such as Frankfurt
    and Hong Kong, as regional platforms for their activities.
        Even with advances in technology, there is still no substitute for
    face-to-face interaction with host governments and publics. State
    continues to support the principle of universality, under which the
    U.S. Government maintains an on the-ground presence in virtually all
    nations with which we have diplomatic relations.
        Question. The fiscal year 2003 budget contains an estimated $3.3
    billion for ``substantive'' foreign affairs activities such as policy
    formulation, diplomatic relations, public diplomacy, consular
    relations, and support of multilateral diplomacy. Approximately $4.4
    billion is for such things as embassy construction, diplomatic
    security, IT infrastructure, travel, and rent--all of which support the
    Department's foreign affairs mission. Secretary Powell, how do you
    justify spending more for the support of our foreign affairs activities
    than we do on the actual conduct of foreign policy?
        Once you have achieved your goals for improving State's
    infrastructure (facilities, IT, etc.) do you expect the numbers to flip
    back?
        Answer. The funding identified is only part of the total budget
    used to conduct the nation's foreign policy. The total fiscal year 2003
    International Affairs budget request is $25.4 billion, including over
    $16 billion for the Foreign Operations appropriations. To effectively
    carry out its foreign policy mission, the Department must have adequate
    staffing, technology, and secure facilities, as well as adequate
    foreign assistance funding. Building an embassy in a foreign country,
    for example, is as much a part of the conduct of foreign policy as is
    concluding a treaty, negotiating a peace agreement, or providing
    humanitarian aid. In fact, our overseas presence is at the very heart
    of our foreign policy, from ensuring the safety and security of
    American citizens overseas to carrying out the daily routine of
    diplomacy. The operations, maintenance, and security costs of our
    overseas presence is difficult to predict; for example, who could have
    forecast in 1987 the fall of the Soviet Union and the sudden rush onto
    the world scene of ``new'' countries with which the United States
    needed to establish diplomatic relations. At OBO, however, we have
    developed for the first time a master plan for embassy construction
    that will help us manage those particular costs. I cannot assure you
    that the current total of funds we need for our daily operations and
    for supporting the conduct of our foreign policy will decrease over
    time. I can assure you, however, that we will be wise stewards of the
    dollars entrusted to us by the American people.
                              embassy construction
        Question. What impact has 9/11 had on the way the Office of
    Overseas Buildings Operations approaches designing and building
    embassies abroad?
        Answer. Following the Africa bombings in 1998, the Department, in
    concert with other Foreign Affairs Agencies, embarked on an intense,
    successful, and continuing effort to review and revise overseas
    security standards and determine what new standards might be needed,
    including preventive measures for chemical or biological attacks. The
    tragedy of 9/11 confirmed that we were already going in the right
    direction regarding strengthening and/or relocating our facilities to
    provide the best security that is reasonably possible for our employees
    at posts abroad. We are making a determined effort to accelerate these
    processes in light of 9/11 and other recent events.
        Question. Do you think the lessons of 9/11 were that we need to
    build more heavily fortified embassies? Or do you believe that 9/11
    demonstrated that we simply cannot build buildings that are 100 percent
    secure and must therefore look to mitigate the threat in other ways
    (such as better deterrence and prevention)?
        Answer. While neither the World Trade Center nor the Pentagon was
    designed to the same physical security standards as our embassies
    abroad, they were designed to withstand what was considered a
    reasonable expectation of survivability following significant
    structural damage. The stresses upon these buildings on 9/11 were
    greater than they could withstand. The U.S. Government's efforts should
    continue to focus on better deterrence and prevention, as well as
    improved-design and construction technologies, to reduce the impact of
    terrorist events. The most urgent need is simply to get our people out
    of buildings that do not come close to meeting any reasonable safety
    and security standards. Using best practices, Standard Embassy Designs,
    and business case analyses, the Department's Bureau of Overseas
    Buildings operations is accelerating its mission to provide safe,
    secure, and functional facilities for our diplomatic and consular posts
    around the world. Use of these initiatives reduces the time that our
    employees would otherwise be in less secure facilities. The
    Department's short and medium-term implementation of physical and
    technical security enhancements, as well as our long-term capital
    building design and construction efforts, significantly improve the
    security and safety of our employees abroad.
                          diplomatic hiring initiative
        Question. Mr. Secretary, last year this Committee provided the
    Department $107 million to hire 360 new employees above attrition. This
    year you have requested another $100 million to hire 399 more people.
    Next year you will ask for another 399 new employees.
        Could you please give us an update on how this process is going?
    How many people have been hired so far? How will new employees be
    allocated among the different bureaus and sections? Has 9/11 altered
    decisions concerning where these new employees will be placed?
        Will the right-sizing of our posts abroad continue despite this
    surge in hiring? Do these two processes (Diplomatic Readiness Hiring
    Initiatives and Right-Sizing) conflict with one another?
        Answer.
    Recruitment Progress:
        Our recruitment and hiring effort thus far has been very
    successful.
      --We had 13,000 takers of the Foreign Service Written Exam in
            September--a sixty-three percent increase over last year.
      --For fiscal year 2002, we have already signed-up 344 new junior
            officers out of our target of 483, which includes Diplomatic
            Readiness hiring and attrition hiring.
      --We have reduced the average time to enter the Foreign Service from
            22 months to 10 months.
      --We are taking a hard look at our Civil Service hiring process to
            make it more efficient.
      --We are using targeted hiring programs in the Civil Service to meet
            anticipated skill needs effectively, including hiring employees
            in groups so they can be available more quickly and hiring into
            training programs that will grow talent from within.
    Position Allocation:
        As we allocate new positions, we are directing them in the first
    instance to our overseas needs--to meet requirements now being
    neglected due to lack of adequate staffing. We are also creating new
    training positions so that we can build our capacity, ensuring our
    employees have the needed training, to meet the challenges of 21st
    century diplomacy.
        The majority of the 360 new positions for fiscal year 2002 were
    used to begin to address overseas staffing deficiencies documented in
    our Overseas Staffing Model (OSM) and to meet Foreign Service training
    needs.
        For fiscal year 2003, the request for 399 new positions will allow
    the Department to continue to close training and staffing gaps and
    bring us another step closer to the full staffing required to meet the
    nation's diplomatic requirements. These new positions will be in
    Foreign Service Generalist, Foreign Service Specialist, and Civil
    Service categories, as determined by our planning models and foreign
    policy requirements.
        To determine specific allocation of those new positions by bureau
    and post, we assessed their human resource requests during our annual
    planning and budgeting process. This process culminates in a review by
    the Deputy Secretary and Under Secretary for Management who then set
    priorities and approve allocations.
        Because those policy priorities can change, we do adjust throughout
    the year. Post 9/11, we did revise our plans and direct more resources
    to counter-terrorism and border security.
    Right-Sizing:
        With regard to rightsizing the USG presence, the State Department
    is only part of the equation. As you know, the U.S. Government's entire
    overseas presence includes staff from over 30 agencies. As part of the
    planning process, each mission's review of its functions and staff
    takes into account all agencies at the mission.
        The Office of Management and Budget is currently undertaking a
    comprehensive government-wide rightsizing study, and we are working
    with them.
        As we determine the optimum allocation of our human resources, we
    use models, such as the Overseas Staffing Model, to develop baseline
    staffing levels. We are also developing a domestic staffing model.
        We use these and other workforce planning tools as part of our
    overall strategic planning and resource review process to determine
    staffing. In this regard, we can ``rightsize'' the Department's
    staffing.
        The Diplomatic Readiness Initiative was the result of that review
    process. It is a three-year plan to increase staffing levels in light
    of the assessed need. Therefore, the Diplomatic Readiness Initiative is
    in fact part of our effort to ensure we have the right staffing
    overseas to meet our mission.
                        border security/consular affairs
        Question. Mr. Secretary, how has the Consular Affairs Mission
    changed since the events of 9/11? Would you agree that the mission your
    consular officers perform is vital to our national security? What are
    the pros and cons of the Department's policy of requiring new Foreign
    Service Officers to serve their first tour in Consular Affairs? Do you
    think this policy has contributed to creating a culture at State where
    CA officers are second class citizens? Do you agree that Consular
    Affairs is a sufficiently important component of the Department's
    mission that it should be staffed by career FSOs, rather than by
    novices?
        Answer. The Bureau of Consular Affairs (CA) has been guided before
    and after the tragic events of 9/11 by two complementary goals:
    ensuring the security of our borders, while at the same time developing
    and implementing state-of-the-art technology to facilitate travel.
    Consular officers in the field are the outermost ring of the U.S.
    border security system. We have been continually engaged in efforts to
    design, deploy, and improve the systems and tools they need to help
    flag terrorists and criminals among visa applicants. Our Consular
    Mission has not changed and, in fact, September 11 has served to
    emphasize the importance of our core Consular functions to ensuring
    national security.
        The Department does not have a policy that new Foreign Service
    Officers (FSOs) must serve their first tour in a consular position.
    Rather, it is the policy of the Bureau of Human Resources in the State
    Department that all FSOs, regardless of career track, perform a minimum
    of one year of consular service during their first two assignments as
    junior officers. Some do this on their first assignment and some on
    their second.
        This policy enables the Department to meet its worldwide statutory
    responsibilities, while at the same time giving these untenured
    officers a diversity of experiences and the opportunity to demonstrate
    their skills in a variety of State Department functions. While serving
    in a consular capacity and under the mentorship of seasoned consuls and
    senior FSOs throughout our Missions, these officers have an opportunity
    to interface with large numbers of the host country population, make
    decisions quickly, manage staffs of host country national employees,
    work on a team within an Embassy or Consulate, hone language skills,
    master immigration and citizenship law, protect the security of the
    United States by selective visa issuance, and protect U.S. citizens
    abroad.
        A consular assignment provides all officers, regardless of career
    track, a foundation for understanding the consular function and its
    role in meeting core U.S. responsibilities abroad. Such service is
    extremely useful to all officers, as they assume greater
    responsibilities in their careers as Foreign Service officers.
    Accordingly, I do not agree that our assignment policy has contributed
    to a Department culture wherein consular officers are considered second
    class citizens. To the contrary, as the vast majority of the FSO corps
    has served in a consular position at some point in their careers, there
    is a greater understanding across the Foreign Service of the consular
    role in foreign policy.
        Question. Can we do a better job of screening student visa
    applications without causing significant delays--delays which may lead
    foreign students to choose not to study in the United States?
        Answer. The U.S. government can do a better job of screening
    students.
        The Immigration and Naturalization Service (INS) is currently
    working on the development and deployment of SEVIS (Student and
    Exchange Visitor System). I am optimistic that SEVIS will assist the
    Federal government in strengthening the current process for issuing
    student and exchange visas. We are actively participating with our
    colleagues from the Immigration and Naturalization Service, as well as
    the academic community, in the design and development of SEVIS,
    designed to convert what was largely a manual, paper-process to a
    modern automated system.
        I believe that the Department's process for adjudicating student
    visa applications is appropriate and expeditious. Consular officers
    evaluate student visa applications according to the criteria
    established by U.S. immigration law. The most pertinent elements are
    the credibility of applicants' plans to study in the United States and
    whether they have adequate financial means. As further required under
    U.S. law, the officer also determines whether a student visa applicant
    has a residence abroad which he or she has no intention of abandoning,
    and intends to depart from the United States upon completion of the
    course of study.
        All visa cases, including student and exchange visas, are processed
    using automated systems, which prompt a name check through the
    Department of State's centralized lookout system (CLASS). A consular
    officer must review all hits before a case can be approved for
    printing, and there is no override to this feature. In addition, the
    Department has in place special headquarters clearance procedures for
    visa applicants, including students from countries of concern, such as
    those on the state sponsors of terrorism list, as well as applicants
    whose planned travel raises concerns about unauthorized access to
    sensitive technologies. In these cases, clearance from Washington is
    required before the visa may be issued.
        In the vast majority of cases, i.e. those applicants whose names
    are not in our lookout system and whose academic or research interests
    raise no technology transfer or other security concerns, this name
    check procedure causes virtually no delay in the adjudication of visa
    applications. We issued approximately 560,000 student and exchange
    visas in fiscal year 2001; there is no indication that our adjudication
    requirements inhibited the number of student visa applicants.
                        department's long-range it plan
        Question. Mr. Secretary, your progress in upgrading your IT systems
    is impressive. Now that two major projects are well underway, what is
    your long-range plan for State in the area of Information Technology?
        Answer. Our Classified Connectivity Program (CCP) and OpenNet Plus
    are underway--on schedule and on budget. We are on the eve of piloting
    a program in India and Mexico to improve collaboration among agencies.
    We are also working on a proposal to replace a potpourri of messaging
    systems, including replacing a legacy cable system of WWII vintage with
    a single integrated messaging system that will substantially improve
    the way we communicate.
        We are not satisfied with catching up to others in this high-tech
    world. Our goal is to move ahead, reconfirming State's position as the
    lead Foreign Affairs agency, setting an example for the rest of
    government, indeed, setting the standard for the international
    community in its conduct of diplomacy.
        The technology we are deploying must satisfy three standards:
    smart, simple, and secure. Our vision is a single computer at every
    desk and mobile connectivity for every contingency--with full access to
    all information required for the effective conduct of diplomacy.
        Our new tools of diplomacy will allow full engagement in the
    networked world of the 21st century and full recognition that the
    fundamental requirements of diplomacy, one of which is that the best
    people be supported by the most reliable technology, will not change.
                             peacekeeping--general
        Question. The fiscal year 1997 State Department Appropriations bill
    required the Secretary to notify Congress 15 days before the United
    States voted to establish or expand a peacekeeping operation. Mr.
    Secretary, do you believe Congress should have a more formal role in
    the decisions leading up to Security Council votes that pertain to
    peacekeeping? Wouldn't this lessen the need for ``holds'' in order to
    effect positive change in these missions?
        Answer. The Department of State continues to comply with the
    requirements of 22 USCA 287b(e)(5)(A) to notify Congress 15 days before
    the United States votes in the Security Council to establish a new U.N.
    peacekeeping mission, expand the authorized force strength of an
    existing mission, or add significant additional or significantly
    different functions to a U.N. peacekeeping operation.
        Well in advance of this formal notification, which includes a
    critical review of major aspects of such operations, the Department
    engages in an extensive process of consultation with Congress on U.N.
    peacekeeping, including monthly ``Round-the-World'' briefings for this
    and other Congressional committees and quarterly and annual reports on
    U.S. contributions to U.N. peacekeeping operations. The monthly
    briefings, in particular, provide a unique opportunity for the
    Department to indicate early developments and trends and for Congress
    to comment at an early stage.
        Question. Secretary Powell, it is estimated that our campaign to
    liberate Afghanistan cost $2 billion, with continuing costs of $200
    million per month. Britain is to be commended for its role in both the
    military campaign and the ensuing Security Assistance Force. Do you
    agree, however, that the peacekeeping function should be left largely
    to our allies, particularly our other European allies?
        Answer. We should commend all the members of the coalition for
    their commitment and their contribution to the military, diplomatic,
    and economic facets of the Global War on Terrorism. There are
    compelling reasons why the United States has chosen not to participate
    directly in the International Security Assistance Force (ISAF)
    peacekeeping mission in Afghanistan. Chief among these, obviously, is
    that it has allowed us to focus on the war against the Taliban and al
    Qaida, as well as on potential threats in other locations related to
    the Global War on Terrorism. Our allies understand and support this
    focus, as demonstrated by the many generous offers of assistance, which
    enable us to maintain that focus. The direct participation of allied
    military forces in ISAF has helped to promote stability in Afghanistan
    and to solidify allied public support for coalition efforts. Another
    reason for supporting our allies' prominent role in ISAF is the unique
    qualifications that many of them bring to peacekeeping. All the current
    ISAF participants are nations that have taken part--and in most cases
    are still taking part--in the multiple Balkans peacekeeping missions of
    the last ten years. Several ISAF troop contributors have peacekeeping
    experience that stretches back several decades and are putting that
    experience to good use in helping to secure a brighter future for
    Afghanistan.
                     u.n. peacekeeping mission in the congo
        Question. Former United States-U.N. Ambassador Richard Holbrooke
    set preconditions for U.S. support of U.N. intervention in the Congo.
    These included withdrawal of combatants to the lines established in the
    Lusaka accord, absolute cessation of hostilities, and free access to
    all areas for U.N. observers. Is this still U.S. policy? If so, will
    the United States apply these conditions to the eventual vote by the
    Security Council to raise the troop level from its current level of
    5,500? If the preconditions are not met, will the United States vote
    against raising the troop level?
        Answer. The conditions set by former Ambassador Holbrooke for U.S.
    support of the U.N. Organization Mission in the Democratic Republic of
    the Congo (MONUC) have been generally met: the combatants have
    withdrawn to the agreed disengagement lines; the cease-fire has held,
    with a few exceptions, since early 2001; and Lusaka Agreement
    signatories have permitted MONUC access to areas under their control.
    The United States has made it clear that its support of MONUC's
    operations in the Congo will require the continued observance of the
    cease-fire by all parties and free access to all areas for U.N.
    observers. In addition, before we could support an increase in MONUC's
    troop level, we would have to be convinced that this would further U.S.
    goals that include achieving the Lusaka Agreement's objective of
    withdrawal of foreign forces and the disarmament and demobilization of
    the armed groups.
        Question. Should the Organization of African Unity or some other
    honest broker host an international conference with the express purpose
    of redrawing colonial borders in Central Africa to create smaller but
    more militarily, politically, economically, and socially viable States?
    Lacking any real history of, or meaningful prerequisites for,
    representative government, what makes you believe that a country as
    large, diverse, and underdeveloped as the Congo can ever achieve
    democratic self-governance? What other than partition can free the
    Congolese people from the twin plagues of rebel warlords and resource-
    hungry neighbors?
        Answer. The Organization of African Unity (OAU) supports the
    principle of inviolability of colonial borders throughout the African
    continent. It would be up to the people of the Congo, working as they
    see fit with their neighbors and the OAU, to consider whether redrawing
    their boundaries can be an effective way to address their problems.
        I firmly believe that the Congolese people can achieve democratic
    self-governance within the present boundaries of the Congo. To expect
    less would be to grossly underestimate their love for their country and
    their desire for freedom.
        Question. Why aren't we pursuing controls on the export of ``col-
    tan'' (short for columbite-tantalite, an ore rich in the element
    tantalum) when it is known that col-tan is bankrolling the Rwandan-
    backed Rally for Congolese Democracy (RCD)? Is this the next Conflict
    Diamonds?
        Answer. Last December, the U.N. Security Council discussed the
    November 13 Addendum to the Report of the Panel of Experts on the
    Illegal Exploitation of the Natural Resources of the Democratic
    Republic of the Congo. We did not support the panel's recommendation
    for a moratorium on the purchase of specific commodities in the Congo,
    including col-tan. We believe such a moratorium would be unenforceable
    and thus would weaken the credibility of the U.N. Security Council's
    efforts to end the illegal exploitation of the Congo's resources.
        We supported the continuation of the panel for up to six months to
    provide for a follow-up to the report, including ways to address the
    exploitation of col-tan in the Congo. We urged all governments to
    cooperate fully with the panel.
                            u.n.-capital master plan
        Question. Mr. Secretary, what in your view is the purpose of having
    a task force oversee U.S. participation in the U.N. renovation?
        Have you heard some of the U.N. ideas about how they might fund
    this project, and do they alarm you?
        How can we guarantee that the renovation of the U.N. building, and
    thus the creation of more ``desk space,'' will not quickly be followed
    by requests to enlarge the U.N. bureaucracy?
        Answer. The task force would bring together personnel from the
    Department of State and other U.S. government agencies, with the
    necessary expertise in construction and financial management, to ensure
    that U.S. interests are met. We believe such oversight is essential in
    a project of the potential magnitude of the U.N.'s Capital Master Plan.
        The U.N. currently is preparing updated proposals regarding all
    aspects of the Capital Master Plan, including funding options. As the
    proposals have not yet been issued, it is premature to speculate on
    what these may contain. Moreover, all proposals will be subject to
    negotiation among the U.N. member states. The funding issue will be key
    in this process. We expect all factors will be considered, including
    private sector and voluntary funding.
        The U.S. remains committed to budget discipline in the U.N. We will
    continue to adhere to this approach, irrespective of the current
    initiative to renovate the aging U.N. headquarters complex and bring it
    up to modern standard in terms of safety, security, and energy
    efficiency. As noted previously by the General Accounting Office, the
    buildings comprising the U.N. headquarters complex have exceeded their
    economic life expectancy. They are energy inefficient and no longer
    conform to current safety, fire and building codes, or to requirements
    regarding U.N. security.
                                     ______

                Questions Submitted by Senator Pete V. Domenici
                         international law enforcement
        Question. While these International Law Enforcement Academies have
    been recognized as a useful tool in the war against drugs, don't these
    organizations also lend themselves to the war against terrorism as the
    United States secures its borders and seeks members of terrorist
    organizations in other countries?
        Answer. The ILEAs play a significant role in combating not only
    crime, but also terrorism and those who often use criminal enterprises
    to accomplish their goals. Many of the advanced investigative skills
    foreign law enforcement officials learn at the ILEAs are also
    applicable to conducting effective counter-terrorism investigations and
    operations. In light of the events of September 11 and the connection
    between terrorism and drug trafficking articulated by the President,
    the Department's Bureau of International Narcotics and Law Enforcement
    Affairs and Coordinator for Counterterrorism, as well as other U.S.
    Government agencies represented on the ILEA Steering Group, will be
    developing ways to include additional antiterrorism courses in the ILEA
    curriculum.
        Question. I was concerned to see that the overall budget for the
    International Narcotics Control and Law Enforcement activity, excluding
    appropriations from the Emergency Response Fund, is reduced from a net
    $217 million in fiscal year 2002 to $198 million in the fiscal year
    2003 budget request. This represents a reduction of $19 million, or 8.8
    percent. What is the rationale for reducing this type of bilateral
    assistance that has the potential to further contribute to our war
    against terrorism?
        Answer. We agree that our counternarcotics and anticrime programs
    have been very successful in combating drug trafficking and other
    transnational crimes, and we expect them to continue to be successful.
    While the initial fiscal year 2002 appropriation for International
    Narcotics Control and Law Enforcement (INCLE) was $217 million, we have
    made the difficult choice to transfer $20 million to the Andean
    Counterdrug Initiative, as authorized by Congress, to provide
    sufficient funding for our programs in that very important region (the
    actual ACI appropriation was $105 million less than our request, a 14
    percent reduction). That transfer brings the actual fiscal year 2002
    program level for INCLE to $197 million, a $28 million increase over
    the comparable fiscal year 2001 level. Therefore, our fiscal year 2003
    request is a straight line from fiscal year 2002. At this level, there
    is sufficient funding to carry out our programs.
        Question. Are the existing ILEAs, including the most recently
    established ILEA in Roswell, New Mexico, supported at their existing
    funding levels in the fiscal year 2003 budget request?
        Answer. Yes. The funding will remain constant.
        Question. Is it not true that funding for the ILEA in Budapest came
    in part from funding for two initiatives that is now drying up? Is the
    Department making up for those funding resources in its crime control
    budget, or is the program essentially being asked to absorb these
    costs?
        Answer. ILEA Budapest has been financed by FREEDOM Support Act
    (FSA) and Support to East European Democracy (SEED) funds. The FSA and
    SEED funding may eventually be reduced in fiscal year 2003 or beyond,
    but any shortfalls will be made up from the International Narcotics
    Control and Law Enforcement (INCLE) Crime account.
             center for anti-terrorism and security training (cast)
        Question. How does the proposed new Center for Anti-Terrorism and
    Security Training relate to the current State Department Anti-Terrorism
    Assistance [ATA] program?
        Answer. Over the last 17 years, the Department's ATA program,
    managed by the Bureau of Diplomatic Security, has provided
    antiterrorism training to over 28,000 foreign law enforcement
    personnel. The events of September 11 underscored the need to increase
    such training for those who partner with us to protect American
    interests overseas. The attacks have also resulted in a mandate to
    increase both the amount of training and the topics addressed. In the
    current environment, the capacity to provide enhanced training on a
    larger scale is limited by existing facilities and technology, often
    relying on ad-hoc arrangements with other organizations which have
    their own increased training needs. CAST provides a remedy for both by
    providing a forward leaning approach and state-of-the art facility.
        The Department's role in countering terrorism abroad requires that
    the Anti-Terrorism Training Assistance (ATA) program add further course
    offerings in specific areas dealing with countering and responding to
    terrorist incidents. These skills are an integral part of the total
    package required for foreign law enforcement personnel to effectively
    prevent and respond to terrorist incidents. Additional training
    capacity would also reduce the risks for Americans working or visiting
    abroad.
        Question. Does the Department intend to fully utilize its current
    training partners to carry out the expanded ATAP [ATA] program?
        Answer. Yes, the existing training facilities are at full capacity
    and will not allow for expansion of the Anti-Terrorism Assistance (ATA)
    program. Therefore, the continued use of specialized facilities, which
    provide unique training environments such as desert and maritime
    training, remains critical to the training mission. The desert border
    patrol training will continue to utilize the facility in Socorro, New
    Mexico. The pipeline security training and certain maritime training
    will continue to utilize facilities connected with the Louisiana State
    Police Academy in Baton Rouge, Louisiana. As evolving training demands
    are recognized, additional partnering needs will be identified and
    integrated.
        Question. How will the Anti-Terrorism Assistance [ATA] program be
    integrated with the new Center for Anti-Terrorism and Security
    Training?
        Answer. The Anti-Terrorism Assistance (ATA) program consists of a
    number of related activities, the majority of which involve U.S.-based
    training, consultation, and program reviews for foreign law enforcement
    personnel. While substantially improving our ability to train
    Diplomatic Security agents, CAST will also help meet increased training
    mandates and improve functional law enforcement related training for
    mid-level and senior-level foreign officials. The concept and planning
    model will allow for a seamless integration of that training, while
    accommodating significantly increased requests for training by front
    line nations. ATA now trains about 3,000 foreign law enforcement
    professionals annually. The CAST facility, when fully operational, will
    accommodate as many as 7,000 foreign trainees per year.
                       international monetary fund (imf)
        Question. International Monetary Fund bailouts and Clinton
    Administration foreign policy aims arguably distorted financial crises
    affecting East Asia and Russia.
        Mr. Secretary, can you tell us what role you and the Department are
    playing, in consultation with the Treasury Department, in reviewing
    United States policy with regard to the role of the IMF in countries
    with chronic fiscal problem, such as those we've seen and continue to
    grapple with in Argentina?
        Answer. This Administration has worked to make the IMF more
    consistently associated with success. The IMF is making progress in
    narrowing the focus of its work. New country programs reflect sharper
    concentration on key areas and a prioritization of measures necessary
    for reforms to succeed. This is a welcome change. A broader review of
    the conditions attached to IMF lending continues. As part of this
    review, the United States is emphasizing the need for the IMF to be
    selective in providing financial support. The IMF needs, in short, to
    demonstrate a greater willingness to focus its support on countries
    doing the most to help themselves, and to decline to finance cases in
    which a country is not prepared to take the steps required to achieve
    credible reforms and a sustainable growth path. We convey the same
    message to those countries seeking IMF assistance.
        Question. What do you expect will be the outcome of the IMF quota
    review that, according to the IMF's Articles of Agreement, must be
    completed by January 2003?
        Answer. The United States believes the liquidity position of the
    IMF is sufficiently strong at this time. Therefore, we do not expect
    the current review to result in any quota increase.
                             management challenges
        Question. As you know, the President's 2003 budget emphasized
    performance-based budgeting--the first time this has been done. As part
    of his management agenda, the Office of Management and Budget
    identified five government-wide initiatives and ranked each department.
    Unfortunately, the State Department failed to receive a passing grade.
    What is your plan to meet the high standards set by the President?
        Answer. I am personally and professionally committed to moving the
    Department from a ``red'' score (meaning failure) to ``green'' (meaning
    success) on all five elements of the President's Management Agenda
    (PMA). We have completed and begun to implement credible plans for two
    of those five elements (Financial Management and E-Government). As a
    result, our current score of the ``work in progress'' on those elements
    has moved from ``red'' to ``yellow''. We take the President's
    Management Agenda very seriously, and all of my senior managers at the
    Department share my commitment to getting to ``green'' in the most
    effective way possible.
        Question. In previous years, the State Department has been unable
    to clearly state the relationship between some key outcomes and
    strategies and indicators in its annual performance report. The
    Department has been unable to establish connections between its actions
    and the success or failure of key outcomes. Given that the nature of
    the State Department's mission makes it difficult to avoid either
    having very broad key outcomes that are not addressed sufficiently by
    the indicators; what role should the Department's annual performance
    report, as mandated under GPRA, serve in helping the Congress determine
    if the State Department is meeting its goals?
        Answer. Because of the complex, long-term nature of the goals of
    the Department of State, and because the environment is unpredictable
    and subject to sudden change, we believe that a clear focus on results,
    and what it takes to achieve them, is critical to our success.
        The Department's 2001 Performance Report reflects the progress we
    are making in communicating the relevance of our goals and how they
    address critical strategic issues facing the country. Much credit goes
    to an improved process that introduced a goal team for each of the
    Department's strategic goals.
        By strengthening the linkage between goals and resources, we
    believe that our plans, reports, and results will be enhanced. To
    accomplish this, we intend to have our goal teams identify
    interdependencies among goals and define specific intermediate outcomes
    that will lead to progress toward positive long-term outcomes. Senior
    Policy and Management reviews chaired by the Deputy Secretary of State
    are also designed to improve the Bureau and Mission Performance Plan
    processes.
        Such measures will provide both the Department and the Congress a
    clearer understanding of the relationship between funding and results.
        Given the size of our plan and report documents at this time, we
    will strongly encourage our goal teams' use of summaries and graphics
    to better communicate the core logic to external stakeholders and the
    public.
        Question. If Congress passed the President's Management Agenda, how
    would operations of the State Department improve?
        Answer. At this time, the Administration has no plans to introduce
    legislation incorporating the President's Management Agenda (PMA). The
    Administration believes that the best way to implement this agenda is
    within the Executive branch and under the guidance of the Office of
    Management and Budget. Consequently, we can make adjustments as
    necessary between the general, over-arching goals of the PMA and the
    particular policies, programs and activities of each individual agency.
                                  foreign aid
        Question. I understand that OMB will be sending us a supplemental
    request in the near future and that it will include additional aid for
    Afghanistan, Colombia, and the Central Asian Republics.
        (1) Is that correct? If so, how much of the supplemental will be
    for the 150 function?
        (2) Which 150 programs will be affected?
        (3) Will it include any additional countries or 150 items?
        Answer. We are working with OMB to put together an emergency
    supplemental package to support the war on terrorism and the front-line
    states.
        No final decisions have been made on requirements and funding
    levels.
        We will provide further details as soon as the request has been
    developed.
                            funding for afghanistan
        Question. As you know, the annual budget cycle is not always well-
    equipped to deal with long-term needs. Each year's immediate priorities
    tend to overshadow continuing problems that require sustained reforms.
    What can be done to ensure that funding for Afghanistan for the out-
    years is secured now, before Afghanistan slips from the headlines?
        Answer. We know that there will be substantial requirements for
    reconstruction and redevelopment in Afghanistan. We will use
    supplemental funding to address Afghanistan's immediate needs.
        Our annual budget requests for the out-years will respond to future
    requirements and reflect the commitment of the United States to assist
    Afghanistan.
        As the President has said, we will not walk away from that
    commitment.
                               biennial budgeting
        Question. How do you think biennial budgeting would affect the
    State Department and the spending and operations of the foreign affairs
    apparatus?
        Answer. The concept of biennial budgets is worth thinking about. On
    the plus side, we would gain a better sense of how much money would be
    available over a longer period for managing the Department and our
    posts abroad. Our planning would benefit.
        However, this idea would not remove the need for periodic
    supplementals in order to respond to unanticipated contingencies.
    Supplemental requests and budget amendments have become a fact of life
    in the international affairs area, where we have very little
    contingency funding to respond to emerging opportunities and threats.
        This idea will not work unless we seek and are appropriated
    adequate and realistic funding levels for the work we know we must do.
        I am open to discussing further any proposal you may have that will
    provide us the resources we need to support the conduct of diplomatic
    relations and U.S. foreign policy.
                      capitalism and the developing world
        Question. In the aftermath of the Asian Financial Crisis, the
    Economic Report of the President indicated that net private sectors
    capital flows to the emerging markets declined more than 90 percent
    between 1997 and 2000. Since then countries like Argentina and
    Indonesia have been mired in recession and political discord. Perhaps
    understandably, the citizens of these countries view American style
    capitalism with skepticism.
        What can be done to improve our nation's image among the citizens
    of the developing world and how can we better promote the idea that
    free markets improve standards of living and strengthen democratic
    institutions?
        Answer. The United States, led by the Department of Treasury, has
    strongly supported International Monetary Fund initiatives to
    strengthen surveillance and crisis prevention measures. With U.S.
    government support, the IMF and World Bank initiated the Financial
    Sector Assessment Program in 1999 to assess members' financial systems
    and the regulatory and legal framework underlying their operation. The
    results are incorporated into the IMF's reviews of national economies.
        Spearheaded by the Asian financial crisis, the IMF's standards and
    codes initiative promotes the development and dissemination of codes of
    good practice in the financial sector. Reports on the Observance of
    Standards and Codes (ROSCs) summarize the extent to which countries
    observe international norms in a number of areas crucial to the health
    of financial systems. Reports are used for official discussions, as
    well as for risk management by rating agencies and the private sector.
        The United States has supported efforts to improve dialogue among
    market participants, the International Financial Institutions, and
    sovereign governments. In June, 2001, the IMF created an International
    Capital Markets Department as part of an initiative to strengthen the
    international financial architecture. The Department serves as a
    liaison with the private sector and enables the IMF to conduct more
    effective surveillance.
        At the urging of the United States and its G-7 partners, the
    Financial Stability Forum (FSF) was established in 1999 to improve
    cooperation in financial surveillance and supervision. The FSF is
    comprised of finance ministry and regulatory official, as well as
    International Financial Institution and international banking
    representatives. The FSF encourages implementation of measures to
    improve the health of financial systems, including improved disclosure
    practices, deposit insurance programs, accounting standards, and
    improving counter-party risk management.
        The Basel Committee on Banking Supervision is playing a fundamental
    role in strengthening the safety and soundness of the international
    banking system. Chaired by New York Federal Reserve President William
    McDonough, the Committee is revising the Basel Capital Accord to
    redefine minimum capital requirements, improve supervisory review
    standards of internal bank assessment processes, and ensure effective
    disclosure standards to encourage sound banking practices.
        The Committee on Banking Supervision and the Bank for International
    Settlements jointly created the Financial Stability Institute in 1999
    to help bank supervisors improve financial systems worldwide. The
    Institute organizes seminars, regional workshops, and informational
    programs on bank supervision issues. Upcoming seminars in Muscat,
    Khartoum, Lusaka, Bangkok, and Vilnius are indicative of the worldwide
    scope of its efforts to improve banking standards.
        Finally, the United States is working on a bilateral basis, where
    appropriate, to address areas of concern. The Department of Treasury's
    technical assistance team and USAID's banking and capital market reform
    team have worked with governments in Asia, Eastern Europe, South
    America, Africa, and the Middle East on a wide range of bank reform
    issues.
        An appropriate financial policy framework facilitates the
    mobilization of capital and is a critical condition for economic
    growth. As the United States works with its partners to promote the
    spread of market-based economies, efforts to strengthen the financial
    and banking sectors will remain a priority.
                                visa procedures
        Question. The State Department has a very considerable role in the
    war on terrorism in its role of issuing visas throughout the world
    thereby enabling foreign nationals to come to our country. Since 9/11
    has there been any significant change in the number of visas issued or
    any review or change in the procedures for issuing visas?
        Answer. In the immediate aftermath of September 11, nonimmigrant
    visa activity declined by as much as 25 percent, compared to the same
    period the year before, although actual rates varied from one part of
    the world to another.
        While the overall procedure employed for issuing visas remains
    basically the same, we are working continually to enhance the
    information available to consular officers when they adjudicate a visa
    application. In January, in cooperation with law enforcement and
    intelligence agencies, we implemented a supplemental nonimmigrant visa
    application form designed to elicit information that would prompt a
    more intense review of certain applications for national security
    reasons. The Bureau of Consular Affairs continues to push hard for
    increased data-sharing with other agencies that may possess derogatory
    information on potential visa applicants, so that information is
    included in our worldwide CLASS visa lookout system and thus available
    to our consular officers as they consider applications. Our robust visa
    system is only as good as the information entered into it. Thus, it is
    absolutely essential that the law enforcement and intelligence
    community provide us with the necessary information. In addition, the
    review process for potentially problematic visa applications has
    lengthened as we attempt to obtain relevant input from any and all
    interested agencies in specific cases.
                            visa and passport fraud
        Question. One of the most important ways in which the State
    Department contributes to the war on terrorism is through its role as
    issuer of visas and passports, which of course, takes place on a global
    basis. It is my understanding the State Department issues approximately
    7 million passports and between 7 and 8 million visas each year. It is
    also my understanding that there are only 215 domestically based agents
    in the Criminal Investigations Division of the Bureau of Diplomatic
    Security who investigate visa and passport fraud. These 215 agents
    spend a small fraction of their time (perhaps one-third) on visa and
    passport fraud investigations since they also must respond to the needs
    of VIP's and other security matters. Overseas there are approximately
    405 agents who deal with security and in case of these agents even more
    demands are placed on their time, leaving maybe 10 percent of their
    time to investigate visa and passport fraud. Thus, by my calculations
    we have only 90 people across the globe working full-time on visa and
    passport fraud. Now I realize that Diplomatic Security intends to
    recruit, train, clear and set-up approximately an additional 186
    Diplomatic Security agents. Still do you believe that the State
    Department's efforts in going after visa and passport fraud are
    adequate?
        Answer. The Department continues to make the best possible use of
    available resources for this purpose. Passport and visa fraud
    investigations are a critical component of our national security. The
    Bureaus of Diplomatic Security (DS) and Consular Affairs (CA) take this
    responsibility seriously and work together domestically and abroad to
    protect our borders. Let me explain their complementary roles in border
    security.
        All consular and passport officers conduct limited investigations
    to detect and prevent fraud in the regular course of their work.
    Passport agencies and consular sections also have a designated Fraud
    Prevention Manager, who is responsible for training line officers and
    investigating potential fraud cases. Passport agencies and many
    embassies have full-time, mid-level officers in these jobs. Overseas
    Consular Sections with lower levels of fraud have part-time officers.
    Consular Sections also have locally hired staff with full-time fraud
    investigation responsibilities.
        Passport and Visa fraud investigations are typically begun by the
    adjudicating officers, who note any anomalies in the cases they
    receive, and refer them to the Fraud Prevention Manager (FPM) at the
    overseas post or at the passport agency. FPMs often conduct preliminary
    investigations to determine whether there is fraud involved in the
    case. Fraudulent U.S. passport applications are passed by CA to DS for
    criminal investigation. Visa fraud that appears to involve
    sophisticated or organized fraud, or falsification of foreign passports
    or other government documents, are passed to DS for criminal
    investigation and coordination with foreign police as appropriate. DS
    also investigates many allegations of passport and visa fraud received
    from outside sources. A large majority of all DS agents worldwide are
    engaged in criminal investigations to some extent, although few are
    committed full time to this mission.
        DS and CA work to satisfy different but complimentary interests,
    while increasing the number of staff to pursue the mission of border
    security. For example, DS is aggressively expanding the number of
    agents committed to passport and visa fraud investigations globally. In
    partnership with Consular Affairs, we are fully committed to increasing
    our critical contribution to U.S. border security. The additional
    special agent positions authorized by Congress under the Emergency
    Response Fund (ERF) following September 11, coupled with additional
    agent positions approved by the Congress in fiscal year 2002, will
    allow DS to better address its visa and passport fraud workload. DS is
    also adopting new methodologies relating to the investigative program,
    in order to ensure that we are maximizing existing investigative
    resources.
        Question. If additional resources had been provided to hire and
    train additional agents to investigate visa and passport fraud, would
    9/11 have happened?
        Answer. Any impact that additional agents may have had on the
    events of September 11 is at best speculative. Those events served to
    validate the need for a variety of enhancements and the retooling of
    others. Aggressive visa and passport investigative efforts add to the
    ability to protect American interests, both domestically and abroad.
    The key to preventing future attacks includes, but is not limited to,
    additional resources, exploiting technology, information sharing, and
    improved interagency cooperation. The Department requires accurate and
    timely intelligence-sharing throughout the intelligence and law
    enforcement communities to expand and improve the ability to prevent
    violations, as well as to respond to criminal activity. It is important
    to remember that the ability to impact the problem depends on cross-
    cutting efforts by multiple agencies.
        Question. Can you explain to me the jurisdiction of the State
    Department as opposed to the Department of Justice and the FBI with
    respect to the investigation of visa and passport fraud? Is there
    overlap or duplication? Is there adequate coordination between these
    departments?
        Answer. The Department's Bureau of Diplomatic Security (DS)
    jurisdiction, under Title 22 USC, Sections 2709 and 4802, is specific
    to illegal passport or visa issuance or use. DS is not a border
    interdiction agency. Its primary focus is supporting the integrity of
    the U.S. passport and visa documents and issuance processes. The Bureau
    of Diplomatic Security also investigates the fraudulent use of foreign
    passports to enter the United States if the circumstances indicate that
    terrorism or other significant criminal activity may be involved.
        Passport fraud usually is not an end in itself, but rather a
    facilitating or predicate crime committed by those seeking to carry out
    other criminal acts. When other criminal activity is indicated, DS
    coordinates with the appropriate Federal, state, or local U.S. law
    enforcement agency with primary statutory jurisdiction for the
    offense(s). DS investigative efforts, targeting the passport or visa
    fraud, are of significant value in the investigation of the other
    underlying criminal activity. Thus, these investigations are often
    multi-agency efforts.
        While interagency cooperation regarding fraud investigations
    exists, there is a continuing need for greater information sharing
    between the law enforcement community and the Department of State, in
    order to expand and improve our efforts to prevent and respond to
    fraud.
        DS' primary focus in passport and visa fraud is on individual cases
    supporting the integrity of U.S. passport and visa documents:
      --Fraudulent applications;
      --Misuse and sale; alterations and counterfeiting (normally document
            vendor rings rather than individuals);
      --Visa ``fixers'' operating near missions overseas. Vendors of feeder
            documents for U.S. passports within the United States;
      --Employee malfeasance (U.S. or foreign national employees).
        Cases identified as possibly involving threats to U.S. national
    security interests are treated as highest priority and are immediately
    coordinated with the U.S. agency with the lead for those crimes. In
    those circumstances, DS continues its investigation of the passport and
    visa fraud as part of a joint, multi-agency investigation and in strict
    coordination with the other agency having the lead for the underlying
    criminal activity.
        DOJ/INS Role.--Although this is not an all-inclusive listing of INS
    responsibilities, the Department interacts closely with INS in the
    following capacities concerning passport and visa fraud: Border
    control/interdiction; control of Alien Arrival and Departure from
    United States; alien smuggling in general; visa fraud based on
    fraudulent petitions filed from within the United States; immigrant
    visas.
        DS often conducts visa fraud investigations in close coordination
    with INS and has taken the lead role in some major cases. For example,
    DS led a multi-agency investigation centered in Los Angeles that
    targeted visa and passport fraud activities of the Iranian terrorist
    organization MEK. That case led to numerous arrests in several states
    and overseas, dismantled a network that was funneling illicit funds to
    the terrorist organization, and resulted in the first U.S. conviction
    of an individual for providing material support to a terrorist
    organization. There is potential for some overlap in domestic portions
    of these investigations, but we have not found this to be a significant
    problem, either in volume of cases or determining which agency should
    have the lead. It should be noted that some redundancies provide a
    safety net, helping to ensure that cases are not missed.
        FBI Role.--The FBI normally focuses on the underlying criminal
    activity, rather than the passport or visa fraud. Obviously, FBI is the
    lead agency in investigation of terrorism, organized crime, money
    laundering, and other serious criminal activity that often involves the
    use of fraudulent international travel documents. DS often works
    jointly with the FBI in cases that also involve passport and visa
    fraud, conducting those parts of the investigations and also conducting
    other substantial leads on behalf of the FBI in other countries where
    the FBI is not present. DS agents assigned to the various Joint
    Terrorism Task Forces (JTTFs) have the lead role for passport and visa
    fraud investigations associated with terrorist activity and work
    closely with the FBI and the cognizant U.S. attorney's office.
                         youth in developing countries
        Question. Could you share with us your vision of how U.S. foreign
    policy can address the challenges and opportunities facing youth in
    developing countries?
        Answer. Even before the urgency pressed upon us by September 11th,
    the Department has been working to offer hope to youth in developing
    countries. Our development efforts have been focused on improving
    education, economic opportunity, and political security for the rapidly
    expanding young population in developing countries. On March 14,
    President Bush outlined a major new vision for development and
    announced the United States would increase its core economic
    development assistance to 50 percent above current levels over three
    years, reaching a $5 billion increase over projected levels in fiscal
    year 2006 and beyond. This new ``Compact for Development,'' which
    proposes creating a separate development assistance account called the
    Millennium Challenge Account, supports countries that are willing to
    commit to sound policies and to fight poverty effectively. We know that
    a major source of tension and discontent in many countries stems from
    the growing ranks of educated youth without the corresponding
    opportunities for gainful employment. Our economic development programs
    therefore must have job generation as a major objective. At the same
    time, our public diplomacy efforts--especially educational and cultural
    exchanges--have been reaching out to youth through programs that engage
    both teachers and students. With new programs focused on educating
    youth in Muslim majority countries, we heighten international social
    and cultural understanding and enhance long-term international problem
    solving. Combined, these new efforts will help build the trust,
    confidence and international cooperation necessary to sustain and
    advance the full range of our interests.
                                  u.n. reforms
        Question. What reforms still need to be instituted at the U.N.?
        Answer. The U.N. already has implemented virtually all of the
    Helms-Biden Tranche Three reform requirements, e.g., the United States
    has a seat on the Advisory Committee on Administrative and Budgetary
    Questions (ACABQ); the U.N. has implemented a personnel evaluation
    system; it has instituted an appropriate code of conduct, etc. We are
    working closely with the U.N. to ensure that they meet the remaining
    conditions, such as GAO access to U.N. financial data, and expect to
    reach a satisfactory conclusion very soon. Assuming that the State
    Department Authorization bill is passed with the requested amendments
    to the Helms-Biden legislation, we believe we will be in a position
    this summer to recommend that the Secretary certify that all the U.N.
    reforms requirements have been met.
        Question. How close is the State Department to certifying the
    reforms in U.N. agencies that are preconditions for payment of the last
    installment of U.S. funds?
        Answer. All of the relevant agencies (U.N., World Health
    Organization, International Labor Organization, and Food and
    Agriculture Organization) have made significant progress toward fully
    implementing the required reforms outlined in the ``Helms-Biden''
    legislation, and we continue to work closely with them. We hope that,
    if the pending State Department Authorization bill is passed with the
    requested amendments to the Helms-Biden legislation, we will be in a
    position to certify this summer that the agencies have met the
    conditions for payment of the last installment (Tranche III).
                                     ______

             Questions Submitted by Senator Ben Nighthorse Campbell
                         corruption/international crime
        Question. Over the past several years the Helsinki Commission,
    which I chair, has paid increasing attention to the multidimensional
    threats posed by corruption and international crime. There is an
    obvious nexus between corruption, international crime and terrorism. I
    have proposed that a special meeting of Ministers of Justice be
    convened to explore ways to enhance cooperation among the 55 countries
    of the Organization for Security and Cooperation in Europe (OSCE).
        Would you support such an initiative and what are some areas that
    should be given priority attention?
        Answer. The United States is a strong advocate of OSCE efforts to
    combat corruption. Corruption distorts the operation of free markets,
    impairs economic stability and growth, jeopardizes privatization and
    economic restructuring, impedes foreign investment, and undermines free
    and fair competition. Corruption is an impediment to development and
    democracy. Although we do not see a need for a Justice of Ministers
    meeting at this time, we will keep your suggestion under review and be
    prepared to reconsider it if circumstances warrant.
        Combating corruption and the international crime it facilitates in
    the OSCE region remains a top priority for the United States. The OSCE
    has implemented several programs aimed at combating corruption and
    supporting good governance. For example, in December 2001, the OSCE and
    Department of State Funded ABA/CEELI (American Bar Association Central
    and Eastern European Law Initiative) worked together to support
    Montenegro's Anti-Corruption Commission to draft a public official
    conflicts of interest law. OSCE and ABA/CEELI also worked with the
    Commission to initiate a public forum process to engage civil society
    in the development of this law. We continue to look for new
    opportunities to expand these good governance programs throughout the
    region. We support the OSCE's current arrangement to combat crime and
    corruption and encourage rapid implementation of OSCE efforts against
    terrorism.
                   southeast european cooperative initiative
        Question. The Southeast European Cooperative Initiative--SECI--was
    conceived and promoted by the United States in an effort to foster
    regional cooperation, among twelve countries from the Balkan region,
    through task forces on narcotics, human trafficking, commercial fraud
    and other criminal activities affecting American interests. I
    understand that the United States is providing important leadership in
    the SECI initiative.
        Please describe some of the Department's ongoing work within the
    SECI framework and the potential benefits derived from U.S.
    participation.
        Answer. The Department of State has provided diplomatic and
    material support (through the SEED program) for the formation of the
    SECI Center to Combat Transnational Crime in Bucharest, Romania. In the
    wake of September 11, the SECI Center established a working group on
    anti-terrorism.
        We very much support the efforts of the countries of Southeast
    Europe to work together to combat criminal activity and believe that
    the Center, in its first full year of activity, has made important
    contributions to combating criminal activity across national borders.
    U.S. assistance to the Center began with assistance for the drafting of
    administrative and legal protocols necessary to the establishment of
    the Center. The United States provided computers and technical advisors
    from the FBI, DEA, USCS, and the INS to work with the Center in the
    creation of national task forces coordinating with the SECI Regional
    Center in Bucharest. These task forces target specific criminal
    networks, including those that smuggle cigarettes, which cause a
    significant loss of revenue for the countries of the region. For the
    past several months, the Department has supported these task forces by
    having U.S. officers provide on-site advice and guidance in Albania,
    Macedonia, Bulgaria, Bosnia, Serbia, and Romania.
        The SECI Center to Combat Transnational Crime has initially
    concentrated its work in three areas: customs fraud, trafficking in
    human beings, and narcotics smuggling. Due to information exchanges
    through the Center and coordination on cases through its task forces,
    there have been recent seizures of over one-half million cartons of
    counterfeit cigarettes by the commercial fraud task force; the
    narcotics task force has not only seized thousands of pounds of
    narcotics, but there have been successful cross-border prosecutions and
    several arrests and charges filed against businessmen and government
    officials. The human trafficking effort has created awareness of the
    problem in each of the SECI countries, which has resulted in numerous
    arrests of significant organized crime figures and government officials
    engaged in the sale of humans for sexual and labor exploitation.
                          human rights in central asia
        Question. Some observers have suggested that the human rights
    situation in some countries, such as Turkmenistan is so bad that they
    should be suspended from the OSCE, the way Yugoslavia was in 1992.
        Is there a point where the OSCE no longer plays a constructive role
    and, on the contrary, inadvertently lends a veneer of legitimacy to a
    brutal regime?
        How do you plan to address the deteriorating respect for human
    rights in Central Asia, especially in light of the reluctance of the
    Central Asian governments to cooperate with the OSCE on these issues?
        Answer. The OSCE has not relaxed its human rights expectations for
    the Central Asian republics; through its missions in Central Asia and
    the Permanent Council in Vienna, the OSCE continues to raise the issue
    of ongoing human rights abuses and lack of democratic institutions in
    the region. It is therefore important for the OSCE to continue to
    engage these countries. The process of having OSCE member states remind
    each other of their commitments, complemented by recommendations for
    improvements, is essential to building a more democratic, prosperous,
    and secure future for the region.
        In the case of Turkmenistan and several other Central Asian states,
    the OSCE is able, through engagement in the region, to improve
    faltering human rights and foster democratic development, while at the
    same time addressing urgent security, environmental and economic needs.
    Serious human rights abuses exist in Turkmenistan; however, they are
    not the kind of gross abuses (including widespread torture and
    genocide) that prompted the removal of Serbia from the OSCE. Our human
    rights and religious freedom reports provide a detailed picture of the
    situation in Turkmenistan. The OSCE continues to be an important forum
    to discuss human rights issues and promote steps toward democracy in
    Central Asia.
        We do believe that suspending participation in the OSCE should
    always remain an option should a government commit egregious human
    rights violations such as those of the former regime in Yugoslavia.
    However, this option should be weighed carefully against the
    opportunity costs of disengaging a country from the OSCE process.
        The deepened United States-Central Asia security relationship does
    not mean that we will cease our efforts to impress upon the governments
    of these countries that Central Asia's long-term stability and security
    depends on economic and political reform, particularly in the areas of
    combating corruption and respecting the rule of law and basic human
    rights. Rather, it offers opportunities for a deeper, more effective
    dialogue. Even modest reforms in these areas can build the foundation
    for more significant change in the long run. We continue to raise human
    rights issues at the highest levels of these governments and are in the
    process of expanding programming that promotes the basic elements of
    democracy and a vibrant civil society.
                                  russia: osce
        Question. Russia, along with a small number of other former Soviet
    states, have complained that the OSCE is ``unbalanced,'' placing too
    great an emphasis on the human dimension. These countries have also
    complained that there is too much attention focused on formerly
    communist countries.
        Do you think there is any merit to this concern?
        Is the United States working to encourage Moscow to seek a
    political solution to the conflict in Chechnya?
        Answer. Respect for human rights, democracy, and the rule of law is
    an integral element of the OSCE and is fundamental to establishing
    enduring security across the OSCE region. We will not weaken support
    for human dimension matters, but we also will not neglect the economic
    and political military dimensions that are part of OSCE's comprehensive
    approach to security. We strongly support the OSCE, and we have
    discussed Russian concerns about the organization. However, we do not
    want to impinge on OSCE's flexibility, its consensus-based approach,
    its commitment to human rights, or other principles laid out in the
    Founding Document. We will continue to engage with the Russian
    Federation on the importance of all dimensions to ensuring stability
    and countering trans-border threats to security. U.S. Ambassador to the
    OSCE Minikes will meet with senior Russian officials in Moscow on March
    14-15 to discuss how we can cooperate more effectively. We will follow
    up on these discussions in Vienna.
        Regarding the conflict in Chechnya, our objectives have not changed
    since September 11. We continue to encourage Moscow to seek a political
    settlement, provide accountability for human rights violations and
    atrocities, and allow access for humanitarian assistance groups. We, in
    the Department, along with other senior U.S. officials, regularly
    engage the leaders of the Russian Government on these issues. While we
    appreciate Russian assistance in the campaign against terrorism and
    have noted some elements in Chechnya that have ties to international
    terrorist organizations, we have urged the Russian Government to take
    the necessary steps to address the situation in Chechnya and bring
    about an end to the conflict.
                          trafficking in human beings
        Question. Is the Department incorporating special programs on
    trafficking into its international law enforcement training?
        Answer. We are finalizing a new anti-trafficking in persons
    curriculum that will be targeted at mid-level police officers. We
    currently support a specific course on trafficking in women and
    children targeted at prosecutors and investigators. Trafficking in
    persons is also incorporated into our violence against women and
    children, and immigration training programs for mid-level law
    enforcement officers, prosecutors, and immigration officials. These
    various programs are implemented by the Department of Justice, Federal
    Bureau of Investigations, U.S. Immigration and Naturalization Service,
    and U.S. Customs Service.
        Question. Does the Department have the resources needed to combat
    this growing phenomenon that targets women and children, including the
    estimated 50,000 who have been trafficked into the United States?
        Answer. We appreciate continued congressional support to ensure
    that we are able to combat effectively trafficking in persons at the
    international level. The Office to Monitor and Combat Trafficking in
    Persons recently established a process with the regional and functional
    bureaus to review all anti-trafficking in persons proposals submitted
    to the State Department. We are currently reviewing these proposals to
    determine whether we have sufficient resources to fund those requests
    identified for further consideration.
                                    policing
        Question. Is the Department considering supporting efforts to
    expand OSCE police training to other OSCE countries?
        Answer. The United States has supported OSCE's efforts to expand
    police training to other OSCE countries, on a case-by-case basis. The
    Kosovo Police Service School is proving to be an exportable model for
    efforts to train new ethnic minority, primarily ethnic Albanian, police
    recruits in Southern Serbia and Macedonia. The Framework Agreement,
    signed on August 13, 2001 in Macedonia, committed the parties to
    ensuring that the police services will generally reflect the
    composition and distribution of the population of Macedonia by 2004.
    The Framework Agreement called for the hiring and training of 1,000 new
    minority police officers by July 2003. To this end, the OSCE, the
    European Union, and the United States were invited by the parties to
    increase training and assistance programs for police. As of March 2002,
    107 minority recruits have graduated training. Under a similar model in
    Southern Serbia, OSCE has trained Serb, Roma, and Albanian police
    cadets in southern Serbia to deploy in the villages in the Presevo
    Valley region.

                              subcommittee recess

        Senator Hollings. The subcommittee will be in recess until
    10:30 tomorrow morning with the Secretary of Commerce.
        [Whereupon, at 11:49 a.m., Tuesday, March 12, the
    subcommittee was recessed, to reconvene at 10:30 a.m.,
    Wednesday, March 13.]

    DEPARTMENTS OF COMMERCE, JUSTICE, AND STATE, THE JUDICIARY, AND RELATED
                  AGENCIES APPROPRIATIONS FOR FISCAL YEAR 2003

                                  ----------

                           WEDNESDAY, MARCH 13, 2002

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 10:28 a.m., in room SD-116, Dirksen
    Senate Office Building, Hon. Ernest F. Hollings (chairman)
    presiding.
        Present: Senators Hollings, Leahy, Kohl, Murray, Reed,
    Gregg, Stevens, and Domenici.

                             DEPARTMENT OF COMMERCE

                            Office of the Secretary

    STATEMENT OF HON. DONALD L. EVANS, SECRETARY OF
                COMMERCE

                               prepared statement

        Senator Hollings. We welcome you. The committee will please
    come to order. We welcome Secretary Evans and we have your
    statement in its entirety. It is made a part of the record and
    you can highlight it as you wish.
        [The statement follows:]
                     Prepared Statement of Donald L. Evans
        Thank you for the opportunity to appear before you to present the
    Department of Commerce's fiscal year 2003 budget request. Our focus,
    first and foremost, is funding the core mission of the Department and
    its bureaus, but as you all know, the tragic events of September 11th
    forever changed our Nation. The Administration faces even greater
    challenges now than when I came before you to present the fiscal year
    2002 budget. The President is committed to fighting and winning the war
    on terrorism, while at the same time harnessing the resources of the
    federal government to protect the lives and safety of all Americans. I
    hope to fully utilize the resources of the Department of Commerce to
    not only provide for the physical security of the Nation, but also to
    work with other agencies and the private sector to promote economic
    security. The President's budget request proposes increases only in
    those areas that are critical to strengthening the core services and
    products provided by the Department of Commerce.
        Our fiscal year 2003 budget request focuses on themes outlined by
    the President in his State of the Union address. Our total request of
    $5.3 billion represents a $107 million increase over fiscal year 2002.
    In addition to adjustments-to-base, our request supports the
    Administration's homeland security and economic revitalization
    priorities and continues our commitment to fund important work of the
    Department to provide infrastructure for technological innovation and
    to observe and manage the Nation's oceanic and atmospheric environment.
                               homeland security
        The fiscal year 2003 President's Budget includes more than $50
    million in increases for new homeland defense activities in the
    Department of Commerce. Included in this increase is $20 million for
    homeland security and critical infrastructure protection activities at
    the Bureau of Export Administration (BXA). BXA seeks to advance U.S.
    national security and foreign policy interests by regulating exports of
    critical goods and technologies that could be used to damage those
    interests, while furthering the growth of legitimate U.S. exporters to
    maintain our economic leadership. Budget increases in fiscal year 2003
    strengthen BXA activities that thwart the global spread of dual-use
    goods and technologies that can be used in biological, chemical, and
    nuclear weapons of mass destruction. To reduce the risk of
    proliferation, beginning in fiscal year 2003, BXA will devote $5.4
    million of this amount to post attaches in several countries abroad
    (including China, Russia, the United Arab Emirates, and Egypt); send
    additional export enforcement agents overseas on temporary assignments;
    and open two new field offices in the critical port cities of Seattle
    and Houston.
        Homeland security investments will also be made in the National
    Oceanic and Atmospheric Administration (NOAA), the Technology
    Administration (TA), and in central departmental management offices.
    NOAA's request includes a $23.1 million increase to enhance response
    capabilities and improve internal safety and preparedness by addressing
    vulnerabilities in weather and satellite systems and provide important
    hydrographic survey data around key ports in the Gulf of Mexico. The
    National Institute of Standards and Technology (NIST), part of TA, will
    continue to devote base resources to fund scientific research on
    chemical, biological, radiological, nuclear, and explosive threat
    detection and remediation; information security; air transport safety;
    and the safety of building structures and occupants. An increase of $5
    million will support the critical and urgent needs in structural fire
    protection and operational guidance for first responders and provide
    advanced measurements and standards to accelerate critical technologies
    that enhance the effective detection, prevention, response, and
    recovery management of natural and manmade disasters. A $2 million
    increase is requested for the Department Chief Information Officer to
    insure the protection of our nation's critical economic and
    environmental information systems.
                       economic information and framework
        The Commerce budget proposes to strengthen core economic activities
    in areas such as statistical programs and international trade
    compliance. The Bureau of Economic Analysis (BEA) supplies the nation's
    key economic statistics, including gross domestic product (GDP), which
    are crucial ingredients for business and government decision making. A
    program increase of $11 million will enable BEA to improve the
    statistical processing systems for its economic data, accelerate the
    release of major economic estimates, and incorporate new international
    economic data classification systems. Also, the Department has begun
    providing new quarterly estimates for the tourism industry and more
    accurate GDP estimates for ``new economy'' products such as local area
    networks.
        This budget includes a $247 million increase for the Bureau of the
    Census to significantly improve the breadth and quality of the
    information it collects and provides to the country by producing better
    measures of trade statistics, improved measurement of services in the
    new economy, and a new measurement of the impact of electronic business
    on the economy. The Department will also undertake an effort to
    significantly reengineer the 2010 Census. As a major part of this work,
    Census will launch the American Community Survey, which will provide
    detailed demographic data on an annual basis, rather than just every
    ten years. During fiscal year 2003, an increase of $33.7 million will
    fully fund data collection for two other cyclical censuses, the
    Economic Census and the Census of Governments.
        The International Trade Administration (ITA) is responsible for
    assisting the growth of export businesses, enforcing U.S. trade laws
    and agreements, and improving access to overseas markets by identifying
    and pressing for the removal of trade barriers. Among other program
    changes, the fiscal year 2003 budget proposes a program increase of $13
    million for trade compliance efforts in the areas of antidumping and
    countervailing duty activities, multilateral trade negotiations, and
    foreign trade barrier analysis. This increase includes $2.3 million to
    organize a domestic education campaign for U.S. firms on compliance
    issues and to place additional staff overseas in major markets with
    compliance problems. The President's Request also seeks an additional
    $2.6 million to open new offices in Senegal, Botswana, Tanzania,
    Mozambique, and Cameroon; reopen the Algeria office; and increase
    staffing in Ghana.
        A reduction of $16 million for the Economic Development
    Administration (EDA) will bring resources in line with congressionally
    authorized levels and program needs. EDA helps communities across the
    nation create economic opportunity by promoting a favorable business
    environment to attract private capital investments and high-wage jobs,
    principally through infrastructure investments and capacity building.
    While the fiscal year 2003 budget streamlines EDA programs, an increase
    of $2.5 million is requested for Trade Adjustment Assistance to firms,
    which provide technical assistance to U.S. manufacturers injured by
    increased imports. The Administration wants to ensure that sufficient
    funds are available through the Trade Adjustment Assistance program to
    help businesses that have been adversely affected by international
    trade.
        The Minority Business Development Administration (MBDA) is
    transitioning from an administrative agency to an entrepreneurial
    organization. MBDA is reorganizing, re-training current employees, and
    hiring expertise driven by entrepreneurship and innovation. MBDA's
    Reorganization Plan will reduce the number of supervisory layers, the
    time it takes to make decisions, and the distance between decision-
    makers and citizens. MBDA will provide minority business development
    services, through its Minority Business Information Portal and local
    Business Development Centers.
             providing infrastructure for technological innovation
        The fiscal year 2003 budget strengthens key Commerce programs that
    provide the infrastructure that enables U.S. businesses to maintain
    their technological edge in world markets. Increased funding is
    requested for the laboratories of TA/NIST to work with industry to
    develop and promote measurement standards that support technological
    innovation. TA/NIST laboratories specialize in electronics,
    manufacturing engineering, chemical science, physics, materials
    science, building and fire research, and information technology. The
    fiscal year 2003 budget proposes an increase of $50 million to allow
    the Advanced Measurement Laboratory, a new facility designed to meet
    state-of-the-art research requirements, to become fully operational and
    fund relocation expenses. The budget also includes an increase of $17
    million for critically needed structural improvements at TA/NIST's
    Boulder, Colorado, facilities.
        Consistent with the Administration's emphasis on shifting resources
    to reflect changing needs, the fiscal year 2003 budget also proposes to
    significantly reduce federal funding for the Manufacturing Extension
    Partnership (MEP) program. MEP's original legislative design called for
    a phase-out of federal funds to each center after six years, with the
    goal of making each center self-sufficient. The fiscal year 2003 budget
    would return the program to its original design. The budget also
    proposes funding the Advanced Technology Program (ATP) at $107 million
    and proposes reforms designed to improve the program. These reforms
    would increase university participation, limit large companies'
    participation, and institute a cost recoupment element.
        The budget strengthens the spectrum management capabilities of the
    National Telecommunications and Information Administration by proposing
    $3.3 million to begin the process of spectrum management reform and to
    upgrade its radio quiet zone test facility in Colorado. The budget also
    proposes to terminate the Technology Opportunities Program. With the
    expansion of the Internet and related technologies into all sectors of
    society, the Administration believes federal subsidies are no longer
    justified to prove the usefulness of such technologies.
        The fiscal year 2003 budget proposes an increase of $237 million
    for the U.S. Patent and Trademark Office (USPTO) to address the
    agency's growing workload in the area of intellectual property. This
    budget increase represents a 21 percent change from last year's level
    and will allow the USPTO to initiate a five-year plan to enhance the
    quality of products and services and improve timeliness of patent
    application processing.
    observing and managing the nation's oceanic and atmospheric environment
        And, finally the President's budget proposes a total budget request
    of $3.2 billion to strengthen key programs of the Department's largest
    and most diverse bureau, the National Oceanic and Atmospheric
    Administration (NOAA). This includes an addition of $84.3 million to
    improve extreme weather warnings and forecasts. The continuity of
    NOAA's satellites and severe weather forecasts is critical to meeting
    our 21st Century mission, and increases are proposed for satellite data
    and systems, weather research and supercomputing, and improved flood
    and river forecasts. An increase of $36.2 million is requested to
    improve NOAA's climate services, of which $18 million is for the
    Administration's Climate Change Research Initiative (CCRI), a multi-
    agency effort to study areas of scientific uncertainty and to identify
    priority areas where investments can make a difference. The increase
    will allow NOAA to advance climate-modeling capabilities at the
    Geophysical Fluid Dynamics Laboratory; to develop a climate observing
    system; and to create partnerships to measure pollutant emissions,
    aerosols, and ozone.
        An increase of $90.9 million is requested to modernize NOAA's
    fisheries management to improve fisheries management in areas such as
    stock assessments, to procure a second Fisheries Research Vessel, to
    build a national fishery observer program, to better fulfill statutory
    and regulatory authorities, and to implement the National Environmental
    Policy Act (NEPA). As part of the Administration's energy policy
    initiative for fiscal year 2003, NOAA requests an increase of $8.7
    million for an energy initiative; of which $6.1 million is for an
    energy pilot program to provide more accurate temperature and
    precipitation forecasts and additional river forecast products to help
    the energy sector improve electrical load forecasting and hydropower
    management. Based on industry estimates, this investment will result in
    savings of $10 to $30 million annually in the pilot region after the
    second year of the demonstration. Expanding the pilot nation-wide could
    generate savings of over $1 billion per year. Funding for the energy
    initiative will help to establish and implement a streamlined energy
    permit review process (executed by the National Marine Fisheries
    Service) and institute energy costs savings measures at NOAA
    facilities.
        The Administration also proposes to transfer the National Sea Grant
    College program from NOAA to the National Science Foundation (NSF) in
    fiscal year 2003. Funding of $57 million is requested by NSF for this
    program. However, NOAA's budget continues to have primary
    responsibility for key ocean and coastal programs, including funding
    for ocean exploration, coastal zone management, coral reef, and marine
    sanctuaries programs.
        NOAH also requests an increase of $52.9 million to invest in its
    people and infrastructure. Investments in scientific and technical
    capacity, as well as facilities and equipment, are essential for NOAA
    to have a well-functioning agency. The budget request includes funding
    for essential facilities upgrades, maintenance of aircraft and ships,
    recruitment and training of NOAA Corps officers, and security of
    information technology systems.
        As I previously stated, this budget request for the Department of
    Commerce has been carefully crafted to focus on the core functions the
    American people rely on from this agency. We will focus on promoting
    innovation, entrepreneurship and exports, while spreading opportunity
    to all Americans and ensuring responsible stewardship of our natural
    resources.

                       OPENING REMARKS BY SECRETARY EVANS

        Secretary Evans. Thank you, Mr. Chairman. Are you ready for
    me to proceed?
        Senator Hollings. Please do.
        Secretary Evans. I will be happy to. Let me just highlight
    my written statement, and I would like to do that by saying to
    you, Mr. Chairman and Senator Gregg and other members of the
    committee that I am pleased to be here to present the
    President's fiscal year 2003 budget request for my Department,
    the Department of Commerce. This budget was carefully crafted
    and it reflects the core assumptions of the Commerce
    Department. These include promoting innovation,
    entrepreneurship and exports, and increasing knowledge and good
    stewardship of the natural environment.
        It also reflects the urgent needs of these challenging
    times. It targets the diverse components of the Department
    toward three great national goals: Winning the war on
    terrorism, protecting our homeland, and strengthening our
    economic security.
        For example, additional funds are requested for the Bureau
    of Export Administration to help halt the spread of weapons of
    mass destruction and combat terrorism. We are also proposing an
    increase for the National Institute of Standards and
    Technology. These world-class labs have more than 75 projects
    underway that support law enforcement, military operations,
    emergency service personnel, information security, and homeland
    security. NIST also will continue to research new ways to
    detect potential threats posed by chemical, biological,
    radiological, nuclear and explosive agents.
        On the economic security front, we are asking for more
    funds for the U.S. Patent and Trademark Office. America's
    competitiveness depends on innovation. We need to be able to
    process patent applications more quickly. To continue improving
    tracking our Nation's key economic statistics, including the
    gross domestic product, we are also asking for additional funds
    for the Bureau of Economic Analysis.
        As you know, business and Government decision makers need
    accurate and timely information, and America's exporters need
    to know they have a level playing field, so we are proposing an
    increase for our International Trade Administration to
    strengthen trade compliance efforts.
        To help communities, businesses, and workers transition to
    the 21st century economy, our 2003 budget also reflects
    streamlined Economic Development Administration programs,
    including additional monies for trade adjustment assistance.
        Our NOAA budget also demonstrates the Department's
    commitment to homeland and economic security. Predicting the
    weather and managing our ocean resources are critical services
    that further public safety and support economic activity. We
    are requesting additional funds for several important projects,
    including fixing vulnerabilities in weather and satellite
    systems so we can always depend on them; a research vessel to
    enable us to do a better job of monitoring fish stocks; survey
    data to enhance the safety of mariners, passengers, and the
    national economy. About 95 percent of America's non-NAFTA trade
    moves through the marine transportation system. Any disruption
    in the flow of goods would immediately effect our economy. And
    also, modernizing NOAA's fisheries to rebuild stocks and
    protect endangered species. Finally, climate change research to
    identify areas where can make a difference.
        And finally, let me say this Commerce budget reflects a
    careful, professional analysis of all Department programs and
    sets priorities for our resources in a post-9/11 world. I look
    forward to hearing your comments, Mr. Chairman and others, and
    I will be pleased to answer any questions that you might have,
    Mr. Chairman.

                          ADVANCED TECHNOLOGY PROGRAM

        Senator Hollings. Very good. You talked about increasing
    the National Institute of Standards and Technology and yet you
    literally choke off, so to speak, the Advanced Technology
    Program. We had the funding level for this program at one time
    up to over $110 million. It has been a political difference.
    The distinguished former chairman and I compromised at $60
    million, but you are not even expending the $60 million. What
    gets me is that is sort of benign neglect. That is what
    Moynihan used to say about the black population when he was
    working for Nixon.
        In other words, if you do not even ask for and solicit
    during the first and second quarters, like has occurred already
    this fiscal year, we are into the third quarter and no
    solicitation at all for the grants, if you do not solicit in
    the first and second quarters, obviously, you are not going to
    be prepared to award in the third and fourth. What do you have
    to say about that?
        Secretary Evans. Well, Mr. Chairman, I have to say we were
    behind and we should catch up. I would like to think that we
    have demonstrated our commitment to this important program and
    the 2003 budget by requesting an amount of $108 million in our
    2003 budget as opposed to our request in our 2002 budget of $13
    million.
        Senator Hollings. Yes.
        Secretary Evans. As I have mentioned before, I have felt
    like there were important reforms we should at least offer or
    recommend. Those reforms deal with letting universities lead
    these important projects. That had not been provided before. I
    think a good part of these projects belong on university
    campuses led by universities and so we have offered that
    reform. We are also offering the reform that the largest
    corporations will not lead these projects. It will restrict
    them to being partners with smaller firms.
        And then finally, there are other pieces of the reforms. I
    think the other one of significance is, in fact, a specific
    project is indeed a success, that the American people should
    share in some of that success being delivered back to the
    United States Government in the form of a royalty or whatever
    it might be called, but that is only in the instance of a
    success. We could say that the taxpayers' money went to invest
    in a project that turned out to be successful, a commercial
    success, and if it is a commercial success, I believe that the
    American taxpayer at least ought to have the opportunity to
    share in part of that.
        In a way, quite frankly, Mr. Chairman, I thought it could
    well be a way to fund the program on a long-term basis, but
    that would take some time. It is not going to happen in year
    one or year two, but if you have a system like that where part
    of the successes went back to the program it would fund the
    program over a long period of time.
        So, yes, we are behind in our awards of 2002. We should do
    everything we can to catch up and accelerate that and I think
    the 2003 budget demonstrates a good faith effort on our part to
    continue to look for ways to strengthen the program and
    maintain funding.
        Senator Hollings. One more time, by way of emphasis, this
    started almost 20 years ago down in your native Texas, in
    Houston, and has developed the superconductor. I think there
    were three of them there at Houston that won the Nobel Prizes,
    but the Japanese won the profits. They have correlated some 21
    entities and started producing it. We looked and said, wait a
    minute. All of this research, we begged, begged, begged the
    Government for research and still are, and fortunately so.
    However, we do not commercialize it, we do not realize in the
    globalization. I am a lot like Al Gore. I invented
    globalization.
        Secretary Evans. Congratulations.
        Senator Hollings. I tried my best and got in a plane back
    in 1960 and we went to all the countries in Latin America, all
    the ones in Europe. I have got 118 German industries now.
        But on that particular score, we really wanted to try to be
    helpful and immediately the charge was, that this was going to
    be pork and you all are just trying to give that money to
    industry and get some votes and what have you. Senator
    Danforth, then chairman, and I reconciled all of this and the
    one particular requirement of reconciliation was that I could
    not call up and get grants. The Secretary could not get the
    grants. The President could not get them. It was on a
    competitive basis after being vetted by the National Academy of
    Engineering.
        Now, I understand Deputy Secretary Bodman is leaning
    towards trying to make those awards himself. Have you
    understood this to be the case?
        Secretary Evans. No, I have not, Mr. Chairman.

                  MANUFACTURING EXTENSION PARTNERSHIP PROGRAM

        Senator Hollings. Well, watch him. We have got the
    Manufacturing Extension Partnership Program. Now, we worry
    about that. You eliminate $95 million and that really
    revitalizes the economy and helps small business and everything
    else like that. They cannot buy the consultants. All big
    industry, even big government now, has consultants.
        I will never forget sometime back, I went down to one
    lumber company and they had not only rearranged their entire
    flow of materials to come in for increased productivity, but
    their ISO, their International Standards Organization. You and
    I talk exports, exports, exports, make them comply with
    exports, and now we cut out the $95 million. What about that?
        Secretary Evans. Well, Mr. Chairman, it is a period of very
    difficult choices, I would say that to you.
        Senator Hollings. This is the easy one, but we've got some
    difficult ones.
        Secretary Evans. Right.
        Senator Hollings. Have you ever heard of abortion? I have
    been debating that for 35 years. We still have it, and I can go
    on and on. I can give you some real hard choices, but this one
    works.
        Secretary Evans. Well----
        Senator Hollings. And everybody is happy with it except
    maybe Mr. Daniels at OMB, from what I understand.
        Secretary Evans. No. I guess what I would say, Mr.
    Chairman, is that I know when the program was founded in 1988,
    the plan was to allow this Federal support to be some seed
    money to help start up these centers across America. The
    initial plan was for the Federal funding to match State and
    local and private funding to get these centers up and going.
    After a 6-year period, then the centers, if they are successful
    centers, would move forward on their own without Federal
    support.
        So we think that is a reasonable model. I have looked at
    the program and have seen the many successes across America and
    do believe that there is a Federal role to play in helping
    start these centers across America. I think if they show the
    success and they are delivering the product, the results and
    the performance, that after a period of time, then they ought
    to be able to stand on their own through local support, State
    support, private support, and collection of fees, and maybe
    even again just a concept of you do not pay anything on the
    front end, but yes, indeed, if you see some efficiencies from
    the process or some results from this process, maybe there is a
    fee that you return back to the program after you receive the
    service.
        We do have underway an effort to look at just that concept.
    Is there a way to privatize this or to bring more private
    funding into it?
        So you are right. We have cut it back to some $13 million.
    That is continuing funding of a couple of these centers that
    have not yet been in business for 6 years and to fund central
    administration and coordination of the program and the
    development and dissemination of products and services to MEP
    centers. The budget proposes that we would eliminate funding of
    those programs that have been underway and are successful for
    more than 6 years.
        Senator Hollings. Well, if the proof of the pudding is in
    the eating, we have proven the success of it. Sometimes we
    verbalize it that way. Sometimes we say it is a pilot program
    to see whether it works, but it is working and still very, very
    much needed, and those who are working ought really to be
    supported because the States are literally strapped. We are
    $190 billion in the red. No State can get even $190,000 in the
    red, extending ports and slap you down and then you cannot
    finance your highways, your schools, and all of the States are
    way behind. They are into the technical training and everything
    else of that kind in order to attract the industry and develop
    it.
        They are into really a vigorous competition. When the
    Mercedes went down to Alabama, we had almost a $100 million
    package with different things that the State was willing to do,
    but Alabama put in $300 and some million. Mercedes required the
    purchase of some 1,000, 2,000 Mercedes school buses and that
    kind of thing.
        My point is that the States are in there and really sort of
    playing catch up where we can at the Federal level and really
    helping, and this is one program that really works.
        I love the attendance here. Let me ask just a couple of
    other questions. You emphasized the university participation,
    Mr. Secretary. On NOAA's Sea Grant program, they want to put it
    in the National Science Foundation with no State matching
    grants. There will be no university or extension program or
    outreach. There will be no university partnerships. You cannot
    go in two different directions at the same time. Get whoever
    who made the sea grant decision and give him weekend leave or,
    give him the part, the letter. You know what I mean; get
    somebody else.
        I want them to follow the Evans policy.
        Secretary Evans. Well, as you look across big government,
    you are always looking for ways that make it more efficient and
    more effective and the decision was made that the program would
    be more effective and the National Science Foundation could
    more effectively deliver this program. So let us take a number
    of the science programs that are across Government and
    consolidate them into the National Science Foundation. The Sea
    Grant program was one of those that they decided to move over
    where it is. NOAA's research is primarily applied research.

           NATIONAL TELECOMMUNICATIONS AND INFORMATION ADMINISTRATION

        Senator Hollings. NTIA, National Telecommunications and
    Information Administration, Larry Irving--I do not know who is
    over there now--did an outstanding job with small communities,
    bringing them up to speed. They do not have the wherewithal to
    get their health care, communications, and their education,
    public safety, social services, and everything out of a
    moderate $16 million, and the program is eliminated. It is
    working and if we do not help those rural areas, I know our
    Vice President one day went over, got enthused about it, and
    said that the Internet was, what did he call it, a civil right?
    Yes, a civil right. I told him I was still trying to get
    toilets in South Carolina, much less the Internet.
        Toilets would be a civil right if that is the way it was.
    We could not finance it. He had the program up to $45, $50
    million, but this is just a modest $16 million. What is your
    comment on this?
        Secretary Evans. Well, I agree with you, chairman, it is a
    modest $16 million. It does not mean we really could get the
    job done and will not get the job done and you need to get the
    job done. It is too important not to. That is why in the
    President's budget he put $700 million in the education budget
    that is specifically focused on this very issue. It is why he
    put some $600 million in the Department of Justice budget
    focused on this very issue, to get the kinds of technology to
    these various law enforcement agencies and fire departments, et
    cetera, in small communities across this country.
        Sixteen million dollars or $20 million, which has kind of
    been the average funding at TOPs for the last 10 years, will
    not get it done. It was started at a time when very few people
    were on the Internet. Computers were not in very many schools
    yet across the country. In the last 10 years, there has been an
    explosion of computers in schools, of computers in homes of
    Americans. We released a report called ``A Nation Online,'' and
    it shows that 54 percent of the people in America now are
    connected to the Internet. It shows that 94 percent of the
    children 5 to 17 years old have access to computers.
        So it is happening in a big way out there and I would say
    the TOPs program just does not do the job. It did the job in
    the beginning. The initial purpose was to bring awareness to
    communities as to what technology could do for them in
    developing their communities and providing information, and now
    it is just a much, much bigger issue than that.
        I know in the President's budget, also, there is $100
    million in the agriculture budget that is directed at getting
    technology, computers, Internet, to rural America, which is
    critically important. Listen, this is a huge issue and TOPs was
    a good program in the early 1990s to begin to make these small
    communities more aware of it, but we have moved way past TOPs.
    This is a serious issue that requires serious commitment and I
    think the President's budget clearly demonstrates that serious
    commitment of over $1.5 billion that is focused on this issue.
        The other thing I would add, chairman, is that in the last
    4 or 5 years, the private sector has moved into this in a big,
    big way. There are all kinds of private foundations now set up
    all across America that have centers that focus on this issue.
    I went to one myself called Oaktech, which is in a little Boys
    and Girls Club here in Washington, DC, where you have the
    children coming into the Boys and Girls Club and learning the
    computers and how they work and that is happening all across
    America.
        So while the TOPs, I thought probably did serve a good
    purpose in the beginning, I think we have moved way, way past
    TOP.
        Senator Hollings. Senator Gregg.

                          ADVANCED TECHNOLOGY PROGRAM

        Senator Gregg. Thank you, Mr. Chairman. We have been
    through the ATP discussion so many times. Let me simply say
    that I think we got a little too generous in the accounts for
    ATP, but we have had that discussion before.

                                   SEA GRANT

        A couple questions. I want to join with the chairman's
    concern about Sea Grant. I have talked to you privately about
    this. I think this is one of those ideas that comes from
    somebody who knows nothing about what NOAA does, maybe a little
    bit about what NSF does, but does not appreciate the
    significance of sea grant to the NOAA program. NOAA may be
    applied, but the fact that they have sea grant gives them the
    access to this basic research.
        I used to be on the committee that had jurisdiction over
    NSF--in fact, I still am, I guess, on the authorizing side--but
    the NSF does not even have a directorate for oceans. NOAA's
    name contains the word oceans. The mood over there is to move
    departments around with nothing more than, I think, academic
    reasons, not substantive reasons. So I would hope that this
    would be put in Circular 86 at some point. Certainly, this
    committee will strongly oppose this effort.
        I have a couple of questions in addition to the chairman's.
    We have heard that those who tried to get access to the
    material from the World Trade Center site in order to conduct
    structural assignments encountered resistance from FEMA. NIST
    has the primary responsibility in this area. FEMA basically
    refused to grant access to the material, and even though they
    pleaded aggressively, they were not able to get it.
        I am interested to know what the status of that unfortunate
    turf war is and how NIST is going to pursue the structural
    review it has been tasked with.

                 NATIONAL INSTITUTE OF STANDARDS AND TECHNOLOGY

        Secretary Evans. Well, Senator, I continue to be briefed on
    this and I cannot tell you that I know the absolute answer to
    that question yet, but I do know that, unfortunately, much of
    this steel has been recycled and is not available. We have been
    very disappointed in the number of samples so far that we have
    been able to actually get our hands on.
        I am not sure of the details of how the materials were
    handled and who is responsible but we do certainly have some
    steel samples that are available to NIST. The available samples
    should be very helpful in an investigation.
        Senator Gregg. Only a systematic failure could allow this
    to happen, in the consequence management area, which this
    committee has spent a lot of time focusing on. It would seem
    that there should be in place a structure which allows an
    agency like NIST, which has a legitimate role in reviewing the
    issue of how these buildings came down so that we could put out
    specs for architectural design and avoid this in the future,
    that they should have been incorporated. They certainly should
    not have been excluded by one of the other agencies that had
    primary jurisdiction over consequence management.
        I am wondering, one, how systematically this broke down,
    and two, what is the system that is being put in place so that
    it hopefully will never happen again, I mean, a structure to
    resolve this----
        Secretary Evans. Right. Senator, I am going to have to get
    back to you with the specific answer, and indeed I will, of
    course, as to exactly when it broke down and why it broke down
    and also respond to your request, which is the right one, which
    is what are we going to do to make sure it does not happen
    again. I am not aware of, right now, exactly what the time line
    was.
        We may have been denied access, or if, in fact, we even
    were, we may have requested late and that is just something
    that I am going to have to take a hard look at and I will
    certainly get back to you.
        [The information follows:]

                      NIST Activities Since September 11th

        FEMA and the American Society of Civil Engineers made trips
    to New York City in October 2001, and made arrangements to set
    aside some of the steel for the investigation. Although some of
    it was subsequently misplaced, most of the marked samples have
    now been sent to the NIST site in Gaithersburg, Maryland. NIST
    and FEMA are currently working together to find a way to
    initiate the investigation.
        Of the steel that was marked for transport to NIST, most
    was later brought to NIST. However, some of it did not make it
    here and is believed to have been included with the steel sent
    for recycling by mistake.
        NIST and FEMA signed a Memorandum of Understanding (MOU) on
    March 29, 2002, that establishes a framework for NIST to serve
    as a research resource for FEMA in the areas of fire, disaster
    prevention, and homeland security. As part of this MOU, FEMA
    and NIST will establish a quick deployment mechanism that may
    be activated when both the Administrator of FEMA and the
    Director of NIST determine a need for a NIST response to
    extreme events.
        NIST has been working since the events of September 11 as
    part of the FEMA-funded Building Performance Assessment Team
    (BPAT) study. NIST was not denied access to the site and/or
    relevant information and was not late in making requests to be
    involved. As a result of the recently-signed MOU between FEMA
    and NIST described above, a framework of cooperation has now
    been established for any future disasters.

                        BUREAU OF EXPORT ADMINISTRATION

        Senator Gregg. Another issue that involves preparation for
    terrorism, the Bureau of Export Administration, they are asking
    for additional attaches overseas.
        Secretary Evans. Correct.
        Senator Gregg. I think this committee, or at least I, was
    under the impression that the State Department Bureau of
    Verification--I think that is the title of it--had
    responsibility for reviewing whether or not these dual-use
    products ended were being used for inappropriate activity. I
    guess my question is, who is doing what here? I mean, does
    State have a role here? Are your roles overlapped? Is there----
        Secretary Evans. We certainly----
        Senator Gregg [continuing]. Some understanding as to who is
    doing what?
        Secretary Evans. There is certainly coordination between
    our two Departments, but we certainly feel a strong
    responsibility for regulating the export of dual-purpose
    products, the export of legitimate products, and the high-tech
    products that might be used around the world. So there is
    coordination between the two, but I would say to you, we feel
    that the responsibility of providing the licenses for these
    dual-export products, and for making sure that we do not have
    illegal transshipments around the world, are two of the central
    reasons for opening up offices, as you have mentioned, around
    the world. We have opened up in Beijing and China and Singapore
    and India and UAE and Egypt, I think are the main ones.
        Senator Gregg. Should we expect that the State Department
    will tell us that their Bureau of Verification is no longer
    undertaking this effort?
        Secretary Evans. I am not sure what they will tell you. I
    feel a pretty good sense of our responsibility for licensing
    products that might be considered dual-use kind of products
    around the world.
        Senator Gregg. Is it possible that we could get from
    Commerce and from State a memorandum of understanding as to how
    these two agencies are going to interact?
        Secretary Evans. Sure. You bet.
        Senator Gregg. We have to know that there is not going to
    be duplication.
        Secretary Evans. Sure. I would be happy to, Senator.
        Senator Gregg. Thank you. Thank you, Mr. Chairman.
        Senator Hollings. Thank you.
        Senator Kohl had questions about the Manufacturing
    Extension Partnership Program and he had another commitment and
    had to leave, so we will leave the record open for his and any
    other Senator's questions.
        Senator Leahy.
        Senator Leahy. Thank you, Mr. Chairman. I would like to put
    my statement in the record, and I have some additional
    questions.
        Senator Hollings. It will be included.
        [The statement follows:]

                 Prepared Statement of Senator Patrick J. Leahy

        Mr. Chairman, thank you for calling this hearing today on
    the Department of Commerce budget request for fiscal year 2003.
    I would like to thank Secretary Evans for coming before this
    Subcommittee to discuss the President's request.
        President Bush has sent Congress a $2.13 trillion budget
    that would provide billions of dollars in new spending for two
    top priorities--the war on terrorism and homeland security--but
    would squeeze much of the budget for domestic programs. While
    he has properly emphasized the need to combat terrorism, the
    President's domestic agenda is riddled with many opportunistic
    cuts, motivated by ideology and special interests, that will
    hurt America's economic recovery. I am very concerned that we
    will no longer be able to adequately support essential economic
    investment programs in this country if Congress accepts the
    President's budget request. His severe under-funding of many
    worthwhile small business and economic development programs is
    a glaring example.
        The Manufacturing Extension Partnership (MEP) program was
    authorized in 1989 to help manufacturers, especially the
    nation's small manufacturers, adopt new technologies, processes
    and business practices to be more competitive on the world-wide
    market. The MEP network now consists of over 2,000
    professionals, working out of more than 400 offices in all 50
    states to provide direct advice and assistance to
    manufacturers. While Congress appropriated $106.5 million for
    the MEP program last year, the President has requested only $13
    million for the program in the coming year, a drastic cut that
    would essentially mean the end of the program.
        MEP is one of the most successful federal-state
    partnerships in government. It is a cost-effective, private-
    public partnership that helps American manufacturers modernize
    to compete in the demanding global marketplace. It has helped
    thousands of small manufacturers--who employ 11.5 million
    people, or two-thirds of all manufacturing employment in the
    United States--increase sales and earnings and decrease
    materials and costs. Since these small manufacturers are the
    major suppliers for larger manufacturers, they are a major
    component of the national economy. We must do all we can to
    ensure their long-term survival and health.
        If MEP were to end, the Vermont Manufacturing Extension
    Center, and other centers all around the country, would be
    crippled in their ability to serve the ever-increasing needs of
    small- and medium-size manufacturers. During these uneasy
    economic times, we should be expanding our efforts to help
    businesses stay afloat instead of cutting them. I support full
    funding for the MEP program at the authorized level of $110
    million and hope Congress will do the right thing and properly
    invest this and other economic development programs this year.
        The President repeatedly called for an economic stimulus
    package to jumpstart the economy. And Congress heeded that
    called last week by a bipartisan stimulus plan by overwhelming
    margins. We all know the need is out there to forge ahead with
    our economic growth. Now is certainly not the time to cut these
    businesses off and tell them to sink or swim on their own.
        Thank you again, Mr. Chairman, for holding this important
    hearing. I look forward to working with you and Secretary Evans
    to ensure that the needs of our nation's businesses are met in
    next year's Department of Commerce budget.

        Senator Leahy. Mr. Secretary, it is good to see you again.
        Secretary Evans. Thank you, Senator.

                  MANUFACTURING EXTENSION PARTNERSHIP PROGRAM

        Senator Leahy. We appreciate you coming over to the
    Internet Caucus event we had the other day and appreciate your
    kind note afterward. It is something that we will continue to
    work on.
        You and I have discussed it a couple of times already and
    obviously you know my concern about rural areas. That can be
    rural areas of Texas or rural areas of Vermont. I often joke
    that I sit up at my farmhouse in Vermont, out there on a dirt
    road and I have got my computer and I am in my jeans and my
    sweatshirt, and if I could have two things, broadband there and
    the ability to vote by phone, I do not think I would ever
    leave.
        I do not have either, but at least give me one of those.
    For one, we would have to probably change the Constitution, but
    for the other one, we could do.
        I look at the budget, the $2.13 trillion budget, which is
    amazing because I remember the debate when I first came here
    about a $300 billion budget, but we have some major problems,
    the war on terrorism, and the President has been very
    supportive on that, and homeland security. I do not, however,
    categorize security as our only domestic priority.
        I look at the Manufacturing Extension Partnership Program.
    We authorized it 11 or 12 years ago, Mr. Chairman--I think it
    was 1988--to help manufacturers, especially small
    manufacturers, develop new technologies and processes and
    business practices so they could be competitive worldwide doing
    the things that they might not be able to do in their own small
    business, but with this help, they can.
        We appropriate $106 million, actually $106.5 million, for
    the program last year. MEP now has 2,000 professionals in all
    50 States. But after we appropriated that $106.5 million, the
    President cut it in his budget to $13 million this year.
        I find that matter somewhat troubling, Mr. Secretary. We
    have all kinds of businesses in our State of Vermont. We have
    IBM with 6,000 employees that makes the fastest, most advanced
    chip in the world. We have a lot of very small businesses,
    small manufacturers developing advanced products and everything
    else, but they are small. A private partnership like this, that
    the business community supports it, workers support it, the
    State supports it, why cut it so much?
        Secretary Evans. Senator, I go back to what I said earlier.
    I think it is just the philosophical position that the Federal
    Government had an important role to play in getting these
    programs started. As was stated in its initial mission
    statement, the core purpose was to provide funding for a 6-year
    period to give these centers time to get up and running, and
    beyond that period should be self-sustainable through private
    funding, State funding, local funding, or fees, and fees could
    be on the front end or the back end. If someone goes and
    receives a service that they deem to be helpful or useful and,
    in fact, increases the profits of that small business or that
    small manufacturer, it seems reasonable that maybe you might
    share some of that back with the center that helped you
    increase your profits.
        I think it is just the philosophical position of the
    original stated purpose of the MEP program was a sound one and
    it was an appropriate role for the Federal Government to play
    and that the ongoing funding that we have proposed in the 2003
    budget reflects that.
        Senator Leahy. Mr. Secretary, if I might----
        Secretary Evans. Sure.
        Senator Leahy [continuing]. I would be able to accept that
    if we are talking about these companies that have benefitted by
    it just competing within their States, such as the companies
    that are in Texas are just competing within Texas or Vermont is
    competing within Vermont. But more and more, these companies
    are part of our worldwide economy. U.S. security, it is not
    just our military, it is also our economy. We have a large
    balance of payment deficit. We have got to export more, and a
    lot of these small companies are the ones that develop the
    ability to export.
        I would hope, and we are going to be debating it within
    this committee, of course, but I wish the administration would
    go back and look at that again because I really think that
    there is a national interest involved here, one that helps us
    as a Nation. Not just my State of Vermont, not just New
    Hampshire or South Carolina or Washington State or Rhode
    Island, but the country as a whole benefits from the ability to
    become more efficient, the ability to produce and innovate, and
    the ability to export. Our economic ability to face the rest of
    the world is extremely important.
        For the same reason, I would hope that you look again at
    cutting the National Telecommunications and Information
    Administration. If we do not do something to close the digital
    divide--and I know there has been some discussion here--if you
    do not, then rural America is going to be cut out.
        I will try to state this very carefully, but in a
    discussion recently within the administration, there was some
    discussion about a particular program that is in Vermont and
    doing great because it has a national security implication.
    Now, fortunately it was in Vermont and dispersed from other
    aspects of the program. I realize that is terribly vague, but
    you will hopefully understand what I am talking about. But this
    Vermont company is crippled by the fact that they are in an
    area where they do not have broadband. In order to track the
    engineers, they need faster Internet connections to create
    something that is vital to our national security.
        There are a lot of things that could be in a lot of rural
    areas. We can disperse a lot of our abilities throughout the
    Nation, which has a security aspect to it.
        Also, more importantly, we cannot tell our children, if you
    are in a rural school, then you do not have the advantages you
    might have in an urban center as we go into the digital age.

                       INFORMATION INFRASTRUCTURE GRANTS

        Secretary Evans. I agree with you, Senator. I think we are
    headed in the same direction. I do not think there is any issue
    that is more important. There are many as important, but the
    deployment of broadband across America, for national security
    reasons, economic security reasons, homeland security reasons,
    health reasons, I mean, this country should be headed in that
    direction and we are. Again, you refer to the TOPs program. I
    agree that we need to close the digital divide as fast as we
    can and I would say to you that $20 million in the TOPs program
    just does not even begin to scratch the surface. What you need
    is big commitments like have been presented in the budget, $700
    million in the Department of Education and $600 million--and we
    have already gone through the numbers.
        I think we are headed in the same direction. I am as
    anxious as you are to make sure that every American is
    connected.
        Senator Leahy. We may keep in touch on that, Mr.
    Secretary----
        Secretary Evans. Sure.
        Senator Leahy [continuing]. And take a look at my
    statement.
        Secretary Evans. I sure will. I sure will, absolutely.
        Senator Leahy. Thank you, Mr. Chairman.
        Senator Hollings. Senator Domenici.
        Senator Domenici. Thank you very much, Mr. Chairman.
        Mr. Secretary, it is good to be with you.
        Secretary Evans. Thank you, sir.

                          BUREAU OF ECONOMIC ANALYSIS

        Senator Domenici. I want to just share quickly an
    experience with the committee and with you and then I want to
    ask you a couple of questions about the Bureau of Economic
    Analysis and the control you have over entities that collect
    data on which we act here.
        Mr. Chairman, I was up in northern New Mexico, at an
    isolated little town named Mora, went to church and then had a
    meeting there at the little restaurant with maybe 30 people.
    This was about 3 years ago. I then sat down and asked, ``what
    do you want to talk about?'' Would you believe that if you
    would have asked me to write down the six issues that might
    have been discussed in Mora, I would have been wrong because
    what they really wanted to know way up there was when will we
    be able to have computers in our homes for our kids? Now, this
    is about an 80 percent Hispanic part of New Mexico.
        I want to tell you, since that time, we have spent almost 3
    years working with the State of New Mexico to try to find out
    how well or how not so well rural areas were serviced by things
    like the underground lines, fiber optics and the like, that
    make rural areas as capable of handling computers and high-tech
    kinds of businesses as a large city or town. That is what is
    going to make rural America have more paychecks, is when
    companies recognize that for the computer age, they can be in a
    little town and do their business. You can have an engineering
    firm that does all its business via the computer. They could be
    situated in a little town of 8,000 people if they like it
    there.
        So I think whatever programs you have that move in a
    direction of helping rural America get the basic infrastructure
    that is needed to lift the small community into the area of
    having the capacity to handle the modern day computer-type
    activities is probably as important a job as you can do. These
    are the highways of the future, not the paved highways. The
    highways are how much computer capacity do you have in little
    towns, big towns.
        Having said that, I came today to congratulate you and your
    Department and the President on something that is in the budget
    and that was prompted because I read, and now I have been told
    that it is correct, that as we came out of this recession, mild
    as it was, that in the first quarter coming out of the
    recession, the productivity of the United States was measured
    as an increase of 5.5 percent. Did you see that?
        Secretary Evans. I did.
        Senator Domenici. Now, that is unheard of. Most of the
    time, when you are coming out of a recession, Mr. Chairman,
    your productivity is zero or negative. The fact that it is 5.5
    percent permits some people to say that something very
    different is at work in this American economy. Nobody yet says
    what it is, but I concur. Something very different is
    happening.
        Or, we do not know how to measure productivity and we are
    measuring it improperly. I have a hunch that we do not know how
    to measure productivity properly, but I do not have a hunch
    that the 5.5 percent is wrong. I do not know that much. But
    sometimes we forget to put money into your budget for you to
    handle the various analytical functions that are yours.
        I understand that with reference to the Bureau of Economic
    Analysis and the Bureau of the Census, you are asking for more
    money for each one of those, and I want to say as one Member of
    the Senate, I want to help you with the maximum amount you need
    for the professional work of this kind of fact finding for the
    United States. I understand that you may have a new e-mail
    program that you want to add. Do I understand that correctly?
    Could you share that with us?
        Secretary Evans. Senator, I am not sure that I know the e-
    mail program that you are referring to. We are continuing to
    pour a lot of money into our information technology within the
    Department of Commerce. You highlight a very important part of
    our budget, which is it is hard to make good decisions if you
    do not have good information and good facts, and so we have
    added a substantial amount to the Bureau of Economic Analysis
    as well as the Bureau of the Census----
        Senator Domenici. You do not have a new approach to BEA's
    understanding and measurement of e-business?
        Secretary Evans. Oh, e-business.
        Senator Domenici. E-business.
        Secretary Evans. I am sorry. E-business, yes, absolutely,
    we do.
        Senator Domenici. What is it?
        Secretary Evans. We are going to measure e-business in this
    economy and we are going to also measure the service component
    of this economy. In the past, Senator, when you look at the GDP
    numbers, we look at the manufacturing sector, we look at the
    mining sector, but not the service sector. We all know what a
    large part of this economy the service sector is now. So we are
    also committing funds to measure that very important segment of
    the economy.
        But yes, on e-business, we think it is vitally important
    that we have good, accurate information as to how much
    information----
        Senator Domenici. Do you have money to do this program?
        Secretary Evans. Yes, sir.
        Senator Domenici. It was within your base----
        Secretary Evans. Yes, sir.
        Senator Domenici. Mr. Chairman, thank you very much for
    recognizing me, and I might say to you in all the work that you
    do in the Commerce Committee and Budget Committee, I think you
    share with me how important it is that productivity be measured
    correctly.
        Senator Hollings. Exactly.
        Senator Domenici. It is actually the force that drove us
    for the 10 years in a recovery and will drive us again, and
    something is different out there. It may be new kinds of
    businesses that are changing productivity. Surely, productivity
    was very, very high throughout the entire 10 years of the
    recovery, and now it is almost in a booming stage which means
    people do not lose money in their paychecks during the
    recession. Paychecks may still go up----
        Secretary Evans. Right.
        Senator Domenici [continuing]. Even when you are having a
    recession. It is very interesting.
        Thank you, Mr. Chairman.
        Senator Hollings. Thank you very much.
        Senator Murray.
        Senator Murray. Thank you very much, Mr. Chairman. Mr.
    Secretary, welcome. It is good to have you here again.
        Secretary Evans. Thank you.

                       INFORMATION INFRASTRUCTURE GRANTS

        Senator Murray. We appreciate your being here. Obviously,
    all of us are concerned about homeland security and the war on
    terrorism, but we are particularly concerned about your budget,
    what you do on investment in our economy. My home State of
    Washington has an unemployment rate that is still over 8
    percent and we are hurting very badly right now. We are second
    only to Oregon in terms of unemployment rates and the
    adjustments that you have are extremely important to us as we
    try to come out of this recession. I am glad to hear the rest
    of the country has, but we are really hurting.
        I wanted to just second what the chairman and Senator Leahy
    said about the TOPs program, the Technology Opportunities
    Program. I know that you think it is a small amount of money,
    but it has made a tremendous difference and needs to continue
    to make a tremendous difference in our rural communities who
    are the hardest to reach. They are the ones that everybody else
    gets taken care of, then we cut the programs and then our most
    rural communities, furthest, hardest to reach, are left out in
    the cold, and I do think that program makes a difference, Mr.
    Chairman. I hope to work with you to restore the funds for
    that.
        I also want to echo the chairman's concerns about the Sea
    Grant program. It is a very important program in my home State
    of Washington. It has been at the University of Washington
    under the Office of Marine Environmental Resource program since
    1968. It does an awful lot of really good work, and we are
    concerned changing who administers it will change some of the
    functions and important things that are going on in terms of
    research at the University of Washington, so Mr. Chairman, we
    will continue on that, too.
        I do have a couple questions for you today. One of them has
    to do with your proposal to create a new Bureau of Export
    Administration field office in Seattle. Can you talk about
    that? I think you have an increase in the Bureau of Export
    Administration's budget that includes an office in Seattle.
    Could you talk a little bit about what you see with that?
        Secretary Evans. Well, only that we are adding two offices
    domestically. One is Seattle. One is Houston. Again, part of
    our homeland security, national security initiative is to make
    sure that we are doing everything we can to work at the ports
    and deal with the issues of products, goods that may be moving
    out of this country for the wrong kind of reason.
        We had a recent case in the Port of New York where we found
    some individuals trying to ship some night vision equipment to
    the Hezbollah, and so it is clear that our ports are areas
    where these products may tend to leave our country and we
    thought it was important to make sure we had the facilities in
    place, the resources in place to watch that and enforce our
    ports.
        Senator Murray. How do you see that impacting the flow of
    trade between Washington State and other countries?
        Secretary Evans. I do not see it impacting it at all. I
    just see it as an enforcement office. It is there to make sure
    we are enforcing our laws. But I do not see it impacting the
    flow negatively or positively.
        Senator Murray. Okay. Can you give me a quick update on
    where we are with the softwood lumber dispute with Canada? I
    know it is a really complex issue, but can you just tell us
    where you see it right now?
        Secretary Evans. Sure, just ongoing dialogue on the
    theories that both sides are sitting down in good faith to talk
    through some very, very difficult issues. I think, one, it is
    safe to say that the discussion has progressed farther than
    ever before in terms of dealing with this decades-old issue.
    Everybody is facing a March 21 final determination date, and so
    that is kind of a hard date that everybody is working against.
    I am going to remain optimistic.
        Senator Murray. There are a lot of issues involved in this,
    and I know you know them. I just wanted to bring to your
    attention the plight of one business in my State. It is Lindall
    Cedar Homes. They manufacture pre-fabricated homes and they are
    the only pre-fabricated home manufacturer that may be subject
    to duties imposed on Canadian lumber. That would put them at a
    huge disadvantage in the Nation and I hope that we can work
    with you to see if we can get an exclusion for them. It will
    have an impact on several hundred people, businesses, an
    important one for the region. As I said, we have an
    unemployment problem now. We do not need to add to it. It is a
    good business and we want to keep them, so I would like to work
    with you as you reach that date to see if we can get an
    exclusion for them.
        Secretary Evans. Very good, Senator.
        Senator Murray. Thank you.
        Senator Hollings. Thank you.
        Senator Reed.
        Senator Reed. Thank you very much, Mr. Chairman, and
    welcome, Mr. Secretary.
        Secretary Evans. Thank you, Senator.

                 NORTHEAST ECONOMIC DEVELOPMENT REPRESENTATIVE

        Senator Reed. Thank you for being here this morning.
        The Economic Development Agency is a vital player up in New
    England. They have been very helpful in my home State of Rhode
    Island and adjoining States. We have worked with them in very
    innovative and very successful programs.
        I understand that there is no EDA New England office
    director appointed yet and that all of the business is being
    forwarded to Philadelphia, the super-regional office. Is that
    type of some reorganization or policy change?
        Secretary Evans. Senator, I am not sure, to tell you the
    truth. I will have to get back with your office or with you and
    I will certainly do that.
        Senator Reed. Thank you, sir.
        [The information follows:]

                 Northeast Economic Development Representative

        The Economic Development Administration does not have
    office directors for individual states or regions. EDA does
    have economic development representatives located around the
    country that act as the agency's primary point of contact. EDA
    is committed to providing the highest level of service to all
    of its customers and stakeholders. While EDA has a long history
    of outstanding service to its customers, we strive to
    continuously improve operations to leverage our limited
    resources to the greatest extent possible.
        Toward this end, EDA is undertaking a number of initiatives
    to transform itself into a results-oriented agency. These
    management improvement efforts will align the workforce with
    organizational goals, eliminate redundancy and confusion, align
    competencies with activities, and will deploy resources to best
    serve the needs of communities.
        EDA has six regional offices located in Philadelphia, PA,
    Atlanta, GA, Chicago, IL, Austin, TX, Denver, CO and Seattle,
    WA. EDA also has a limited number of staff members, Economic
    Development Representatives who report to the Regional Office
    Director, and usually, although not always, work in one-man
    offices located in a number of different locales throughout the
    country. As management improvement efforts progress, EDA will
    continue to manage its human resources by assessing the
    competing needs of the agency and making decisions that fit
    within the constraints of its budget.
        EDA understands the importance of an effective EDA presence
    in New England and places a high degree of importance on
    maintaining the level of service and technical assistance this
    region has historically received. EDA is committed to taking
    the appropriate measures to continue its excellent level of
    service and assistance in the New England area.

                             EDA PROGRAM REDUCTION

        Senator Reed. I will also note that the EDA's budget is
    being streamlined by $16 million, which in a creative way is
    the change. Can you talk about the reduction in EDA, the
    proposed reduction, because it is a very valuable agency.
        Secretary Evans. Oh, it is. Again, Senator, it is
    priorities. There are a lot of tough choices to make. We are at
    war, and so we are doing the best we think we can to optimize
    the allocation of the resources that we have. When it comes to
    EDA, I think we have a terrific team of people. We still have a
    substantial amount of money in the budget, $350 million, and
    what I would say is that I think the focus of EDA has been
    changing over the last few years. Where there was a serious
    focus on base closures for a relatively long period of time
    that required a substantial amount of effort and a substantial
    amount of funding, the need is not there, as we saw in the
    1990s.
        I think we are moving much more toward community
    rebuilding, trade adjustment assistance. We have added $2.5
    million within the EDA budget to trade adjustment assistance.
    So the focus is starting to move away from base closure,
    rebuilding, and economic development to community development,
    community infrastructure, communities particularly that have
    been impacted by opening up trade around the world. We all know
    some of the industries that are dealing with a difficult period
    because of trade and so this program will be part of helping
    that, the transitioning economy by supporting and helping local
    communities.
        So there is still a substantial amount of money in the
    budget. There is a stronger focus toward trade adjustment
    assistance and communities that are dealing with trade-related
    issues.

                          TRADE ADJUSTMENT ASSISTANCE

        Senator Reed. Thank you, Mr. Secretary. You have actually
    anticipated my next question, which is the trade adjustment
    assistance budget, and as you know, it is an increase of $2.5
    million. I understand, however, that the Department's original
    request was for $5 million. I appreciate the increase, but I
    think it goes also to the issue of free trade and also the
    issue of fast track authority.
        We all recognize, and we take different positions on this,
    but I think we all recognize that any major change in our trade
    policy forces disruptions in local communities. In the long
    run, we might be better off, but in the short run, there are a
    lot of people who are disadvantaged. It very well may be that,
    as we go forward, we may need even more than $2.5 million in
    the trade adjustment account, and I would hope that you would
    be sensitive to that.
        In my part of the country, we have a lot of industries,
    manufacturing particularly, that are holding on against stiff
    competition, and when we change the trade laws, the competition
    gets even fiercer. So this trade adjustment is very important.
    It has been increased, but I would suggest it might even go up
    even further.
        Secretary Evans. Thank you, Senator. We will be sensitive
    to it. It is a big issue. I am not sure that the programs of
    the 20th century fit the programs of the 21st century, and we
    are certainly looking very hard at this whole trade adjustment
    assistance area.
        Senator Reed. Let me conclude by adding my comments in
    support of the Technology Opportunities Program that has been
    highlighted by many of my colleagues. It is an important
    program and your efforts in this regard will be appreciated,
    also. Thank you, Mr. Secretary.
        Secretary Evans. Thank you, Senator. I appreciate it.

                       INTERNATIONAL TRADE ADMINISTRATION

        Senator Hollings. Mr. Secretary, Senator Stevens left
    momentarily but will be right back.
        When you are talking about EDA, my understanding is now
    that there is an emphasis in the administration, in your
    administration, of higher profile projects rather than
    community needs. We just got where highways 301 and Interstate
    26 intersected and we extended the sewer line. We saved about a
    dozen businesses out there and we saved over 100 and some jobs.
    Greenville is a higher profile area and they have got
    industries after industries and you can always assist in
    getting those industries. But you go higher profile in the
    little rural areas with economic development. The
    administration wants economic development, not higher profile.
    Look at that from the----
        Secretary Evans. I sure will, Mr. Chairman.
        Senator Hollings. Another thing. When Senator Domenici was
    asking about the productivity, you have got to have an industry
    to produce in order to measure productivity. We have lost
    50,900 textile jobs alone. Do you think that you could come
    down there for a meeting, that you could then get President
    Bush to campaign for me like he did for Senator Domenici?
        Secretary Evans. Mr. Chairman, I always love coming to your
    State. I have been down there a few times and I look forward to
    coming back to your State and talking to the fine people of
    South Carolina.
        Senator Hollings. We have got to do something on that
    productivity. I mean, there is no question. Trying to bring us
    into the reality of what trade is doing, because we are in the
    hands of the Philistines. These producing ones are now moving
    their production from the free trade United States to the
    protected trade of Malaysia or Mexico or China. We can go right
    on down, but you move them all into protectionism and then they
    shout at me, free trade creates jobs, but it creates jobs in
    China, not in the United States. I am losing them faster than I
    can possibly produce them.
        On that particular score, see if you cannot do statistical
    studies to find out exactly the consumption of America
    represented in imports. We had, back in the 1970s, we had
    testimony that the figure was about 41 percent. I know it is
    over 50 percent.
        I am looking, and the clothing in this room, a good two-
    thirds is imported of the clothing. The shoes on the floor in
    this room, 86 percent of the shoes are imported. So we can get
    by without shoes and clothing. What else do you expect them to
    make?
        My trouble is, they are making the shoes, the clothing, the
    airplanes, the computers, everything. Now, that is the kind of
    competition, and you have got to have a manufacturing capacity
    in order to have a strong economy. See if we can get that
    measured. Do you remember one hearing we had originally last
    year and you said you were going to work on that for us?
        Secretary Evans. Yes. I know the import statistic number is
    we import about 13 percent of our gross domestic pre-product. I
    know that number, and we continue to do what we can to do a
    better job of delivering more accurate information, more timely
    information. This is one area where we have specific focus
    because I have been troubled that it takes so long to release
    the information on imports. I have always wondered why we have
    to wait some 60 to 75 days after the end of the quarter before
    we can release the information, the data.
        So it is something we continue to put a lot of emphasis on,
    Mr. Chairman. The last time I looked at the import number,
    though, it reflected about 13 percent of our GDP.
        Senator Hollings. On this, and I will yield to Senator
    Stevens, you have got a tremendous resource. People do not
    realize what they have over there in the old Bureau of
    Standards. One of the best defense projects was a RAMP, Rapid
    Acquisition of Manufactured Parts. We are in the gulf and a 23-
    year-old destroyer breaks down on a part. They do not make it
    anymore and have not made it for the last 15 years or whatever,
    and then it just languishes there in the gulf 1 month, 2
    months, whatever it is before they can finally wire back, get
    it measured up, everything else like that.
        Now what we do is we computerize. That came out of the
    Department of Commerce, not DOFA. Senator Stevens is heading up
    DOFA all the time, and I work with him. Now, they computerize
    the actual parts for all defense, the aircraft and the Navy. We
    are trying to get the Army into it. It has not worked. But if
    that part breaks down now, we can just go to the computerized
    thing, punch it out on this thing, and you have got it within 3
    or 4 days.
        Election reform standards, all these machines and chads and
    everything else like that, I can tell you from being in the
    game for years, we have got to get some kind of standard that
    is acceptable, and NIST, your Department would be extremely
    helpful. I do not believe it was provided in the election
    reform bill, but can you please work on that and see if you
    cannot get the Department working to use some of its monies to
    try to get us an election machine standard or something,
    because if we are going to mandate nationally, then there ought
    to be an accepted machine, because these fellows come around
    and sell to local entities on any kind of little gadget and
    then the thing is broken and election day is over with. Can you
    help us?
        Secretary Evans. Sure. Absolutely. We will be glad to take
    a look at that, Mr. Chairman, and see what it would take to
    bring a recommendation to you.
        Senator Hollings. Senator Stevens.
        Senator Stevens. Thank you. Mr. Secretary, it is nice to
    see you.
        Secretary Evans. Chairman, it is nice to see you.

                                MARINE RESEARCH

        Senator Stevens. I am full of good news for you this
    morning. Our State has the highest unemployment rate. It is not
    quite the highest, but if you count the people who have left
    the State to go somewhere else to find a job because they
    cannot live on unemployment we have the highest. I think your
    people are doing some good things for us, trying to create
    long-term jobs, the Ketchikan shipyards, the operation from EDA
    is very good, and we are making major investments in marine
    research.
        I thought maybe I might invite you up for a little part of
    the first class fishing 101 this summer.
        Secretary Evans. I need it.
        Senator Stevens. I will show you some of the things that
    you are doing that far away, so that would be a good time. The
    chairman can tell you about that.

                            VESSEL MONITORING SYSTEM

        We would like to have you come up and see what you are
    doing, and particularly in the marine research, and I am very
    serious. The money that we made available for research on
    stellar sea lions is the most that any country has ever spent
    on really developing science, real science, on what is causing
    the decline of one of the great creatures of the sea. We are
    very pleased with how your people are handling that. It may not
    produce all the results I would like to see, but I think they
    are going after true scientific research in a way that will
    demonstrate that we may find a way to protect some of those
    mammals without destroying our basic industry.
        Half of the people in our State who have income derive a
    substantial portion of that income from fishing. It is one of
    the mainstays of our economy. In a period when we do not have
    oil and gas exploration, the mines are closed down, the timber
    operation is down, the one thing that is really sustaining our
    State today is fishing. Again, I think what EPA is looking at
    are long-term activities.
        I have just three real questions, if I may. We are
    concerned about the implementation of the vessel monitoring
    system and the ground fish fleet. We would like to know what
    you might be able to do to help us defray the cost for small
    fishing vessels to comply with the requirements for vessel
    monitoring systems.
        Secretary Evans. Well, we will take a look at it, Senator.
    I do not know what the cost is exactly per vessel. I do not
    know what we have in our budget, if anything, for that, but we
    will take a hard look at it. I know the cost pressure that that
    whole industry is under there and so one thing we do not want
    to do is be adding additional burdens to them.
        Senator Stevens. Compliance is so essential to the safety
    of other vessels, we think actually you ought to give them to
    people who cannot afford them, and I hope you will look at
    that.
        Secretary Evans. Okay, we will.
        Senator Stevens. Another question, the people in Fairbanks
    are concerned about the Gilmore Creek tracking station. This
    station may not proceed, or may not survive, I take it, in the
    new satellite tracking concept, particularly one that is being
    developed in Norway. It is my feeling that we should have at
    least one active station on American soil. We ought not to be
    dependent totally on foreign information to track our own
    satellites.
        Secretary Evans. I agree with that, Senator. I am not aware
    of an effort to shut it down. I agree with you. I think we
    ought to have one on American soil.
        Senator Stevens. It is the last one, and if we get a
    chance, if you come up, I would like to have you take a look at
    that.
        Secretary Evans. I sure will.

                                STELLAR SEA LION

        Senator Stevens. It is very interesting.
        Again, and lastly on still this stellar sea lion problem,
    do you have a problem producing another biological opinion this
    summer? I am not sure that the science will be ready for that,
    but I do hope that we can keep a close watch on that process
    and if some mechanism to extend the time until we all have the
    answers that that research will bring us will help, I think we
    ought to ask Congress to consider that. That is a court ordered
    deadline, as I understand it, for the biological opinion, and
    the time frame is too tight, I think, to finish the research
    that we funded. We funded a total of $80 million on that study.
        Secretary Evans. Right.
        Senator Stevens. I think it would be a travesty to have the
    burden on the Department to prepare the opinion before the
    results are in from the study. I would urge you to just watch
    that for us, because I think if the last biological opinion had
    been implemented, it would have shut down half the fishing
    fleet.
        Secretary Evans. We will keep a close watch on it. I was
    briefed on it about 1 week ago and people have been encouraged
    with the progress and the facts that have been collected, but
    obviously they did not feel like we are ready yet, and so we
    will continue to watch it very closely.
        Senator Stevens. Just one last comment. I got a report the
    other day, we have several of them down at Seward, where people
    are watching them. We now have television out on the rocks
    where they rest and rear their young pups. They are actually
    getting to the point where they are so familiar with these sea
    lions that they are giving them names. We are actually now
    going to start tagging some. One of them, a young pup, was
    tagged in Seward, and within 1 year, it ended up out in Kiska
    Island at the end of the chain. That is 1,200 miles in the
    first year of life.
        Secretary Evans. The first year? Wow.
        Senator Stevens. It is great science. It really is.
        Senator Hollings. Is that one named Ted?
        Senator Stevens. I will give the one that survives the name
    of Ted.
        Senator Hollings. We have got a name for one of Alaska's
    sea lions here in Washington. Thank you.
        Senator Stevens. Thank you.

                                BUREAU OF CENSUS

        Senator Hollings. Finally, on the census, we had a GAO
    study, Ted, on this one, and you think they cut out a little
    $10 billion here and a little $5 billion there and ruin all the
    rural programs and everything else and then come with a census
    budget of $5 billion more. You all have gotten to be like tax-
    and-spend Democrats. I mean, how do you justify $5 billion more
    for a census in 2010? The one in 2000 was $6.4 billion, I
    think.
        Secretary Evans. Right. Correct.
        Senator Hollings [continuing]. And now you have got $11.4
    billion requested?
        Secretary Evans. Right.
        Senator Hollings. And GAO talks about your accounting
    divisions there in the Bureau of the Census?
        Secretary Evans. Right. Senator, obviously, we are focused
    on the planning, the work that is going to be necessary to
    develop the most accurate possible census that we can deliver
    to this country in the year 2010. We learned a lot from 2000,
    and 2000 happened to wind up being the most accurate census
    ever by far, but can we do better? Yes, we can do better.
        One of the ways we feel like we can do better is by
    implementing some programs like the American Community Survey
    that will provide to this country census-type data every year,
    not every 10 years, but every year, and what that can do for
    local municipalities and counties and States can be fairly
    dramatic, because when you are able to provide census-related
    data every year, then States and local governments and
    communities can do a better job in distributing the resources
    that they distribute to the population.
        It may be flu shots. It may be polio vaccine. It may be
    dollars. I am not sure what it might be. But you will have not
    just a 2010 census, but this will provide important information
    every year so we can do a more effective job across America of
    allocating again the scarce resources that we have.
        Senator Hollings. But $5 billion more?
        Secretary Evans. Of course, some of it, Mr. Chairman, is
    inflation. I do not know how much of that is inflation, but a
    big chunk of it is inflation, I can assure you of that. Over a
    10-year period, it does not take much inflation to double the
    cost of something in nominal terms.
        Senator Hollings. Well, look at that GAO report----
        Secretary Evans. We will.
        Senator Hollings [continuing]. On the finding they have had
    on the accounting over there.
        Secretary Evans. We sure will, Chairman.

                         ADDITIONAL COMMITTEE QUESTIONS

        Senator Hollings. We thank you very, very much for your
    appearance here today.
        Secretary Evans. Thank you.
        [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 Ernest F. Hollings
                          advanced technology program
        Question. The Advanced Technology Program (ATP) is an industry-led,
    competitive, and cost-shared program to help the United States develop
    the next generation of breakthrough technologies in advance of its
    foreign competitors. For fiscal year 2002, the Department of Commerce
    has $60.7 million available for new ATP grants. The Department has not
    yet issued a solicitation for new ATP grant applications.
        When do you anticipate that you will issue the solicitation asking
    companies to apply for fiscal year 2002 ATP grants?
        Answer. A Federal Register Notice was issued on April 18, 2002,
    soliciting grant applications.
        Question. According to fiscal year 2003 Budget proposal, the
    Department of Commerce intends to carry over $34 million in ATP funds
    from fiscal year 2002 to fiscal year 2003.
        Why is this? Do you have a plan in place to spend the entire $60.7
    million that Congress has given you for new ATP grants in fiscal year
    2002? If not, do you intend to send up a reprogramming for the $35
    million you intend to carry over?
        Answer. The President's budget request for the ATP will allow the
    program to meet all its current obligations in funding on-going work,
    and also will allow the program to fund approximately 35 new projects
    in fiscal year 2002 and fiscal year 2003.
        Question. As you and I have discussed, Secretary Evans, the ATP
    selection process has always been merit based. No Senator, or
    Secretary, or Deputy Secretary has picked which projects will be funded
    and which will not. Instead, the final decision has been removed from
    politics and left with a career official.
        Can you assure me that this process will remain merit-based and
    will not be influenced by your Department's political appointees?
        Answer. ATP has and will continue to comply with the selection
    process stipulated in its regulations (15 CFR part 295) as it has in
    the past. ATP has a rigorous competitive peer-review process that
    removes any potential bias. Potential projects are evaluated on both
    technical and business merits. ATP will ensure that this rigorous
    review process is continued when it selects future awards.
                  manufacturing extension partnership program
        Question. Manufacturing creates growth for our nation: wealth in
    the form of economic growth, increased jobs, and robust trade. The
    United States' manufacturing strength is built on the backbone of more
    than 350,000 small manufacturers that account for over one-half of the
    value of total U.S. production. These firms employ 11.4 million
    Americans--more than two-thirds of the manufacturing workforce. Yet,
    despite the critical role that small manufacturers play in U.S.
    economy, the productivity gap between small manufacturers and their
    larger counterparts continues to grow. This disparity causes concern
    because expertise in technology will only become a bigger factor in the
    success of small companies.
        One of the President's stated priorities for the fiscal year 2003
    budget is to ``revitalize the economy and create jobs.'' Yet, your
    fiscal year 2003 budget sunsets the Federal share of MEP centers which
    assist our nation's vital small and medium sized manufacturers to stay
    competitive. In 2000, small manufacturers reported $1.3 billion of new
    or retained sales and more than 14,000 jobs saved as a result of the
    MEP.
        How does cutting the funding for MEP support the President's
    priority of revitalizing the economy and saving jobs? Isn't this move
    counterproductive when the nation is in a recession that threatens
    high-paying manufacturing jobs?
        Answer. MEP has been a successful program and demand for its
    services continues to increase. However, given that this Nation is
    fighting a war against terrorism, difficult choices have to be made in
    terms of priorities within the Federal budget. We believe that many MEP
    centers will continue to exist in the absence of Federal funding. As a
    result, small businesses will continue to receive the expertise and
    assistance from the centers. This continued assistance will help small
    manufacturers remain competitive and continue their crucial role in the
    Nation's economy. To offset the loss of Federal funding, centers could
    increase fee receipts. Given the centers' success in improving
    productivity and efficiency, assessing fees for service should be the
    direction in which the program heads. The benefits to small firms
    seeking MEP assistance, such as improved productivity and efficiency,
    should outweigh the cost of the fees. Also, large manufacturers that
    depend on smaller companies may also wish to provide support to MEP
    centers to ensure the continuing success of their smaller suppliers.
                           election reform standards
        Question. The House-passed election reform bill and the Senate
    version of election reform both call for NIST to have a role in
    assisting to develop election machine standards.
        Have you prepared a request for such funding? What is such an
    effort likely to cost?
        Answer. In the House version (H.R. 3295, Ney-Hoyer bill), NIST
    estimates the cost to support the functions as described in the bill to
    be between $7.5 and $10 million per year. In the Senate version (S.
    565), the costs have not been determined. In S. 565, NIST would be a
    consultant to the Office of Election Administration of the Federal
    Election Commission. The level of assistance by NIST to the Office of
    Election Administration is not detailed in S. 565. Under the House
    bill, NIST would play an integral role vis-a-vis the Office of Election
    Administration. NIST costs could be much less than the House version
    but the Conference bill will determine NIST's role.
                        world trade center investigation
        Question. It is my understanding that NIST will have a significant
    role in examining the collapse of the World Trade Centers.
        Have you identified funding for this effort? Should we expect a
    supplemental request in this regard?
        Answer. NIST is planning to conduct an independent, comprehensive,
    NIST-led technical investigation of the building construction,
    integrity of the materials used, and all the technical conditions that
    combined to cause the World Trade Center (WTC) collapses. This
    technical investigation will be funded by a reimbursable agreement with
    the Federal Emergency Management Agency (FEMA), using funding requested
    by FEMA in the fiscal year 2002 supplemental.
                         cost of 2010 decennial census
        Question. Please explain why we are faced with a 2010 Decennial
    Census that will cost approximately $5 billion more than the 2000
    Decennial Census.
        Answer. Some of this increase is attributable to inflation, but
    there are other factors as well. The population is expected to increase
    by approximately 10 percent. In addition, we have observed over several
    decades that for a number of reasons it becomes more difficult to
    enumerate the population during each decennial census:
      --The population is becoming increasingly diverse.
      --Households are more complex.
      --It is increasingly difficult to develop a workforce with the skills
            necessary to conduct the enumeration.
      --People are more reluctant to cooperate with the government, and
            with the enumerators asking for interviews.
        Consequently, each decennial census becomes more expensive and more
    difficult to implement. If we do not make fundamental changes in our
    methodology, our current best estimate is that the cost of the 2010
    Census will increase by $5 billion broken down as follows:
      --$2,833 million--Due to inflation (as estimated by the fiscal year
            2001 President's budget for ``Federal Civilian Pay'' index and
            GDP inflator for procurements).
      --$994 million--Because we expect that enumerators will process fewer
            cases per hour. As noted above, this process has been a steady
            trend for several decades.
      --$532 million--Due to enumerator pay increases needed to hire
            temporary employees in a tight labor market. We anticipate,
            based on research and experience related to Census 2000,
            needing to pay our field staff 90 percent of the prevailing
            wage rate in the areas where they work.
      --$320 million--Increase in Field workload--Housing units will
            increase by 10 percent, Group Quarters by 12 percent, and we
            will need 51 additional local census offices.
      --$148 million--Due to inflation in information technology contract
            costs, which are estimated to be 2 percent above the federal
            inflation rate.
      --$40 Million--Due to an increase in the data capture workload of 10
            percent due to population growth.
        Even at this great cost, repeating the old design would be
    extremely risky and would result in inferior data to that collected by
    the reengineered design. Opportunities do exist to reduce risk, reduce
    full cycle costs, and improve accuracy for the 2010 Census by
    fundamentally reengineering the process. The advantages and savings
    associated with reengineering have been presented in the Potential Life
    Cycle Savings for the 2010 Census document provided to the Congress in
    April of 2001. The President's fiscal year 2003 budget request reflects
    the intent to reengineer the decennial census process.
                   census bureau financial accounting systems
        Question. A recent GAO report pointed to significant flaws in the
    financial accounting system at the Bureau of the Census. What can this
    Committee do to assure that such problems are alleviated?
        Answer. Several of the management recommendations in the GAO report
    (``2000 Census: Analysis of Fiscal Year 2000 Budget and Internal
    Control Weaknesses at the U.S. Census Bureau''--GAO-02-30) address
    improvements to the Bureau's financial accounting systems. We are
    currently acting on these recommendations. This answer addresses all
    but three of those recommendations. The three not addressed by this
    answer dealt with current financial activities, rather than financial
    accounting systems.
    Recommendation #3: Instruct accounting personnel to follow the written
            policy for establishing accruals and proper cutoff for goods
            and services received at year end.
        The Finance Division and Accenture contractors conducted staff
    training on September 13, 2001, on the estimated accrual process to
    ensure proper recordation of accrual transactions at year-end. As
    changes to accounting personnel occur, the Finance Division will
    continue to educate new personnel and provide refresher training to
    existing personnel, as needed.
        The Finance Division also has set up an internal audit review
    process to review the following:
      --Year-end accrual policies and procedures.
      --Year-end Estimated Accrual forms submitted from divisions.
      --Match subsequent disbursements with year-end accruals.
      --Actual vendor invoices to determine period of performance.
        The Census Bureau considers this recommendation closed.
    Recommendation #4: Post accounting adjustments to subsidiary records in
            a timely manner.
        We have implemented our new Commerce Administrative Management
    System (CAMS) closing program, which gives us the needed ability to
    track year-end adjustments in multiple periods. It has the capability
    to distinguish our year-end adjustments from the adjustments entered
    after the initial FACTS II submission and audit adjustments, which has
    caused discrepancies between Treasury and Office of Management and
    Budget records. All year-end adjustments have been entered into the
    financial system for fiscal year 2001. We have completed the validation
    of the year-end trial balance and closing entries. The final close
    process, which sets all financial system modules for fiscal year 2001
    to close, establish ending balances, and carry-forward balances, was
    completed on March 29, 2002. This new closing program will enable the
    Census Bureau to close our financial records on schedule.
        Implementation date: March 29, 2002--Completed.
    Recommendation #5: Complete efforts to modify the Bureau's financial
            systems to produce usable accounts payable and undelivered
            orders subsidiary reports by vendor, close out thousands of
            completed transactions with small balances, and archive all
            completed transactions.
        The data clean-up is a continuing effort for all Undelivered Orders
    and Accounts Payable accounts to purge all remaining unmatched
    transactions, which were converted from our legacy system to CAMS. The
    data clean-up converts unmatched transactions by determining related
    transactions and populating the fields used in document matching with
    common matching values. These transactions have no impact on our
    financial balances. The Census Bureau plans to complete this data
    clean-up effort by July 2002.
        Targeted completion date: July 31, 2002.
        However, Census is working in conjunction with the Department is
    reviewing the existing archiving capability in CAMS, and to provide
    additional requirements for a comprehensive, JFMIP compliant approach
    to provide archiving and retrieval capability. The requirements
    documentation should be completed this fiscal year, with implementation
    targeted for fiscal year 2003.
    Recommendation #6: Amend policies and procedures, which will require
            supervisors to closely review employees time charges and
            project codes to ensure more accurate project costs for
            salaries and benefits.
        As part of the census planning process for the 2004 Census Test,
    the Census Bureau is reviewing policies and procedures related to the
    completion of payroll documents and supervisory review and approval of
    those documents and will amend them as appropriate. We know that with a
    large, short-term intermittent staff, it is difficult to train them
    adequately in proper charging of hours and other expenses. We will look
    for ways to improve training and to stress the use of proper task codes
    and project numbers for the various field operations. We also will work
    on supervisors' training and procedures for the review and approval of
    payroll documents to improve the accuracy of reporting. We will develop
    supervisory checklists, which can be used during the review of payroll
    forms to simply make more accurate that proper task codes and project
    numbers are being used for the various operations.
        Another aspect of our procedures that we feel impacts the accuracy
    of costs is the appointing of field staff into the proper position. In
    Census 2000, we created the Crew Leader Assistant, that was established
    late in the census process and was paid at the same rate as the
    enumerator. We know that in many offices, people that worked as Crew
    Leader Assistants were originally hired as enumerators and were not
    officially converted into the Crew Leader Assistant position. This
    resulted in their hours and expenses being reported as enumerators and
    had an adverse impact on cost reports and productivity. We plan to
    establish all positions in a more timely manner in the future and to
    develop procedures that ensure staff is hired into the proper position.
    It is extremely important that hours and expenses for production and
    nonproduction staff are reported accurately. Policies and procedures to
    ensure this occurs will be instituted when hiring is initiated for the
    2004 Test.
        Target Implementation Date: Procedures will be revised and amended
    as appropriate and will be implemented when hiring and training are
    initiated for the 2004 Test, which should be in the summer of 2003.
                      2010 decennial census--cost savings
        Question. Is there any cost savings to the 2010 Census associated
    with conducting the American Community Survey?
        Answer. Yes. Repeating the design used for Census 2000 would be
    costly, extremely risky and would result in inferior data to that
    collected by the reengineered design. Fundamentally reengineering the
    process would reduce risk, reduce full cycle costs, and improve
    accuracy for the 2010 Census. The American Community Survey (ACS) is a
    critical component to successfully reengineering the design.
        The advantages and savings associated with reengineering the
    decennial census process have been presented in the Potential Life
    Cycle Savings for the 2010 Census document provided to the Congress in
    April of 2001. The President's fiscal year 2003 budget request reflects
    the intent to reengineer the decennial census process.
        The reengineered 2010 Census, including ACS as a critical
    component, consists of three highly integrated activities designed to
    meet the following four goals: Improve the relevance and timeliness of
    census long form data, reduce operational risk, improve the accuracy of
    census coverage, and Contain costs.
        The ACS is fundamental to this strategy. It sits alongside the
    other two components of our plan to reengineer the decennial census:
    (1) improving the inventory of all known living quarters and ensuring
    that they are accurately located on our census maps (MAF/TIGER
    enhancement), and (2) our program of early planning, development and
    testing designed to completely restructure the management and conduct
    of a short form only census in 2010.
        ACS will provide more timely and relevant data to communities
    throughout the decade. Moreover, the cost of conducting a short form
    only census will be reduced later in the decade because the elimination
    of the long form from the decennial census, coupled with MAF/TIGER
    enhancements, will dramatically reduce the workload for enumerators in
    the field. Field staff will be working with more accurate maps and
    address lists. There will be fewer households to visit because a short
    form only census will have a higher response rate. We anticipate a
    higher response rate because ever since the inception of the short
    form, we have consistently experienced a higher response rate on short
    form questionnaires than on long form questionnaires. For example, in
    census 2000 the response rate for the short form questionnaires was
    66.4 percent while the corresponding response rate for the long form
    questionnaires was 53.9 percent. We also expect savings because
    enumerators will not be required to follow up on unanswered long form
    questionnaires--a process that is time consuming and costly. Finally,
    staffing also will be reduced at headquarters because we will not be
    required to conduct the following operations for the development of the
    long form since they will be carried out by the ACS program:
      --Content testing and development
      --Questionnaire design
      --Data collection methods--development and implementation
      --Edit, coding and imputation--development and implementation
      --Sample design
      --Estimation and variance development and computation
      --Product development
      --Data tabulation and review
      --Data dissemination
        The results of this work will mean that the overall cost of
    conducting the 2010 Census, including MAF/TIGER enhancements, ACS, and
    early planning and development for 2010, will be reduced. In addition,
    the persistent problem of a huge spike in the funding needs for the
    census occurring in the census year will be dramatically reduced.
    However, making these changes in Census 2010 will require an increased
    investment earlier in the decade as compared with the Census 2000
    cycle. Additional resources are needed in the early years because
    decennial census operations must be completely restructured to take
    full advantage of ACS and MAF/TIGER enhancements. But this increase is
    more than offset by the significant reductions later in the decade
    described above.
                               cost of maf/tiger
        Question. What is the total projected cost to the 2010 Census for
    the MAF/TIGER geographic database system?
        Answer. The full cycle cost (through 2012) for enhancing the MAF/
    TIGER database is $535 million. An improved MAF/TIGER database allows
    us to adopt the technology necessary to fully utilize GPS equipped hand
    held mobile computing devices to find, interview, and update data on
    people and their housing units for the short form only census. This
    innovation alone means that we can dramatically reduce field
    infrastructure costs because we can substantially reduce the use of
    paper maps and virtually eliminate the use of paper assignment sheets,
    along with the staff and space required to handle that paper. In
    addition, the enhanced system will utilize commercial off-the-shelf
    software allowing for an open, flexible, and integrated system that
    makes it easier to update maps and address lists. This will allow us to
    take advantage of geographic partnership programs in which address and
    map update information from state, local, and tribal governments can be
    used more effectively. The result will be a substantial increase in the
    accuracy of our address list and maps. Consequently, the cost of MAF/
    TIGER enhancement will be more than offset by savings and efficiencies
    in 2010 Census operations.
        Repeating the design used for Census 2000 would be costly,
    extremely risky and would result in inferior data to that collected by
    the reengineered design. Fundamentally reengineering the process would
    reduce risk, reduce full cycle costs, and improve accuracy for the 2010
    Census. The MAF/TIGER enhancement program is a critical component to
    successfully reengineering the design. The advantages and savings
    associated with reengineering the decennial census process have been
    presented in the Potential Life Cycle Savings for the 2010 Census
    document provided to the Congress in April of 2001. The President's
    fiscal year 2003 budget request reflects the intent to reengineer the
    decennial census process.
                            eda investment criteria
        Question. Pursuant to the Public Works and Economic Development Act
    of 1965, as amended by the Economic Development Administration Reform
    Act of 1998, EDA provides grants to ``alleviate conditions of
    substantial and persistent unemployment and underemployment in
    economically distressed areas and regions.'' In the last year, the
    Economic Development Administration has altered its grant-making
    strategy by awarding infrastructure and business development grants for
    projects that are high profile and create lucrative jobs that pay wages
    higher than the average county rate.
        In April of 1999, prior to this change in policy, EDA provided a
    grant ($1.5 million) to the City and County of Orangeburg, South
    Carolina for a sewer project to serve seven commercial businesses at
    the intersection of Interstate 26 and Highway 301. The project saved 65
    jobs and created 42 new jobs. Since the time of the award, a 400 acre
    industrial park has been attracted to the area. Approximately 100 jobs
    have been created in the park and that number is anticipated to reach
    over 700 jobs when the park reaches its capacity. In addition, tens of
    millions of dollars in private investment have been funneled in the
    area. Under the current criteria a similar project would not be funded
    by EDA.
        Has EDA recently switched its grant-making focus from distressed
    communities to so-called ``higher profile'' projects?
        Under what authority does EDA propose to shift the focus of its
    infrastructure and business development grants?
        Can you provide the Committee with a list of ``high priority''
    projects that have or are proposed to receive funding?
        Answer. Based on the project described, it is not accurate to
    assume that such an investment would not be made by EDA today. In fact,
    the project you described is the type of project that can fundamentally
    change the economic fortunes of a region, and the type of investment
    that results in substantial higher wage, higher skill jobs and private
    sector investments that are consistent with EDA's mission.
        EDA has not changed its focus from distressed communities to
    ``higher profile'' projects. Consequently, EDA does not compile a list
    of ``high priority'' projects. EDA remains committed to its core
    mission, articulated in its authorizing legislation, which states in
    part that ``the goal of Federal economic development activities should
    be to work in partnership with local, regional, and State public and
    private organizations to support the development of private sector
    businesses and jobs in distressed communities.''
        EDA is not shifting the focus of its infrastructure and business
    development grants. EDA's Investment Policy Guidelines are merely a
    clarification of the evaluation criteria in EDA's longstanding
    regulations. The guidelines promote investment decisions based on
    outcomes such as value-added employment and private sector investment;
    however, application of the guidelines is relative to each proposal
    since every project is different in how it addresses the unique needs
    of the area it benefits. The investment policy guidelines will lead to
    investments that are proactive in nature, look beyond the immediate
    economic horizon, anticipate economic change, and enhance regional
    competitiveness in distressed communities, both rural and urban. The
    Investment Policy Guidelines help ensure that distressed communities
    receive the most impact from EDA investments and that taxpayers' funds
    are spent in a thoughtful manner with long lasting impact.
                            noaa's sea grant program
        Question. I see little sense in moving Sea Grant from the
    Department of Commerce to the National Science Foundation. Please
    explain the rationale behind this proposal.
        Answer. The proposal is a result of a review of Federal science
    programs that the Office of Management and Budget (OMB) conducted and
    is consistent with the President's Management Agenda. Under the
    proposal, the Sea Grant program would be administered as an NSF/NOAA
    partnership. The transfer is part of a wider Administration effort to
    promote competitive funding of scientific research and to capitalize on
    the demonstrated excellence of the NSF and its program management.
                       ita textile and manufacturing jobs
        Question. Since NAFTA, the textile and apparel industry in the
    United States and in South Carolina, we have seen a massive decline in
    jobs. In South Carolina, we have lost approximately 50,900 jobs.
    Nationally, we have lost nearly 700,000 jobs.
        What is the Administration doing to halt this decline and to create
    textile and apparel jobs in this country?
        Answer. The economic crisis in the textile industry is of great
    concern to this Administration. I and other senior Commerce Department
    officials, including Under Secretary Aldonas and Assistant Secretary
    Lash have traveled to major textile producing states to learn first
    hand about the industry's problems and to consult with the industry on
    formulating solutions.
        We are taking steps to ensure that our textile industry can compete
    in global markets. We place a high priority on enforcing our existing
    trade agreements on textiles and apparel and will closely monitor
    foreign textile trade barriers.
        We are committed to leveling the playing field for the textile
    industry internationally. To accomplish this, the President and I
    established a high level interagency Textiles Working Group. At the
    direction of the President and I, the Working Group has begun to
    address such issues as:
      --aggressively pursuing the opening of foreign markets to U.S.
            textile and apparel products in any future trade agreement;
      --ensuring compliance with existing agreements on textiles and
            apparel and closely monitoring foreign textile trade barriers;
      --implementing the WTO Agreement on Textiles and Clothing, including
            maintaining the current schedule for, not accelerating, the
            elimination of existing quotas;
      --strengthening U.S. enforcement efforts to combat illegal textile
            transshipment;
      --facilitating utilization of trade preference programs with the
            Caribbean Basin and Africa, in order to expand exports of U.S.
            fiber, yarn and fabric to these regions;
      --achieving re-authorization of improved trade adjustment assistance
            programs;
      --ensuring full access to trade remedy laws for the textile industry,
            consistent with international rights and obligations; and
      --examining the prospects for economic diversification in the textile
            sector.
      --Additionally, the Working Group has established a Subgroup on
            Compliance and Enforcement that is reaching out to domestic
            industry to identify and address market access and compliance
            problems.
      --Members of the Subgroup are meeting regularly with other U.S.
            Government agencies and representatives of U.S. industry to
            support work on textiles market access and compliance issues.
      --As a result of our compliance efforts, we are examining several
            issues including marking and labeling requirements, new
            prohibitive tariffs exceeding WTO bound rates, copying of
            textile designs, fee and taxes assessed in addition to customs
            duties, among other issues.
      --We will pursue these issues vigorously and will continue our
            efforts in the future. We will be equally vigilant regarding
            access to overseas markets when textile restraints under the
            WTO expire in 2005.
                               manufacturing jobs
        Question. Job loss in the manufacturing sector over the last year
    has been extraordinary. Since the end of 2000, the United States has
    lost over 1.5 million of these jobs.
        Are creating manufacturing jobs a priority of the Administration?
    What will you do to assist in the creation of these sorts of jobs?
        Answer. Job creation in all sectors is a priority of this
    Administration. The economy's weak performance since mid-2000 has
    contributed to an increase in the unemployment rate to 5\1/2\ percent
    from a low of about 4 percent. Real GDP advanced a small 0.5 percent
    during 2001 (fourth quarter to fourth quarter), despite growing 1.7
    percent at an annual rate in the fourth quarter. The 2001 performance
    reflected a downshift in the growth rate of consumer spending, a sharp
    downturn in business fixed investment, the liquidation of business
    inventories, weak economic growth in many foreign economies, and the
    economic impact of September 11th terrorist attacks. Businesses
    achieved strong productivity growth in 2001 by cutting back employment.
    Recent data including consumer spending, industrial production, and
    shipments of nondefense capital goods in February suggest that the
    economy is emerging from its mild recession.
        Continued momentum in consumer spending and a recovery in
    investment spending are key to a sustained recovery and to employment
    growth. Total employment rose 66,000 in February, after declining 1.4
    million between March and January. With demand improving, employment
    should continue to rise. Contributing to improving economic conditions
    has been the Administration's tax cut and the Federal Reserve's
    reductions in short term interest rates. Lower taxes and lower interest
    rates supported consumer spending and housing activity in the second
    half of last year and early 2002. These policies helped to make this
    recession the mildest on record, and helped to contain the losses in
    employment.
                          patent and trademark office
        Question. Is the 5-year operating plan for PTO that was submitted
    as part of the President's fiscal year 2003 Budget Request the final
    version of the 5-year operating plan, which PTO was tasked to write
    under the fiscal year 2002 CJS Appropriations Act Conference Report?
        Answer. The five-year Business Plan that was drafted last year and
    submitted in our fiscal year 2003 budget request is in response to the
    fiscal year 2002 CJS Appropriations Act Conference Report. As
    presented, it is a traditional response to attack increasing pendency,
    and it would stem the dangerous tide of rising pendency that began in
    the early 1990s. However, like any business seeking dynamic ways to
    improve, the business plan submitted is not set in stone.
        As you may be aware, newly installed USPTO Director Jim Rogan was
    not a party to the drafting of the submitted plan, although he assures
    me that it represents an important first step toward achieving quality
    and timeliness improvements. He has also begun an aggressive review of
    the USPTO to identify innovative and possibly nontraditional ways to
    improve quality and reduce pendency. This process includes a thorough
    top-to-bottom review of USPTO spending to ensure that resources are
    fully devoted to mission critical tasks and a comprehensive analysis of
    how the USPTO and applicants conduct business.
        Question. Has a compelling link ever been drawn between reduced
    patent pendency and increased numbers of FTE at the PTO?
        Answer. Yes, there is a demonstrated and verified link between
    reduced patent pendency and increased numbers of patent examiner FTEs.
    While increased hiring is not the only solution to the USPTO pendency
    challenges, increasing the number of patent examiners is vital to
    addressing the growing numbers of applications filed and the inventory
    of pending applications. Patent pendency is primarily a function of the
    number of applications filed, the number of patent examiner staff
    available, and the ever-increasing complexity of the applications.
    Pendency rises when the rate of application filings grows faster than
    the rate and the ability of staffing levels to absorb them.
        Looking back in history, the USPTO faced nearly identical
    challenges in the 1980's. The USPTO, at that time, implemented an
    aggressive plan to reduce overall pendency to 18 months by increasing
    its examining staff. In the years 1980 to 1990, filings grew by 56
    percent. During that same period, examiner staff grew by 107 percent
    and pendency was lowered from 22.6 months to 18.3 months. In addition
    to bringing pendency down, a backlog of more than 80,000 applications
    that had built up prior to the increased hiring was cleared.
        Conversely in the 1990's, filings grew at a greater rate than staff
    and pendency increased. In the years 1990 through 2000, filings grew by
    79 percent. Examining staff grew by 71 percent and pendency increased
    from 18.3 months to 25 months. Also during this period, there was a
    dramatic increase in the filing of biotechnology and electrical arts
    applications--some of the most complex applications handled by the
    USPTO. This increase in the complexity of applications resulted in a
    significant increase in the time spent per application. In addition to
    the dramatic increase in pendency during the 1990's, the office has
    accumulated a backlog of nearly 332,000 applications. This backlog will
    negatively affect pendency both today and in the future.
                    ntia's technology opportunities program
        Question. Mr. Secretary, your Department seems to be at odds over
    whether or not the Technology Opportunities Program (TOP) has fulfilled
    its mission. According to the Departments' own ``Budget in Brief'', the
    TOP grants have demonstrated the use of advanced telecommunications
    technologies to enhance the delivery of social services, such as
    education, health care, and public safety. Surely these missions have
    not been accomplished. Could you explain the rationale behind the
    decision to eliminate the TOP grants?
        Answer. The TOP program, established in 1994, has been a valuable
    program for generating awareness of how advanced telecommunication
    technologies can enhance the delivery of social services. But, in light
    of higher priorities, this awareness-generating program did not make
    the cut in this year's budget.
        The Administration does view that government has an important role
    to play in fostering the use of advanced telecommunication technologies
    to provide important social benefits. However, rather than funding a
    limited, general awareness program, the Administration has proposed
    funding specific, proven uses of advanced telecommunication
    technologies in amounts designed to make a difference. For example:
      --Within the Department of Education, $700 million was appropriated
            in fiscal year 2002 for Educational Technology State Grants and
            continues in the President's Budget request for fiscal year
            2003 at $700 million. It is targeted toward high poverty school
            districts to better integrate technology into the classroom for
            improved student achievement.
      --The Department of Agriculture Distance Learning and Telemedicine
            Program (DLT) is requesting $27 million for grants and the
            authority to make $130 million in loans. The Broadband and
            Pilot Program within the DLT Program will finance the
            installation of broadband transmission capacity (i.e. the
            necessary fiber optic cable capacity needed in order to provide
            enhanced services such as Internet or high-speed modems) to and
            through rural communities. The DLT Program finances equipment
            for schools, libraries and hospitals to connect to the
            Internet.
      --The Justice Department is requesting $50 million for the Law
            Enforcement Technology grant program for State and local law
            enforcement; $60 million for states and localities to
            computerize and interconnect their crime and court records; as
            well as $800 million for the Justice Assistance Grant Program,
            a significant portion of which will go towards the acquisition
            of communications and information technology for law
            enforcement.
      --Housing and Urban Development is requesting $20 million for the
            Neighborhood Networks Program. It supports the establishment
            and operation of computer centers that bring job training and
            life long learning to residents of public housing.
        The Administration believes that these Federal programs, combined
    with the tremendous work being done in the private sector by corporate
    and private foundations, are a more effective mechanism for extending
    the benefits of advanced telecommunication technologies to all
    Americans.
                                     ______

                    Questions Submitted by Senator Herb Kohl
                  manufacturing extension partnership program
        Question. I was disappointed to see that the Administration's
    proposed budget would cut the Manufacturing Extension Partnership
    Program by $93 million, from $106 million to $13 million. This is a
    dramatic cut for a program which is unique in that it targets small
    manufacturers. Although the original model for this program was that
    licensing technology from federal labs would pay for the assistance the
    program provides to small manufacturers, this has not happened. The
    reality is that small manufacturers are not in the position to use the
    latest technology from federal labs. Rather, this program provides
    significant training assistance to small manufacturers across the
    nation, and in my state of Wisconsin, by helping level the playing
    field as they compete with low-cost foreign suppliers.
        There have been many studies of the Manufacturing Extension
    Partnership Program over the years. One that has special importance, I
    believe, is the 2001 study by Nexus Associates which indicates that a
    conservative estimate of the return on investment of MEP Program
    dollars is at least 4 to 1. Did the Commerce Department look at this
    study before you made your decision to cut the MEP Program?
        Answer. There have been numerous studies that point to the fact
    that MEP is a successful program. However, given that this Nation is
    fighting a war against terrorism, difficult choices have to be made in
    terms of priorities within the Federal budget. Unfortunately, every
    program cannot be funded. In the fiscal year 2003 President's budget
    request, MEP was funded at $12.9 million to fund two centers that are
    less than six years old and to administer the program and develop
    products and services for centers.
        Question. Many large U.S. manufacturers are under tremendous
    pressure to purchase from low-cost foreign suppliers that have low
    labor costs or governmental support to capture business or both. As we
    have seen in Wisconsin, the Manufacturing Extension Partnership Program
    is one program that has been successful in giving these large companies
    a reason to keep purchasing from small U.S. manufacturers because it
    has helped make their suppliers more competitive.
        If the Manufacturing Extension Partnership Program were to go away,
    and I fear that it will if the cut you are proposing holds, what does
    the Administration propose to do to help U.S. suppliers keep business
    and jobs in this country?
        Answer. Since approximately two-thirds of their funding comes from
    state and local organizations and from fees for service, we believe
    that many MEP centers will continue to operate without Federal funding.
    As a result, small businesses will continue to receive the expertise
    and assistance from the centers, which will keep them competitive. MEP
    has been a successful program and demand for its services continues to
    increase. To offset the loss of Federal funding, centers could increase
    fees receipts. Given the centers' success in improving productivity and
    efficiency, assessing fees for service should be the direction in which
    the program heads. The benefits to small firms seeking MEP assistance,
    such as improved productivity and efficiency, should outweigh the cost
    of the fees. Large manufacturers that depend on smaller companies may
    also wish to provide support to MEP centers to ensure the continuing
    success of their smaller suppliers.
        Question. What do you believe is the appropriate role for
    government in helping small businesses compete?
        Answer. The Federal government should ensure that small businesses
    have the resources needed to be competitive. In the case of MEP, the
    Federal government's role was to help start these MEP centers across
    the United States with the goal of helping small manufacturers improve
    their competitiveness. MEP's initial mission was to provide start-up
    funding to centers for a six year period with the assumption that after
    six years the centers would be up and running and could operate using
    funds from sources such as private funding, state funding, local
    funding and fees.
                                     ______

                   Questions Submitted by Senator Judd Gregg
                commerce administrative management system (cams)
        Question. Mr. Secretary, have you reviewed the status of the
    Commerce Administrative Management System (CAMS)? Are you satisfied
    with the progress that has been made on this project? What are you
    doing to assure that CAMS will be delivered on time, within budget and
    to specifications?
        Answer. I am aware of the status of CAMS and the schedule for its
    full implementation throughout the Department. I am also aware of the
    statutory requirements in the Chief Financial Officers (CFO) Act of
    1990 for integrated financial systems, as well as the need to provide
    managers within the Department timely, accurate financial data.
    Implementation of CAMS is critical to meeting both of these
    requirements. Separate reviews conducted within the last three years by
    Booz Allen Hamilton and the Department of Commerce's Inspector General
    agree that the Department would not gain by switching to another
    software package. In addition, while OMB gave the Department a ``red''
    on the President's Management Scorecard for financial management
    because of our lack of an integrated financial system, we received a
    ``green'' in the same category on its planning/progress scorecard. This
    is based on the progress we are making to achieve that goal.
        As far as our level of satisfaction where progress has been made, I
    do not believe any manager should be satisfied with the progress of a
    project that has been underway for seven years, and is still not
    completed. However, I do believe that we now have a sound plan for
    completing this project, and the support of the senior managers in our
    bureaus to achieve that goal. And, with the Congress' support, that
    goal will be met in fiscal year 2003. In spite of a $3 million
    reduction in its CAMS budget, NOAA is working closely with the
    Department to complete their implementation this fiscal year, giving us
    control over federal funds not possible in the current 30-year-old
    system. NIST has begun their conversion and will be the final component
    to bring CAMS online in fiscal year 2003, assuming the Congress
    appropriates the funds necessary to finish this project.
        There have been a number of lessons learned in this project which
    we are utilizing to successfully complete the project and better manage
    our financial information. We have also examined other financial
    systems implementations throughout the government to learn from their
    experiences, as well. Unfortunately, we have found our experience is
    not unique. Virtually every department or agency that has integrated
    multiple legacy systems in their component organizations into a single
    system of record has encountered significant delays and cost overruns.
    In the Department of Commerce, there were 36 separate major interfaces
    to address, and countless ``cuff systems.''
        One of the major reasons we believe CAMS is now on target is the
    close coordination between the bureaus and the Department's team
    managing the overall implementation. The initial approach was very
    decentralized and resulted in little oversight of the bureaus'
    implementation budgets and, too often, customized software to meet
    bureau requirements. Every bureau budget for CAMS is reviewed by the
    Department CFO's office, which has responsibility for ensuring our
    schedule is maintained and the product delivered meets all external and
    management requirements. In addition, finance officers from throughout
    the Department determine a standard approach to financial processes
    such as year-end closing and reporting, which is then implemented.
        The CAMS Executive Board, consisting of the CFOs from the bureaus
    using or implementing CAMS, recommends overall policy to the CFO and
    reviews any major software changes. The only major bureaus scheduled to
    implement CAMS who are not already on the system are NOAA and NIST. The
    Deputy CFO and his staff meet with NOAA management at least biweekly to
    discuss programmatic and budget issues. The technical staffs meet
    weekly, to ensure the schedule is met. The $3 million reduction in
    NOAA's appropriation for CAMS will impede our ability to provide the
    systems capability to eliminate some manual activity this year, but we
    are confident we will complete the system and comply with OMB Circular
    A-127 on schedule.
        A similar approach to completing the final bureau implementation at
    NIST is being utilized. Our completion of this project and CAMS overall
    is contingent on Congressional approval of the Department's
    appropriation for CAMS.
        Question. Your budget request includes $41.93 for CAMS in fiscal
    year 2003. Does the budget include funding for separate information
    technology systems at the EDA, the MBDA, the BXA, and the ESA? If so,
    why are these systems not tied into CAMS? What other information
    technology systems within the Department of Commerce are not tied to
    CAMS and what is their status?
        Answer. The bureaus you identify do not maintain their own
    financial management systems. They are all cross-serviced by other
    bureaus utilizing, or implementing, CAMS. All but BXA are supported by
    NIST, which converted to CAMS for those bureaus it cross-serviced in
    fiscal year 2001, though NIST itself is scheduled to implement CAMS in
    fiscal year 2003. BXA is supported by NOAA, which will complete its
    implementation of CAMS in fiscal year 2002. The $41.93 million does
    include the costs for support provided to those bureaus.
        The budgets for the bureaus listed, along with all the Commerce
    bureaus, include funding for separate information technology systems,
    most of which, since they are not directly linked to the financial
    systems, are not tied to CAMS. The Department has an Information
    Technology Investment Review Board whose purpose is to: review the
    business case for any enterprise system development initiative in the
    Department; determine if an adequate capital asset plan is in place;
    evaluate the soundness of the technical design and implementation
    strategy; review the acquisition plan; and ensure that the appropriate
    ties to the CAMS financial system have been considered and planned. In
    the case of CSTARS, the Department's acquisition management system, the
    Board reviewed and approved the business case for CSTARS after they
    were presented with a plan for integrating CSTARS with CAMS. In fact,
    the Office of Financial Management and the Office of Acquisition
    Management have successfully collaborated on the design of an interface
    between the two systems. Any other enterprise system in the Department
    that generates data with a financial impact is required to go through
    this same process with the Investment Review Board.
        The majority of the information technology systems in Commerce are
    not directly linked to the financial system. These include
    infrastructure and mission or program-specific systems that do not have
    a financial component and therefore do not have to tie to CAMS. These
    other information technology systems support the wide range of programs
    in the Department, including the following:
      --Census and Surveys
      --Advanced Short Term Warning and Forecast Services
      --Implement Seasonal to Interannual Climate Forecast
      --Predict and Access to Decadal to Centennial Change
      --Promote Safe Navigation
      --Build Sustainable Fisheries and Recover Protected Species
      --Sustain Healthy Coasts
      --Enforce U.S. Trade Laws
      --BEA Statistical Estimation
      --Export Control
      --Measurement and Standards Laboratories
      --Advanced Technology Program
      --Manufacturing Extension Partnership
      --Radio Spectrum Assignments
      --Digital Department
      --Grant Processing and Management
      --IT Infrastructure and Office Automation Support to all program
            areas.
                               homeland security
        Question. Mr. Secretary, could you discuss the evaluative process
    the Bureau of Export Administration undertook to determine why and
    where attaches were needed?
        Answer. In its evaluative process, the Bureau of Export
    Administration (BXA) focused on placing attaches in countries where the
    Bureau had the greatest concerns of illegal diversions of dual-use
    items to weapons of mass destruction (WMD) programs or for WMD
    capabilities. The countries identified were China, Russia, the United
    Arab Emirates (UAE), India, Singapore, and Egypt:
      --The attache in Beijing would be responsible for conducting end-use
            checks on U.S. commodities and technologies exported to North
            and Central China. Ensuring that these items are not diverted
            to unauthorized military or other end uses is particularly
            critical in this region, which is the major production area for
            the People's Liberation Army (PLA) and China's military-
            industrial complex.
      --The attache in Shanghai would focus on performing end-use checks in
            South and West China. With significant commercial centers and
            transportation hubs, this large region poses significant risks
            of diversion.
      --Russia's physical proximity to and close commercial relationships
            with countries of proliferation concern such as Iran, Iraq, and
            India make Russia a critical country in which to post an
            attache.
      --The UAE is a major transshipment point for U.S. products going to
            Iran, Iraq, and Pakistan. Front companies are set up in the UAE
            specifically to move advanced technology to the WMD projects of
            those countries. An attache on the ground is important to
            monitor developments, gather information, and perform end-use
            visits.
      --The attache in India would monitor WMD programs in the South Asia
            region and, through end-use visits, seek to prevent diversions
            to those programs.
      --The attache in Singapore would monitor transshipments through
            Singapore, which is the largest port in the world, and would
            work within Southeast Asia to halt the transfer of strategic
            products to WMD programs or uses.
      --Egypt's physical proximity and close commercial relationships with
            the Sudan and Libya make it a transshipment risk. The attache
            in Egypt would more closely monitor possible transshipments to
            these countries. The attache also would perform end-use checks
            in Malta and Cyprus, which are other key transshipment ports in
            the region.
        Question. Prior to this year, who was responsible for conducting
    export monitoring and enforcement in Russia, the United Arab Emirates,
    India, and Singapore?
        Answer. In March 2001, BXA placed an export control attache in
    Moscow. This attache is responsible for conducting end-use checks,
    advising the embassy on dual-use export control issues, and working
    with the Russian government and local industry on export control
    issues. The Department of Commerce's Foreign Commercial Service
    officers, supplemented by special agents from BXA's Office of Export
    Enforcement (OEE) who travel overseas as part of the OEE Safeguards
    Program, are responsible for conducting export monitoring for the UAE,
    India, and Singapore.
        Question. Why is this receiving attention only now?
        Answer. Since, BXA has been conducting its statutorily-mandated
    mission of seeking to prevent illegal diversion of controlled items in
    or through these countries for many years. BXA efforts have intensified
    as the likelihood that dual-use commodities and technologies could be
    illegally diverted to weapons of mass destruction projects has
    increased and because of the growing importance of the countries
    identified above as transfer points for sensitive Commerce-licensed
    goods. BXA increased its Safeguards visits (composed of OEE special
    agents) to these countries and received temporary funding for our
    attache in Moscow from the State Department.
        Question. Does BXA's mission for export enforcement overlap with
    the mission of the Department of State's Bureau of Verification and
    Compliance? If so, in what way do they overlap and how do you expect to
    resolve this jurisdictional issue?
        Answer. There are only two agencies with statutorily-mandated
    responsibilities for verifying the end use of U.S. exports--the State
    Department and the Commerce Department. The State Department and
    Commerce Department have clearly delineated roles in the export control
    process. State licenses and verifies the end-use of munitions articles,
    while Commerce licenses and verifies the end-use of dual-use items
    (i.e., items having both a military and a commercial use).
        The Commerce Department established an end-use verification program
    in the early 1970s to conduct end-use verifications on certain products
    exported under Commerce-issued licenses or licence exceptions provided
    for in the Export Administration Regulations. These end-use checks are
    carried out by the Commerce Department's Foreign Commercial Service
    officer posted at the U.S. embassy in the destination country, or by
    Safeguards teams comprised of special agents from BXA's Office of
    Export Enforcement.
        The State Department has established the Blue Lantern program,
    based on the Commerce program, to conduct end-use verifications on
    munitions exports. Those munitions are licensed for export by the State
    Department, and the Customs Service has exclusive enforcement authority
    for any related violations. This program is carried out by designated
    State Department or Treasury Department employees assigned to the U.S.
    embassy in the destination country. Each embassy must designate a Blue
    Lantern coordinator each year. Embassies typically choose either an
    economics officer, political officer, or the Customs Service attache
    for this position.
        Accordingly, there is no overlap in the end-use verification
    programs conducted by the Departments of Commerce and State.
    Transactions are regulated either by Commerce or State. The nature of
    the items regulated by each differs fundamentally.
                       critical infrastructure protection
        Question. What criteria are used to evaluate CIAO and how regularly
    is this office evaluated?
        Answer. The Critical Infrastructure Assurance Office (CIAO) is
    reviewed annually on the basis of two performance goals. The first
    performance goal involves engendering awareness among the owners and
    operators of the nation's critical infrastructures (both private sector
    and state/local governments) on the need to secure their assets,
    systems, and networks against deliberate physical and cyber attacks.
    The CIAO is evaluated on the basis of how well it carries out its
    responsibilities for promoting national outreach, education, and
    awareness, and for coordinating the preparation of an integrated
    national strategy for critical infrastructure assurance.
      --National Outreach, Education, and Awareness.--The challenge of a
            national outreach and awareness effort is to present a
            compelling business case for corporate action. The primary
            focus of the CIAO's effort is on the nation's critical
            infrastructure industries (e.g., information and
            communications, banking and finance, transportation, energy,
            and water supply), and particularly the corporate boards and
            chief executive officers who ultimately are responsible for
            setting company policy and allocating company resources. The
            basic message conveyed is that critical infrastructure
            assurance is a matter of sound corporate governance and prudent
            risk management. Senior management is responsible for securing
            corporate assets--including information and information
            systems. Corporate boards are accountable, as part of their
            fiduciary duties, to provide effective oversight of the
            development and implementation of appropriate infrastructure
            security policies and best practices.
          In addition to infrastructure owners and operators, the CIAO's
            awareness and outreach efforts target other influential
            stakeholders in the economy. The risk management community--
            including the audit and insurance professions--is particularly
            effective in raising matters of corporate governance and
            accountability with corporate boards and senior management. In
            addition, the investment community is increasingly interested
            in how information security practices affect shareholder
            value--a concern of vital interest to corporate boards and
            management.
      --National Strategy.--A national strategy for critical infrastructure
            assurance developed jointly between government and industry is
            essential to developing a consensus about respective roles and
            responsibilities. A national strategy also will help to
            establish a basis for proposing legislative and public policy
            reforms where such reforms are needed to advance national
            policy on critical infrastructure assurance.
        The development of a national strategy will not be an end in
    itself, but part of an ongoing process in which government and industry
    will continue to modify and refine their efforts at critical
    infrastructure assurance, adjust to new circumstances, and update the
    national strategy as appropriate. A particular focus of this strategy
    will be on cyberspace security. The White House has assigned the task
    of coordinating the development and final integration of this strategy
    to the CIAO. The Administration's strategy will be completed during
    2002, with updates and revisions expected during 2003.
        The second performance goal for the CIAO involves assisting
    civilian federal departments and agencies in analyzing their
    dependencies on critical infrastructures to assure the delivery of
    federal government services that are essential to the nation's
    security, economy, or the health and safety of its citizens. To carry
    out this mission, the CIAO developed ``Project Matrix,'' a program
    designed to identify and characterize accurately the assets and
    associated infrastructure dependencies and interdependencies that the
    U.S. Government requires to fulfill its most critical responsibilities
    to the nation. These are deemed ``critical'' because their
    incapacitation could jeopardize the nation's security, seriously
    disrupt the functioning of the national economy, or adversely affect
    the health or safety of large segments of the American public. Project
    Matrix involves a three-step process in which each civilian federal
    department and agency identifies: (i) its critical assets; (ii) other
    federal government assets, systems, and networks on which those
    critical assets depend; and (iii) all associated dependencies on
    privately owned and operated critical infrastructures.
        Question. What function does CIAO perform that no other agency
    does?
        Answer. The CIAO performs a number of essential, non-duplicative
    functions in connection with the Administration's overall critical
    infrastructure protection efforts. Under Executive Order 13231 (the
    Order), issued on October 18, 2001 and entitled ``Critical
    Infrastructure Protection in the Information Age,'' the CIAO supports
    the newly created President's Critical Infrastructure Protection Board
    (the Board). The Board was created to coordinate federal efforts and
    programs relating to the protection of information systems and networks
    essential to the operation of the nation's critical infrastructures. In
    carrying out its responsibilities, the Board fully coordinates its
    efforts and programs with the Assistant to the President for Homeland
    Security.
        Under the Order, the CIAO also supports the activities of the
    National Infrastructure Advisory Council (NIAC). The NIAC will be
    composed of thirty senior executives from private industry, academia,
    and state and local governments who will advise the President on
    matters relating to the security of information systems for critical
    infrastructures that support other sectors of the economy, including
    banking and finance, transportation, energy, manufacturing, and
    emergency government services.
        The CIAO also will administer a new program--the Homeland Security
    Information Technology and Evaluation Program--to assess federal
    information systems and methods of acquiring and distributing
    information to improve data sharing among federal agencies for
    emergency response, law enforcement, intelligence, border security, and
    immigration. The program office established in CIAO will propose
    methods to improve information sharing among federal agencies and state
    and local governments. The CIAO will work closely with and take direct
    guidance from the Office of Homeland Security and the Office of
    Management and the Budget to ensure consistency with the
    Administration's overall homeland security policy.
        In addition to these responsibilities, the CIAO will continue to
    perform its national outreach and awareness efforts, its coordination
    of the national strategy for critical infrastructure assurance, and its
    efforts to assess federal agency dependencies via Project Matrix as set
    forth in detail above. These functions remain essential to carrying out
    the Administration's policy for homeland security and critical
    infrastructure protection and are not performed by any other agency.
        Question. Does CIAO's work overlap with the FBI's National
    Infrastructure Protection Center or any other Federal agencies or
    offices?
        Answer. No. The CIAO and the National Infrastructure Protection
    Center (NIPC) do very different things. While both organizations engage
    in industry outreach, their efforts are complementary rather than
    duplicative. The CIAO focuses on raising national awareness of critical
    infrastructure assurance issues across industry sectors, influencing
    corporate information assurance policy, promoting market solutions for
    greater cyber security, and addressing legislative and legal issues
    that potentially undermine business incentives to maximize voluntary
    efforts at securing critical infrastructures. NIPC seeks to encourage
    private industry to share information about cyber vulnerabilities and
    incidents so that it can assist companies in preventing specific types
    of attacks and investigating such attacks when they occur. Both efforts
    are required elements of overall critical infrastructure assurance
    policy.
        Question. Since it was established in fiscal year 1999, we have
    appropriated a total of $20.5 million for CIAO. What is the argument
    for continuing--and this year expanding--CIAO?
        Answer. The argument for continuing the CIAO is that the office
    continues to play an essential role in advancing the Administration's
    critical infrastructure protection efforts. The specific roles and
    functions that justify the office's continued operation--including
    promoting national awareness and outreach on critical infrastructure
    assurance issues, coordinating the development of the national strategy
    for critical infrastructure protection, analyzing federal asset
    dependencies through Project Matrix, supporting the work of the
    President's Critical Infrastructure Protection Board and the National
    Infrastructure Advisory Council, and administering the Homeland
    Security Information Technology and Evaluation Program--are described
    in detail above.
        Question. As I understand it, CIAO's original purpose was to liaise
    with the private sector to ensure that inattention to critical
    infrastructure protection did not provide opportunities to those who
    seek to cause damage to our Nation's physical or economic security.
    Now, CIAO has become a policy-making office with responsibility,
    according to the fiscal year 2003 budget request, for coordinating with
    the Office of Homeland Security, conducting a study of other agencies'
    information systems, and developing models for improved information-
    sharing among agencies. From whence does CIAO derive its authority to
    undertake these initiatives, many of which will require intimate
    involvement with our Nation's law enforcement agencies? Is this not an
    example of mission creep at its worst?
        Answer. The CIAO always has served as an interagency policy-
    coordinating office; it has never been nor seeks to be a policy-making
    office. As discussed above, the CIAO serves a number of functions in
    addition to promoting national public-private awareness and outreach.
    The CIAO will administer the Homeland Security Information Technology
    and Evaluation program, working closely with the Office of Homeland
    Security and the Office of Management and the Budget. Assigning this
    program to the CIAO is not an example of mission creep. Three
    particular attributes made the CIAO a good choice for this program.
    First, the CIAO is an interagency office that already has demonstrated
    effectiveness in crossing agency boundaries to achieve broad program
    goals and recommend actions to policy officials for improved program
    performance within the agencies. Second, the CIAO has extensive
    experience in analyzing critical federal government functions and
    systems under the highly successful Project Matrix program. The CIAO
    knows how to manage and leverage expertise within the federal
    government and from the private sector to achieve specific programmatic
    outcomes. Third, and perhaps most important, Commerce and the CIAO have
    no vested interest in the outcome of any decisions on implementation of
    recommendations. Implementation of any recommendations proposed by the
    program office within the CIAO will fall on the relevant lead agencies.
    Locating the program office in the CIAO was one way to ensure
    institutional neutrality in the development and evaluation of various
    policy options. Housing this program office in the CIAO will not result
    in the program office becoming ``operational.'' Any recommendations
    that are made by the program office will be reviewed by an interagency
    Information Integration Management Review Board, led by a Deputy
    National Security Advisor, and will be carried out by the relevant
    department or agency.
        Question. Mr. Secretary, are you aware of the important work the
    Dartmouth Institute for Security and Technology Studies in this area
    (critical infrastructure protection)? Two years ago, I helped get this
    program off the ground. Its mission is to study and develop
    technologies addressing counter-terrorism, especially counter-cyber
    terrorism. Its core research program studies threats to electronic
    information infrastructure systems and technologies, and seeks
    appropriate and effective technological preparedness, response and
    recovery actions, as well as training and information needs. This
    program has enormous potential--Dartmouth has the ability to draw upon
    some of the best minds in the country. I would ask you to look at how
    the Department of Commerce (specifically CIAO and NIST) can integrate
    and coordinate its efforts with the work being done at ISTS.
        Answer. The Dartmouth Institute for Security and Technology Studies
    (ISTS) is the Executive Agent for the Institute for Information
    Infrastructure Protection (I\3\P), funded through the National
    Institute of Standards and Technology (NIST). The CIAO has been
    involved with that initiative to develop a national R&D agenda. At the
    request of the Special Advisor to the President for Cyberspace
    Security, the first scheduled I\3\P meeting will be in the Washington,
    D.C. area on April 15-16, 2002, to allow for coordination between I\3\P
    and the President's Critical Infrastructure Protection Board. The
    Director of the CIAO will participate in that meeting.
        The CIAO also has been working closely with the ISTS through the
    National Institute of Justice (NIJ). Recently, NIJ has reviewed and
    approved a proposal from ISTS for investigative research for
    infrastructure assurance. CIAO is represented on the NIJ review board
    and has been fully engaged in the ISTS review and approval process.
    (NIST is also represented on the review board.)
        Mr. Vatis (Director, Dartmouth ISTS) has invited CIAO officials to
    New Hampshire for a visit of the ISTS facility and that visit should
    take place in the next several months. The purpose of the visit is two
    fold: (1) to see the facilities and capabilities first-hand; and (2) to
    discuss how we may partner in the future on many of these important
    issues.
        With regards to NIST, NIST has met with ISTS representatives on a
    number of occasions to discuss our mutual programs so as to both avoid
    duplication and also to explore areas of mutual cooperation. NIST has,
    in fact, been invited by the National Institute of Justice to review
    on-going and proposed ISTS work items. We intend to continue to do so.
             national institute for standards and technology (nist)
                               homeland security
        Question. How is NIST currently supporting Federal efforts to
    combat terrorism?
        Answer. NIST has for many years provided measurements, standards,
    data, and technical advice to help Federal, state, and local agencies
    and the private sector protect U.S. citizens from terrorist and
    military threats, natural disasters, and other types of security
    threats. NIST's broad expertise in measurement science and technology
    supports current and future homeland security applications and
    research. For example, NIST provides standards to ensure accurate
    forensic DNA analysis, develops computer security standards with the
    private sector, provides tools to analyze building fires and collapses,
    develops measurements and standards to support chemical, biological,
    radiological, nuclear and explosive (CBRNE) threat detection, and
    provides a broad range of support for many other security activities.
    NIST's Office of Law Enforcement Standards (OLES) works with Federal
    agencies to develop standards, test methods, and procedures for
    evaluation technologies used by the public safety and criminal justice
    communities, which includes law enforcement, corrections, forensic
    science, the fire service, and emergency responders. OLES work focuses
    on the areas of public safety communications standards, detection and
    inspection systems, chemical detection, forensic sciences, weapons and
    personal protective systems, and critical incident technologies.
        Since immediately following the September 11 attacks, NIST experts
    have been working with Federal, state, and local government agencies
    and the private sector to help mitigate the effects of the attack and
    learn how to prepare against possible future attacks. For example, NIST
    building and fire experts have worked on teams probing the causes of
    the collapse of the World Trade Center towers and the damage to the
    Pentagon. NIST scientists provided expert advice on DNA analysis to
    identify remains of terrorist victims. Following the anthrax attacks,
    NIST experts have worked with the U.S. Postal Service and other Federal
    agencies to ensure that commercial radiation facilities can be used to
    sanitize mail potentially contaminated with anthrax and/or other
    biological bacteria. NIST scientists have also worked with Federal
    officials to model the transport of anthrax bacteria through the Hart
    Senate Office Building to better understand how to best decontaminate
    that facility.
        NIST is conducting more that 75 ongoing and newly initiated
    research and standards development projects to support law enforcement,
    military operations, emergency services, airport and building security,
    cyber security, and research into future security technologies. Because
    much of NIST's work builds general measurement and standards
    capabilities that are applicable to a wide range of applications in
    addition to homeland security, it is difficult to accurately report the
    resources devoted to homeland security. NIST estimates at least a $40
    million current investment in measurements and standards work directly
    or indirectly related to homeland security.
        Question. Mr. Secretary, with regard to NIST's investigation into
    the collapse of the World Trade Center towers, it has been brought to
    my attention that the engineers who were on-site in the first days
    following the attack pleaded with FEMA to save some key pieces of the
    destroyed structure for research purposes. Their requests were ignored,
    and much of the wreckage is no longer available for study. So, my
    question for you is: What is NIST going to study? Is any field research
    going to be done, or is this largely going to be a theoretical study
    using computer models?
        Answer. The primary objectives of the independent and comprehensive
    NIST-led technical investigation of the WTC disaster are to:
      --Determine technically, why and how the World Trade Center buildings
            collapsed following the airplane impacts.
      --Determine why the injuries and fatalities were so high or low
            depending on location, including all technical aspects of fire
            protection, response, evacuation, and occupant behavior and
            emergency response.
      --Determine whether or not state-of-the-art procedures and practices
            were used in the design, construction, operation, and
            maintenance of the World Trade Center buildings.
      --Determine whether there are new technologies or procedures that
            should be employed in the future to reduce the potential risks
            of such a collapse.
      --Identify building and fire codes, standards, and practices that
            warrant revision.
        NIST will ensure a totally independent technical investigation both
    in planning and conducting the investigation and in publishing its
    findings and recommendations. The technical issues are highly complex,
    unique, and subtle. The focus of the investigation will be on creating
    new technical and/or scientific knowledge. The technical work will be
    thorough, deliberate and rigorous. The results will be objective and
    unbiased. NIST will provide timely and open public disclosure within
    legal bounds on the progress of the investigation. NIST will make no
    findings of fault or responsibility. It will make no determination as
    to behavior or negligence of any individual or organization.
        The technical approach of the NIST investigation will include the
    following phases:
      --Data Collection: inputs from the Port Authority of New York and New
            Jersey (PANYNJ) and local authorities; building and fire
            protection design, plans, and specifications; construction,
            maintenance, operation records, building renovations and
            upgrades; video and photographic data; field data; interviews;
            emergency response records including audio communications; and
            other records.
      --Analysis and Comparison of Building and Fire Codes: analysis and
            comparisons of codes and standards then and now, and
            specifications used for WTC buildings.
      --Identification of Technical Issues and Major Hypotheses Requiring
            Investigation: opportunity for public input (e.g., open forum;
            website; Federal Register notice); convene expert panels to
            solicit input (experts in structural and fire protection
            engineering; experts in construction, maintenance, operation
            and emergency response procedures of tall buildings); findings
            and recommendations of FEMA-funded study; analyze inputs and
            establish priorities; review and approval by independent
            Technical Review Panel.
      --Collection and Analysis of Forensic Evidence: structural steel,
            material specimens and other forensic evidence to the extent
            they have been collect or are otherwise available;
            metallurgical and mechanical analysis.
      --Modeling, Simulation, and Scenario Analysis: aircraft impact on
            structures and estimate damages to interior and core structure
            and residual capacities; role of jet fuel and building contents
            in resulting fire; fire dynamics and smoke movement; thermal
            effect on structures and the effect of fireproofing; structural
            response under fire and the effect of connections, flooring
            system, core and exterior columns, and the overall structural
            system; occupant behavior and response including influence of
            communications and barriers to egress; evacuation issues
            including egress, analysis of control/fire panels, emergency
            response, and communications; analysis of fire protection
            system design and vulnerability; and analysis of structural
            collapse mechanisms including evaluation of system
            vulnerability to progressive collapse and fires, scenario
            analysis to test hypothesis and address technical issues, and
            establishing bounds for probably technical causes.
      --Testing to Demonstrate Scenarios and Failure Mechanisms: small and
            some real-scale re-creation tests to provide additional data
            and verify simulation predictions, especially effect of fires
            (e.g., use and adequacy of standard fire ratings, behavior of
            connections and assemblies).
      --Preparation of Interim and Final Reports: review and approval by
            specially appointed and independent Technical Review Panel;
            dissemination via published reports, web, and media.
      --Presentation of Findings and Technical Recommendations: building
            and fire safety communities and including appropriate codes and
            standards and professional practice organizations, and the
            media.
                           world trade center towers
        Question. Mr. Secretary, with regard to NIST's investigation into
    the collapse of the World Trade Center towers, it has been brought to
    my attention that the engineers who were on-site in the first days
    following the attack pleaded with FEMA to save some key pieces of the
    destroyed structure for research purposes. Their requests were ignored,
    and much of the wreckage is no longer available for study. So, my
    question for you is: What is NIST going to study? Is any field research
    going to be done, or is this largely going to be a theoretical study
    using computer models?
        Answer. The primary objectives of the independent and comprehensive
    NIST-led technical investigation of the WTC disaster are to:
      --Determine technically, why and how the World Trade Center buildings
            collapsed following the airplane impacts.
      --Determine why the injuries and fatalities were so high or low
            depending on location, including all technical aspects of fire
            protection, response, evacuation, and occupant behavior and
            emergency response.
      --Determine whether or not state-of-the-art procedures and practices
            were used in the design, construction, operation, and
            maintenance of the World Trade Center buildings.
      --Determine whether there are new technologies or procedures that
            should be employed in the future to reduce the potential risks
            of such a collapse.
      --Identify building and fire codes, standards, and practices that
            warrant revision NIST will ensure a totally independent
            technical investigation both in planning and conducting the
            investigation and in publishing its findings and
            recommendations. The technical issues are highly complex,
            unique, and subtle. The focus of the investigation will be on
            creating new technical and/or scientific knowledge. The
            technical work will be thorough, deliberate and rigorous. The
            results will be objective and unbiased. NIST will provide
            timely and open public disclosure within legal bounds on the
            progress of the investigation. NIST will make no findings of
            fault or responsibility. It will make no determination as to
            behavior or negligence of any individual or organization.
        The technical approach of the NIST investigation will include the
    following phases:
      --Data Collection: inputs from the Port Authority of New York and New
            Jersey (PANYNJ) and local authorities; building and fire
            protection design, plans, and specifications; construction,
            maintenance, operation records, building renovations and
            upgrades; video and photographic data; field data; interviews;
            emergency response records including audio communications; and
            other records.
      --Analysis and Comparison of Building and Fire Codes: analysis and
            comparisons of codes and standards then and now, and
            specifications used for WTC buildings.
      --Identification of Technical Issues and Major Hypotheses Requiring
            Investigation: opportunity for public input (e.g., open forum;
            website; Federal Register notice); convene expert panels to
            solicit input (experts in structural and fire protection
            engineering; experts in construction, maintenance, operation
            and emergency response procedures of tall buildings); findings
            and recommendations of FEMA-funded study; analyze inputs and
            establish priorities; review and approval by independent
            Technical Review Panel.
      --Collection and Analysis of Forensic Evidence: structural steel,
            material specimens and other forensic evidence to the extent
            they have been collect or are otherwise available;
            metallurgical and mechanical analysis. By testing the material
            samples that are available, we believe we can make limited
            determinations on the quality of steel and the maximum
            temperatures reached by the steel. These determinations would
            be valid for the samples actually tested and to the extent that
            those samples are representative of steel used elsewhere in the
            buildings. In addition, the field observations already made by
            the ASCE team have enabled them to draw useful inferences on
            the possible mechanisms of structural failure.
      --Modeling, Simulation, and Scenario Analysis: aircraft impact on
            structures and estimate damages to interior and core structure
            and residual capacities; role of jet fuel and building contents
            in resulting fire; fire dynamics and smoke movement; thermal
            effect on structures and the effect of fireproofing; structural
            response under fire and the effect of connections, flooring
            system, core and exterior columns, and the overall structural
            system; occupant behavior and response including influence of
            communications and barriers to egress; evacuation issues
            including egress, analysis of control/fire panels, emergency
            response, and communications; analysis of fire protection
            system design and vulnerability; and analysis of structural
            collapse mechanisms including evaluation of system
            vulnerability to progressive collapse and fires, scenario
            analysis to test hypothesis and address technical issues, and
            establishing bounds for probably technical causes.
      --Testing to Demonstrate Scenarios and Failure Mechanisms: small and
            some real-scale re-creation tests to provide additional data
            and verify simulation predictions, especially effect of fires
            (e.g., use and adequacy of standard fire ratings, behavior of
            connections and assemblies).
      --Preparation of Interim and Final Reports: review and approval by
            specially appointed and independent Technical Review Panel;
            dissemination via published reports, web, and media.
      --Presentation of Findings and Technical Recommendations: building
            and fire safety communities and including appropriate codes and
            standards and professional practice organizations, and the
            media.
                       patent and trademark office (pto)
        Question. How is a 21 percent increase for the Patent and Trademark
    Office justified? What evidence do you have that higher funding levels
    will necessarily lead to improved turnaround rates on pending patents
    and trademarks?
        Answer. As the importance of intellectual property assets has
    increased in society, so too has the USPTO's workload. In fiscal year
    2001, patent filings increased 11.2 percent above fiscal year 2000's
    level. Since 1996, patent filings are up over 70 percent and these
    levels of growth are expected to continue for the next several years.
    Trademark filings in fiscal year 2001, while down 21 percent, were
    still the second highest level ever and follow two consecutive years of
    27 percent increases. In recent years, the USPTO budget has not been
    increased relative to this dramatic growth in its workload.
        Without adequate and sustained funding, we cannot reduce pendency
    in the short term or invest in business process changes that will allow
    us to better manage workloads in the future. Patent and trademark
    processing and pendency times are highly dependent on the number of
    applications filed, existing pending inventories, and staffing levels
    specific skills. Successive years of insufficient funding relative to
    workloads have contributed to staffing levels that were woefully
    inadequate to keep up with new filings. As a result, pendency increased
    well beyond established goals.
        Trademark pendency to first office action dropped below our goal of
    three months and reached its lowest level in thirteen years in 2001.
    This accomplishment was achieved as a result of declining application
    filings, a greater reliance on electronic communications and systems,
    and a larger and more productive examination staff. Our request for
    2003, to complete the process redesign of the trademark operation by
    delivering a fully electronic workflow, represents the final investment
    in our successful integration of automated systems and processes that
    will allow us to manage more filings with fewer staff by relying on
    electronic filing and communications. Trademarks will use $18.1 million
    of the 21 percent increase to complete its process redesign and deliver
    a fully electronic trademark workflow by 2004. This e-Government
    initiative represents an investment in the future ability of the USPTO
    to create a process that will enable us to handle fluctuations in
    trademark filings with more predictable results and reduce our
    dependence on ever increasing budget requests and staffing relative to
    workloads.
        The Patent Business has been experiencing double-digit growth rates
    as high as 12 percent annually for a number of years. Patent
    applications are estimated to increase by 10 percent from fiscal year
    2003 through fiscal year 2007. The majority of these applications are
    in the high technology fields. Patents must have the flexibility to
    hire additional examiners who have the industry specific knowledge to
    examine these complex applications. The Patent Business is also fully
    aware of customer concerns about increasing pendency. To address this
    problem, the Patent Business plans on hiring 950 patent examiners in
    fiscal year 2003 and for several years thereafter. Hiring these
    examiners will allow us to begin turning the corner on pendency in
    fiscal year 2004. Without sufficient and sustained funding to hire
    additional examiner staff, the USPTO will be unable to maintain a
    pendency level that is acceptable to our customers.
        Question. In the fiscal year 2002 Commerce appropriations bill, the
    PTO was directed to develop a five-year plan. We understand that this
    plan was debuted in the PTO's fiscal year 2003 budget request. How
    heavily were you involved in the preparation of this plan? What is your
    opinion of it?
        Answer. The five-year Business Plan that was submitted as the
    fiscal year 2003 budget request is in response to the fiscal year 2002
    CJS Appropriations Act Conference Report. The plan establishes goals
    for timeliness and quality for patent and trademark processing. The
    USPTO kept both the Deputy Secretary and myself informed of their
    planning process. While I believe the Business Plan represents a start
    toward achieving quality and timeliness improvements, I support USPTO
    Director Jim Rogan's efforts to seek innovative ways to achieve even
    greater pendency and quality improvements than those identified in the
    Business Plan.
        Question. What progress has PTO made towards a paperless patent
    application process? Is this a priority for you?
        Answer. Implementing paperless patent application processing at the
    USPTO is of the highest priority. We have recently initiated an
    automation initiative, called Tools for Electronic Application
    Management (TEAM), that will establish the infrastructure required to
    support the electronic processing of patent applications while
    retaining the essential legal and business processes that protect the
    intellectual property rights of the applicants. The TEAM program will
    support the entire patent application process beginning with
    application authoring, through the Electronic Filing System (EFS), and
    proceeding through to electronic publishing and records archival.
        The TEAM program will also integrate individual automated
    information systems, both existing and to be developed, to achieve the
    appropriate legal replication of the current paper-based patent
    business process. The electronic patent application process must
    support statutory regulations promulgated by Congress, as codified
    under Title 35 of the United States Code (35 U.S.C.), both as they
    presently exist and as they may become enacted in the future.
    Additionally, the electronic patent application process must be
    commensurate with USPTO's rules and interpretations of the statutory
    regulations, as published within Title 37 of the Code of Federal
    Regulations (37 C.F.R.). TEAM will be implemented in phased releases
    with full implementation scheduled for September 2006.
        To accomplish the goal of patent application electronic filing, the
    USPTO plans to gradually transfer the responsibility of developing and
    maintaining electronic application authoring and submission tools to
    the private sector. To this end, the USPTO has issued a Request For
    Agreement (RFA) to private sector vendors, reviewed responses, and is
    the final stages of solidifying contractual arrangements. It is
    envisioned that working with these vendors will allow the USPTO to take
    advantage of their established customer base, marketing techniques, and
    current tools, which they plan to adapt to promote electronic filing.
    These are clearly important advantages to reach the electronic filing
    rate needed to support the Return On Investment (ROI) for both the EFS
    and TEAM programs. The use of products developed by multiple RFA
    vendors provides additional adaptability and flexibility that is
    believed to be essential to achieving that goal.
        The USPTO is also continuing to explore a number of creative
    approaches to further encourage electronic filing. However, serious
    review of current policies and laws affecting USPTO business practices
    must be conducted in order to provide incentives to USPTO customers to
    file electronically and enable the internal end-to-end electronic
    processing of patent applications.
                   fundamental change at bureau of the census
        Question. Mr. Secretary, would you agree that fundamental change is
    needed at the Bureau of the Census?
        Answer. Even though we just completed the most successful decennial
    census ever undertaken by the Census Bureau, we believe the process of
    conducting the decennial census needs to be fundamentally changed for
    2010. Census 2000 was an operational and data quality success: all
    operations were completed on time and within overall budget; overall
    coverage was improved; and differential coverage was improved for all
    minority groups and children. However, Census 2000 was conducted with
    high cost and at great risk. In 2010 the job will be more complex. We
    project that to repeat the Census 2000 design in 2010 would cost about
    $11.7 billion. Even at this great cost, repeating the old design would
    be extremely risky and would result in inferior data to that collected
    by the reengineered design.
        Opportunities exist to reduce risk, reduce full cycle costs, and
    improve accuracy for the 2010 Census. To take advantage of these
    activities, the Census Bureau must have adequate resources in place
    early in the decade for 2010 planning, development and testing. The
    strategy for re-engineered 2010 census features three key components
    that allow for improved testing, simplified data collection, and better
    information at less cost.
      --To increase enumerator efficiency, facilitate identification of
            duplicate addresses and reduce field work, the Census Bureau
            will enhance the geographic database and associated address
            list (referred to as MAF/TIGER) by replacing the internally
            developed system with one that uses Global Positioning
            Technology and satellite mapping imagery or aerial photography
            to update and improved the address information gathered for
            Census 2000.
      --The American Community Survey which has been designed to sample 3
            million households per year by county nationwide is expected to
            provide more timely accurate data by replacing the decennial
            system.
      --Early and comprehensive planning, development, and testing that
            allows the Census Bureau to more efficiently reengineer the
            process for taking the 2010 Census, particularly in the area of
            field data collection, by taking advantage of the opportunities
            afforded by an enhanced geographic system, and only short-form
            data collection activities.
        These components are heavily integrated and interdependent. They
    can be thought of in the same way one envisions a 3-legged stool. They
    build on Census 2000 data collection efforts, as well as build on and
    complement one another.
        Savings in the overall cost and gains in accuracy for Census 2010
    can be realized only if there is adequate funding early in the decade
    to examine, develop, and test these opportunities.
                  cost effectiveness of 2010 decennial census
        Question. How can we ensure that the next census is done in the
    most cost-effective way possible?
        Answer. The reengineered 2010 Census is based on a strategy
    designed to meet the following four goals: Improve the relevance and
    timeliness of census long form data, reduce operational risk, improve
    the accuracy of census coverage, and contain costs.
        To achieve each of these, including our goal to conduct the most
    cost-effective census possible, we have developed a three-pronged
    approach based on the following components:
      --The American Community Survey--which will provide more timely and
            relevant data to communities throughout the decade and allow us
            to conduct a short-form only census in 2010.
      --MAF/TIGER enhancement--which will improve our inventory of all
            known living quarters, ensure that they are accurately located
            on our census maps, and utilize commercial off-the-shelf
            software allowing for an open, flexible, and integrated system
            that makes it easier to update maps and address lists.
            Commercial software will greatly facilitate our work with
            geographic partnership programs as we incorporate address and
            map update information from state, local, and tribal
            governments.
      --2010 planning--A program of early planning, development and testing
            designed to take advantage of these innovations and completely
            restructure the management and conduct of a short form only
            census in 2010. This will result in a 2010 Census that will
            realize savings in excess of the additional costs associated
            with conducting the ACS, implementing the MAF/TIGER
            enhancements program, and early planning, development and
            testing for the 2010 Census. Specifically,
      --The workload for enumerators in the field will be reduced because
            they will be working with more accurate maps and address lists,
            there will be fewer households to visit because a short form
            only census will have a higher response rate, and they will not
            be required to follow up on unanswered long form
            questionnaires--a process that has been time consuming and
            costly.
      --Staffing will be reduced at headquarters because we will not be
            required to design, test and implement operations to
            disseminate long form questionnaires and capture long form
            data.
      --MAF/TIGER enhancements will enable us to fully utilize GPS equipped
            hand held mobile computing devices to find, interview, and
            update data on people and their housing units for the short-
            form only census. This innovation alone means that we can
            dramatically reduce field infrastructure costs because we can
            substantially reduce the use of paper maps and virtually
            eliminate the use of paper assignment sheets, along with a
            portion of the staff and space required to handle that paper.
            While the costs for these MAF/TIGER enhancements would offset
            some of these savings, the overall savings would exceed the
            MAF/TIGER costs. Our full cycle analysis looks at the total
            costs for ACS, MAF/TIGER and early planning for the 2010
            Census. The total costs for full implementation are less than
            the total costs for repeating Census 2000 in 2010. These net
            savings would be realized even after paying for the full ACS,
            MAF/TIGER, and early planning, testing and development
            programs.
      --Planning, development and testing for 2010 operations also includes
            a number of cost-saving initiatives, including targeting a 2nd
            mailing of the questionnaires, which will increase the response
            rate, taking advantage of electronic communications such as the
            internet and telephone to deliver questionnaires and capture
            data, and targeting our address list update operations to
            improve the address list in the areas that need it most.
        The results of this work will mean that the overall cost of
    conducing the 2010 Census, including MAF/TIGER enhancements, ACS, and
    early planning and development for 2010, will be reduced. In addition,
    the persistent problem of a huge spike in the funding needs for the
    census occurring in the census year will be dramatically reduced.
    However, making these changes in Census 2010 will require an increased
    investment earlier in the decade as compared with the Census 2000
    cycle. Additional resources are needed in the early years because
    decennial census operations must be completely restructured to take
    full advantage of ACS and MAF/TIGER enhancements. But this increase is
    more than offset by the significant reductions later in the decade
    described above.
                   census bureau's internal operating system
        Question. What is being done to rehabilitate the Census Bureau's
    internal operating system?
        Answer. Several of the management recommendations in the GAO report
    (``2000 Census: Analysis of Fiscal Year 2000 Budget and Internal
    Control Weaknesses at the U.S. Census Bureau''--GAO-02-30) address
    improvements to the Bureau's financial accounting systems. We are
    currently acting on these recommendations. This answer addresses all
    but three of those recommendations. The three not addressed by this
    answer dealt with current financial activities, rather than financial
    accounting systems.
    Recommendation #3: Instruct accounting personnel to follow the written
            policy for establishing accruals and proper cutoff for goods
            and services received at year end.
        The Finance Division and Accenture contractors conducted staff
    training on September 13, 2001, on the estimated accrual process to
    ensure proper recordation of accrual transactions at year-end. As
    changes to accounting personnel occur, the Finance Division will
    continue to educate new personnel and provide refresher training to
    existing personnel, as needed.
        The Finance Division also has set up an internal audit review
    process to review the following:
      --Year-end accrual policies and procedures.
      --Year-end Estimated Accrual forms submitted from divisions.
      --Match subsequent disbursements with year-end accruals.
      --Actual vendor invoices to determine period of performance.
        The Census Bureau considers this recommendation closed.
    Recommendation #4: Post accounting adjustments to subsidiary records in
            a timely manner.
        We have implemented our new Commerce Administrative Management
    System (CAMS) closing program, which gives us the needed ability to
    track year-end adjustments in multiple periods. It has the capability
    to distinguish our year-end adjustments from the adjustments entered
    after the initial FACTS II submission and audit adjustments, which has
    caused discrepancies between Treasury and Office of Management and
    Budget records. All year-end adjustments have been entered into the
    financial system for fiscal year 2001. We have completed the validation
    of the year-end trial balance and closing entries. The final close
    process, which sets all financial system modules for fiscal year 2001
    to close, establish ending balances, and carry-forward balances, was
    completed on March 29, 2002. This new closing program will enable the
    Census Bureau to close our financial records on schedule.
        Implementation date: March 29, 2002--Completed.
    Recommendation #5: Complete efforts to modify the Bureau's financial
            systems to produce usable accounts payable and undelivered
            orders subsidiary reports by vendor, close out thousands of
            completed transactions with small balances, and archive all
            completed transactions.
        The data clean-up is a continuing effort for all Undelivered Orders
    and Accounts Payable accounts to purge all remaining unmatched
    transactions, which were converted from our legacy system to CAMS. The
    data clean-up converts unmatched transactions by determining related
    transactions and populating the fields used in document matching with
    common matching values. These transactions have no impact on our
    financial balances. The Census Bureau plans to complete this data
    clean-up effort by July 2002.
        Targeted completion date: July 31, 2002.
        However, Census is working in conjunction with the Department is
    reviewing the existing archiving capability in CAMS, and to provide
    additional requirements for a comprehensive, JFMIP compliant approach
    to provide archiving and retrieval capability. The requirements
    documentation should be completed this fiscal year, with implementation
    targeted for fiscal year 2003.
    Recommendation #6: Amend policies and procedures, which will require
            supervisors to closely review employees time charges and
            project codes to ensure more accurate project costs for
            salaries and benefits.
        As part of the census planning process for the 2004 Census Test,
    the Census Bureau is reviewing policies and procedures related to the
    completion of payroll documents and supervisory review and approval of
    those documents and will amend them as appropriate. We know that with a
    large, short-term intermittent staff, it is difficult to train them
    adequately in proper charging of hours and other expenses. We will look
    for ways to improve training and to stress the use of proper task codes
    and project numbers for the various field operations. We also will work
    on supervisors' training and procedures for the review and approval of
    payroll documents in hopes that accuracy of reporting can be improved.
    We also will develop supervisory checklists, which can be used during
    the review of payroll forms to ensure that proper task codes and
    project numbers are being used for the various operations.
        Another aspect of our procedures that we feel impacts the accuracy
    of costs is the appointing of field staff into the proper position. In
    Census 2000, we created a new position, the Crew Leader Assistant, that
    was established late in the census process and was paid at the same
    rate as the enumerator. We know that in many offices, people that
    worked as Crew Leader Assistants were originally hired as enumerators
    and were not officially converted into the Crew Leader Assistant
    position. This resulted in their hours and expenses being reported as
    enumerators and had an adverse impact on cost reports and productivity.
    We plan to establish all positions in a more timely manner in the
    future and to develop procedures that ensure staff is hired into the
    proper position. It is extremely important that hours and expenses for
    production and nonproduction staff are reported accurately. Policies
    and procedures to ensure this occurs will be instituted when hiring is
    initiated for the 2004 Test.
        Target Implementation Date: Procedures will be revised and amended
    as appropriate and will be implemented when hiring and training are
    initiated for the 2004 Test, which should be in the summer of 2003.
                                softwood lumber
        Question. Mr. Secretary are you aware of the softwood lumber issue,
    and can you give us a status report on the countervailing and
    antidumping investigation?
        Answer. As you may know, on Friday, March 22, 2002, the Department
    announced our findings in these investigations. We found that Canada
    was subsidizing their lumber at 19.34 percent. We also found that
    Canadian companies sold their product below market value at an average
    of about 10 percent. We will, nonetheless, continue to pursue a lasting
    solution to the softwood lumber issue--one that encourages market-based
    reforms of provincial forestry practices in Canada.
        Question. Are you aware of the particular problem that some loggers
    and landowners in New England have had, which is that a dumping tax
    was, in effect, imposed on U.S. lumber that is shipped to Canada for
    processing?
        Answer. I am very much aware of this situation and understand the
    hardship that these duties can have on our loggers and landowners in
    New England and other U.S. states. For this and other reasons, we have
    excluded 20 Canadian companies from the duties; a number of which were
    Quebec border mills based on our findings that these Canadian companies
    were not subsidized.
        Question. Is there going to be any opportunity for these companies
    [logger and landowners in New England] to present their case and thus
    rectify this situation?
        Answer. We are looking into all administrative procedures under the
    law that will allow us to address this issue. My staff will continue to
    work closely with your staff and those from Senators Snowe and Collins'
    office, as well as the U.S. industry, to find ways to make sure that
    the timber suppliers in the United States have the opportunity to be
    heard and have their concerns addressed.
                  noaa--transfer of national sea grant program
        Question. Mr. Secretary, do you support the transfer of Sea Grant
    to the National Science Foundation?
        Answer. I support the President's Budget Request that proposes to
    transfer Sea Grant to the National Science Foundation. The proposal is
    a result of a review of Federal science programs that the Office of
    Management and Budget (OMB) conducted and is consistent with the
    President's Management Agenda. Under the proposal, the Sea Grant
    program would be administered as an NSF/NOAA partnership. The transfer
    is part of a wider Administration effort to promote competitive funding
    of scientific research and to capitalize on the demonstrated excellence
    of the NSF and its program management.
        Question. If we keep this program at Commerce, will you continue to
    execute it as you have in the past?
        Answer. At this time, we have not considered any changes to the
    program. Should the program remain within the Department of Commerce,
    we will work with Congress and the Administration to make any changes
    that may be appropriate.
                                     ______

                Questions Submitted by Senator Pete V. Domenici
                          bureau of economic analysis
        Question. Mr. Secretary, it is crucial that policymakers have the
    most accurate economic data possible. This is particularly the case for
    budgeting. We use BEA data for constructing our baseline, and it is a
    foundation for most fiscal policy making by the Administration and the
    Congress.
        I am pleased to see the President request additional funding to
    improve our economic statistics through both the Bureau of the Census
    for which $23.6 million is requested, and through the BEA for which
    $10.7 million is requested.
        I am especially concerned that BEA's data responsibilities are
    becoming even more difficult, in light of ongoing changes in our new
    economy. I understand that you have proposed an initiative to enhance
    BEA's understanding and measurement of e-business. Could you explain to
    the Subcommittee why this initiative is so important?
        Answer. The rapid change in the U.S. economy has challenged BEA to
    keep its statistics as accurate and reliable as possible. Until
    recently, BEA was unable to implement a number of initiatives that
    sought to incorporate these significant changes in our economy. Recent
    budget increases, including President Bush's request for fiscal year
    2003, were important in getting BEA statistics back on track. Measuring
    e-business and the new economy has been part of these recent
    improvements.
        Why is measuring e-business important? Measuring the impact of e-
    business and other high-tech sectors of the economy is critical to
    reducing the size of the revisions of GDP and the national accounts
    which contributed to large corrections in budget forecasts. The
    Congressional Budget Office (CBO), in The Budget and Economic Outlook,
    Fiscal Years 2001-2012, estimated that roughly 40 percent of the change
    in the budget outlook over the next ten years, or $1.6 trillion, was
    due to changes in economic and technical assumptions. A major
    contributor to the changes in CBO assumptions were BEA's revisions in
    the level and trend growth of GDP, incomes, and productivity. A large
    share of the GDP revisions were related to inadequacies in the data
    available to BEA on key products such as software and other high-tech
    sectors. Funding to develop more adequate source data will help reduce
    these revisions and the resulting corrections in budget forecasts.
        Question. Previous administrations and the Congress have been
    working toward the goal of better economic estimates since the Boskin
    initiative in the 1980's. Could you provide the Subcommittee with
    information on what funding has been provided over the past ten years
    for these initiatives and a brief statement on what has been
    accomplished thus far?
        Answer. BEA made a number of important changes to improve economic
    statistics as a result of the Boskin Commission recommendations of
    1990-1991. Chain indexes were introduced into the national accounts;
    improved measures of productivity, output and prices were incorporated;
    estimates of GDP by industry were dramatically improved; and better
    measures of foreign and U.S. investments were developed. Funding levels
    for the early 1990s are shown in the attached tables from the General
    Accounting Office's July 1995 report Economic Statistics: Status Report
    on the Initiative to Improve Economic Statistics.
        BEA's efforts to fully implement most of the Boskin Commission
    recommendations were hampered by budget shortfalls in the second half
    of the 1990's. From fiscal year 1994-fiscal year 2000, BEA received no
    funding increases to provide for data improvement initiatives. Today,
    BEA again is able to address some of the issues raised by Chairman
    Boskin in the early 1990s. Budget increases in fiscal year 2001 and
    fiscal year 2002 have allowed BEA to develop measures of the new
    economy and close important gaps in coverage of GDP. President Bush's
    budget request for fiscal year 2003 also allows BEA to address specific
    recommendations made by the Boskin Commission such as improving the
    timeliness of important economic indicators such as international trade
    and GDP by Industry. Fiscal year 2003 initiatives at the Census Bureau
    to improve coverage of the service sectors and better measure e-
    business and high-technology sectors are critical to further
    improvements to the GDP. Despite current budget increases, a number of
    recommendations still remain to be address. (See Attachment A)
        Question. Should Congress provide the requested funding in fiscal
    year 2003, what is the outlook for additional enhancements in the next
    two to three years?
        Answer. Funding for fiscal year 2003 will help BEA achieve the
    challenges put forth by Secretary Evans to generate more timely
    economic statistics and meet international statistical obligations.
    Working closely with its data users, BEA developed a Five-Year
    Strategic Plan which calls for a number of important improvements over
    the next five years to a broad range of economic measures. The summary
    table below lays out highlights of the Plan for the next two to three
    years.

    ----------------------------------------------------------------------------------------------------------------
                BEA Accounts                                   Future Strategic Plan Priorities
    ----------------------------------------------------------------------------------------------------------------
    National............................  Utilize ``real-time'' data in estimates to more quickly and accurately
                                           measure price changes
                                          Improve timeliness of GDP and NIPA release
                                          Reduce GDP revisions by developing improved source data for under measured
                                           sectors such as software and biomedicine
    International.......................  Develop better measures for financial transactions and holdings that now
                                           bypass international capital reporting systems
                                          Conduct research on alternative methods of measuring U.S. balance of
                                           payments
    Industry............................  Improve timeliness and accuracy of capital flow data to allow users to
                                           determine where industries invest (i.e., high tech investments)
                                          Develop employment tables to measure employment impacts by industry
                                          Provide increased industry detail in input-output tables
    Regional............................  Improve accuracy and timeliness of state, local, metropolitan and regional
                                           estimates
                                          Develop state-level estimates of public and private investment flows
                                          Develop regional price indices to measure across-region price differences
    Management Agenda...................  Develop strategies to hire and retain staff and plan for the anticipated
                                           wave of senior manager retirements
                                          Increase usability and data content of BEA website
                                          Expand electronic data collection systems
    ----------------------------------------------------------------------------------------------------------------

                  manufacturing extension partnership program
        Question. Secretary Evans, I know that the Administration has to
    make tough decisions in its budget deliberations. In some years, budget
    proposals have gone so far as to do away with the entire Department of
    Commerce, and yet it is still here. I am concerned, however, about the
    Administration's proposal to essentially eliminate funding for the
    Manufacturing Extension Partnership program within the National
    Institute of Standards and Technology (NIST). The Manufacturing
    Extension Partnership Program is currently funded at $106.5 million,
    and the 2003 request is for $12.9 million to phase out the program.
        Mr. Secretary, I have to tell you that the Manufacturing Extension
    Partnership Program has done extremely good work in New Mexico, and I
    have heard from dozens of my constituents in favor of continuing
    funding for the program at $110 million in 2003.
        What has the Manufacturing Extension Partnership Program achieved
    during the past six years of funding? Has it met the purpose for which
    it was established--to assist small businesses and manufacturers gain
    access to technologies, resources, and technical expertise that they
    might not have in-house and make them more competitive?
        Answer. MEP has been a successful program and demand for its
    services continues to grow. Over the last six years MEP has had a
    significant impact on small manufacturers performance. MEP has provided
    direct assistance to small manufacturers for their business operations,
    including process improvement, implementing quality management systems,
    implementing business systems, marketing development, plant layout,
    environmental studies, electronic commerce, and other areas of best
    practices to improve productivity and competitiveness. In fiscal year
    2000, MEP clients surveyed reported that MEP services resulted in: Over
    25,000 jobs created or retained; $2.3 billion in sales impact; cost
    savings of over $480 million; and increased investments of over $870
    million.
        Question. I know that this program works through a nationwide
    network of manufacturing extension centers, which are linked to state,
    university, and private sources of technical expertise. It is somewhat
    modeled on the extremely successful agriculture extension model. How
    much does the Manufacturing Extension Partnership Program leverage in
    terms of non-federal investments annually?
        Answer. Typically, centers receive one-third of their funding from
    the Federal government. From fiscal year 1989 through fiscal year 2002
    (estimated), the Federal investment in MEP centers is approximately
    $806 million. One-third of the remaining two-thirds of center support
    comes from state and local organizations, and the other third comes
    from fees for services.
        Question. With this kind of success and broad support in the
    private sector, what is the Administration's rationale for phasing out
    this program?
        Answer. We are a nation at war against terrorism and difficult
    choices have to be made in terms of priorities within the Federal
    budget. Unfortunately, every program cannot be funded. MEP has been a
    successful program and demand for its services continues to increase.
    We believe that many MEP centers will continue to exist in the absence
    of Federal funding, and as a result, small businesses will continue to
    receive the expertise and assistance from the centers. To offset the
    loss of Federal funding, centers could increase fees receipts. Given
    the centers' success in improving productivity and efficiency,
    assessing fees for service should be the direction in which the program
    heads. The benefits to small firms seeking MEP assistance, such as
    improved productivity and efficiency, should outweigh the cost of the
    fees. Also, large manufacturers that depend on smaller companies may
    also wish to provide support to MEP centers to ensure the continuing
    success of their smaller suppliers.
                  public telecommunications facilities program
        Question. Secretary Evans, I am pleased to see that the
    Administration's fiscal year 2003 budget continues to support the
    Public Telecommunications Facilities Program (PTFP), which provides
    grants to public radio and TV stations for equipment. The PTFP program
    has had its ups and downs over the year, and has even been proposed for
    termination. From $15.25 million in fiscal year 1997, and over the past
    several years, this Subcommittee has elevated funding to the current
    $51.7 million in fiscal year 2002--$43.5 million plus a supplemental of
    $8.25 million.
        Mr. Secretary, I have been a longtime supporter of the Public
    Telecommunications Facilities Program because it is an important source
    of funding to rural states like New Mexico. PTFP grants enable local
    broadcasting stations to provide quality programming to populations
    that are generally under served.
        The budget includes $43.6 million for PTFP for fiscal year 2003,
    essentially level funding minus the supplemental. My local broadcasters
    have been in to request significant additional federal support as the
    statutory deadline for converting to digital equipment approaches in
    2003. The broadcasters' funding request is $110 million for fiscal year
    2003. How much of the $43.6 million requested does the Administration
    envision going toward assisting broadcasters with the purchase of
    digital equipment as we approach the 2003 conversion date?
        Answer. During the recent fiscal year 2001 grant round, NTIA
    awarded almost $35 million for digital conversion grants out of a total
    of $42 million awarded through the program. We expect to award
    approximately this level of funding for digital television conversion
    projects from the $43.6 million requested in fiscal year 2003.
        Question. For the past several years, Congress has worked to
    augment the PTFP budgets to support the conversion to digital
    equipment. How much has the PTFP program provided for this purpose?
    Could you provide the Subcommittee with a breakdown of the amounts
    provided and the grantees funded for this purpose for the past five
    years?
        Answer. Over the past four years (fiscal year 1998-2001) that NTIA
    has funded the digital conversion of public television facilities, the
    program has awarded over $60 million for digital conversion projects to
    grantees in 42 states. These Federal funds have been matched by the
    recipients with almost $95 million in non-Federal funds. Attached is a
    breakdown of the grant awards (Attachment B). Grants for fiscal year
    2002 will be announced in September.
        Question. The Congress has provided some digital conversion funding
    through the Corporation for Public Broadcasting (CPB), and in fact, the
    private and public sectors will be providing two-thirds of the total
    cost of digital conversion, and the federal government one-third of the
    cost. Do the Department and the PTFP program work closely with the
    Corporation of Public Broadcasting as this conversion project proceeds?
    How is this effort being coordinated?
        Answer. NTIA is working closely with CPB. The two grant programs
    have coordinated their grant timetables and plan to stagger funding
    decisions. To ensure that NTIA and CPB do not duplicate funding for
    stations, the programs will exchange equipment lists of applicants and
    meet as necessary to review funding decisions.

                                                               ATTACHMENT A.--APPENDIX II--ECONOMICS STATISTICS INITIATIVE RECOMMENDATIONS
                                                                                         [Dollars in Thousands]
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                                 Funding for fiscal
                                                                                                                                                            Responsible agency      year 1990-94
             GAO's 7 Areas                   38 ESI Recommendations                 1990 Recommendations \1\                1991 Recommendations \2\                \3\        ---------------------
                                                                                                                                                                                Requested   Received
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    National Income and Product      Indirect estimation methods...........  Explore alternative methods for         Use indirect estimation methods to     BEA...............  \4\ $3,20  \4\ 1,700
     Accounts statistics                                                      estimating constant dollar output.      close data gaps; methods include                                  0
     recommendations.                                                                                                 price measurement of high-tech
                                                                                                                      goods, measurement of certain
                                                                                                                      services, and improved deflation of
                                                                                                                      purchases by state and local
                                                                                                                      governments.
                                     Input-output tables...................  Expedite the compilation of input-      Reduce by 2 years the lag in           BEA...............    ( \4\ )    ( \4\ )
                                                                              output data.                            benchmark and annual input-output
                                                                                                                      tables.
                                     Construction-methodology..............  Complete ongoing methodological and     .....................................  BEA...............    ( \4\ )    ( \4\ )
                                                                              data collection improvements and
                                                                              incorporate these in the 1990 GNP.
                                     System of national accounts...........  Revise the U.S. national income and     Develop modernized and extended        BEA...............      5,700      1,200
                                                                              product accounts to be consistent       national economic accounts that
                                                                              with the major components of the        follow the United Nations revised
                                                                              United Nations system of national       system of national accounts.
                                                                              accounts, which are used by most of     Features are to include (1) an
                                                                              the major industrialized nations of     integrated set of current and
                                                                              the world.                              capital accounts that include both
                                                                                                                      financial and nonfinancial
                                                                                                                      transactions and (2) satellite
                                                                                                                      accounts.
                                     Inflation adjustments.................  Add supplementary series to the         .....................................  BEA...............          0          0
                                                                              national income and product accounts
                                                                              that separate the real and inflation
                                                                              components of the return to capital.
                                                                              Currently this is done only with the
                                                                              corporate profits series.
                                     Purchased services....................  Accelerate and rearrange timetable for  Provide data for improved assessment   Census............      3,492          0
                                                                              service sector improvements.            of the sources of economic growth
                                                                                                                      and structural change by industry.
                                     Corporate financial data..............  Accelerate and rearrange timetable for  Provide greater precision in           Census............      4,970          0
                                                                              service sector improvements.            estimates by industry and more
                                                                                                                      comprehensive data by asset size.
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    Price measurement statistics     Service prices........................  Accelerate the BLS programs to expand   Conduct research to develop measures   BLS...............      7,241      5,685
     recommendations.                                                         and improve producer, consumer, and     of output for the service sector.
                                                                              international price indexes to
                                                                              measure service prices more
                                                                              accurately.
                                     Separation of quality and inflation     ......................................  Separate quality and inflation         BLS...............      3,479      2,309
                                      changes.                                                                        changes in price data.
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    Labor market statistics          Employment cost index.................  Expand and seasonally adjust the        .....................................  BLS...............      1,700      1,700
     recommendations.                                                         employment cost index.
                                     Coverage of payroll employment          Continue BLS and Census efforts to      Add 110 service producing industries   BLS...............      8,948      7,458
                                      estimates.                              improve and modernize the current       to the payroll survey.
                                                                              population survey and the current
                                                                              employment statistics program.
                                     Accuracy of payroll employment          Continue BLS and Census efforts to      Improve accuracy of estimates of       BLS...............     13,294     13,794
                                      estimates.                              improve and modernize the current       payroll employment.
                                                                              population survey and the current
                                                                              employment statistics program.
                                     Business establishment data--Census     Explore ways for Census to share its    .....................................  Census............        400          0
                                      and BEA.                                establishment data with BEA, for use                                          BEA...............          0          0
                                                                              in improving the national accounts.
                                     Construction-coverage.................  ......................................  Improve coverage and accuracy of       Census............      3,900  .........
                                                                                                                      construction statistics.
                                     Investment and saving.................  Accelerate work to improve measures of  .....................................  Federal Reserve...    ( \5\ )    ( \5\ )
                                                                              investment and saving and to the                                              BEA...............          0          0
                                                                              extent possible reconcile differences                                         Census............        900        638
                                                                              between the various measures of
                                                                              saving.
                                     Flow of funds.........................  Improve the collection, coverage, and   .....................................  Federal Reserve...    ( \5\ )    ( \5\ )
                                                                              processing procedures for the
                                                                              financial flow data in the Federal
                                                                              Reserve Board flow of funds accounts.
                                     Annual investment survey..............  Undertake the proposed annual           .....................................  Census............      2,000      2,000
                                                                              investment survey at the Census
                                                                              Bureau.
                                     Data gaps.............................  ......................................  Use administrative records, support    BEA...............      4,700          0
                                                                                                                      new surveys, support extensions to
                                                                                                                      existing surveys, and conduct
                                                                                                                      research to close data gaps.
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    Service sector statistics        Service sector surveys................  Accelerate and rearrange timetable for  Increase detail and coverage of        Census............      7,116      1,400
     recommendations.                                                         service sector improvements.            service sector in Census' annual
                                                                                                                      survey of services and periodic
                                                                                                                      census of service industries.
                                     Automated data collection for current   Continue BLS and Census efforts to      Incorporate automated data collection  BLS...............      5,000      3,510
                                      population survey.                      improve and modernize the current       techniques to improve the current
                                                                              population survey and the current       population survey.
                                                                              employment statistics program.
                                     Reconciliation of employment estimates  Continue BLS efforts to reconcile and   .....................................  BLS...............          0          0
                                                                              reduce discrepancies between the
                                                                              employment series arising from the
                                                                              household and the establishment
                                                                              surveys.
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    Income and poverty statistics    Poverty thresholds....................  Begin research on developing a new      .....................................  Census............          0          0
     recommendations.                                                         benchmark estimate of poverty
                                                                              appropriate to prices, consumption
                                                                              patterns, and family composition in
                                                                              the 1990s.
                                     Experimental estimates of income and    Continue publication of the             .....................................  Census............          0          0
                                      poverty.                                experimental estimates of real family
                                                                              income and poverty.
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    International transactions       Trade in services.....................  Accelerate improvements in estimates    Undertake surveys of bank and nonbank  BEA...............  \6\ 7,600  \6\ 3,100
     statistics recommendations.                                              of trade in services.                   financial institutions' noninterest
                                                                                                                      service income and improve BEA's
                                                                                                                      survey of international trade in
                                                                                                                      other services.
                                     International investment and capital    Estimate direct investment using        Improve coverage of capital flows and  BEA...............    ( \6\ )    ( \6\ )
                                      flows.                                  market values or replacement cost       investment income and reduce the
                                                                              rather than historical cost and         large statistical discrepancy in the
                                                                              address problems with the measurement   international payments accounts.
                                                                              of international portfolio investment
                                                                              and other capital flows.
                                     Reconciliation of import and export     Extend efforts to reconcile import and  .....................................  Census............  \7\ 1,400      \7\ 0
                                      data.                                   export data to Mexico, the European
                                                                              Community, South Korea, and Japan.
                                     Automation of export and import data..  Continue work to increase automation    .....................................  Census............    ( \7\ )    ( \7\ )
                                                                              of export and import data collection.
                                     Merchandise exports model.............  ......................................  Develop a model to adjust for          Census............    ( \7\ )    ( \7\ )
                                                                                                                      understatements of exports and other
                                                                                                                      improvements in the measurement of
                                                                                                                      exports.
                                     Access to trade data..................  Increase the ease of access to trade    .....................................  Census............    ( \7\ )    ( \7\ )
                                                                              data.
                                     International guidelines for economic   ......................................  Develop modernized and extended        BEA...............      1,000          0
                                      accounts.                                                                       international economic accounts that
                                                                                                                      follow the International Monetary
                                                                                                                      Fund guidelines. Features are to
                                                                                                                      include (1) an integrated set of
                                                                                                                      current and capital accounts,
                                                                                                                      including balance sheets and (2) new
                                                                                                                      detail in several significant areas.
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    Systemwide statistics            Survey of Income and Program            Explore the possibility of carefully    .....................................  Census............          0          0
     recommendations.                 Participation.                          linking the data from the Survey of
                                                                              Income and Program Participation to
                                                                              administrative records, while taking
                                                                              great care to safeguard
                                                                              confidentiality.
                                     Standard industrial classification....  ......................................  Ensure that the standard industrial    BEA...............          0          0
                                                                                                                      classification system can keep track  Census............        100        100
                                                                                                                      of emerging industries and develop
                                                                                                                      methods to keep up with rapid
                                                                                                                      changes occurring across all
                                                                                                                      industries.
                                     Farm lists............................  ......................................  Develop a more complete and accurate   NASS..............      4,800      2,250
                                                                                                                      farm list for the 1992 Census of
                                                                                                                      Agriculture.
                                     Business establishment lists--Census    ......................................  Improve business establishment lists   BLS...............      1,900        500
                                      and BLS.                                                                        by reconciling BLS and Census lists   Census............          0          0
                                                                                                                      of business establishments.
                                     Cooperation...........................  Increase cooperation between the        .....................................  BEA...............          0          0
                                                                              statistical establishment and                                                 BLS...............          0          0
                                                                              academic researchers.                                                         Census............          0          0
                                     Mandatory v. voluntary surveys........  Consider the efficacy of mandatory      .....................................  Census............          0          0
                                                                              versus voluntary surveys.
                                     Data duplication......................  Continue work toward the goal of        Prepare legislation to provide a       OMB...............          0          0
                                                                              eliminating unnecessary duplication,    standardized mechanism for limited
                                                                              but avoid the loss of unique and        sharing of confidential information
                                                                              important alternative data.             solely for statistical purposes.
                                     Center for survey methods.............  ......................................  Create a center for survey methods to  NSF...............      2,100      2,100
                                                                                                                      improve the talents and skills of
                                                                                                                      the existing federal statistical
                                                                                                                      workforce and attract highly
                                                                                                                      qualified entrants.
                                                                                                                                                                               ---------------------
          Total....................  ......................................  ......................................  .....................................  ..................  \8\ 94,94     49,444
                                                                                                                                                                                        0
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    \1\ The 1990 recommendations are quoted directly from a prepared statement for Michael J. Boskin, Chairperson of the Council of Economic Advisers at a hearing before the Joint Economic
      Committee, U.S. Congress, March 1, 1990.
    \2\ The 1991 recommendations are paraphrased by GAO from a February 14, 1991, Council of Economic Advisers announcement.
    \3\ Information is recorded for each responsible agency for recommendations with multiple responsible agencies.
    \4\ BEA combined these three recommendations into one budget request to increase funding to stop the deterioration in the quality of the national economic accounts.
    \5\ Federal Reserve funds are not included here since it does not receive appropriated funds from Congress.
    \6\ BEA combined these two recommendations into one budget request to improve balance of payments and international investment data.
    \7\ Census combined these four recommendations into one budget request to improve foreign trade statistics.
    \8\ Total request includes $14,047,000 in reinstated requests, which means an agency requested funding more than once when the funding was not received in prior years.

    Note: GAO's 7 areas and the 38 ESI recommendations are our categorizations of the Economics Statistics Initiative recommendations that were in the 1990 and 1991 CEA releases.

                           ATTACHMENT B.--PTFP DIGITAL TELEVISION CONVERSION GRANTS 1998-2001
    ----------------------------------------------------------------------------------------------------------------
                                                                                              Total Project
                   Grantee                            City/State              Federal Award       Cost         Year
    ----------------------------------------------------------------------------------------------------------------
    Alaska Public Telecommunications.....  Anchorage, AK...................        $701,073      $1,046,378     2001
    Alabama ETV Commission...............  Birmingham, AL..................       1,070,884       2,677,210     2001
    Alabama ETV Commission...............  Birmingham, AL..................         870,800       2,177,000     2000
    Alabama ETV Commission...............  Birmingham, AL..................         810,667       1,621,334     1999
    Alabama ETV Commission...............  Birmingham, AL..................         374,701         749,403     1998
    Arizona State University.............  Tempe, AZ.......................       1,028,450       2,056,900     1999
    The University of Arizona............  Tucson, AZ......................         671,962       1,679,905     2001
    Redwood Empire Public TV, Inc........  Eureka, CA......................         494,769         743,025     2001
    Valley Public Television, Inc........  Fresno, CA......................         193,884         484,712     2001
    Community TV of Southern California..  Los Angeles, CA.................         861,607       1,723,215     1999
    KVIE, Inc............................  Sacramento, CA..................         711,780       1,779,451     2001
    San Diego State Univ. Foundation.....  San Diego, CA...................         610,111       1,220,222     1999
    San Diego State Univ. Foundation.....  San Diego, CA...................         475,152         950,305     1998
    KQED, Inc............................  San Francisco, CA...............         850,176       1,700,352     1998
    Front Range Educ. Media Corp.........  Denver, CO......................         379,374         758,748     2001
    Connecticut Public Broadcasting, Inc.  Hartford, CT....................         317,524         793,812     2001
    Connecticut Public Broadcasting, Inc.  Hartford, CT....................         552,282       1,380,705     2000
    Coastal Educational Broadcasters.....  Daytona Beach, FL...............         807,687       3,230,750     2001
    Pensacola Junior College.............  Pensacola, FL...................         675,000       1,250,585     1999
    Florida W. Coast Pub. Brdcstg., Inc..  Tampa, FL.......................         121,600         304,000     2001
    Florida W. Coast Pub. Brdcstg., Inc..  Tampa, FL.......................         704,691       1,761,726     2000
    Georgia Pub. Telecom. Commission.....  Atlanta, GA.....................         933,539       3,734,155     2001
    Georgia Pub. Telecom. Commission.....  Atlanta, GA.....................         222,500         890,000     2000
    Hawaii Public Television Found.......  Honolulu, HI....................         746,792       2,075,000     2001
    Iowa Public Broadcasting Board.......  Johnston, IA....................         350,237       1,400,950     2000
    Idaho Public Television..............  Boise, ID.......................         881,031       3,524,123     2001
    Idaho Public Television..............  Boise, ID.......................         473,402       1,893,610     2000
    Idaho Public Television..............  Boise, ID.......................         668,574         891,433     1998
    Southern Illinois University.........  Carbondale, IL..................         599,437       2,397,750     2001
    Window to the World Communications...  Chicago, IL.....................         909,574       1,819,148     2000
    Washburn University of Topeka........  Topeka, KS......................         522,376       1,305,940     2001
    Washburn University of Topeka........  Topeka, KS......................         125,000         250,000     1999
    Kentucky Authority for ETV...........  Lexington, KY...................         365,807       1,877,727     2001
    Louisiana ETV Authority..............  Baton Rouge, LA.................         434,007       1,736,030     2001
    Louisiana ETV Authority..............  Baton Rouge, LA.................         548,755       2,195,020     2000
    Educational Brdcstg. Found., Inc.....  New Orleans, LA.................         863,120       2,157,800     2001
    Maine Public Broadcasting Corp.......  Bangor, ME......................         681,375       2,725,500     2001
    Maine Public Broadcasting Corp.......  Bangor, ME......................         256,250       1,025,000     2000
    Detroit ETV Foundation...............  Detroit, MI.....................         486,257         972,515     1999
    University of Michigan...............  Flint, MI.......................         683,236       1,708,090     2001
    Central Michigan University..........  Mt. Pleasant, MI................         530,200       1,325,500     2001
    Delta College........................  University Center, MI...........         349,067         520,995     2001
    Delta College........................  University Center, MI...........         636,500         950,000     2000
    Northern Minnesota PTV, Inc..........  Bemidji, MN.....................         934,611       1,394,942     2001
    Twin Cities Public Television, Inc...  St. Paul, MN....................         679,278       1,358,557     1999
    Public Television 19, Inc............  Kansas City, MO.................         291,488         728,722     2000
    Southwest Missouri State Univ........  Springfield, MO.................         613,587       1,227,174     2001
    St. Louis Regional E&PTV Comm........  St. Louis, MO...................         299,164       1,196,656     2000
    Central Missouri State University....  Warrensburg, MO.................         775,540       3,401,495     2001
    Mississippi Authority for ETV........  Jackson, MS.....................       1,800,000       4,537,400     2001
    Montana State University.............  Bozeman, MT.....................         723,860         965,147     2001
    Prairie Public Broadcasting, Inc.....  Fargo, ND.......................         359,587         536,698     2001
    Prairie Public Broadcasting, Inc.....  Fargo, ND.......................         916,696       1,368,203     2001
    Prairie Public Broadcasting, Inc.....  Fargo, ND.......................       1,141,302       1,521,736     2000
    Prairie Public Broadcasting, Inc.....  Fargo, ND.......................         939,635       1,252,847     1999
    Nebraska Educ. Telecom. Comm.........  Lincoln, NE.....................       1,500,000       3,840,122     2001
    Nebraska Educ. Telecom. Comm.........  Lincoln, NE.....................       1,200,000       3,186,060     2000
    New Jersey Pub. Brdcstg. Authority...  Trenton, NJ.....................         622,575       2,490,300     2001
    New Jersey Pub. Brdcstg. Authority...  Trenton, NJ.....................         608,262       1,216,525     1999
    University of New Mexico.............  Albuquerque, NM.................         871,799       1,644,905     2001
    University of New Mexico.............  Albuquerque, NM.................       1,200,000       2,274,974     2000
    Clark County School District.........  Las Vegas, NV...................         429,405       1,073,514     2000
    Channel 5 Public Broadcasting, Inc...  Reno, NV........................         392,562       1,570,248     2001
    WSKG Public Telecom. Council.........  Vestal, NY......................         663,576       1,658,940     2001
    Greater Dayton PTV, Inc..............  Dayton, OH......................         705,542       1,763,856     2001
    Northeastern ETV of Ohio, Inc........  Kent, OH........................         210,113         525,284     2000
    Oklahoma ETV Authority...............  Oklahoma City, OK...............         241,111         482,222     1998
    Oklahoma ETV Authority...............  Oklahoma City, OK...............       1,110,702       4,442,807     2001
    Oregon Public Broadcasting...........  Portland, OR....................         501,416       1,253,540     2001
    Oregon Public Broadcasting...........  Portland, OR....................         642,020       1,605,050     2000
    WHYY, Inc............................  Philadelphia, PA................         221,661         554,154     2001
    Pennsylvania State University........  University Park, PA.............         586,357       1,465,893     2001
    Pennsylvania State University........  University Park, PA.............       1,246,422       3,116,057     2000
    South Carolina ETV Commission........  Columbia, SC....................       1,499,551       5,998,206     2001
    South Dakota Educ. Telecom...........  Vermillion, SD..................         996,453       1,660,755     2001
    East Tennessee Pub. Telecom. Corp....  Knoxville, TN...................         178,656         446,640     2001
    Mid-South Pub. Comm. Found...........  Memphis, TN.....................         766,635       1,916,587     2001
    Nashville Public Television..........  Nashville, TN...................         184,640         461,600     2001
    WDCN Public Television Corporation...  Nashville, TN...................         154,110         385,275     2000
    North Texas Public Brdcstg., Inc.....  Dallas, TX......................         500,000       1,175,580     1999
    North Texas Public Brdcstg., Inc.....  Dallas, TX......................         475,487         950,974     1998
    El Paso PTV Foundation, Inc,.........  El Paso, TX.....................         203,325         271,100     2001
    University of Utah...................  Salt Lake City, UT..............         384,775       1,539,100     2000
    Public Broadcasting Service..........  Alexandria, VA..................         981,420       2,453,550     2001
    Greater Wash. Educ. Telcom. Assoc....  Arlington, VA...................         156,250         312,500     1998
    Shenandoah Valley ETV Corp...........  Harrisonburg, VA................         427,078       1,067,697     2001
    Shenandoah Valley ETV Corp...........  Harrisonburg, VA................         464,948       1,162,369     2000
    Hampton Roads Ed.Telecom. Assoc......  Norfolk, VA.....................         472,191       1,180,477     2000
    Vermont ETV, Inc.....................  Colchester, VT..................         636,388       1,590,971     2001
    Washington State University..........  Pullman, WA.....................         312,420         781,051     2001
    KCTS Television......................  Seattle, WA.....................         967,400       1,934,801     1998
    Spokane School District #81..........  Spokane, WA.....................         539,138       1,347,844     2001
    Wisconsin Educ. Comm. Board..........  Madison, WI.....................       1,048,841       4,195,258     2001
    University of Wisconsin System.......  Madison, WI.....................         473,831       1,895,326     2000
    West Virginia Educ. Brdcstg.           Charleston, WV..................         574,654       1,436,636     2001
     Authority.
                                                                            --------------------------------
          TOTAL..........................  ................................      60,377,645     155,284,349
    ----------------------------------------------------------------------------------------------------------------

                              subcommittee recess

        Senator Hollings. We will meet next on Tuesday, March 19,
    to hear NOAA, the Small Business Administration, and the
    Federal Trade Commission.
        Secretary Evans. Wonderful. We are looking forward to that.
    Thank you, chairman.
        Senator Hollings. The subcommittee will be in recess.
        [Whereupon, at 11:40 a.m., Wednesday, March 13, the
    subcommittee was recessed, to reconvene at 10 a.m., Tuesday,
    March 19.]

    DEPARTMENTS OF COMMERCE, JUSTICE, AND STATE, THE JUDICIARY, AND RELATED
                  AGENCIES APPROPRIATIONS FOR FISCAL YEAR 2003

                                  ----------

                            TUESDAY, MARCH 19, 2002

                                           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. Ernest F. Hollings (chairman)
    presiding.
        Present: Senators Hollings, Reed, Gregg, Stevens, and
    Domenici.

                             DEPARTMENT OF COMMERCE

                National Oceanic and Atmospheric Administration

    STATEMENT OF CONRAD C. LAUTENBACHER, JR., VICE ADMIRAL,
                U.S. NAVY (Ret.), UNDER SECRETARY OF
                COMMERCE FOR OCEANS AND ATMOSPHERE

                               prepared statement

        Senator Hollings. The committee will come to order. We
    welcome Admiral Lautenbacher, the Administrator of the National
    Oceanic and Atmospheric Administration. Admiral, we appreciate
    your appearance here. We have your statement. It will be
    included in its entirety in the record and you can summarize it
    or deliver it as you wish.
        [The statement follows:]
               Prepared Statement of Conrad C. Lautenbacher, Jr.
        Thank you, Mr. Chairman, and members of the Committee, for this
    opportunity to testify on the President's fiscal year 2003 Budget
    Request for the National Oceanic and Atmospheric Administration (NOAA).
        Let me begin by saying that this budget supports and enhances the
    goals of the President and the Department of Commerce. NOAA has
    established itself as one of the world's premier scientific and
    environmental agencies. We are an agency that deals with environmental
    change. We are an agency whose products form a critical part of the
    daily decisions made by Americans across the Nation and have economic
    impacts which affect our Nation's Gross Domestic Product. From our
    climate predictions that impact farming and financial decisions, to our
    hydrological products that affect public utilities and energy
    consumption, NOAA is a critical part of our Nation's economic security.
        We are experts in climate, with its cooling and warming trends. We
    are an agency that manages fluctuating fisheries and marine mammal
    populations. We observe, forecast and warn the public about the rapidly
    changing atmosphere and especially severe weather. We monitor currents
    and tides, and beach erosion. We survey the ocean bottom and provide
    mariners with products to maintain safe navigation. We operate the
    Nation's most important constellation of earth--observing satellites.
    Lastly, we provide all this knowledge and exploration to citizens
    everywhere, especially to schools and young people across our Nation
    through our website www.noaa.gov. We provide this as a result of our
    mission to advance environmental assessment, environmental prediction,
    and natural resource stewardship for our great Nation.
        This budget supports products that are essential for decision
    makers in every part of our economy. NOAA's budget will continue to
    fund products that assist in protecting the health and safety of this
    Nation's citizens from both routine and severe environmental changes.
    This budget supports our research, science and services from the local
    weather forecast offices around the Nation to our Fisheries Research
    Vessels that ensure sustainable stocks of our Nation's fisheries. It
    provides for technology infusion and critical infrastructure protection
    to reduce single points of failure for our satellite and weather
    prediction programs; continues our special partnerships with
    universities, states, and local governments around the Nation; and
    invests in education and human resources. This budget also supports our
    vast infrastructure, which will allow NOAA to continue its mission in
    years to come.
        In a period of strongly competing Presidential priorities for our
    national defense, and economic security, the President's fiscal year
    2003 Budget Request for NOAA is $3,330.5 million in total budget
    authority, and represents a decrease of $45.4 million below the fiscal
    year 2002 enacted level. Within this funding level, NOAA proposes
    essential realignments that allow for a total of $148.8 million in
    program increases, and $129.0 million in base adjustments. NOAA's
    request highlights critical areas such as People and Infrastructure,
    Improving Extreme Weather Warnings and Forecasts, Climate Services,
    Modernization of NOAA Fisheries, and other key NOAA programs such as
    Energy, Homeland Security, Ocean Exploration, and Coastal Conservation.
          people and infrastructure: $129.0 million adjustment-to-base
        NOAA's people and infrastructure are at the heart of what NOAA is
    and does. From our hurricane research center in Miami, FL to NOAA's
    weather service office in Barrow, AK, these are the underlying and
    interconnecting threads that hold NOAA and its programs together.
    Investments in NOAA's scientific and technical workforce as well as
    NOAA's facilities and equipment is essential for us to carry out our
    mission into the 21st Century. ``People and Infrastructure'' is about
    investing in the future, and about maintaining NOAA's infrastructure
    that has been built over the last thirty-one years.
                improving extreme weather warnings and forecasts
        Critical to meeting our 21st Century mission is the continuity of
    NOAA's Satellites and Severe Weather Forecasts. There are few things
    that the Federal Government does that are as critical as issuing severe
    storm warnings and protecting the life and safety of Americans. Listed
    below is NOAA's request for this $84.3 million endeavor.
        Tornado Severe Storm Research.--NOAA requests a total of $1.0
    million to develop new technologies for forecasting and detecting
    tornadoes and other forms of severe weather, and to disseminate this
    information to emergency managers, the media, and the general public
    for appropriate action. This new technology has the potential to
    significantly extend lead times for tornadoes and other forms of severe
    and hazardous weather. Coupled with advanced decision support systems,
    tornado lead times may double from 10 to 22 minutes using this
    technology. The bottom line is that this investment will help save
    lives.
        U.S. Weather Research Program (USWRP).--NOAA requests an increase
    of $1.0 million for a total of $3.8 million to transition research and
    development into operations in order to reach a USWRP goal of improving
    forecasts of inland heavy precipitation associated with hurricane
    landfalls. This increase will be used to address the improvement of the
    forecasts of heavy and frequent, flood-producing rains associated with
    hurricanes and tropical storms as they move inland.
        Weather & Air Quality Research Laboratories.--NOAA requests an
    increase of $4.2 million for a total of $48.1 million to recapitalize
    the laboratories that conduct weather and air quality research, which
    includes funding for ongoing operational scientific activities to
    continue operation of the Wind Profiler Network and NOAA's Space
    Weather Program.
        Advanced Hydrological Prediction Service (AHPS).--NOAA requests an
    increase of $4.7 million for a total of $6.2 million to accelerate
    nationwide implementation of improved flood and river forecasts
    services in the Northeast, Middle Atlantic, and Southeast regions of
    the United States, including the states of: New Hampshire, Vermont,
    Virginia, North Carolina, and South Carolina. As implemented, AHPS
    will: (1) produce new information with better predictions of river
    height and flood potential to reduce loss of life and property; (2)
    deliver high resolution, visually oriented products to provide partners
    and customers with valuable information for life decisions; (3) refresh
    aging hydrologic forecasting infrastructure to support rapid infusion
    of scientific advances; and (4) leverage NOAA's investments in
    observational systems and atmospheric models to enhance accuracy and
    resolution of river forecasts.
        Weather & Climate Supercomputing.--NOAA requests an increase of
    $6.2 million for a total of $21.2 million to continue operations and
    maintenance of the current National Weather Service (NWS)
    supercomputer, and to transition the next generation weather and
    climate supercomputing system into operations. The NWS supercomputer is
    the foundation for all NWS weather and climate forecasts. Operational
    transition of the next generation supercomputer will enable the NWS to
    improve the resolution and forecast accuracy of the prediction models.
        Radiosonde Replacement.--NOAA requests an increase of $2.0 million
    for a total of $7.0 million to continue replacing and modernizing the
    upper air radiosonde network. The radiosonde network provides critical
    upper air observations which are a vital component of all weather
    forecast models. The current network is obsolete and nearing collapse,
    risking widespread loss of data within the next two to three years.
        Aviation Weather.--NOAA requests a total of $2.5 million to
    initiate a 7-year plan to help improve U.S. aviation safety and
    economic efficiencies by providing state-of-the-art weather observation
    and forecast products responsive to aviation user needs. Weather
    accounts for over 70 percent of all air traffic delays, which results
    in greater expenditures by both airline customers and the airlines. In
    addition, an average of 200 general aviation pilot fatalities per year
    are caused by weather-related accidents across the United States. This
    initiative will provide a means for the NWS to improve its aviation
    weather forecast services through 3 major components which include: (1)
    increasing the number and quality of aviation weather observations; (2)
    transitioning successful applied research efforts to operational
    products; and (3) developing and implementing new training programs for
    forecasters, pilots, and controllers. This initiative has the goal of a
    10 percent reduction in National Airspace System weather-related air
    traffic delays, which would save $600 million annually in potential
    economic losses, and reduce general aviation weather related fatalities
    by 25 percent, or 50 lives annually.
        Huntsville, AL Weather Forecast Office.--NOAA requests a total of
    $1.4 million to pay for recurring operations and maintenance costs at
    the new Huntsville, Alabama Weather Forecast Office (WFO). The
    Huntsville WFO was established in fiscal year 2002 at the University of
    Alabama at Huntsville. The $1.4 million requested will provide for NWS
    employee salaries, facilities rent and maintenance, and operational
    equipment and supplies to operate and maintain weather forecast and
    warning services in the Huntsville area.
        Polar Orbiting Systems.--NOAA requests a net increase of $64.3
    million for Polar Orbiting Systems, which are comprised of NOAA Polar
    K-N and the National Polar Operational Earth Satellite System. The net
    increase requested is described as follows:
      --NOAA Polar K-N'.--NOAA requests a decrease of $15.6 million for a
            total of $122.9 million for the NOAA Polar K-N'. The Polar K-N
            program is completing major procurement items and therefore
            does not need to continue the funding levels of previous years.
      --National Polar-orbiting Operational Environmental Satellite System
            (NPOESS).--NOAA requests an increase of $79.9 million for a
            total request of $237.3 million for the continuation of the
            tri-agency NPOESS program that will replace the NOAA POES
            program after completion of the current NOAA K-N' series of
            satellites. This request represents NOAA's share of the
            converged NOAA/DOD/NASA program. In fiscal year 2003, funds
            will be required to continue the development and production of
            the NPOESS instruments, including the Visible Infrared Image
            Radiometer, the Conical Microwave Imager Sounder, the Cross-
            track Infrared Sounder, the Ozone, Mapping and Profiler Suite,
            the Global Positioning System Occultation Sensor, and the Space
            Environmental Sensing Suite. The continued development of these
            instruments is critical for their timely and cost effective
            delivery to replace both the Defense Meteorological Satellite
            Program (DMSP) and the NOAA POES spacecraft when needed.
      --Geostationary Operational Environmental Satellite (GOES).--NOAA
            requests a decrease of $35.1 million for a total request of
            $227.4 million to support continued post launch requirements
            for GOES I-M; the continued procurement of the GOES-N series
            satellites, instruments, ground systems, and systems support
            necessary to maintain continuity of Geostationary operations;
            and planning and development for the GOES-R series of
            satellites and instruments. This decrease represents a program
            change resulting from the successful launch of GOES M, and the
            continued success of the GOES I-M series.
        Earth Observing System Data Archive & Access System Enhancement.--
    NOAA requests a total of $3.0 million to ensure that NOAA can fully
    utilize the vast amounts of new satellite-based environmental data
    becoming available, process and distribute that data in a variety of
    formats, provide stewardship for the data, and make the data accessible
    to users in a variety of economic, research, government, and public
    sectors.
        Joint Center for Data Assimilation.--NOAA requests an increase of
    $2.6 million for a total of $3.4 million for the Joint Center for
    Satellite Data Assimilation. NWS, the Office of Atmospheric Research
    (OAR), and NASA also provide funding as partners in this coordinated
    national effort to more fully realize the potential of the vast
    quantities of new satellite data that are becoming available.
        Coastal Ocean Remote Sensing.--NOAA requests a total of $6.0
    million to develop and deploy a prototype high-resolution imaging
    sensor to meet long-standing NOAA requirements. This initiative will
    allow NOAA to work with NASA to develop conceptual design and
    capabilities of this instrument, which will continuously monitor
    coastal ocean areas for harmful algae blooms, coral reef deterioration,
    pollution changes, fisheries management, and navigation. This
    instrument will provide continuous, high resolution monitoring in
    unprecedented detail of terrestrial features such as vegetation
    changes, flooding, wild fires, volcanic eruptions, and ash cloud
    transport.
        Satellite Command & Data Acquisition (CDA) Facility.--NOAA requests
    an increase of $1.0 million for a total of $4.6 million to continue the
    Satellite CDA Infrastructure program. Improved facilities reduce the
    risk of outages and service disruptions caused by failure of the
    supporting buildings, facilities, and infrastructure. This program
    minimizes the risk of spacecraft loss and data loss and allows NOAA to
    continue supporting worldwide requirements for critical operational
    satellite data and services.
        Satellite Command and Control.--NOAA requests an increase of $4.4
    million for a total of $34.8 million for satellite command and control.
    This investment supports the operations of the NOAA satellite systems,
    the ingesting and processing of satellite data, and the development of
    new product applications required for continuity of operations. NOAA
    provides satellite command and control services on a 24 hours per day,
    365 days per year schedule. Two critical components of this initiative
    are:
      --Protecting Critical Satellite Control Facilities.--NOAA requests
            $0.3 million to enhance security at the satellite Command and
            Data Acquisition ground stations by upgrading and expanding
            security lighting.
      --Satellite Command and Data Acquisition Station Operations.--NOAA
            requests $2.2 million for the operation of the polar Satellite
            Command and Data Acquisition (CDA) ground station. NOAA will
            use these funds to obtain the appropriate technical,
            management, and administrative contractor support to operate
            and maintain the acquisition and throughput of data from NOAA
            and DOD polar-orbiting satellites to NOAA's Satellite
            Operations Control Center, and to National Weather Centers.
        Product Processing and Distribution.--NOAA requests an increase of
    $6.7 million for a total of $27.7 million to process and analyze data
    from NOAA, DOD, and other Earth-observing satellites; supply data,
    interpretations, and consulting services to users; and operate and
    maintain the Search and Rescue mission control center. This includes
    supplying satellite data that makes up approximately 85 percent of the
    data used in NWS numerical weather prediction models. NOAA will use the
    requested program increase to support the following two mission
    critical functions:
      --Reducing the Risk to Continuity of Critical Operations.--NOAA
            requests a program increase of $3.1 million to expand on-site
            maintenance and staffing levels to ensure that all critical
            functions are performed. This ensures vital and timely
            information to customers and staff during times of peak
            workload.
      --Improved Support for Weather and Hazards.--NOAA requests a program
            increase of $2.0 million to automate wild fire detection
            algorithms to speed up the delivery of information to
            customers, to integrate the information into geographic
            information systems for detailed location information, and to
            integrate new fire detection sensors from non-NOAA satellites.
        G-IV Instrumentation.--NOAA requests a total of $8.4 million to
    begin upgrading instrumentation aboard the G-IV aircraft. Improvements
    in NOAA's Gulfstream IV aircraft's remote-sensing systems will enhance
    NOAA's hurricane-reconnaissance capability. New technology will use
    remote sensors to develop 3-dimensional profiles of hurricanes from
    45,000 feet down to the surface and would provide forecasters with
    unprecedented real-time information on size and intensity. In addition,
    radar-composite maps will provide critical rainfall information that is
    crucial to forecasters and to the emergency management community for
    preparedness and evacuations.
                                climate services
        NOAA maintains a balanced program of focused research, large-scale
    observational programs, modeling on seasonal-centennial time scales,
    and data management. In addition to its responsibilities in weather
    prediction, NOAA has pioneered in the research and operational
    prediction of climate variability associated with the El Nino Southern
    Oscillation (ENSO). With agency and international partners, NOAA has
    also been a leader in the assessments of climate change, stratospheric
    ozone depletion, and the global carbon cycle. Our confidence in our
    recent El Nino prediction is based upon a suite of robust observing
    systems that are a critical component in any forecast.
        The agency-wide Climate Services activity represents a partnership
    that allows NOAA to facilitate the transition of research observing and
    data systems, and knowledge into operational systems and products.
    During recent years, there has been a growing demand from emergency
    managers, the private sector, the research community, and decision-
    makers in the United States and international governmental agencies for
    timely data and information about climate variability, climate change,
    and trends in extreme weather events. The economic and social need for
    continuous, reliable climate data and longer-range climate forecasts
    has been clearly demonstrated. NOAA's Climate Services Initiative
    responds to these needs. The following efforts will be supported by
    this initiative:
        Climate Change Research Initiative.--On February 14, 2002,
    President Bush announced the Clear Skies and Global Climate Change
    initiatives. The Clear Skies plan aims to cut power plant emissions of
    three pollutants (nitrogen oxides, sulfur dioxide, and mercury) by 70
    percent. The new Global Climate Change initiative seeks to reduce
    greenhouse gas intensity by 18 percent over the next decade. The
    President's proposal supports vital climate change research and ensures
    that America's workers and citizens of the developing world are not
    unfairly penalized. NOAA's expertise will be extremely important in the
    area of climate research. NOAA, along with NASA, Department of Energy,
    National Science Foundation, and the Department of Agriculture will
    implement a multi-agency Climate Change Research Initiative totaling
    $40 million. The following sections detail NOAA's $18.0 million request
    to address key priorities of the CCRI.
      --Climate Modeling Center.--NOAA requests $5.0 million to establish a
            climate modeling center at Princeton, New Jersey. This center
            will focus on model product generation for research, assessment
            and policy applications. NOAA has played a central role in
            climate research, pioneering stratospheric modeling, seasonal
            forecasting, ocean modeling and data assimilation, and
            hurricane modeling. This core research capability will be
            enhanced to enable product generation and policy related
            research.
      --Global Climate Atmospheric Observing System.--NOAA requests $4.0
            million to work with other countries to reestablish the
            benchmark upper-air network. NOAA will emphasize data sparse
            areas, and place new Global Atmosphere Watch stations in
            priority sites to measure pollutant emissions, aerosols, and
            ozone, in specific regions.
      --Global Ocean Observing System.--NOAA requests $4.0 million to work
            towards the establishment of an ocean observing system that can
            accurately document climate scale changes in ocean heat,
            carbon, and sea level changes.
      --Aerosols-Climate Interactions.--NOAA requests $2.0 million to
            contribute to the interagency National Aerosol-Climate
            Interactions Program (joint partnership with NASA, DOE, NSF)
            currently under development. Specifically, NOAA will establish
            new and augment existing in-situ monitoring sites and conduct
            focused field campaigns to establish aerosol chemical and
            radiative properties.
      --Carbon Monitoring.--NOAA requests $2.0 million to augment carbon
            monitoring capabilities in North America as well as
            observations of globally relevant parameters in key under-
            sampled oceanic and continental regions around the globe.
      --Regional Integrated Science Assessments Program.--NOAA requests
            $1.0 million for the Regional Integrated Science Assessments
            Program (RISA). Working with the National Science Foundation
            (NSF), NOAA will augment its research capability in assessing
            climate change impacts vulnerability by utilizing the research
            on ``Decision Making in the Face of Uncertainties'' in the
            framework of the RISA programs, e.g. Pacific Northwest.
        Arctic Research.--NOAA requests a total of $2.0 million in support
    of the Study of Environmental Arctic Change (SEARCH) to improve
    monitoring of the elements of the Arctic environment. NOAA's SEARCH
    activities are part of a coordinated interagency and international
    program, begun in response to evidence of an alarming rate of
    environmental change occurring in the Arctic. The SEARCH initiative
    will substantially increase understanding of long-term trends in
    temperature, precipitation and storminess across the United States,
    with potential improvements in forecasting and planning for energy
    needs, growth seasons, hazardous storm seasons and water resources.
        University-National Oceanographic Laboratory System (UNOLS).--NOAA
    requests a total of $2.5 million to outsource with UNOLS and other
    sources for ships in the Pacific to support long-time series research
    for Fisheries-Oceanographic Coordination Investigations (FOCI), VENTS,
    Oregon/Washington Groundfish Habitat and maintenance of the Tsunami
    moorings in the Gulf of Alaska and Pacific Ocean. The increase will
    enable NOAA to continue to meet research requirements in the Pacific
    Ocean, Gulf of Alaska, and Bering Sea utilizing time aboard UNOLS and
    other vessels.
        Climate Monitoring and Ocean Observations.--NOAA requests an
    increase of $5.4 million for a total of $54.6 million to recapitalize
    the laboratories that conduct climate research, which includes $0.6
    million for purchasing equipment and improving the scientific
    activities that contribute to the long-term observing systems that
    directly support the President's CCRI initiative. These observing
    systems are the Global Ocean Observing System (GOOS); the Global Air
    Sampling Network and a gas network at four baseline observatories, and
    at Niwot Ridge, CO; and the Tropical Atmosphere Ocean (TAO) array which
    is the cornerstone of the El Nino/Southern Oscillation (ENSO) Observing
    System and other ocean observing systems.
        NOAA requests an increase of $8.3 million for a total of $36.6
    million for the Archive, Access, and Assessment programs working in
    Climate Services. This continued investment will be used for the
    following activities:
      --Regional Climate Services & Assessments.--To develop an improved
            climate data and information delivery service. This will allow
            NOAA to improve national, regional and state linkages and make
            national, regional, state, and local weather and climate
            observing systems and data bases more accessible.
      --Next Generation Environmental Information.--To develop a new
            generation of World Wide Web accessible climate information and
            statistics for primary use by the energy sector of our economy.
            This funding will allow NOAA to overhaul the current methods
            and procedures for computing climate information such as
            heating and cooling degree days, heat indices, wind chills,
            freezing degree days, and other related statistics with the
            goal of making this information more appropriate and timely for
            business decision-making and strategic planning purposes.
      --World Ocean Database.--This investment will be used to update the
            World Ocean Database to include new sources of data and to put
            in place the analytical and data management infrastructure
            needed to transition this activity from the current research
            mode to a sustained, operational service mode.
      --Extending America's Climate Record.--NOAA will use the funds to
            gather key paleoclimatic records to fill gaps; reconstruct
            climate records during pre-instrumental periods; and produce
            blended data sets that integrate instrumental, historical, and
            paleoclimatic data into a holistic climate record.
      --Solar X-ray Imager Archive.--NOAA will use the SXI archive to
            derive new products to help reduce the effects of extreme space
            weather events on telecommunications satellites, electrical
            power services, and health risks to astronauts.
                        modernization of noaa fisheries
        The fiscal year 2003 President's Budget Request for NOAA, invests
    in core programs needed for our National Marine Fisheries Service
    (NMFS) to meet its mission to manage fisheries, rebuild stocks, and
    protect endangered species such as sea turtles and whales. NMFS
    modernization funds will be allocated to ensure that existing statutory
    and regulatory requirements are met for fisheries and protected species
    management programs (including the Magnuson-Stevens Act, National
    Environmental Protection Act, Endangered Species Act, Marine Mammal
    Protection Act, and other statutory requirements). This budget request
    continues NOAA's effort to modernize NOAA's Fisheries. The
    Modernization of NMFS encompasses a long-term commitment to improve the
    NMFS structure, processes, and business approaches. In addition to this
    budget request, the Administration will propose that any
    reauthorization of the Magnuson-Stevens Fisheries Conservation and
    Management Act include authority for fishing quota systems within
    regional fisheries, including transferable quotas, where appropriate.
    This initiative focuses on improving NMFS' science, management, and
    enforcement programs and begins to rebuild its aging infrastructure.
    These improvements will result in measurable progress in the biological
    and economic sustainability of fisheries and protected resources. To
    continue this modernization program, NOAA's fiscal year 2003
    President's Budget Request includes the following program investments
    in Science, Management, and Enforcement.
    Science: $74.8 Million Increase
        Fisheries Research Vessel.--NOAA requests an increase of $45.5
    million for a total of $50.9 million for NOAA's second Fisheries
    Research Vessel (FRV2). This vessel will replace the 39-year old
    ALBATROSS IV in the North Atlantic. Costs of maintaining the aging
    ALBATROSS IV for the five years needed to construct the replacement FRV
    and to allow side-by-side missions for calibration purposes are
    escalating. Moreover, replacing the aging fleet is required to provide
    research platforms capable of meeting increasingly sophisticated data
    requirements for marine resource management.
        Modernize Annual Stock Assessments.--NOAA requests an increase of
    $9.9 million to modernize annual stock assessments. Funding will allow
    NMFS to conform to new national stock assessment standards of data
    quality, assessment frequency, and advanced modeling. An increase of
    $5.1 million is requested to provide for the recruitment and training
    of stock assessment biologists and supporting staff to produce annual
    stock assessments that meet the new standard for Federally managed
    stocks. This request would also add an increment of 260 Fisheries
    vessel/charter days at sea toward the balance of 3,000 days identified
    in the NOAA Fisheries Data Acquisition Plan at a cost of $2.4 million.
    The initiative includes $0.9 million for advanced sampling
    technologies. This element targets improvements and innovative uses of
    existing technologies, including the application of new and advanced
    sampling systems and approaches. Also, included in this request is $1.5
    million to enhance fisheries oceanography studies, principally, the
    Fisheries and the Environment program (FATE).
        Endangered Species Act Sea Turtle Research.--NOAA requests an
    increase of $2.0 million for a total of $6.5 million to continue the
    recovery of highly endangered sea turtles. Of the $2.0 million
    increase, $1.4 million is to provide the necessary research to recover
    highly endangered marine turtles. This program is designed to help us
    collect information on biology and habitats and share that information
    with other range countries. The remaining $0.6 million is requested to
    implement management strategies to reverse population declines,
    implementation of multi-lateral international agreements, and building
    capacity through domestic and international educational and outreach
    programs.
        Columbia River Biological Opinion (BiOp) Implementation.--NOAA
    requests an increase of $12.0 million to provide for the research,
    monitoring, and evaluation (RM&E) necessary to continue implementation
    of measures included in the Columbia River Biological Opinion. The RM&E
    program will provide the scientific information necessary to assess
    whether BiOp performance measures are being achieved at 2003, 2005, and
    2008 check-ins. This funding also provides for the research needed to
    address key uncertainties identified in the BiOp in the areas of
    estuary and near-shore ocean survival, delayed effects related to dam
    passage, and the effects of hatchery programs on the productivity of
    naturally spawning fish.
        Recovery of Endangered Large Whales.--NOAA requests an increase of
    $1.0 million to provide resources to scientifically determine whether
    two key endangered whales--humpbacks and bowheads--have recovered and
    are candidates for delisting. This information will enable NOAA to
    detect changes in the status of large whales and prevent any long-term
    irreversible damage to these populations.
        Socioeconomics.--NOAA requests an increase of $1.5 million for a
    total of $4.0 million to support the on-going development of a multi-
    year comprehensive social sciences program to support NMFS policy
    decisions. The approach is 3-tiered, augmenting the integral components
    of a successful social sciences program that includes staffing ($0.6
    million and 7 FTE); data collection ($0.5 million); and research
    activities ($0.4 million). In combination, the funding will be used to
    continue addressing shortcomings in economic and social assessments of
    policy alternatives by improving the economic and social science staff
    capability, and initiation of data and applied research programs.
        National Observer Program.--NOAA requests an increase of $2.9
    million for a total of $17.0 million for the National Observer Program.
    Funding will be used to expand the collection of high quality fisheries
    and environmental data from commercial and recreational fishing vessels
    to assess impacts on marine resources and fishing communities and to
    monitor compliance with marine resource laws and regulations. This
    request will primarily provide for approximately 4,000 observer sea
    days spread over 11 fisheries, most of which are currently unobserved.
    Management: $6.4 Million Increase
        NMFS National Environmental Policy Act (NEPA) Implementation.--NOAA
    requests an increase of $3.0 million for a total of $8.0 million to
    continue striving to enhance its management of the NEPA process. This
    funding will provide NMFS with the necessary resources to continue to
    support agency-wide NEPA activities and will allow NMFS to strengthen
    its decision-making and documentation process to more fully take
    advantage of the decision making tools provided by NEPA.
        Regional Fishery Management Councils.--NOAA requests an increase of
    $1.9 million for a total of $16.0 million for the Regional Fishery
    Management Councils. This request will provide needed resources for the
    Councils to respond to increased workload in developing, implementing,
    and supporting management measures to eliminate overfishing and rebuild
    overfished stocks; identify and protect essential fish habitats; reduce
    fisheries' bycatch to the maximum extent practicable; minimize the
    impacts of fishing regulations on fishing communities; and to implement
    programs that result from the next reauthorization of the Sustainable
    Fisheries Act. These results will be achieved through the development
    of amendments to and creation of new Fishery Management Plans and
    regulations and corresponding and supporting international management
    measures to control fishing activities.
        Statutory and Regulatory Requirements.--NOAA requests an increase
    of $1.5 million to provide for thorough, complete, and timely
    environmental and economic analyses to NOAA customers and for its
    recovery programs. Funds will support personnel in all NMFS regions,
    science centers and headquarters to conduct required data gathering,
    analysis, and document preparation to assess the impacts of human
    activities that affect protected species. These include the range of
    Federal actions, including management of marine fisheries. This funding
    will also support assessments of the environmental and socioeconomic
    impacts, costs and benefits of implementing conservation programs for
    protected species.
    Enforcement: $9.7 Million Increase
        Enforcement and Surveillance.--NOAA requests an increase of $4.3
    million for a total of $39.3 million to expand and modernize NMFS'
    fisheries and protected species enforcement programs. These programs
    include Alaska and west coast groundfish enforcement, protected species
    enforcement, state and local partnerships, specialized Magnuson-Stevens
    investigatory functions, community oriented policing and problem
    solving, and swordfish/Patagonian toothfish import investigations.
        Vessel Management System (VMS).--NOAA requests an increase of $5.4
    million for a total of $7.4 million for additional support and
    continued modernization and expansion of the vessel management system
    (VMS) program. These resources will create a program which will monitor
    approximately 1,500 vessels and is readily expandible. VMS technology
    is an invaluable tool for modern fisheries management. It provides
    outstanding compliance without intrusive at-sea boardings, enhances
    safety at sea, and provides new tools to managers for real time catch
    reporting.
                            other key noaa programs
        NOAA is constantly pursuing areas where the expertise of our
    researchers, scientists, and staff can contribute to solving problems.
    Therefore, NOAA has other key programs that respond to these
    challenges. They are Energy, Homeland Security, Ocean Exploration, and
    Coastal Conservation.
                                     energy
        Energy Initiative.--NOAA requests a total of $6.1 million to
    implement a pilot program that will provide more accurate temperature
    and precipitation forecasts, and additional river forecast products to
    help the energy industry improve electrical load forecasting and
    hydropower facility management. Based on industry estimates, this
    investment will result in savings of $10 to $30 million annually in the
    pilot region after the second year of the demonstration. Expanding the
    pilot nation-wide could generate savings of over $1 billion per year.
        Energy Permit Rapid Response.--NOAA requests a total of $2.0
    million to support the establishment and implementation of a
    streamlined energy permit review process. This proposal responds to an
    Executive Order directing Federal agencies to expedite permits and
    coordinate Federal, state, and local actions needed for energy-related
    project approvals on a national basis and in an environmentally sound
    manner. The goal of this request is to reduce, by 25 percent, the time
    required to adjust the permits of licensed energy projects/facilities.
    Currently, re-licensing of existing facilities takes 6-10 years. It is
    anticipated that the combination of regular re-licensing and permit
    adjustments to implement the new National Energy Policy will result in
    thousands of new actions for NOAA nationally.
        Energy Management.--NOAA requests a total of $0.6 million for
    Energy Management. The requested funds will be used to reduce NOAA's
    facility operating costs through actively pursuing energy commodities
    at competitive prices, identifying and implementing energy savings
    opportunities and applying renewable energy technologies and
    sustainable designs at NOAA-managed facilities. Many of the equipment
    retrofits that are a part of energy management have enabled facilities
    to recover their costs in less than five years.
                               homeland security
        On September 11, 2001, the Nation experienced an unprecedented
    attack on the World Trade Center and the Pentagon. NOAA immediately
    implemented its agency-wide Incident Response Plan, and was able to
    rapidly deploy critical assets, capabilities, and expertise to support
    response and recovery efforts. NOAA personnel in weather offices,
    satellite and remote sensing teams, hazardous materials units, marine
    transportation and geodesy offices, and fisheries enforcement teams
    provided a wide range of products and services.
        NOAA's response to the September 11 attacks was rapid and focused.
    However, the attack fundamentally altered the context of NOAA's
    incident response planning. The threats resulting from attacks on the
    nation may be different in nature, and larger in scale and scope. Thus,
    NOAA's Homeland Security efforts are focused on enhancing its response
    capabilities and improving internal safety and preparedness. NOAA is
    working quickly to improve its ability to coordinate emergency
    response, to evaluate its existing capabilities, and to identify
    products and services that will meet the challenge of new response
    realities. NOAA's Homeland Security activities are dedicated to
    advancing the coordinated efforts within the Department of Commerce,
    the Office of Homeland Security and assisting NOAA's many federal,
    state, and local partners.
        In fiscal year 2003, funding is requested to address the most
    immediately recognized areas of programmatic vulnerabilities to ensure
    the continuity of the most critical of NOAA's services and information
    products in the event of natural or man-made emergencies.
        Vessel Lease/Time Charter.--NOAA requests an increase of $9.9
    million for a Vessel Lease/Time Charter. In fiscal year 2003, NOAA will
    continue assisting DOD in mapping and charting key port areas. NOAA
    will initiate a vessel time charter to expand its hydrographic
    surveying capacity. While having the capability to operate throughout
    America's Exclusive Economic Zone (EEZ), initial emphasis during fiscal
    year 2003 will be in the Gulf of Mexico. Ninety-five percent of
    America's non-NAFTA economic trade moves through the marine
    transportation system. Any interruption in the flow of goods through
    our nation's marine transport system yields immediate and dire impact
    to the national economy. Four of the top seven port areas are found on
    the Gulf of Mexico, including: (1) New Orleans and South Louisiana, (2)
    Houston/Galveston, (3) Port Arthur, TX and Lake Charles, LA; and (4)
    Corpus Christi, TX. The combination of high traffic, hazardous cargos
    and vessels operating close to the ocean bottom make waterways and
    ports particularly vulnerable to terrorist activities including those
    utilizing low technology mines. Requested funding provides critical
    survey data to directly enhance safety of mariners, passengers, and the
    national economy from threats both natural or human in origin.
        NESDIS Single Point of Failure.--NOAA requests a total increase of
    $2.8 million to provide backup capability for all critical satellite
    products and services. This effort supports the continuity of critical
    operational satellite products and services during a catastrophic
    outage. In fiscal year 2003, NOAA will begin the first phase of
    hardware, software, and telecommunications purchases; and perform
    initial testing of all capabilities for this backup system. The
    requested funding also supports installing additional communications
    links to connect the backup location to the NOAA Science Center in Camp
    Springs, Maryland.
        Satellite Facilities Security.--NOAA requests a total of $2.3
    million, an increase of $0.3 million, to maintain enhanced security at
    the satellite Command and Data Acquisition ground stations. NOAA
    requires these funds to enhance the systems that protect these
    stations, reducing the risk to satellites and ground systems due to
    breaches in security. These satellite stations represent the backbone
    of the ground systems that support NOAA spacecraft programs-commanding,
    controlling, and acquiring data from on orbit satellites with an
    estimated value of $4.5 billion.
        NWS Gateway Critical Infrastructure Protection.--NOAA requests a
    total of $3.0 million for the National Weather Service
    Telecommunications Gateway Backup (NWSTG). During fiscal year 2003,
    this funding will enable the NWS to complete the establishment of the
    NWSTG facility. After scheduled deployment in early fiscal year 2004,
    the continued funding level of $3.0 million will cover recurring costs
    for NWSTG backup communications, system software licenses, systems
    operations and maintenance support, facility rent, and cyclical
    technology refreshment. This will ensure uninterrupted delivery of
    critical meteorological data necessary for the protection of life and
    property, and the economic well being of the Nation.
        Weather & Climate Supercomputing Backup.--NOAA requests a total of
    $7.2 million to implement an operational backup system for the NWS
    weather and climate supercomputer. The NWS weather and climate
    supercomputer is a critical component of NOAA's mission and is
    currently a single point of failure as the entire system is located in
    a single facility. Many of the data, products and services provided by
    and through the Central Computer System (CCS) directly contribute to
    the issuance of life saving NWS watches and warnings to the public. The
    NWS weather and climate supercomputing backup system is a critical part
    of DOC's Homeland Security Initiative and NOAA's comprehensive business
    continuity plan, designed to support uninterrupted data and product
    delivery to NOAA customers. The National Center for Environmental
    Prediction's (NCEP) CCS is currently the only computer system within
    NOAA capable of running highly complicated forecasting models in the
    required operational (regimented) mode. During fiscal year 2003 the NWS
    will acquire the necessary backup system hardware capability, conduct
    site selection, and begin installation.
        Commercial Remote Sensing Licensing.--NOAA requests a total of $1.2
    million for the Commercial Remote Sensing Licensing and Enforcement
    Program to ensure the timely review and processing of satellite license
    applications. This NOAA investment will support staff engaged in the
    review of commercial remote sensing licensing applications. NOAA will
    also support monitoring and compliance activities, which include the
    review of licensee quarterly reports, on-site inspections, audits, and
    license violation enforcement. The funds requested in fiscal year 2003
    will also support implementation of shutter control over commercial
    systems to ensure that our Nation can respond to commercial remote
    sensing security issues in national security and foreign policy crisis
    situations.
                           ocean and coastal programs
        NOAA requests a total of $14.2 million for Ocean Exploration, this
    includes a small amount for adjustments-to-base. This program seeks to
    increase our national understanding of ocean systems and processes
    through partnerships in nine major voyages of discovery in fiscal year
    2003. Ocean Exploration is investment in undersea exploration,
    research, and technology in both the deep ocean and areas of special
    concern, such as the U.S. Exclusive Economic Zone (EEZ), and National
    Marine Sanctuaries (NMS).
        NOAA's coastal conservation activities total $348.5 million, and
    are central to accomplishing the mission of environmental monitoring,
    and underscore a commitment to coastal, estuarine, and marine
    ecosystems. NOAA's activities include Coastal Zone Management; Marine
    Sanctuaries, Estuarine Research Reserves, and Marine Protected Areas;
    Coral Reefs, Habitat, and Other Coastal Conservation & Restoration
    Programs; and Pacific Salmon recovery Fund and Treaty. Many of these
    programs receive adjustments-to-base, and there is an increase for
    Cooperative Conservation and Recovery with States. NOAA requests a
    total of $1.0 million for Cooperative Conservation and Recovery with
    States to provide funds to state partners under the Endangered Species
    Act Section 6 cooperative conservation program. These agreements will
    provide the means for states and local communities to undertake local
    initiatives in the management and recovery of ESA-listed and candidate
    species by providing the legal authority to make the decisions about
    how best to protect species at risk of extinction. The agreements would
    provide funding on a matching basis to accomplish conservation
    activities. Funding provided to the states would support local
    researchers, non-governmental organizations and volunteers to
    accomplish monitoring, restoration, science and conservation
    activities.
                          financial management in noaa
        NOAA will continue to improve its core financial management
    responsibilities in order to meet the future needs of NOAA and its
    stakeholders. NOAA has placed a high priority on the proper execution
    and accounting of its resources. Key budgetary and financial management
    improvements are centered around three key areas: (1) Improved Funds
    Control and Execution through Automation; (2) Improved Budget
    Structure; and (3) Improved Outreach and Communications.
    Improved Funds Control and Execution through Automation
        Included in the fiscal year 2003 request is $16.1 million for
    NOAA's share of the Commerce Administrative Management System (CAMS).
    CAMS will contribute to improved financial management in a number of
    significant ways, primarily by accounting for NOAA's expenditures and
    maintaining NOAA's clean audit opinion. While NOAA has made significant
    efforts to retain its clean audit opinion for a third consecutive year,
    it has done so with inefficient manual, error-prone business processes
    that are labor-intensive. Without significant amounts of overtime and
    creative manual resource tracking, NOAA's accounting details would be
    non-existent. CAMS will provide financial managers with on-line, real-
    time, and accurate financial information and will enable NOAA and DOC
    to meet statutory obligations under the Federal Managers' Financial
    Integrity Act (FMFIA) and the Chief Financial Officers Act (CFO Act).
    Improved Budget Structure
        In the fiscal year 2003 budget, legislation is requested to
    establish a Business Management Fund (BMF) for corporate centralized
    services in NOAA. For decades, NOAA has managed its centralized
    services through a funding mechanism supported in its current financial
    management system, FIMA, known as indirect costs. The process by which
    funds were collected and distributed to support centralized services
    was convoluted at best, and fraught with inconsistencies. Three years
    ago, NOAA began a comprehensive effort to review its corporate funding
    methodologies and work toward moving its headquarters management fund
    into a business-like environment. A number of improvements have been
    realized already, including stability in corporate charges for three
    years in a row, returning unspent corporate costs, and reporting to
    customers the status of funds mid-year and at year-end. However, to
    complete this effort of truly realizing a business fund operation, NOAA
    requires legislation. No current legislation exists for NOAA to operate
    this fund, particularly after FIMA is replaced by CAMS. Once
    legislation is secured, NOAA will begin to develop budgetary
    documentation with the same rigor and reporting as required with
    appropriated funds. Already underway, in support of this effort is
    NOAA's initiative to implement Activity Based Costing (ABC) across all
    of the Office of Finance and Administration's key business lines. ABC
    studies are being completed to compute costs for services such as human
    resources, grants, and eventually all other support services. The end
    result of these studies will be the ability to charge customers a fee
    for services, based on actual and estimated usage, and by the specific
    services required. This will replace the flat rate, off-the-top
    methodology employed today and will allow charges to be tailored to
    line offices' specific requirements. NOAA is committed to bringing its
    corporate services up to 21st century standards, and the flexibility of
    a business management fund is a cornerstone of our plan.
        Over the past several years, NOAA has been working to respond to
    Congressional concerns regarding its budget structure. NOAA, in
    conjunction with both Congressional and Administration assistance,
    recently restructured the budget during the fiscal year 2002
    Appropriations process. However, this effort is just a beginning, and
    NOAA will continue to work with Congress to ensure that our budget is
    adapted to Congressional reporting needs and concerns. For example, in
    the fiscal year 2003 budget, NOAA has added additional specialty tables
    that will allow Congress to track budgetary initiatives that cross
    multiple programs and/or NOAA Line Offices, and NOAA has enhanced its
    base narratives to be more descriptive. Also, in support of flexible
    budgetary reporting, NOAA is developing a budget database that moves
    its tracking tables from the current lotus driven environment to a
    database environment. This will allow for more accurate tracking,
    quicker response to inquires, and allow for greater flexibility in
    preparing budgetary charts in response to Congressional and
    Administrative inquires. In conjunction with OMB, NOAA has developed a
    simplified tracking table that clearly indicates NOAA's primary mission
    areas.
        Finally, NOAA began an effort to conduct a position and FTE
    management review. This effort began in fiscal year 2002 and was
    adopted during the fiscal year 2002 appropriations process. The fiscal
    year 2002 efforts focused developing an accurate baseline of FTEs based
    on actual usage. The baseline was completed and has been implemented.
    In fiscal year 2003, NOAA's efforts will focus on ensuring that the
    positions associated with this new baseline are aligned properly with
    program requirements.
                                   sea grant
        I would also like to explain the Administration's proposal to
    transfer funding for the Sea Grant College Program to the National
    Science Foundation (NSF). The Sea Grant program plays an important role
    in marine and coastal research and is a cost-effective way to address
    new problems in marine research management. Under the Administration's
    proposal, the current Sea Grant structure would be replaced with a
    university-based coastal and ocean program modeled after the NSF
    centers, with input from researchers, educators and practitioners,
    through workshops. NSF will retain the Sea Grant College designation
    for qualified centers. The program will be open to all public and
    private institutions of higher education through a fully competitive
    process. NSF also has a lower matching requirement, so state and local
    funds will be freed up to address outreach and extension needs of local
    communities. NOAA will have a strong role in setting research
    objectives for the program. To ensure the program transfer does not
    adversely affect current awardees, NSF will transfer funds to NOAA to
    support the current award commitments through the duration of their
    grant period.
        Several studies of the Sea Grant Program have noted its
    effectiveness, as well as its problems. In 1994, the National Research
    Council (NRC) found that NOAA's Sea Grant Program has played a
    significant role in U.S. marine science, education, and outreach. The
    review's recommendations included better defining the roles of the
    National Sea Grant Office, the Sea Grant College programs, and the Sea
    Grant Review Panel, and streamlining the proposal review and program
    evaluation processes. Many of the recommendations of the NRC report
    have been adopted by the program and were also incorporated in the 1998
    Amendments to the National Sea Grant College Program Act. In a November
    2000 study, entitled ``A Mandate to Engage Coastal Users,'' a committee
    led by Dr. John Byrne of Oregon State University and the Kellogg
    Commission indicated Sea Grant has been effective in facilitating the
    Nation's sustainable development of coastal resources by helping
    citizens make better informed and wiser decisions. Twenty-two of the 30
    state Sea Grant Programs have undergone performance evaluations by
    teams of outside reviewers and Sea Grant peers. Sixteen were graded
    ``excellent'' in achieving significant results. A program was graded
    ``excellent'' if it produced significant results, connected Sea Grant
    with users, and was not found to need improvement in areas such as
    long-range planning and management. Sea Grant's 1999 Hammer Award-
    winning program in seafood safety training and the national marina
    management effort are examples of other successful national programs.
    Through the years, a number of successful partnerships have been
    established between NOAA and the National Science Foundation (NSF),
    such as the Teacher-at-Sea Program, our partnerships with NSF on the
    U.S. Global Change Research Program and the U.S. Weather Research
    Program, as well as the Study of Environmental Arctic Change (SEARCH)
    program. And, NSF supports some applied research programs, such as the
    Small Business Innovation Research and Technology Transfer programs.
                                   conclusion
        NOAA's fiscal year 2003 Budget request invests in people, climate,
    energy, homeland security, infrastructure, and high priority research,
    science, and services. This budget maintains NOAA on its course to
    realize its full potential as this nation's premier environmental
    science agency. NOAA is also doing its part to exercise fiscal
    responsibility as stewards of the Nation's trust as well as America's
    coastal and ocean resources. And, in the same way that NOAA is
    responsible for assessing the Nation's climate, we are responsible for
    assessing and improving our management capabilities. NOAA will continue
    to respond to key customers and stakeholders, and will continue to
    leverage its programs and investments by developing those associations
    that most efficiently and economically leverage resources and talent,
    and that most effectively provide the means for successfully meeting
    mission requirements. Thank you for the opportunity to present NOAA's
    fiscal year 2003 budget.

                 OPENING STATEMENT BY VICE ADMIRAL LAUTENBACHER

        Admiral Lautenbacher. Thank you, Senator Hollings. It is a
    great pleasure and privilege to be here with you this morning.
    I appreciate the opportunity to answer questions and to support
    our budget request for fiscal year 2003. If I could just take 2
    or 3 minutes to summarize the highlights, I will be very brief,
    sir.
        I want to thank the committee for their support of NOAA
    over the years. This support has been very important to our
    country and to our organization and we appreciate that and we
    look forward to working with you during this budget cycle as we
    have in previous years.
        The budget this year is a total of $3.3 billion that we are
    requesting. This is roughly level with last year's request. It
    is a budget that maintains the services and critical products
    and support that NOAA provides for our country. There are
    several high-priority items that I would like to emphasize.
        First of all, it is our emphasis and request for people. We
    are asking for the funds to ensure that pay raises and
    maintenance of our corps of scientists and experts in all
    areas, from weather to fisheries management to ecosystem
    development, that that base of people be maintained in their
    current condition. We believe that that is very important for
    the country and our organization. That is our number one
    priority, sir.
        We also have a number of small initiatives in this budget
    which I think are very important to us, small in a sense in
    terms of the larger budget picture, but I wanted to mention
    several of them. It is the continuation and the development of
    our NPOESS satellite system. This is a joint program with the
    Department of Defense. It is on track and on schedule. There is
    an extra $63 million in that line, in our satellite line, which
    allows for the normal development of this program. The NPOESS
    satellite will replace our polar orbiting satellite system
    starting in 2008.
        We have also requested funds for a second fisheries
    research and survey vessel. Recapitalization of our survey
    fleet, in fact, our entire fleet, is a very important issue. We
    believe this is deserving of your support, sir.
        We also have money in there for increasing our fisheries
    surveys, to improve our management of sustainable fisheries. We
    believe that increase is important to maintain our knowledge,
    increase our knowledge, and for prudent management of our
    fisheries.
        We also have an increase of about $9 million for
    enforcement issues regarding fisheries. We think that moving to
    technology innovations like vessel monitoring system on our
    vessels will provide high-tech solutions and will help our
    observer problem. This will ensure fair enforcement across the
    board and will go a long way toward improving our management.
        We have also taken steps to improve our internal management
    of NOAA budgets. We are asking for a business management fund
    authority this year which will allow us to use activity-based
    costing, be much more aware and cognizant of the types of
    internal costs it takes for providing central services, such as
    HR and human resource management and budget management.
        We also have organized our budget in accordance with
    directives of Congress, hopefully to make it easier for
    everybody to understand and to help us as we deliberate for the
    future.
        Again, thank you very much to all the members of this
    committee for their support and help for our great organization
    and I look forward to answering your questions, sir. Thank you.
        Senator Hollings. Admiral, we appreciate it very much and
    we are all working for the good of the order.
        Just one observation, that somehow, somewhere, sometime,
    this administration might sober up and settle down. For one,
    they seem to act like the administration is not the execution
    of the laws and policies of the Congress, but what they think
    ought to be done. Wonderful. We have had many administrations
    come up and request of us, why do we not change this, do this,
    do that, and everything else of that kind. And we do it, three
    readings in the House, three in the Senate.
        Now, we just had the Attorney General testify. He came with
    a wild idea to take COPS on the beat, law enforcement at the
    local level, which has got a stellar record now for the past 10
    years, since we put in this community policing, and send it
    over to FEMA where they do not know anything about law
    enforcement and are not supposed to know anything about law
    enforcement.
        You read in the morning paper where they want to take
    Customs, which is working good, and put it over in the Border
    Patrol and INS and Justice told me it would be vice-versa.
    There is no reason to jumble it up. Border Patrol is working.
    Customs is working. Parts of the INS are working. It is just
    you have got to get somebody in there to tell the congressional
    callers to bug off. What happens is where you have got local
    enforcement with respect to the immigration, a Congressman will
    call and tell the head of the INS that their agents are out of
    hand and everything else because they are enforcing the law
    that Congress passed. Let us get with the program and
    understand what has been happening. These industries are flying
    in from Guatemala and elsewhere illegals to do the work, and so
    when we go to enforce it.

                     TRANSFER OF SEA GRANT COLLEGE PROGRAM

        Now, we start with your Department. Out of the blue, to the
    National Science Foundation gets the sea grant program. Nobody
    heard about it. I have been here for a few years, since its
    initiation in the very beginning of NOAA. If you move sea
    grant, you lose your State extension programs, you lose your
    student educational programs at the universities and everything
    else of that kind, just send it over to the National Science
    Foundation. Was that your suggestion?
        Admiral Lautenbacher. No, sir. This occurred before I came
    into my current position.
        Senator Hollings. Did you----
        Admiral Lautenbacher. I am a strong supporter of the sea
    grant program and I believe the administration wants to see the
    sea grant program continue, as well, sir.
        Senator Hollings. But where do they want it, because they
    have eliminated the $62 million for the sea grant program. That
    is why I am asking the question.
        Admiral Lautenbacher. Yes, sir. There are a number of pros
    and cons on the management of the sea grant program. The
    administration looked at it this year and looked at the heavy
    component that it has in common with research management and
    felt that our four-star research organization, NSF, could do a
    better job in terms of managing the bulk of that program. That
    is one pro which was looked upon as a very positive effort for
    this program. The decision was made, along with several other
    programs that had significant research components, to move them
    into NSF. It was part of a larger package, Senator.
        Senator Hollings. Well, I understand that is about as good
    of an answer as you can give, but the ocean exploration
    initiative by our ranking member and myself, has now been
    recognized by the administration. The only trouble is, it is
    unfunded at the level of $14 million. You have got space at $14
    billion. The ocean is seven-tenths of the Earth's surface, 95
    percent unexplored, and $14 million. That will handle one
    research project in one part of this seven-tenths of the
    Earth's surface. So let us see if we cannot do even better on
    that.

                          NMFS LITIGATION CASE BACKLOG

        On the other hand, let us look more particularly at your
    fisheries. We had, long before your coming, some cases and we
    noticed in the middle of the 1990s we only had 15 cases, but
    then it got up to 100, and we put some money into it and now
    they have got 150 active cases there in the fisheries. The
    National Marine Fisheries is asking for an additional 115
    positions, but none of it going to the litigation problems.
    Why?
        Admiral Lautenbacher. We have about $3 million for
    improvements in the NEPA process and another $1.5 million in
    regulatory increases. Our NEPA program is essentially handled
    by all of the various parts of the NMFS organization that deal
    with these types of cases.
        We are putting more resources into it. I am also conducting
    an internal review of all of NOAA management processes right
    now. I am hoping that at the end of this, that we will find
    better ways of managing our business. I am not a fan of having
    all of these court cases, as you know, sir, and I am looking
    for ways to improve that, as well.
        We do have a modest down payment for improvements in our
    NEPA process in this budget and I look forward to doing more in
    the future.
        Senator Hollings. Admiral, the year before last, a
    fisheries case held up the entire Government. We could not
    finalize our budget. We could not finalize and adjourn for
    Christmas until that fishery case was disposed of, and the
    distinguished member of the panel up here is more familiar with
    it than myself, but these fisheries cases, let us get on top of
    them and get them out of the way.
        Admiral Lautenbacher. Yes, sir.
        Senator Hollings. Senator Gregg.
        Senator Gregg. Thank you, Mr. Chairman.

                       NATIONAL SEA GRANT COLLEGE PROGRAM

        I want to associate myself with your concerns about the sea
    grant program. It is my view that NOAA is the proper agency to
    continue to manage the sea grant program. NOAA is the leading
    oceanographic research entity, it is the most advanced agency
    in the world as far as ocean issues are concerned, and although
    sea grant is theoretically basic research, NOAA does a great
    deal of basic research as well as applied research and it makes
    no sense at all to move it over to NSF. I would hope that the
    chairman would accept an amendment from myself, or maybe the
    chairman or the ranking member of the full committee, which
    would make it clear that sea grant is a NOAA operation when we
    get to markup.

                       FISHING RESTRICTIONS IN NORTHEAST

        On another issue, the fish issue, in New England, we have a
    very serious situation. We just had a ruling by a Federal judge
    here in Washington which potentially not only shuts down our
    fisheries for commercial fishermen, but ironically shuts it
    down for pleasure fishermen and charter boats, which makes
    virtually no sense at all. We recognize the fish stock is a
    huge question and a huge problem for us on the Grand Banks and
    in the Gulf of Maine, and I am sure my friend from Rhode Island
    appreciates this problem as much as I do, but this appears to
    be an overreaching, especially when it applies to private
    fishing that is of a recreational nature and to charter boats,
    which are popular things for people to do with their kids and
    for school groups to take, to go out and learn about the ocean,
    if nothing else.
        So I am interested in getting your thoughts on where this
    is going to go and where we are going to end up.
        Admiral Lautenbacher. Well, we are in a difficult position
    because the courts have taken the case. We are in a position of
    being accused of not doing enough to support the laws of the
    land in sustainable fisheries. We are still working to mediate
    with the parties involved to see if we cannot reach a more
    acceptable solution that balances the needs of both the
    environmental community and economic interests.
        The matter is not finished yet, by a long shot. I
    understand your concerns. I am keeping myself involved with
    this. Bill Hogarth has been personally involved with this
    continuously for the last couple of months now. We will
    continue to work to try to balance these interests. It is a
    very difficult issue. We are not done yet. So I am hoping that
    we can reach a better solution than we have right now.
        Senator Gregg. Are you in active negotiations with
    different parties, including the Conservation Law Foundation in
    Boston, which is the basic energizer of the position that you
    did not go far enough in your original proposals?
        Admiral Lautenbacher. I have not had an update in the last
    couple of days on the negotiations, but we have been in contact
    with them over the past several weeks, let me say that, and I
    will get you a better update and up-to-the-minute accounting
    for that, Senator.
        [The information follows:]

            Status of Negotiations With Conservation Law Foundation

        A number of the parties involved in the New England
    Groundfish case have reached a settlement agreement. Parties
    involved in the agreement are: the Conservation Law Foundation,
    NOAA/NMFS, the State of Maine, the Commonwealth of
    Massachusetts, the State of New Hampshire, the State of Rhode
    Island, the Associated Fisheries of Maine, the City of
    Portland, the City of New Bedford, the Trawlers Survival Fund,
    Paul Parker, Craig Pendleton, the Northwest Atlantic Marine
    Alliance, the Stonington Fisheries Alliance, the Saco Bay
    Alliance, and the Cape Cod Commercial Hook Fishermen's
    Association. The court was notified of this settlement
    agreement on Monday, April 15, 2002. Any parties that have not
    agreed to the settlement had until noon on Friday, April 19,
    2002 to respond to the settlement. NOAA is now waiting to hear
    from the Judge if the settlement agreement is accepted by the
    Court.

        Senator Gregg. Well, it is a huge issue for us in New
    England and how we resolve it is going to have a major impact
    on a lot of families and, really, a lot of fisherman and just
    the character of the region. I do not know if you ever read the
    little book called ``Cod.'' It is worth reading, though. It is
    about how the cod basically founded America.
        That was the theme of the book.
        Senator Hollings. Before Al Gore?
        Senator Gregg. Yes, it is an incredible little book. It may
    overstate the case, but it definitely makes the case that the
    culture of New England is tied to the cod.
        I also want to thank Deputy Administrator Gudes for coming
    to New Hampshire yesterday. I am glad he got out before the
    snowstorm. We appreciate his support and his attention to the
    concerns of our university and to the exciting things that are
    happening up there with NOAA, so thank you very much.
        Senator Hollings. Senator Stevens.
        Senator Stevens. Thank you very much. Good morning,
    Admiral.
        Admiral Lautenbacher. Good morning.

                        ADDRESSING GLOBAL CLIMATE CHANGE

        Senator Stevens. As you know, I have spoken often about the
    changes that are taking place in Alaska because of the impact
    of global climate change. I am not sure I am an advocate of
    global warming because Antarctica is getting colder and the
    Arctic is getting warmer, but in any event, our forests
    definitely are moving further north. Permafrost is melting. We
    have several villages along the Arctic coast that have been
    inundated in the summertime because of high water. In four of
    them, the only means of access or egress is by the air and
    their strips were underwater for about 1 month last summer.
        The National Science Foundation committed $30 million for
    the SEARCH program, it is called the Study of Environmental
    Arctic Change, to study climate change. You have $149 million
    for climate change research. Can you tell me, how does that fit
    in with what the NSF is doing? Are you going to be involved at
    all in the Arctic research to determine what is going on or how
    we can understand what is going on in the Arctic?
        Admiral Lautenbacher. We have put in an increment. I admit
    it is a very small one, but it is an increment for $2.5 million
    to join with NSF in the SEARCH program that you just talked
    about. We also are looking at plans for our ocean observing
    system, to include, obviously, observing posts and sensors that
    would include the Arctic and the Antarctic. The poles are
    obviously bellwethers of what is happening in the atmosphere
    and our whole environment in terms of climate.
        It is very important to me personally to learn more about
    it and to get better observations and better models. I am
    hoping that we will be able to put more effort into this in the
    future, but I think it is recognized within NOAA. We are adding
    money in this year's budget to help with this research.
        Senator Stevens. For $2.5 million, you get about a couple
    of weeks' computer time, Admiral.
        Admiral Lautenbacher. Yes, sir.
        Senator Stevens. I really hope that you can find some way
    to pick up that pace. When I was chairman of the committee, we
    went down to Antarctica to look at the change down there and I
    will never forget walking down into the American station, and
    as I walked down, about 40 feet down a slope, I asked the
    person in charge why they had decided to build the Antarctic
    station under the ice and he said, ``You do not understand.
    This was the surface of the ice when we came here.'' They have
    got a buildup, a tremendous buildup of ice down there. The
    continent may well break up because of the pressure of it, and
    we are losing the ice.
        I do not think $2.5 million will cut it, Admiral. I hope
    that you will find some way to join in a robust study with the
    National Science Foundation to try and tell us if there is any
    indication that that change is brought about by any activity of
    man. If it is not, then we had better get ready for a real
    change in the globe if it proceeds at the rate it is going
    right now.

                               NOAA SOLE SOURCING

        On another subject, last week, I was pleased to see that
    the Commerce Department pulled back a grant, $97,000, approved
    by the Marine Sanctuary Office of NOAA. It was sole-sourced to
    an entity, as a matter of fact, I call it a radical
    environmental entity, to study marine sanctuaries.
        I have two questions for you. How come NOAA is sole-
    sourcing money for purposes such as that, and why is it that we
    even need to go outside of Government to get people to study
    the marine sanctuaries? I thought you had an ample number of
    employees that NOAA could have done that job. Can you tell us
    why?
        In addition to that, I might tell you that there is a
    provision in the 1980 Alaska National Interest Lands Act that
    prohibits additional withdrawals in Alaska. That covers the
    oceans as well as the land, because of the battle we had at
    that time. I am sure you know that Glacier Bay has lands that
    the Federal Government claims, notwithstanding the Tidelands
    Act, in the 3-mile limit off our shore. Outside of those areas
    where Congress created such a sanctuary, however, you have no
    authority in the 3-mile limit to create sanctuaries without
    State approval, and yet this contract, as I understand it, was
    to study additional areas off our State, having this
    environmental organization make those studies. Can you tell me
    why?
        Admiral Lautenbacher. Well, first of all, I was unaware
    that this contract was in place, having only been here a couple
    of months. As soon as I found out about it, it was no longer in
    place. I am not a big fan of sole source and I think any sole-
    source contracts need to be reviewed at a much higher level
    than this one was reviewed at, so we have taken care of that
    problem.
        Now, why did that happen? I have been informed that the
    folks that were doing this felt that the technical ability of
    the people involved in this organization were of sufficient
    value in terms of being able to mediate and bring people
    together to a table and to discuss issues, they had a success
    which was considered a bellwether in that type of work and they
    were trying to capitalize on it. So it was not done with any, I
    think, negative purposes. But be that as it may, it is not in
    place any longer and we will not do business that way within
    NOAA, sir.
        Senator Stevens. Well, I have a problem with the Government
    contracting with an advocacy group, that is known as an
    advocacy group, to make scientific studies.
        Admiral Lautenbacher. I have trouble with that, too,
    Senator.

                       NATIONAL SEA GRANT COLLEGE PROGRAM

        Senator Stevens. Let me go back to what the chairman and
    Senator Gregg said about sea grant. We are constantly besieged
    in this committee by the administration and others saying that
    we are appropriating monies for items that were not authorized
    by law. NOAA is authorized by law to conduct the sea grant
    program. It is a specific law.
        Could you tell me, did you have any attorneys or your
    general counsel's opinion that you have the authority not to
    ask for money for sea grant? If sea grant is going to get
    money, it should be according to the law that authorized it,
    which makes the sea grant a portion of your agency and of your
    Department. Yet I am told that the request shifts sea grant
    over to NSF. That amounts to a reorganization of the Government
    by budget request.
        Admiral Lautenbacher. The budget request reflects the
    administration's decision to consolidate the national sea grant
    college program and the research programs into the National
    Science Foundation.
        Senator Stevens. We are having too many fights around here
    about prerogatives, but there is one prerogative. That is a law
    that was signed. The distinguished chairman and I helped to
    create the sea grant program and we know where it should be and
    where the money should be requested to go, and yet now it is
    over at NSF. We support NSF entirely, but that was not the
    understanding of who was going to run the sea grant program and
    the law says it is NOAA. I would urge you to go back and ask
    your general counsel about that before we go any further,
    because I think this is going to end up in your Department,
    notwithstanding the budget.
        Admiral Lautenbacher. I understand, Senator. Thank you.
        Senator Stevens. Thank you, Mr. Chairman.
        Senator Hollings. Thank you very much, Senator Stevens.
        Senator Reed.
        Senator Reed. Thank you, Mr. Chairman, and thank you,
    Admiral. Let me, too, underscore what my colleagues have said
    about the proposed transfer of sea grant functions from NOAA to
    NSF. The University of Rhode Island is a major participant in
    the sea grant program and it has been a very effective and a
    very, I think, productive relationship with NOAA and I would
    hate to see that cease, so you can add me to the list.

                           GROUNDFISHING IN NORTHEAST

        Let me also touch upon an issue that Senator Gregg raised
    and that is the issue of groundfishing in the Northeast. The
    National Marine Fisheries Service, as you know, has been
    attempting to balance the demands of restocking groundfish with
    the need to allow fishermen to fish and it is a very difficult
    issue. Now, it is involved in court proceedings. But let me ask
    one aspect of this situation.
        There are proposals to buy out some of the groundfishing
    licenses and operations. The concern I have, and I wonder if
    you might address it, is that that could force fishing activity
    to other species. In Rhode Island, we have been way ahead of
    the curve in going after underutilized species and become
    somewhat successful. So I wonder if you are gauging the impact
    of buying out the groundfish permits, the impact on other
    species. Could you comment, Admiral?
        Admiral Lautenbacher. Yes. We have had a number of attempts
    at the buy-out process over the years. My understanding, after
    looking at the history, is that we have not done very well in
    terms of setting up a program which makes sense. You end up
    taking care of one small piece and then you end up creating
    problems somewhere else.
        Everyone that works for me is aware of that, and as we are
    looking at the potential of how to do this, that will be taken
    into account because we do not want to exacerbate the issue
    with other species or other parts of the New England regional
    or any part of our country, for that matter. So I am well aware
    of it and I will not support any buy-out program that does
    damage or has the potential to do damage in other parts of our
    fisheries.
        Senator Reed. Thank you, Admiral.
        One other issue. When I talk to the fishing operators in
    Rhode Island, and we have an extensive fleet at Galilee and
    other parts of Naragansett Bay, they complain that a lot of
    policy is being made with scanty information, that the type of
    information that is necessary for sound policy of following
    fish populations, projecting fish populations, is not there.

                         NMFS ANNUAL STOCK ASSESSMENTS

        Last year, the administration requested $15 million for the
    National Marine Fisheries Service to expand annual stock
    assessments. I think the need, as I understand it, is close to
    probably $25 million. Your request this year is $12 million.
    The committee has responded in the past, but probably not
    aggressively enough. Can you comment about the resources for
    information gathering, stock assessment, et cetera?
        Admiral Lautenbacher. The resources for stock assessments
    are still inadequate. We have an increase in this year's
    budget, based on the total levels of resources that we had and
    priorities to meet. We added money to this area. I would like
    to improve the validity and the extent of our information on
    fishery stocks. We are not to the levels we need to be. We have
    come a long way, however, and I think some of the data that we
    are taking is really very good, but it needs to be expanded. We
    have a number of stocks that are not covered as well as they
    should be.
        Senator Reed. It strikes me, too, that sometimes the
    litigation problems might result, in some respect, from this
    poor information, that decisions are made and then later easily
    questioned because the intervenors, the petitioners can point
    to poor analysis. That at least gets them past the summary
    judgment.
        So I think your comment would be appreciated, that this
    might in the longer run help you make decisions that are less
    likely to be challenged in court, is that your sense?
        Admiral Lautenbacher. Yes, sir, I believe that. I think
    another big part of our problem is process. We do not follow
    our processes very well in NEPA, which was brought up by
    Senator Hollings. So we have those two issues to deal with,
    yes, sir.
        Senator Reed. Thank you, Admiral. Thank you, Mr. Chairman.
        Senator Hollings. Admiral, two things in thanking you. On
    that climate change initiative, I think, overall, with respect
    to the Government, we appropriate some $4.5 billion. In NOAA,
    you have only $110 million of the $4.5 million, and I am
    looking and finding a majority of that money is over there in
    Energy, and it is just political appointments over there and
    they use it politically. They were into the CAFE standards
    adversely just recently on last week's debate and everything
    else. It is sort of frustrating that you are given the
    responsibility and you are limited in money, and then politics
    holds you so that you cannot develop a good policy in global
    climate change protocols.
        Remember when you get a chance at the higher levels of
    Government mentioning this so that we start straightening that
    out, and otherwise, watch that Kennedy fund.
        Admiral Lautenbacher. Yes, sir.
        Senator Hollings. We only get $4.5 million and one big $5
    million grant was given to a good colleague of ours to get a
    vote with respect to trade promotion authority. Let us bring
    back--you are of high integrity, so let us get some integrity
    back into the Kennedy program.
        Are there any further questions?
        [No response.]
        Senator Hollings. We thank you very, very much for what you
    are doing over there. We are lucky to get you.
        Senator Gregg. Let me just echo that. We are very
    appreciative of your taking this job on. It is a superb agency
    and we look forward to continuing to strongly support it.

                         ADDITIONAL COMMITTEE QUESTIONS

        Admiral Lautenbacher. Senator Hollings, thank you and the
    distinguished members of the committee very much. It has been a
    pleasure to be here today. I look forward to working with you.
    Thank you, gentlemen.
        Senator Hollings. Thank you.
        [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 Judd Gregg
                      noaa organization and administration
        Question. Admiral, is the National Oceanic and Atmospheric
    Administration (NOAA) organized appropriately to successfully fulfill
    its mission? Do you think NOAA headquarters is organized and staffed
    appropriately to analyze and transfer information up and down the chain
    of command accurately and efficiently? If not, how would you change
    things?
        Answer. As I have only been on board at NOAA for a few months, I
    haven't determined if NOAA is organized appropriately to successfully
    fulfill its mission. As I mentioned during the hearing, I am conducting
    an internal review of all of NOAA management processes. I hope that at
    the end of this review, I will be able to better assess NOAA's
    organizational structure and implement changes if necessary.
        Question. Please provide an organizational chart of NOAA
    headquarters broken out to the lowest level of organization. For each
    box include the office's budget in fiscal year 2002 dollars, and the
    number and description of the various positions (include all positions:
    FTE, detail, contractor, fellow, or otherwise). Additionally, in a
    table format please provide the same information for years fiscal year
    1998 through fiscal year 2003. (Use the President's budget for 2003.)
        Answer. See attached organizational chart and Attachment A for the
    NOAA headquarters breakouts for fiscal years 1998-2003.

     NATIONAL OCEANIC AND ATMOSPHERIC ADMINISTRATION UNDER SECERTARY AND ASSOCIATED OFFICES HISTORICAL FTE, DETAILEES, CONTRACTORS AND BUDGETS, FISCAL YEAR
                                                                            1998-2003
    --------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                  Fiscal Year 1998 Actual         Fiscal Year 1999 Actual         Fiscal Year 2000 Actual
                                                             -----------------------------------------------------------------------------------------------
                                                               FTE   Detail   Cont   Dollars   FTE   Detail   Cont   Dollars   FTE   Detail   Cont   Dollars
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    Undersecertary's Office.................................     13  ......  .....     3,265     14  ......  .....     3,439     10  ......  .....     2,381
    Dep. Undersecertary's Office............................      5       6  .....       294      5       6  .....       255      7       6  .....       418
    Chief Scientist.........................................      4  ......  .....     1,197      4  ......  .....     1,092      4       1  .....       722
    Public & Constitutient Affairs..........................     37  ......  .....     3,897     37  ......  .....     3,575     35       6  .....     4,530
    Policy & Strategic Planning.............................     10  ......  .....     1,004     16  ......  .....     1,018     10       5  .....     1,008
    Sustainable Dev. & Intergov. Affairs....................      9  ......  .....     1,368     10  ......  .....     1,574     11  ......  .....     1,472
    Legislative Afairs......................................     20  ......  .....     1,561     21  ......  .....     1,649     21  ......  .....     1,724
    International Affairs...................................      8  ......  .....       906      9  ......  .....       752      8  ......  .....       856
    General Counsel.........................................    103  ......  .....     7,625    110  ......  .....     7,765    110  ......  .....     8,555
    Federal Coordinator for Meteorology.....................  .....  ......  .....  ........     13  ......  .....  ........     10  ......  .....  ........
    Military Affairs........................................  .....  ......  .....  ........  .....  ......  .....  ........  .....  ......  .....  ........
                                                             -----------------------------------------------------------------------------------------------
          Total.............................................    209       6  .....    21,117    239       6  .....    21,119    226      18  .....    21,666
    --------------------------------------------------------------------------------------------------------------------------------------------------------

    --------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                  Fiscal Year 2001 Actual        Fiscal Year 2002 Enacted      Fiscal Year 2003 President's
                                                             ----------------------------------------------------------------             Budget
                                                                                                                             -------------------------------
                                                               FTE   Detail   Cont   Dollars   FTE   Detail   Cont   Dollars   FTE   Detail   Cont   Dollars
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    Undersecertary's Office.................................     12  ......  .....     2,392     13  ......  .....     2,349     13  ......  .....     3,076
    Dep. Undersecertary's Office............................      8       8      1       750      4       6      1       569      4       6  .....       703
    Chief Scientist.........................................      4  ......  .....       578      5  ......      2       500      5  ......      2       639
    Public & Constitutient Affairs..........................     36       5  .....     3,560     36  ......      3     3,570     36  ......      3     4,209
    Policy & Strategic Planning.............................     10  ......  .....       916     10       3  .....       913     10       3  .....     1,080
    Sustainable Dev. & Intergov. Affairs....................     10  ......  .....     1,031     11  ......  .....     1,074     11  ......  .....     1,328
    Legislative Afairs......................................     21  ......  .....     1,711     21       1  .....     1,707     21       1  .....     1,875
    International Affairs...................................      9  ......  .....       718     10  ......  .....       761     10  ......  .....       846
    General Counsel.........................................    110  ......  .....     9,275    112  ......      3     9,547    112  ......      3    10,734
    Federal Coordinator for Meteorology.....................     11  ......  .....  ........     10       2      2       833     10       2      2       902
    Military Affairs........................................  .....  ......  .....  ........  .....  ......  .....  ........  .....  ......  .....  ........
                                                             -----------------------------------------------------------------------------------------------
          Total.............................................    231      13      1    20,931    232      12     11    21,823    232      12     10    25,392
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    Note: NOAA doesn't maintain historical records of contract employees as they are hired on an as needed basis.

                             noaa energy initiative
        Question. In your House Hearing, you claimed that the energy
    initiative in the Northeast was ``not logical''. Please explain.
    Additionally, please explain why it makes sense to initiate a pilot
    program in one region and terminate that program before it is taken
    operational, in order to initiate a similar operational program in
    another region. Have the two energy programs initiated in fiscal year
    2002 been well-received by the community? Are these programs
    successful? What level of funding would be required to take the two
    energy programs in the northeast operational? Which NOAA programs would
    be most appropriate to receive these funds to make these programs
    operational?
        Answer. NOAA responds to the energy needs of society by pursuing
    research, development and implementation of programs that will lead to
    better weather and climate forecasts, safer and more efficient energy
    transportation and expedite energy permitting. The Northeast pilot
    program begun in fiscal year 2002 was a research program designed to
    evaluate the potential use of air quality and improved temperature
    forecasts to increase the efficiency of energy, production,
    dispatching, and distribution. The funding will support research and
    development of an innovative temperature and air quality forecast
    systems during fiscal year 2002. An external economic evaluation of the
    program will produce a final report in fiscal year 2003, and will be
    the basis for further studies of the use of environmental information
    in the energy sector in the Northeast.
        The Energy Security Program requested in fiscal year 2003 is an
    operational program that will be used to improve the accuracy and
    reliability of forecast models of hydrology (e.g., precipitation and
    water flow), weather and climate conditions. Improvements in the
    forecast models will be used to increase the efficiency of energy
    production, dispatching and distribution. The focus of this program is
    the Southeastern United States where unlike the Northeast, there is
    greater reliance on hydropower and an opportunity to test and evaluate
    potential improvements in river flow forecasts that will improve the
    efficiency of water management and hydropower generation. Air Quality
    forecasting studies will not be conducted in this program. The
    preliminary results of the fiscal year 2002 pilot program will help
    determine the appropriate implementation of the observing network in
    the Southeast.
        Additionally, the southeast was identified through NOAA's internal
    process as the target region. The decision was based on both need and
    opportunity as expressed by industry stakeholders nationwide who were
    consulted in the development of the pilot program. The information
    gained from conducting the fiscal year 2002 pilot program will benefit
    the fiscal year 2003 program and is applicable to all regions of the
    country. The long-term goal is to expand the program nationwide.
        The programs for fiscal year 2002 have been well-received by the
    research community. However, it is too early to determine the level of
    success of the programs because the operating plan was finalized
    recently and research has just begun.
        An evaluation of the funding levels required to take the fiscal
    year 2002 pilot program operational has not been completed. The results
    of this evaluation will help us determine the scope of future costs
    required to make the pilot operational and to expand the program beyond
    the pilot region. NOAA's Energy Security Program is a collaborative
    effort between Office of Atmospheric Research (OAR) and National
    Weather Service (NWS). This program is coordinated by OAR, and NOAA's
    fiscal year 2003 President's Budget requests funding in the amount of
    $6.1 million in fiscal year 2003 for OAR to coordinate this program.
                         new england groundfish lawsuit
        Question. As you know, a lawsuit filed by the Conservation Law
    Foundation and others found that the Department of Commerce and the
    National Oceanic and Atmospheric Administration violated federal laws
    when they failed to prevent overfishing and bycatch in the New England
    groundfish fisheries. The U.S. District Court is currently reviewing
    options for a remedy. Did you include an analysis of the social and
    economic consequences of the remedy you provided to the court? Why or
    why not? Is it true that if your proposed remedy is accepted, the
    average income of New Hampshire's fisherman could be cut by almost 45
    percent? If your remedy or a more aggressive remedy is ordered by the
    court, what will you do to ensure that the fishing industry remains a
    vital industry in New Hampshire?
        Answer. On March 1, 2002, the National Marine Fisheries Service
    (NMFS) proposed to the Court, on behalf of the Secretary, to bring the
    Northeast Multispecies Fishery Management Plan (FMP) into full
    compliance with the Sustainable Fisheries Act, the Magnuson-Stevens
    Fishery Conservation and Management Act (Magnuson-Stevens Act) and all
    other applicable law as quickly as possible by way of three separate
    actions: a Secretarial interim action under authority of section 305(c)
    of the Magnuson-Stevens Act, to be implemented by May 1, 2002, which
    would be effective for 180 days; a Secretarial amendment to the FMP,
    under authority of section 304(e) of the Magnuson-Stevens Act, to be
    implemented before the Secretarial interim action expires in October
    2002; and Amendment 13 to the Northeast Multispecies FMP, to be
    completed by NMFS and the New England Fishery Management Council and
    implemented by August 2003.
        The Secretarial interim action, the first part of this approach,
    will put in place important measures to reduce overfishing on major
    groundfish stocks in the Northeast, particularly for Gulf of Maine
    (GOM) cod, and will monitor and assess bycatch. NMFS has prepared an
    Environmental Assessment for this action, as required by the National
    Environmental Policy Act (NEPA), which analyzes the expected
    biological, social, and economic impacts of a range of alternatives.
    The remedy proposed to the Court on March 1, 2002, did not contain the
    analysis in the Environmental Assessment, because the Environmental
    Assessment was still under revision. A summary of the economic and
    social impacts of the interim action was provided to the Court in a
    Declaration by Pat Kurkul filed on April 1, 2002.
        The analysis indicates that for the preferred alternative, the
    relative distribution of impacts is greatest for New Hampshire vessels,
    with 50 percent of all New Hampshire vessels having an estimated loss
    in gross fishing income of 21.4 percent or greater. One-quarter of all
    New Hampshire vessels would lose at least one-third of vessel income,
    and 10 percent of vessels would lose 43.6 percent of their May-October
    fishing income. The estimated adverse impacts on Maine and
    Massachusetts vessels were comparatively lower than they were for New
    Hampshire vessels, but they are significant just the same, especially
    considering the fact that there are twice as many Maine vessels than
    New Hampshire vessels, and Massachusetts vessels outnumber New
    Hampshire vessels by more than 8:1. Thus, while New Hampshire vessels
    fare relatively worse than Maine and Massachusetts vessels, the overall
    impact on the state of New Hampshire is likely to be less than that on
    Maine and Massachusetts. Across all of these states, 84 vessels will
    have an estimated loss in May-October income of at least 30 percent or
    greater. Under the Non-Preferred Alternative, which relies on expanded
    area closures in the GOM to achieve the necessary mortality objectives
    for GOM cod, New Hampshire vessels would be more adversely affected at
    all percentiles (except the 90th) than they would be under the
    Preferred Alternative.
        Depending on what the Court orders for May 1, 2002, the Agency
    will, provided the Court allows, develop and analyze a range of
    alternatives, as has been done for the interim action, to determine
    what alternative meets the goals and objectives of the Court Order and
    that has the least social and economic impacts to the fishing industry.
    Given the outcome of this lawsuit, it is likely that the adverse short-
    term impacts will be felt broadly across the Northeast and across all
    industry sectors. We will do everything possible to spread the impacts
    fairly and to ensure that the benefits that accrue from rebuilt stocks
    will also be shared equitably.
        Question. The National Oceanic and Atmospheric Administration
    submitted the agency's proposed remedy for the New England groundfish
    violations to the court in early March. Weeks later, the agency
    announced new scientific findings regarding the fisheries in question.
    Why didn't the agency conclude its scientific investigation and
    announce its findings prior to the submission of their remedy to the
    court? Will these new scientific conclusions undermine the credibility
    of the agency's proposed remedy? Does the public announcement of these
    new findings on the day all comments are due to the court, undermine
    the ability of the intervening parties to consider the best available
    science when submitting their comments to the court?
        Answer. The reevaluation of the biological reference points
    (biomass at maximum sustainable yield (Bmsy), fishing mortality at
    maximum sustainable yield (Fmsy)) for all of the groundfish stocks
    regulated under Amendment 9 was deemed necessary to provide information
    to the New England Fishery Management Council (Council) for preparation
    of Amendment 13 to the Fishery Management Plan. It was based on a
    reevaluation of biological reference points for the GOM cod stock,
    completed in the spring and summer of 2001. In re-evaluating the Bmsy
    and Fmsy values for that stock (33rd Stock Assessment Workshop (SAW),
    September 2001), the peer review scientific panel noted that the
    biological reference points for the GOM cod stock contained in
    Amendment 9 were inappropriately estimated, using incorrect models. The
    33rd SAW proposed new revised values of Bmsy and Fmsy based on models
    deemed to be more scientifically valid. The revised values of Bmsy and
    Fmsy reported by the 33rd SAW for GOM cod are essentially the same as
    those proposed in a final report entitled the ``Working Group on Re-
    Evaluation of Biological Reference Points for New England Groundfish'',
    prepared by a scientific working group in which NMFS' scientists met
    with outside scientists on February 12-14, 2002.
        Since many of the stocks regulated under Amendment 9 suffered from
    the use of inappropriately estimated biological reference points
    calculated by the age-aggregated biomass dynamics model, when age-
    structured models were more scientifically valid, scientists undertook
    a thorough but expedited reassessment of reference points in order to
    provide the Council with needed information so it could expedite the
    development of Amendment 13. Biological reference points are routinely
    updated in stock assessments of various fisheries, and the Sustainable
    Fisheries Act permits the revised values of Bmsy and Fmsy to be
    substituted, when appropriate, without requiring revised Fishery
    Management Plan amendments.
        Because the revised values of Bmsy and Fmsy reported by the 33rd
    SAW for GOM cod are essentially the same as those proposed in the final
    report on the re-evaluation of biological reference points produced by
    the scientific working group, the interim action and the Secretarial
    amendment, the first and second part of the three-part remedy proposed
    to the Court, incorporate these new scientific findings for GOM cod
    and, thus, propose to implement measures to move rebuilding of this
    stock in the right direction.
        Unfortunately, it was impossible to provide the public with the
    final report of the revised biological reference points for the
    remaining groundfish stocks well in advance of March 1 due to the time-
    consuming task of updating this science, developing the final report
    and allowing scientists outside the Northeast region an opportunity to
    review and comment on the report. However, a summary of the report was
    presented to the Council at its March 19-21, 2002, meeting, at which
    the public was present.
                                role of science
        Question. What is the future of science within the National Oceanic
    and Atmospheric Administration? Should the science be consolidated or
    distributed throughout the agency? Currently, the science supporting
    the National Weather Service and the National Environmental Satellite,
    Data and Information Service is based in the Office of Oceanic and
    Atmospheric Research, while the science supporting the National Ocean
    Service and the National Marine Fisheries Service is based within those
    line offices. Does this make sense? What is the rationalization for
    this structure?
        Answer. The current distribution of scientific functions within
    NOAA is based on a series of historical decisions made over many years.
    NOAA is currently conducting a rigorous internal program review to
    determine if NOAA, as currently organized, is best positioned to
    accomplish its missions successfully and efficiently now, and in the
    future. The role and distribution of science activities is an important
    part of this review, and while it is still ongoing, it would be
    premature to speculate on the future direction of science within NOAA.
    Results of this review will be available at the end of May 2002.
                       national sea grant college program
        Question. Why did the Administration transfer Sea Grant to the
    National Science Foundation?
        Answer. This proposal is a result of a review of Federal science
    programs that the Office of Management and Budget (OMB) conducted and
    is consistent with the President's Management Agenda. The transfer is
    part of a wider Administration effort to promote competitive funding of
    scientific research and to capitalize on the demonstrated excellence of
    the NSF and its program management.
        Question. What will happen to the state Sea Grant programs if the
    transfer is allowed?
        Answer. Should the transfer occur, the states will have to
    determine and set their individual priorities and determine how much
    funding to provide to their Sea Grant programs. The Administration is
    not capable of determining whether each state would choose to continue
    funding Sea Grant programs if the transfer occurs.
        Question. Is the National Science Foundation equipped to carry out
    the outreach and extension mission of the Sea Grant program?
        Answer. If the transfer occurs, it would be NSF's decision as to
    how to allocate the $57 million proposed for Sea Grant in the
    President's budget. NOAA and NSF will coordinate in identifying
    research priorities. If the transfer occurs, the NSF program will not
    be designed to support the Sea Grant Marine Advisory Service functions,
    as it is currently operated. However, it will support outreach
    activities for K-12, graduate, and undergraduate education.
        Question. Under what authority is the Department of Commerce
    allowed to transfer the Sea Grant program to the National Science
    Foundation?
        Answer. The Administration has requested the transfer through the
    fiscal year 2003 budget request, and recognizes that Congress must
    approve the transfer for it to occur. The Administrations' position is
    that NSF needs no additional statutory authority to manage a new Marine
    Science Program.
                                     ______

               Questions Submitted by Senator Ernest F. Hollings
                       noaa's national sea grant program
        Question. The $62 million Sea Grant program is slated for
    termination under NOAA and reconstitution under the National Science
    Foundation. Under the National Science Foundation (NSF), Sea Grant
    would lose its university partnerships and its extension program. Why
    are you proposing to eliminate the successful Sea Grant College
    Program?
        Answer. The proposal is a result of a review of Federal science
    programs that the Administration conducted and is consistent with the
    President's Management Agenda. Under the proposal, the Sea Grant
    program would be administered as an NSF/NOAA partnership. The transfer
    is part of a wider Administration effort to promote competitive funding
    of scientific research and to capitalize on the demonstrated excellence
    of the NSF and its program management.
                                 nmfs lawsuits
        Question. Litigation against the National Marine Fisheries Service
    (NMFS) has increased steeply to the point where there are 150 active
    cases this year. To improve NMFS's ability to manage its regulatory
    cases the Committee has provided $42 million in the past two years.
    NMFS has only one person responsible for administering this program. In
    its fiscal year 2003 budget request, NMFS asks for an additional 115
    positions, none of which are to work on the litigation problems.
        Clarification: As of May 3, 2002, the NMFS has 103 open cases--a
    number of those cases are old cases, where the court has ruled but
    still retains jurisdiction, so we keep them on our litigation database
    (they are open cases in the legal sense but not necessarily active
    cases). Also included in the list of 103 are cases where the court has
    ruled, but the time for appeal has not expired.
        What is NOAA doing with the National Environmental Policy Act
    funding that the Committee has provided?
        Answer. Of the fiscal year 2001 and 2002 appropriated NEPA funds
    totaling $42.0 million, approximately $26.0 million were grants. The
    amount for grants included $5.7 million divided among the eight
    Regional Fishery Management Councils. Of the remaining amount, $11.9
    million was provided for in-house research and management activities
    and $4.1 million were contracts. Please see the following table for
    distribution of the $42.0 million.

    ------------------------------------------------------------------------
     NEPA--Funding by Programs,
        Projects, Activities       In-house  Contracts    Grants     Total
    ------------------------------------------------------------------------
    Alaska--Impact on Ocean
     Climate Shifts--Steller Sea
     Lion:
        Fiscal year 2001........  .........  .........     $6,000     $6,000
        Fiscal year 2002........  .........  .........     $6,000     $6,000
                                 -------------------------------------------
          Subtotal..............  .........  .........    $12,000    $12,000
                                 ===========================================
    Alaska--Predator/Prey
     Relationships--Steller Sea
     Lion:
        Fiscal year 2001........  .........  .........     $2,000     $2,000
        Fiscal year 2002........  .........  .........     $2,000     $2,000
                                 -------------------------------------------
          Subtotal..............  .........  .........     $4,000     $4,000
                                 ===========================================
    Alaska--Steller Sea Lion/
     Pollock Research--N.
     Pacific Council:
        Fiscal year 2001........  .........  .........     $2,000     $2,000
        Fiscal year 2002........  .........  .........     $2,000     $2,000
                                 -------------------------------------------
          Subtotal..............  .........  .........     $4,000     $4,000
                                 ===========================================
    NEPA--NMFS:
        Fiscal year 2001........     $1,809     $1,999     $4,192     $8,000
        Fiscal year 2002........     $3,480  .........     $1,520     $5,000
                                 -------------------------------------------
          Subtotal..............     $5,289     $1,999     $5,712    $13,000
                                 ===========================================
    NEPA--Hawaiian sea turtles:
        Fiscal year 2001........         $0         $0         $0         $0
        Fiscal year 2002........     $2,605       $225       $170     $3,000
                                 -------------------------------------------
          Subtotal..............     $2,605       $225       $170     $3,000
                                 ===========================================
    Hawaii Sea Turtle Research--
     Data Collection:
        Fiscal year 2001........     $2,017       $932        $50     $3,000
        Fiscal year 2002........     $2,018       $933        $50     $3,000
                                 -------------------------------------------
          Subtotal..............     $4,035     $1,865       $100     $6,000
                                 ===========================================
          Total--NEPA Funding...    $11,929     $4,089    $25,982    $42,000
    ------------------------------------------------------------------------

        Funding for NMFS-NEPA ($13 million total for fiscal year 2001 and
    fiscal year 2002) to support the following activities:
      --Preparation of priority Environmental Impact Statements (EIS) that
            were outdated or insufficiently comprehensive, including
            essential fish habitat concerns. Many of these were the subject
            of litigation.
      --Data and analytical support for those efforts both in the regional
            offices and at the Councils to support NEPA compliance.
      --Implement our regulatory streamlining project (regulatory process),
            an initiative to improve the efficiency and effectiveness of
            NMFS' regulatory process. Regulatory streamlining plan has
            multiple components including placing NEPA coordinators in
            regional offices and HQ, providing support to councils for data
            and staff for NEPA, development of national training programs,
            enhancing the use of electronic systems for permitting and rule
            making.
                Fiscal year 2001--$8.0 million (In-house/contract/grants
                        \1\)
    ---------------------------------------------------------------------------
        \1\ $1,120,000 of the $8.0 million was divided among the Regional
    Fishery Management Councils.
    ---------------------------------------------------------------------------
        Overall, this funding was used to address the following NEPA
    related issues:
      --Environmental Impact Study (EIS) on the groundfish fisheries off
            Alaska and for programmatic EISs on the crab, scallop, and
            salmon FMPs inclusive of essential fish habitat (EFH)
            alternatives.
      --Comprehensive programmatic EIS on west coast groundfish fisheries
            inclusive of EFH.
        EISs on Fishery Management Plans were:
      --Western Pacific Regional Fishery Management Council (RFMC):
            pelagic, coral reef ecosystem, bottomfish.
      --Caribbean RFMC: EIS will be written to support an EFH amendment to
            the FMPs for Spiny Lobster, Coral Reef Resources, Queen Conch,
            and Reef, to supplement the EISs for the Spiny Lobster and Reef
            Fish FMPs.
      --Gulf RFMC: EIS will be written to support a generic EFH amendment
            to the FMPs for Coastal Migratory Pelagics, Coral Reefs, Red
            Drum, Reef Fish, Spiny Lobster, and Stone Crabs FMPs.
      --South Atlantic RFMC: To supplement the EISs for the Snapper-Grouper
            and Shrimp FMPs and to write an EIS on Marine Protected Areas.
      --Comprehensive programmatic EISs (inclusive of EFH) in New England
            for amendment 10 to the scallop FMP and amendment 13 to the
            multispecies FMP.
      --EIS to address EFH for monkfish, herring, and salmon.
                Fiscal year 2002--$5.0 million (In-house/contract/grants
                        \2\)
    ---------------------------------------------------------------------------
        \2\ $1.5 million of the $5 million was divided among the Regional
    Fishery Management Councils.
    ---------------------------------------------------------------------------
        Of the remaining $3.5 million:
      --$800,000--To begin hiring the fiscal year 2003 full staff of: 6
            NEPA coordinators (1 HQ, 5 Region); 23 regional support staff
            for various analyses and document management capabilities in
            Councils, regional offices and centers; and Paralegal support
            may also be hired to support regional offices.
      --$30,000 for training in fiscal year 2002.
      --$2.7 million will be spent on the following NEPA related
            activities:
        --There are 2 EIS for the West Coast groundfish; one EFH and one
                programmatic EIS. Continue work started in fiscal year 2001
                on programmatic EIS for west coast groundfish, inclusive of
                EIS in fiscal year 2002, including contracts for data
                analysis and science needs.
        --EIS for coral reef FMP was completed and bottomfish almost
                completed with 2001 funds; crustacean FMP is on hold
                waiting for information on fishery status. Work with 2002
                funds will complete bottomfish and update the pelagics EIS
                for seabirds and begin a new EIS process for a new squid
                fishery to determine if pelagics plan should be amended to
                include this fishery, and lastly work on MHLS and South
                Pacific tuna convention requirements.
        Question. For fiscal year 2003, the National Marine Fisheries
    Service requests 115 new positions. None of these are for paralegals to
    manage case files and enforcement of schedules. Why?
        Answer. After consultation and coordination with NMFS Regional
    Offices on staffing requirements, NMFS is considering hiring paralegals
    to support our litigation activities and will keep the Congress
    informed.
        Question. NMFS does not keep a data base of litigation wins and
    losses and the reasons for the outcomes. It has also failed to report
    progress on management of regulatory issues such as standardized
    formats, assigning paralegals to manage case files and enforcement of
    schedules. In addition, NMFS has not created a regulatory calendar of
    expected regulatory actions. Such a calendar could be available over
    the Internet so that all interested parties could anticipate regulatory
    actions of interest to them. This would also establish a published
    regulatory schedule. Why haven't you implemented such improvements?
        Answer. NOAA General Counsel does maintain a database that tracks
    open and closed cases. However, this database does not enable NMFS to
    respond in a timely way to the numerous queries about litigation. As a
    result, NOAA General Counsel and NMFS have undertaken a joint project
    to develop a searchable database. This searchable database will enable
    agency personnel to access information via the internal website about
    open and closed cases and recent court decisions.
        The Federal government has published the Semi-Annual Unified Agenda
    of Federal Regulatory and De-Regulatory Action (Unified Agenda) and the
    Annual Regulatory Plan. The Regulatory Plan contains the most important
    significant regulatory actions that each agency reasonably expects to
    issue in the current fiscal year or thereafter. The Unified Agenda is
    published twice each year in the Federal Register and contains a
    compilation of the rules planned, in process, and completed for each
    department or agency.
        All NMFS regulatory actions are included in the NOAA portion of the
    Department of Commerce Unified Agenda available on the Internet at:
    http://ciir.cs.umass.edu/ua/info.html. Most rules and regulations are
    also available through the NMFS website.
        Question. There are thirteen layers of review within NOAA of each
    regulatory decision. There is further review in the Department of
    Commerce and OMB. Are you working on streamlining this process?
        Answer. Although the Kammer Report notes thirteen bullets under the
    Rulemaking Process, these represent the different stages in the
    development of a Fishery Management Plan (FMP), not thirteen layers of
    review for a single action. This process is designed to ensure adequate
    opportunity for public participation in the regulatory process. In some
    cases, multiple reviews are noted. However, these reviews are often
    conducted concurrently; they are not necessarily redundant since the
    various offices noted have different functions.
        Under its Regulatory Streamlining Project, NMFS is carefully
    considering such concurrent reviews. We have identified certain cases
    where we can eliminate layers of review without sacrificing the quality
    of the final product.
        To bring about some of these changes, NMFS plans to implement a
    number of measures to ensure the necessary infrastructure is in place
    to support streamlined review processes such as:
      --Update the ``Operational Guidelines for the Fishery Management Plan
            Process'' to incorporate changes in agency procedure (last
            revised 5/1/97).
      --Develop an internet-based guide for agency and Council staff
            containing checklists and examples of required documentation
            for all actions.
      --Adopt mandatory standards for document contents and format to
            ensure that decision documents address all pertinent issues and
            adhere to a basic level of national consistency.
      --Assign regulatory review experts in each region to provide drafting
            assistance and quality control review for all regulations and
            associated documents.
      --Conduct appropriate training to ensure that regional experts are
            fully conversant with Federal Register document requirements,
            compliance with all legal requirements, etc.
      --Establish a quality assurance protocol to monitor whether agency
            fishery management decisions are adhering to all applicable
            requirements.
      --Expand use of the internet to enhance the regulatory process
            through electronic rulemaking.
                             northern right whales
        Question. There are only 300 Northern right whales left in the
    world and each year several of them are killed by being entangled in
    fishing gear or by being run over by ships.
        Biologists have been able to tag Steller sea lions, bluefin tunas
    and Great White sharks, but NMFS claims that Northern right whales
    cannot be tagged. Is this true? Please explain.
        Answer. North Atlantic right whales can be tagged in a variety of
    ways. There have been numerous short-term (1-2 day) successful
    attachments of time-depth recorders, VHF (very high frequency) radio
    tags, and acoustic (underwater transmitter) tags attached to the
    animals using suction cups. Right whales have also been tagged using
    implantable VHF and satellite-linked radio tags.
        In the last two decades of tagging work involving a number of large
    whale species in many locations, the main problem with transmitter
    technology has been attachment methods inasmuch as the tags (even those
    implanted into the tissue) tend to slough off the animal or migrate out
    as a foreign body would. In this regard, the challenges with attachment
    to a whale are different from those species listed in the question. For
    example, in seals and sea lion transmitter studies, the devices are
    glued to the fur or pelage with little impact.
        Nonetheless, a number of successful transmitter studies have been
    conducted. Fourteen implantable VHF tags were successfully attached to
    right whales by Goodyear in the late 1980s. More recently a right whale
    cow was tagged on January 20, 1999, approximately 30 nmi east of
    Fernandina Beach, Florida. The whale and her calf were tracked
    continuously for 44 hours, when tracking was abandoned due to bad
    weather. The pair was relocated on January 25, 1999 and tracked
    continuously for an additional 96 hours.
        Between 1988 and 1997, 41 satellite tags were attached to right
    whales. All tags were implantable. A reliable tag did not result, as
    most instruments failed within a few weeks of the initial deployment.
    In 2000, NMFS provided funds for Oregon State University researcher Dr.
    Bruce Mate and colleagues to conduct satellite tagging studies of right
    whales in the Bay of Fundy. In summer 2000, Dr. Mate successfully
    tagged 16 whales. The study was generally successful, but not all
    transmitters worked. Transmitters sent signals for up to 130 days with
    one transmitter broadcasting during a migration from the Bay of Fundy
    to the coast of South Carolina. It was believed that the antennae on
    the other tags were rubbed off during whale-to-whale contact or contact
    with the sea floor. As a result of the partial success in 2000, Dr.
    Mate continued his studies in 2001 using southern right whales off of
    South Africa. Deployments there appeared to be more successful, and
    NMFS hopes to continue support for Dr. Mate's work on North Atlantic
    right whales in United States and Canadian waters. As a cautionary
    note, there has been much concern expressed over the physiological and
    medical impacts of implantable tags. In response to this concern,
    particularly since right whales are a highly endangered species, NMFS
    has evaluated the tagged whales. Swellings have been noted at the site
    of tag implantation suggesting the tags were creating serious
    infections which could be compromising the health of the whales. Whales
    tagged by Dr. Mate in 2000 were observed during 2001 with follow-up
    photo-studies to track the progress of the wounds. Swellings were
    noted, but there was no evidence of long-term effects.
                        global climate change initiative
        Question. NOAA has budgeted for an $18 million Climate Change
    Initiative. This is part of the President's $40 million multi-agency
    Climate Change Initiative. The overall Federal Climate Change budget is
    $4.5 billion.
        NOAA's fiscal year 2003 Budget request for Global Climate Change
    research and policy is $114 million. What is NOAA's role in the $4.5
    billion federal Global Climate Change research and policy program?
        Answer. NOAA has participated in the government-wide U.S. Global
    Change Research Program (USGCRP) and funds climate research on all the
    elements of the program. These focus areas are: atmospheric
    composition, changes in ecosystems, global carbon cycle, human
    dimensions, climate variability and change, and the global water cycle.
    In support of its mission of environmental monitoring and prediction,
    NOAA plays a lead role in the government in maintaining observing
    systems, providing operational forecast products, and maintaining
    environmental data bases and data distribution systems.
        Question. The budget request proposes a $700 million increase for
    global climate change funding, yet NOAA is asking only for an $18
    million increase. Why isn't NOAA playing a larger role in the global
    climate change arena?
        Answer. Of the approximately $700 million increase in climate
    change funding, $555 million is related to tax incentives for clean
    energy technologies like renewable energy, hybrid and fuel cell
    vehicles, and the conversion of landfill gas to fuel. Increases in
    climate change science, international climate change assistance, and
    certain climate-related energy programs account for the remainder of
    the $700 million increase.
        NOAA is a major participant in the Climate Change Research
    Initiative (CCRI), which was developed through an interagency process.
    The total fiscal year 2003 request in the President's budget for CCRI
    is $40 million. NOAA's request is $18 million, which is 45 percent of
    the government-wide CCRI increase request. The total request breaks
    down according to the following:
        Reduce uncertainties in climate science:
      --Develop reliable representation of the global and regional climatic
            forcing by atmospheric aerosols: $4 million (NOAA: $2 million,
            NASA: $1 million, and NSF: $1 million)
      --Inventory carbon and model sources and sinks: $15 million (NSF: $9
            million, NOAA: $2 million, DOE: $3 million, and USDA: $1
            million)
      --Climate Modeling Center: $5 million at NOAA
        Support policy and management decisions:
      --Tools for risk management under uncertainty: $6 million (NSF: $5
            million and NOAA: $1 million)
      --Atmospheric observations: $4 million at NOAA
      --Oceanographic observations: $4 million at NOAA
      --Satellite observations: $2 million at NASA
        Question. What are your plans for spending the $18 million increase
    you requested for global climate change research in your fiscal year
    2003 budget request?
        Answer. The $18 million will be spent according to the following
    plans:
      --$5 million will be used to establish a Climate Modeling Center
            within NOAA Research's Geophysical Fluid Dynamics Laboratory to
            provide a suite of climate products for decision support by
            policy makers.
      --$8 million will used to support the Global Climate Observing
            System:
        --$4 million will be used in conjunction with the World
                Meteorological Organization system of Observing Networks.
                Working with other developed countries following the
                President's June 11, 2001, speech, NOAA will reestablish
                the benchmark upper-air network, emphasizing data sparse
                areas, and place new equipment in priority sites to measure
                pollutant emissions, aerosol, and ozone.
        --$4 million will be used to contribute to the establishment of an
                ocean observing system that can accurately document climate
                scale changes in ocean heat, carbon, and sea level changes,
                improving fields of sea surface temperature and surface
                fluxes.
      --$2 million will be used for an intensive North American study of
            carbon monitoring.
      --$2 million will be used to allow NOAA to contribute to the
            interagency National Aerosol-Climate Interactions Program
            (joint with NASA, DOE, DOI) that is presently under
            development. The work will focus on the establishment of new
            and augmentation of existing monitoring sites, and efforts to
            establish distribution trends and assess the radiation
            properties of aerosols, which are small particulates in the
            atmosphere.
      --$1 million will go towards work with the National Science
            Foundation to apply the research on decision-making in the face
            of uncertainties, within the framework of existing Regional
            Integrated Science Assessment (RISA) programs.
                  national estuarine research reserve program
        Question. There are 25 National Estuarine Research Reserves (NERRs)
    in the United States; two of them, North Inlet/Winyah Bay and ACE Basin
    are in South Carolina.
        Do you have a backlog of land acquisition and construction needs
    for the NERRs sites?
        Answer. Yes. In addition to the five year projection of reserve
    acquisition and construction projects shown below, NOAA's Office of
    Ocean and Coastal Resource Management has contracted to have a land
    acquisition strategy prepared. The report will document land
    acquisition needs of the reserves system. A draft report is scheduled
    for completion in June 2002. A facilities plan for the sites was
    prepared in 1998, but needs to be updated.
        There are 25 existing National Estuarine Research Reserves with two
    more in the development stage (San Francisco Bay, California and St.
    Lawrence River, New York). NERRS allocations are done in a
    collaborative workshop involving all the NERRS sites and the NOAA
    national program office. The working group determines the split among
    sites, adjusting the split to account for specific needs of each site,
    and accounting for national, system-wide needs.
        See Attachment B for a proposed list of priority projects for
    fiscal year 2003-fiscal year 2007:

                                                                                              ATTACHMENT B
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                     Fiscal Year  Fiscal Year  Fiscal Year  Fiscal Year  Fiscal Year
                      Reserves                                                         Projects                                          2003         2004         2005         2006         2007
                                                                                                                                      Proposals    Proposals    Proposals    Proposals    Proposals
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    ACE Basin, SC...............................  Land acquisition.................................................................  ...........   $2,750,000   $2,500,000   $2,500,000  ...........
    Apalachicola, FL............................  Reserve Visitor Center Renovation/Expansion......................................     $477,000  ...........  ...........  ...........  ...........
    Ches. Bay, MD...............................  Acquire Monie Bay parcel.........................................................  ...........  ...........  ...........     $200,000  ...........
    Elkhorn Slough, CA..........................  Office and Public Meeting Area Expansion.........................................     $665,000  ...........  ...........  ...........  ...........
                                                  Outdoor Classroom/Field Lab......................................................  ...........  ...........     $100,000  ...........  ...........
                                                  Parcel A-adjoining reserve.......................................................     $200,000  ...........  ...........  ...........  ...........
                                                  Parcel B-adjoining reserve.......................................................     $450,000  ...........  ...........  ...........  ...........
                                                  Parcel C-adjoining reserve.......................................................  ...........     $500,000  ...........  ...........  ...........
                                                  Parcel D-adjoining reserve.......................................................  ...........     $800,000  ...........  ...........  ...........
    Deleware, DE................................  Reserve Headquarters addition....................................................     $400,000  ...........  ...........  ...........  ...........
    Grand Bay, MS...............................  Phase II Construction Admin Offices, Ed & Outreach Facility......................     $800,000  ...........  ...........  ...........  ...........
    Great Bay, NH...............................  Facilities.......................................................................     $200,000  ...........  ...........  ...........  ...........
    GTM, FL.....................................  Facility construction: Guana River State Park Facility...........................     $500,000     $500,000  ...........  ...........  ...........
                                                  Facility construction: Complete Environmental Educ. Cntr.........................     $200,000  ...........  ...........  ...........  ...........
                                                  Facility construction: Marineland Facility.......................................  ...........     $250,000     $250,000  ...........  ...........
                                                  Future Land Acquisition..........................................................  ...........     $300,000     $200,000  ...........  ...........
    Jacques Cousteau, NJ........................  Dry labs, cupola enhancement.....................................................     $185,000  ...........  ...........  ...........  ...........
    North Carolina, NC..........................  Research/educational facilities..................................................     $300,000     $200,000  ...........   $2,000,000  ...........
    North Inlet/Winyah Bay, SC..................  Education kiosks and signs.......................................................      $25,000  ...........  ...........  ...........  ...........
                                                  Education Center construction....................................................     $770,000  ...........  ...........  ...........  ...........
                                                  Cottages for visiting researchers and educators..................................  ...........     $450,000  ...........  ...........  ...........
    Padilla Bay, WA.............................  Acquire farmland next to bay (700 acres).........................................     $500,000  ...........  ...........  ...........  ...........
                                                  Exhibits in renovated aquaria/display room.......................................     $450,000  ...........  ...........  ...........  ...........
    Rookery Bay, FL.............................  Expanded vehicle parking Phase V.................................................     $150,000  ...........  ...........  ...........  ...........
                                                  Planning and design: research dormitory Phase VI.................................  ...........     $200,000  ...........  ...........  ...........
                                                  Construction and research dormitory Phase VII....................................  ...........  ...........     $700,000  ...........  ...........
    Sapelo, GA..................................  Construction boat house, dock facility for research vessels, and educational          $100,000  ...........     $100,000  ...........  ...........
                                                   exhibits.
                                                  Water quality research lab.......................................................     $500,000  ...........  ...........  ...........  ...........
    South Slough, OR............................  Acquire Indian Pt. uplands and tidelands.........................................  ...........  ...........  ...........     $914,600  ...........
                                                  Phase II interpretive center renovations exhibit construction....................     $250,000  ...........  ...........  ...........  ...........
                                                  Phase II interpretive center renovations observation tower and...................  ...........     $264,000  ...........  ...........  ...........
                                                  Road repair and North Creek Trail Loop...........................................      $75,000  ...........  ...........  ...........  ...........
                                                  Parking lot expansion............................................................  ...........  ...........      $50,000  ...........  ...........
                                                  Acquire Empire Tidelands (33 acres)..............................................  ...........  ...........  ...........     $100,000  ...........
                                                  Coastal Environmental Learning Center (acq. plan, proj. mgmt.)...................     $100,000      $40,000  ...........  ...........  ...........
                                                  Acquire Joe Ney Uplands (100 acres)..............................................     $100,000  ...........  ...........  ...........  ...........
                                                  Acquire Hayward Creek Uplands (200 acres)........................................  ...........  ...........     $500,000  ...........  ...........
                                                  Acquire Hidden Creek Headquarters (30 acres).....................................  ...........  ...........     $130,000  ...........  ...........
                                                  Acquire Wasson Creek Watershed...................................................  ...........  ...........   $1,000,000  ...........  ...........
                                                  Acquire Elliot Creek Headwaters..................................................  ...........  ...........   $1,100,000  ...........  ...........
                                                  Acquire Small Tract Willing Sellers..............................................  ...........     $150,000     $350,000  ...........  ...........
                                                  Trail System--Historic Jed Smith Expedition Trail................................      $50,000      $60,000  ...........  ...........  ...........
                                                  Trail System--boat shelter.......................................................  ...........  ...........      $35,000  ...........  ...........
                                                  Admin Office in Charleston property acquisition..................................     $100,000  ...........  ...........  ...........  ...........
                                                  Admin Office in Charleston planning and design...................................      $50,000  ...........  ...........  ...........  ...........
                                                  Admin Office in Charleston construction..........................................  ...........     $330,000  ...........  ...........  ...........
                                                  CELC site restoration demolition.................................................  ...........  ...........      $50,000  ...........  ...........
                                                  CELC parking area and landscaping................................................  ...........  ...........      $10,000  ...........  ...........
                                                  CELC reuse existing building.....................................................  ...........      $25,000       $5,000  ...........  ...........
    Tijuana River, CA...........................  Border Field State Park Interpretive Center......................................     $256,000  ...........  ...........  ...........  ...........
                                                  Acquire 20 acre parcel...........................................................     $170,000  ...........  ...........  ...........  ...........
    Waquoit Bay, MA                               Land acquisition.................................................................     $200,000  ...........  ...........  ...........  ...........
    Weeks Bay, AL...............................  Land acquisition (2000 acres)....................................................   $1,039,000   $2,181,000   $1,210,000   $1,588,600   $1,000,000
                                                  Wetland restoration construction.................................................     $250,000  ...........  ...........  ...........  ...........
                                                  Construction needs: equip. storage and workshop bldg.............................  ...........  ...........     $150,000  ...........  ...........
                                                  Construction needs: equip. storage and workshop bldg.............................  ...........  ...........  ...........     $150,000  ...........
                                                  Construction needs: bike-hike trail/boardwalk....................................     $100,000  ...........  ...........  ...........  ...........
                                                  Construction needs: coastal initiative training center...........................  ...........   $1,000,000   $1,000,000  ...........  ...........
    Wells, ME...................................  Land acquisition.................................................................     $400,000  ...........  ...........  ...........  ...........
    Wells, ME...................................  Dormitory........................................................................  ...........  ...........     $560,000  ...........  ...........
                                                                                                                                    ----------------------------------------------------------------
          SUBTOTAL, ALLOCATED FUNDS.............  .................................................................................  $10,012,000  $10,000,000  $10,000,000   $7,453,200   $1,000,000
                                                                                                                                    ================================================================
    UNALLOCATED FUNDS...........................  .................................................................................           $0           $0           $0   $2,546,800   $9,000,000
                                                                                                                                    ================================================================
          TOTAL.................................  .................................................................................  $10,012,000  $10,000,000  $10,000,000  $10,000,000  $10,000,000
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    This projection was updated in fiscal year 2001--however, the fiscal year 2005-fiscal year 2007 figures are not complete.

        Question. Could you provide the Committee with a list of staffing
    needs throughout the NERRs network?
        Answer. With the substantial increases in reserve funding for
    grants over the last three years, staffing levels at reserve sites has
    improved. All personnel at the NERRS sites are state employees, not
    Federal employees. At this point, most reserves have the core staff--a
    manager, research coordinator, and education coordinator. In addition,
    increased funding has allowed many reserves to add a water quality
    monitoring technician, Coastal Training Program coordinator, and part-
    time geographic information technician. Approximately half of the
    reserves also have stewardship coordinators. These positions are funded
    with either state or Federal funds, depending on the site. In general,
    limitations in the ability of the NERRS sites to add staff have been a
    function of a lack of ability to obtain a state funding match or tight
    state FTE ceilings, rather than a shortage of Federal funding for the
    sites. A few sites have been inhibited from adding staff because of
    these state budget and FTE restrictions.
        For NOAA, recent increases in the CZMA Program Administration line
    item have allowed the Estuarine Reserves Division to add much needed
    staff. These staff provide critical support to the reserves and help
    NOAA advance system-wide initiatives.
                           saltonstall/kennedy funds
        Question. Within the past five years, the highest amount of new
    budget authority generated by the Saltonstall/Kennedy program has been
    $4.8 million. The average grant level has been approximately $125,000.
    $11 million was made available for fiscal year 2002. You recently
    issued a $5 million grant to the State of Maine to help the Atlantic
    Salmon Aquaculture Industry. This single grant is more than the entire
    program level in fiscal year 2001 and more than $4.5 million more than
    any other single grant the program has ever issued.
        Clarification: NOAA has not issued a $5 million grant to the State
    of Maine to help the Atlantic Salmon aquaculture industry. For the
    fiscal year 2002 S-K Program, NOAA has reserved $5 million for projects
    addressing Atlantic Salmon aquaculture (Priority A) which will study
    the possible negative impacts of cultured Atlantic salmon on endangered
    wild stocks. Concern about such impacts threatens the viability of the
    Atlantic salmon aquaculture industry. The remaining funds are
    available, in no predetermined allocation, for projects addressing five
    other funding priorities, B-F (see below). The S-K Request for
    Proposals was published in the Federal Register on May 14, 2002.
    Proposals must be submitted by COB July 15, 2002.
        The S-K Program, which NMFS administers, provides financial
    assistance on a competitive basis for research and development projects
    to benefit the U.S. fishing industry. Grants or cooperative agreements
    are awarded to selected applicants for a maximum of 18 months. Eligible
    applicants include individuals, universities, state and local
    government agencies, Indian tribes, businesses, and non-profit
    organizations.
        All applications to the S-K Program must address one of the six
    published priorities, and will be subject to the requirements of the
    competition, including eligibility, submission deadline, and review
    process. Proposals found to have merit will be recommended for funding.
    Although we do not specify a minimum or maximum requested funding
    amount, we do not expect to make just one award with the $5 million.
        If we do not receive enough applications that meet the established
    requirements, to use the entire $5 million reserved for Priority A,
    NOAA will carry over the remainder to address this Atlantic Salmon
    priority in our fiscal year 2003 competition.
        Question. Why did you not alert the Appropriations Committee to the
    fact that Saltonstall/Kennedy fund receipts were substantially higher
    in 2001?
        Answer. Saltonstall-Kennedy funds are derived from a transfer from
    the Department of Agriculture to NOAA from duties on imported fisheries
    products. An amount equal to 30 percent of these duties is made
    available to NOAA and, subject to appropriation, is available to carry
    out the purposes of the American Fisheries Promotion Act (AFPA). These
    duties are tabulated on a calendar year basis and therefore the
    estimated transfer amount from the U.S. Department of Agriculture is
    not known until early summer, well after the President's Budget Request
    goes to the Congress.
        Question. Did the Administration issue this grant through the
    Secretarial review process established by Congress in the Saltonstall-
    Kennedy Act? Please provide a copy of both the grant application and
    all documentation of the Secretary's review and approval.
        Answer. A grant has not been issued and NMFS expects that the $5
    million will fund multiple grants versus one. Atlantic Salmon is one of
    the 6 priorities within the Saltonstall-Kennedy solicitation and
    proposed projects will be reviewed based on the established criteria
    for all grants approved for funding from the S-K program. Below are
    descriptions of all priorities.
    A. Atlantic Salmon Aquaculture Considering the Endangered Species
            Status of Atlantic Salmon
        Promote the continued development of the Atlantic salmon
    aquaculture industry, by minimizing the potential for negative impacts
    on wild Atlantic salmon, which is listed as endangered under the ESA.
    Acceptable activities include the development and testing of: More
    secure cages to reduce farmed fish escapement; brood stock strains that
    grow more quickly, better resist disease, or pose less genetic threat
    to North Atlantic wild salmon stocks; improved marks or tags to trace
    potential escapes of farmed fish; vaccines or other methods to prevent
    the spread of disease between farmed fish and wild fish; and improved
    methods to monitor sea cage integrity and farmed fish disease.
    B. Fishing Capacity Reduction under section 312(b)-(e) of the Magnuson-
            Stevens Act
        Promote the reduction of excess harvesting capacity in appropriate
    fisheries by analyses and evaluations that prepare the proponents of
    buybacks financed by NMFS loans under Title XI of the Merchant Marine
    Act to consider, plan for, organize, justify, support, and effect
    financed buybacks. (See 50 CFR part 600.1000, et seq. for framework
    rules governing buybacks; see section I.I. for electronic address of
    rules.) Acceptable activities include, but are not limited to:
          1. Analyzing cost/benefit to determine a fishery's potential for
            financed buyback, including:
            a. Establishing the type of financed buyback (i.e., permit only
                or permit and vessel buyback) that reduces the maximum
                capacity at the least cost in the least amount of time;
            b. Knowledgeably estimating various capacity ranges in a
                fishery that could be bought back at various cost ranges;
            c. Evaluating harvesters' pre-buyback cost-income, how various
                buyback capacity/cost ranges could change post-buyback
                cost-income, the prospective ability of post-buyback
                harvesters to pay the estimated fees to service the buyback
                loan, and the benefits to them of doing so; and
            d. Assuming the fishery's FMP already prohibits new entrants to
                the fishery, establishing the scope and possible content of
                appropriate FMP amendments that might first be required to
                effectively and permanently resolve latent capacity in that
                fishery prior to buyback, and to prevent post-buyback
                vessel upgrading or other circumstances from replacing the
                capacity that a buyback removes.
          2. Evaluating detailed means and methods for industry buyback
            proponents in the fishery to efficiently and effectively:
            a. Survey potential referendum voters (each permit holder in
                the buyback fishery) to establish the prospective degree of
                interest in, and support for, a financed buyback in that
                fishery, and
            b. Prepare a successful financed buyback application and
                business plan (see 50 CFR 600.1003).
        In addition to the above, responsible proponents of financed
    buybacks in individual fisheries may also submit proposals to prepare
    actual financed buyback applications and business plans for that
    fishery.
    C. Conservation Engineering
        (1) Reduce or eliminate adverse interactions between fishing
    operations and non-targeted, protected, or prohibited species,
    including the inadvertent take, capture, or destruction of such
    species. These include juvenile or sublegal-sized fish and shellfish,
    females of certain crabs, fish listed under the ESA, marine turtles,
    seabirds, or marine mammals.
        (2) Improve the survivability of fish discarded or intentionally
    released and of protected species released in fishing operations.
        (3) Reduce or eliminate impacts of fishing activity on EFH that
    adversely affect the sustainability of the fishery.
    D. Optimum Utilization of Harvested Resources under Federal or State
            Management
        (1) Reduce or eliminate factors such as diseases, human health
    hazards, and quality problems that limit the utilization of fish and
    their products in the United States and abroad.
        (2) Increase public knowledge of the safe handling and use of fish
    and their products.
        (3) Develop usable products from economic discards (defined in the
    Magnuson-Stevens Act as ``fish which are the target of a fishery, but
    which are not retained because they are of an undesirable size, sex, or
    quality, or for other economic reasons''), underutilized species, and
    byproducts of processing.
        (4) Facilitate industry cooperation and outreach to promote and
    enhance marketability of regional U.S. fishery products.
                               energy initiative
        Question. The President's fiscal year 2003 budget for NOAA includes
    an initiative to ``assist the operations of the U.S. energy sector'' at
    a cost of an additional $8.7 million. This increase is comprised of:
      --$6.1 million to implement a National Weather Service pilot program
            that will provide more accurate forecast products to help the
            energy industry improve electrical load forecasting and
            hydropower facility management--a nationwide program cost is
            estimated at $100 million;
      --$2.0 million to support the establishment and implementation of a
            streamlined hydropower permit review process at NMFS; and
      --$550,000 for ``energy management''--which includes ``pursuing
            energy commodities at competitive prices,'' among other things.
        Question. The National Weather Service's mandate is to protect life
    and property, and National Marine Fisheries Service is charged with
    conserving our marine resources. Nowhere do I see in NOAA's mandates
    the responsibility of saving the energy industry money--well, at least
    that's not NOAA's charge.
        Answer. NOAA believes that one of its roles is to support the U.S.
    economy as part of the Department of Commerce. Our mission statement
    states our commitment to ensure sustainable economic opportunities, and
    the NWS Organic Act, 15 U.S.C. 313, states that NOAA, ``. . . shall
    have the charge of the forecasting of the weather, the issuance of
    storm warnings, the display of weather and flood signals for the
    benefit of agriculture, commerce, navigation, . . .''. By improving
    certain basic services that the National Weather Service already
    provides (e.g., daily temperature forecasts), NOAA will provide
    information that can improve efficiency in the energy sector which can
    in turn benefit the economy. There are significant potential savings
    that can be realized by the general public through lower energy prices
    if the industry makes better use of environmental information.
        In addition, there are numerous benefits to wise energy management
    beyond cost savings. For example, the potential exists to reduce excess
    greenhouse gas emissions by providing the necessary data that will
    enable more accurate electrical load forecasts and reduce excess
    electrical energy generation. In addition, brownouts and blackouts can
    be avoided completely if the Nation's electrical needs are better
    forecast. Thus, while the energy sector is one beneficiary, improved
    daily temperature forecasts and improved river forecasts benefit
    multiple sectors of the economy and the public, including agriculture,
    water resource management, water transportation, and others. The $6.1
    million initiative will address these issues.
        The $2.0 million proposal is to expedite permits and coordinate
    Federal, State, and local actions needed for energy-related project
    approvals on a national basis. The goal is to reduce, by 25 percent,
    the time required to adjust the permits of licensed energy projects/
    facilities. Currently, re-licensing of existing facilities takes 6-10
    years.
        The $550,000 request will be used to identify and implement energy
    savings opportunities and apply renewable energy technologies and
    sustainable designs at NOAA-managed facilities. NOAA manages over 500
    facilities across the United States.
        Question. Whose idea was this?
        Answer. The original idea for the NOAA Energy Initiative resulted
    from the Department of Commerce input to the Administration's Energy
    Task Force report released in April 2001. In addition, a survey of and
    meetings with industry executives have validated the benefits of
    improved weather information to forecast energy needs.
        Question. Can you explain to me how the use of an additional $8.7
    million of taxpayer dollars for the Energy Sector benefits our citizens
    more than the critical life-saving services government should provide--
    like coastal hazards warnings, transportation advisories, or improving
    hurricane and tornado prediction?
        Answer. The fiscal year 2003 energy initiative, in the Southeast,
    for $6.1 million, provides energy related benefits to citizens, one of
    which is energy management. There are numerous benefits of wise energy
    management beyond cost savings, including the potential to save lives
    with improved temperature forecasts and improved air-quality. U.S.
    citizens depend on a stable energy supply. Blackouts and brownouts
    disrupt commerce and place many citizens' lives at risk (e.g., air
    conditioning failures, heating failures). Heat is the number one
    weather-related cause of death. Improving daily temperature forecasts
    will help to improve heat-related advisories and forecasts. The risk of
    heat-related death can be minimized through more effective use of
    environmental forecasts.
        The remaining $2.6 million funds a $2.0 million request for
    streamlining the energy-permit process, which responds to an Executive
    Order directing federal agencies to expedite permits needed for energy
    related project approval, and $0.55 million for energy management to
    reduce NOAA's facility operating costs through actively pursuing energy
    commodities at competitive prices, identifying and implementing energy
    savings opportunities, and applying renewable energy technologies and
    sustainable designs at NOAA-managed facilities.
        Question. Your budget documents ``savings'' from the better
    forecasts at $1 billion per year--if a $100 million nationwide program
    were instituted. Based on what we have learned from the last year's
    energy ``crisis'', those sound like savings to the power producers. Do
    you know that these savings will be passed on to the consumer?
        Answer. The potential does exist to transfer savings to the
    consumers but we do not know the extent of these savings. With
    increasing deregulation of the energy industry, consumers are realizing
    the actual costs of energy production and the savings associated with
    increased efficiency. NOAA aims to ensure that the best environmental
    information is available to all sectors of the economy and to the
    public.
        Question. I understand you did one of these ``pilot projects'' in
    New Hampshire--are you still funding that? Why would you stop funding
    that, and start a new one?
        Answer. NOAA, as a result of Congressional action, is funding a
    pilot project in New England with a focus on improving the daily
    temperature and air quality forecasts for the region. The initial data-
    gathering phase will be completed by September 2002. A competitive
    contract is being let to conduct an independent, peer-reviewed
    assessment of the expected improvements in forecasting and their
    benefits to energy efficiency. The Modernized Cooperative Observing
    Program instrument network installed during fiscal year 2002 for this
    project will remain operational thereafter with operation and
    maintenance costs supported through the National Weather Service.
        While Congress was conferring about the fiscal year 2002 budget,
    NOAA simultaneously developed through the fiscal year 2003 budget
    formulation process a separate energy pilot study focusing on the
    Southeast. The Southeast was identified through NOAA's internal process
    as the target region. The decision was based on both need and
    opportunity as expressed by industry stakeholders nationwide who were
    consulted in the development of the pilot program. This region was also
    chosen because there is a greater reliance on hydropower and an
    opportunity to test and evaluate potential improvements in river flow
    forecasts. The information gained from conducting the fiscal year 2002
    pilot program will benefit the fiscal year 2003 program and is
    applicable to all regions of the country. The long-term goal is to
    expand the program nationwide.
                              international issues
        Question. The United States has some of the strictest marine
    protection laws in the world. It is important that NOAA and the
    Department of State continue to pursue international agreements in
    order to level the playing field. With respect to regulation of
    shrimpers, Congress in 1990 enacted Section 609 of Public Law 101-162,
    which restricts the import of shrimp harvested in a way that harms sea
    turtles. Under this law, nations must be certified as having a
    regulatory program to protect sea turtles in their shrimp trawl
    fisheries that is comparable to the U.S. program in order to obtain
    access to U.S. shrimp markets. Evidence observed during an inspection
    by the National Marine Fisheries Service (NMFS) at the port of
    Mazatlan, Mexico, November 13-16, 2001 revealed serious compliance and
    enforcement issues with respect to the use of Turtle Excluder Devices
    (TEDs). A follow-up inspection took place during the week of March 4,
    2002.
        Back in November of last year, NMFS found serious compliance and
    enforcement problems in Mexico with respect to shrimpers' use of Turtle
    Excluder Devices, or ``TEDs''. Admiral, such TED violations in Mexico
    come at a time when NMFS is considering a rule that would impose more
    stringent regulations on U.S. shrimpers. I understand that a new team
    was recently in Mexico to inspect the situation down there.
        Answer. Yes, you are correct. A team consisting of NMFS and
    Department of State personnel conducted inspections from early to the
    middle of March, 2002, in several ports of Mexico--Tampico, Ciudad del
    Carmen, Campeche, Guaymas, and Mazatlan.
        Question. Did the inspection team find improvements in Mexico? If
    not, does the Administration plan to decertify Mexico, and block
    imports of shrimp?
        Answer. While a few problems were observed on some vessels, in
    general the inspection team found that the Government of Mexico has
    taken actions to improve its enforcement program since the November
    inspection. The team noted that it is important for Mexico to increase
    or, at a minimum, maintain TED enforcement activity at sea and
    dockside. To help ensure that this occurs, NMFS, with assistance from
    the Department of State, has organized a fishery enforcement training
    workshop for Mexican fishery enforcement personnel. The Mexican Navy
    will be included in the training to assist Mexico's General Bureau of
    Fishery and Marine Resource Inspection and Oversight (PROFEPA) to
    accomplish higher TED compliance. The preliminary determination is that
    Mexico's sea turtle protection program for its commercial fisheries is
    currently effective and meets the requirements for certification.
        Question. On a broader note, what is the Administration doing to
    ensure that foreign fishing fleets are held to the same standards as
    the U.S. fleet, such as negotiating an international agreement to
    prohibit the practice of shark finning, or to prevent marine debris
    that ends up on U.S. shores?
        Answer. Our efforts to conserve and manage sharks go back many
    years and are detailed in our February 1, 2002, ``Report to Congress
    Pursuant to the Shark Finning Prohibition Act of 2000 (Public Law 106-
    557),'' a copy of which is enclosed. The Shark Finning Prohibition Act
    calls for a multiplicity of actions to the taken by the Administration,
    including the collection of information on the incidence of finning as
    well as seeking an end to the practice. Clearly, these actions must be
    carried out in a logical sequence, and our Report explains how we will
    do this. In addition, working closely with the Department of State,
    before the end of May 2002, we will carry out a worldwide program of
    diplomatic demarches that will include our message regarding the
    requirements of: (1) the Shark Finning Prohibition Act and (2) the
    International Plan of Action for the Conservation and Management of
    Sharks of the Food and Agriculture Organization of the United Nations.
    These demarches will go to appropriate coastal countries and regional
    fisheries management organizations worldwide.
        NMFS has consulted, under the Endangered Species Act, with many
    federal agencies on their activities that are likely to result in
    adverse effects to endangered sea turtles as a result of marine
    pollution and plastics. For example, through a consultation with the
    Air Force on Search and Rescue Training in the Gulf of Mexico, NMFS
    required the Air Force to collect as many lightsticks, a major source
    of marine plastic debris, as possible after completion of an exercise
    and properly dispose all plastic wrappings associated with the
    lightsticks. NMFS also required the Mineral Management Service to
    condition permits issued to oil companies to require collection and
    removal of flotsam resulting from explosive or mechanical rig removals.
    The Commerce Department's National Oceanic and Atmospheric
    Administration (NOAA), including NMFS' staff, joined forces with the
    Ocean Conservancy, U.S. Coast Guard, Fish and Wildlife Service, and the
    Hawaii Sea Grant program in a major ocean debris removal campaign in
    the northwestern Hawaiian Islands where derelict fishing gear and trash
    threaten marine turtles and other living marine resources. NOAA
    deployed three chartered commercial vessels, and to date more than 120
    tons of nets and derelict gear have been recovered. NMFS recognizes
    that marine debris is a serious threat to the recovery of marine
    turtles and will continue to address this threat through consultations
    with federal agencies and collaborative efforts such as those conducted
    in the northwestern Hawaiian Islands.
                            FEDERAL TRADE COMMISSION

    STATEMENT OF TIMOTHY J. MURIS, CHAIRMAN

                               SUMMARY STATEMENT

        Senator Hollings. We next have the Federal Trade
    Commission. We welcome you, Chairman Muris, and we would
    appreciate your statement at this time, which will be included
    in full. You can highlight it or deliver it as you wish.
        Mr. Muris. Thank you very much, Mr. Chairman. As your
    letter requested, let me just briefly summarize my testimony. I
    appreciate the opportunity to appear before you today in
    support of our fiscal year 2003 appropriations request.
        Let me start by expressing my sincere thanks to the
    subcommittee and in particular to you, Mr. Chairman and Senator
    Gregg, for your strong support of the FTC in both antitrust and
    consumer protection. As you know, the FTC is the only Federal
    agency that has jurisdiction over both consumer protection and
    antitrust in broad areas of the economy. With credit to our
    excellent and dedicated staff, the FTC's record of protecting
    American consumers is impressive. We will continue to build on
    the successes of my predecessors.
        The most important word in understanding what we are doing
    at the FTC, I believe, is continuity with the past. We will
    continue to address competition and consumer protection issues
    with the same expertise and commitment as was the case under
    Bob Pitofsky.
        To accomplish our mission in fiscal year 2003, the FTC
    requests $176,599,000 and 1,074 FTE. Funding at this level
    would allow us to further our record of solid accomplishment on
    behalf of American consumers. A few highlights, I think, reveal
    the benefit of our role.
        In consumer protection, fighting fraud, especially on the
    Internet, remains a key priority. For example, we have cracked
    down on the sale of bogus bioterrorism-related products that
    sprung up after September 11. We sent 121 warning letters to
    Internet marketers of these products and most sites have
    eliminated their suspect claims. We targeted the most egregious
    of the remaining marketers for law enforcement action. Last
    month, we announced settlements with the marketers of a home
    test kit for anthrax and an online seller of a purported
    anthrax treatment product.
        We also have moved aggressively against diet deceptive
    claims about supplements on the Internet. We have taken action
    against fraud involving our telemarketing sales rule. Last
    fall, we achieved a settlement of over $8 million involving the
    pernicious practice of companies that had the consumer's credit
    card information, called the consumer, and did not tell them
    they had the information. Yesterday, we announced a $39 million
    order in a telemarketing sales case.
        We are planning many more cases on fraud, both online and
    off. We are increasing our efforts to have career fraudsters
    put in jail, and we are spending more money on the growing
    problem of cross-border fraud.
        We have also, Mr. Chairman, turned much greater attention
    to the issue of privacy, and we propose to do more in the
    future. We have recently proposed amendments to our
    telemarketing sales rule, including a national ``do not call''
    list, and a proposal to deal with the pre-acquired account
    information that I mentioned.
        We have begun law enforcement in a new area with our Eli
    Lilly case involving promises of security made by companies. In
    that case, Eli Lilly inadvertently sent an e-mail with 600 e-
    mail addresses of individuals taking Prozac. They had promised
    to keep the information confidential. They had promised, in our
    opinion, to take reasonable steps for security and they did
    not. We accordingly achieved a consent agreement.
        We have also, for the first time, systematically begun to
    attack deceptive spam with a series of cases we brought last
    month and we have several more in the pipeline.
        We also, as requested by this committee, are continuing to
    monitor the marketing of violent media to children. We issued
    our third report last December and have another one coming this
    summer.
        On the antitrust side, despite the decline in the merger
    wave, we are still pursuing many cases. This fiscal year alone,
    the FTC has taken action in 10 cases. In non-merger antitrust,
    we have doubled our number of investigations. The
    pharmaceutical area is a particularly important area. We have
    what I call a first and second generation of cases and
    investigations.
        The first generation involves agreements between branded
    products and generic products to keep the generic products off
    the market. The Commission has brought three such cases.
        The second generation involves unilateral actions by
    branded companies to keep generic competition off the market.
    These cases, I think, promise enormous benefits for consumers.
    We recently were successful in an amicus brief that we filed
    involving the unilateral action where a branded company had
    tried to manipulate the FDA process to keep a generic off the
    market. The District Court in New York accepted our analysis
    and rejected the branded company's arguments. We are pursuing
    many other cases in health care at all levels of health care
    competition. We have a consent agreement that we will announce
    soon. Also, as former Chairman Bob Pitofsky suggested to me, we
    are holding hearings to explore the complex relationship
    between intellectual property and antitrust.
        Mr. Chairman, let me briefly address the issue that has
    attracted much attention lately, which is this so-called
    clearance agreement with the Department of Justice's Antitrust
    Division. First, we are grateful that you have confidence in
    the FTC and want us to do more. In more than 50 years of
    clearance process agreements, no Member of Congress has ever
    taken such close interest in the process.
        The reality, Mr. Chairman, is that we have two antitrust
    agencies enforcing the same antitrust law with the exact same
    standard. The law, however, states that only one agency can
    investigate a specific merger. Because of that, the agencies
    have agreed for decades that neither will proceed with an
    investigation unless one first clears the investigation to the
    other.
        This process worked well up until the 1990s. In the 1980s,
    for example, there were only, on average, about 10 disputes a
    year. Since then, however, there have been more than 80
    disputes per year. There have been delays in the last 2 years
    of 3 weeks or more in one-quarter of the cases for which
    clearance was sought. When I arrived at the FTC last summer,
    there was a case where both agencies wanted to investigate and
    they had fought for over 1 year over who would do it. In that 1
    year, neither could investigate. Bob Pitofsky and Joel Klein
    tried to fix this problem, but they could not agree on a
    solution.
        Now, I know there is concern about media mergers, but I
    want to make clear that the new clearance agreement does not
    affect which agency will do media mergers. Even without the new
    agreement, the Antitrust Division would have done media
    mergers. If we had not signed a new agreement, disputes would
    be governed by the 1993 agreement. That agreement said that the
    primary grounds for resolving clearance disputes is experience
    within the last 5 years.
        In media, the DOJ has a lot of experience and the FTC has
    very little. There are only two major FTC cases in the last
    several years. One is Turner-Time Warner, which is now outside
    the 5-year window contained in the 1993 agreement. The other is
    AOL-Time Warner. In that case, the clearance was so hotly
    contested that Chairman Pitofsky promised that if the FTC could
    do the deal, then the FTC would not count the experience in
    AOL-Time Warner in future clearance disputes. Now, even if we
    were to count AOL-Time Warner, in the last 5 years, the FTC has
    done only one major media deal and the Department of Justice
    has done six.
        The clearance agreement did do something different. It
    publicly announced in detail for the first time how the process
    would work. A secret process has become transparent. I believe
    this is a good Government initiative that will avoid investing
    resources in fighting with the DOJ. In fact, our predecessors,
    Joel Klein and Bob Pitofsky, wrote us a letter saying exactly
    that.

                               prepared statement

        In summary, Mr. Chairman, I believe the role of the FTC is
    vital for consumers. I believe we do good work and I hope that
    you approve our full budget request. Thank you.
        [The statement follows:]
                     Prepared Statement of Timothy J. Muris
                                  introduction
        Mr. Chairman, I am Timothy J. Muris, Chairman of the Federal Trade
    Commission. I am pleased to appear before the Subcommittee today to
    testify in support of the FTC's fiscal year 2003 Appropriation
    request.\1\
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        \1\ The written statement represents the views of the Federal Trade
    Commission. My oral presentation and responses are my own and do not
    necessarily reflect the views of the Commission or of any other
    Commissioner.
    ---------------------------------------------------------------------------
        The FTC is the only federal agency with both consumer protection
    and competition jurisdiction in broad sectors of the economy.\2\ We
    enforce laws that prohibit business practices that are anticompetitive,
    deceptive, or unfair to consumers, as well as promote informed consumer
    choice and public understanding of the competitive process. The work of
    the FTC is critical in protecting and strengthening free and open
    markets in the United States.
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        \2\ The FTC has broad law enforcement responsibilities under the
    Federal Trade Commission Act, 15 U.S.C. Sec. 41 et seq. With certain
    exceptions, the statute provides the agency with jurisdiction over
    nearly every sector of the economy. Certain entities, such as
    depository institutions and common carriers, as well as at the business
    of insurance, are wholly or partially exempt from FTC jurisdiction. In
    addition to the FTC Act, the FTC has enforcement responsibilities under
    more than 40 additional statutes and more than 30 rules governing
    specific industries and practices.
    ---------------------------------------------------------------------------
        The FTC's record is impressive. The agency has fulfilled its
    mission of protecting American consumers by pursuing an aggressive law
    enforcement program during rapid changes in the marketplace--the past
    decade saw the largest merger wave in history, the rapid growth of
    technology, and the increasing globalization of the economy. Through
    the efforts of a dedicated and professional staff, the FTC has
    shouldered an increasing workload despite only modest increases in
    resources. I would like to thank the Chairman and members of the
    Subcommittee for their continued support of the Commission's mission.
        The guiding word at the FTC is ``continuity.'' The agency continues
    aggressively to pursue law enforcement initiatives, launch consumer and
    business education campaigns, and organize forums to study and
    understand the changing marketplace, just as we have done for several
    years. We will continue to address competition and consumer protection
    issues in the evolving economy with the same expertise and commitment
    as before.
        Our competition mission continues to reflect the following widely
    shared consensus: (1) the purpose of antitrust is to protect consumers;
    (2) the mainstays of antitrust enforcement are horizontal cases--cases
    involving the business relations and activities of competitors; (3) in
    light of recent judicial decisions and economic learning, appropriate
    monopolization and vertical cases are an important part of the
    antitrust agenda; and (4) case selection should be guided by sound
    economic and legal analysis, and made with careful attention to the
    facts. The FTC is primarily a law enforcement agency, and we will
    continue aggressive enforcement of the antitrust laws within the
    agency's jurisdiction. The FTC is also an independent expert agency and
    a deliberative body, and is thus well suited to studying an evolving
    marketplace and developing antitrust policy--we will continue to hold
    public hearings, conduct studies, and issue reports to Congress and the
    public.
        Similarly, there is widespread agreement on how the FTC best
    carries out its consumer protection mission. Twenty years ago, the FTC
    shifted its emphasis toward more aggressive enforcement of the basic
    laws of consumer protection. The staple of our consumer protection
    mission is to identify and fight fraud and deception. The FTC monitors
    trends and developing issues in the marketplace to determine the most
    effective use of its resources. The FTC has become the national leader
    in consumer protection and partners with other law enforcement agencies
    at the federal, state, local, and international levels to maximize
    benefits for consumers.
        To accomplish our mission in fiscal year 2003, the FTC requests
    $176,599,000 and 1,074 FTE. These figures represent an increase over
    the current year of $20,617,000, but no additional FTE. Almost 25
    percent of the requested dollar increase would be devoted to comply
    with proposed legislation requiring all federal agencies to begin
    funding directly certain retirement and health benefits. Funding at the
    requested level would allow the FTC to build on a record of solid
    achievement on behalf of American consumers.
        During fiscal year 2003, the FTC will address significant law
    enforcement and policy issues throughout the economy, devoting the
    major portion of its resources to those areas in which the agency can
    provide the greatest benefits to consumers. This testimony in support
    of our fiscal year 2003 appropriation highlights program priorities in
    the FTC's two missions. In the Consumer Protection Mission, we discuss
    Privacy; Internet Law Enforcement; Health, Safety, and Economic Injury;
    Media Violence, Gambling, and Children; Globalization; and Consumer
    Outreach. In the Maintaining Competition Mission, we discuss Merger
    Enforcement; Streamlining the Merger Review Process; Nonmerger
    Enforcement; Targeting Resources for Consumer Impact; and Outreach
    Efforts. The testimony concludes with a brief summary of the FTC's
    fiscal year 2003 appropriation request.
                          consumer protection mission
    Privacy
        During fiscal year 2003, the FTC intends to devote significant
    resources to privacy protection. Consumers are deeply concerned about
    the privacy of their personal information, both online and offline.
    Although privacy concerns have been heightened by the rapid development
    of the Internet, they are by no means limited to the cyberworld.
    Consumers can be harmed as much by the thief who steals credit card
    information from a mailbox or dumpster as by the one who steals that
    information from a Web site. Of course, the nature of Internet
    technology may raise its own special set of issues.
        The FTC currently enforces a number of laws that address consumers'
    privacy,\3\ and intends to increase substantially the resources
    dedicated to privacy protection. Our initiatives in this area attempt
    to reduce the serious consequences that can result from the misuse of
    personal information and fall into three major categories: vigorous
    enforcement of existing laws, additional rulemaking, and continued
    consumer and business education.
    ---------------------------------------------------------------------------
        \3\ See, e.g., Federal Trade Commission Act, 15 U.S.C. Sec. 41 et
    seq. (prohibiting deceptive or unfair acts or practices, including
    violations of stated privacy policies); Fair Credit Reporting Act, 15
    U.S.C. Sec. 1681 et seq. (addressing the accuracy, dissemination, and
    integrity of consumer reports); Telemarketing and Consumer Fraud and
    Abuse Prevention Act, 15 U.S.C. Sec. 6101 et seq. (including the
    Telemarketing Sales Rule, 16 C.F.R. Part 310) (prohibiting
    telemarketers from calling at odd hours, engaging in harassing patterns
    of calls, and failing to disclose the identity of the seller and
    purpose of the call); Children's Online Privacy Protection Act, 15
    U.S.C. Sec. 6501 et seq. (prohibiting the collection of personally
    identifiable information from young children without their parents'
    consent); Identify Theft and Assumption Deterrence Act of 1998, 18
    U.S.C. Sec. 1028 (directing the FTC to collect identity theft
    complaints, refer them to the appropriate credit bureaus and law
    enforcement agencies, and provide victim assistance); Gramm-Leach-
    Bliley Act, 15 U.S.C. Sec. 6801 et seq. (requiring financial
    institutions to provide notices to consumers and allowing consumers
    (with some exceptions) to choose whether their financial institutions
    may share their information with third parties).
    ---------------------------------------------------------------------------
                Privacy Law Enforcement
        The FTC will pursue law enforcement efforts in the following areas:
      --Enforcing privacy promises, focusing on cases involving sensitive
            information, transfers of information as part of a bankruptcy
            proceeding, and the failure of companies to meet commitments
            made under the Safe Harbor Program to comply with the European
            Commission's Directive on Data Protection.\4\ For example, in
            January 2002, the FTC accepted a consent order with Eli Lilly &
            Company to resolve allegations that Lilly violated the FTC Act.
            According to the complaint, Lilly claimed that it employed
            measures appropriate under the circumstances to protect the
            confidentiality of personal information obtained from consumers
            who visited its Prozac.com Web site, when in fact it did
            not.\5\
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        \4\ The European Commission's Directive on Data Protection became
    effective in October 1998, and prohibits the transfer of personal data
    to non-European Union nations that do not meet the European
    ``adequacy'' standard for privacy protection. To bridge different
    privacy approaches between the United States and the EU, and to provide
    a streamlined means for U.S. organizations to comply with the
    Directive, the U.S. Department of Commerce, in consultation with the
    European Commission, developed a ``Safe Harbor'' framework, which was
    approved by the EU in July 2000. Companies that self-certify to the
    Department of Commerce that they comply with the Safe Harbor Principles
    may be deemed by the EU to provide ``adequate'' privacy protection
    under the EU Directive. The FTC will give priority to referrals of non-
    compliance with safe harbor principles from EU Member States. See
    Department of Commerce's Safe Harbor Website, www.export.gov/
    safeharbor.
        \5\Eli Lilly & Co., No. 012-3214 (Jan. 18, 2002) (consent agreement
    accepted subject to public comment).
    ---------------------------------------------------------------------------
      --Enforcing the Children's Online Privacy Protection Act (COPPA),\6\
            which prohibits the collection of personally identifiable
            information from young children without their parents' consent.
            Since 2001, the Commission has brought a number of COPPA
            enforcement actions resulting in more than $100,000 in civil
            penalties.\7\
    ---------------------------------------------------------------------------
        \6\ 15 U.S.C. Sec. 6501 et seq.
        \7\ United States v. American Pop Corn Co., No. C02-4008DEO (N.D.
    Ia., Feb. 28, 2002) (consent decree); United States v. Lisa Frank,
    Inc., No. 01-1516-A (E.D. Va., Oct. 3, 2001) (consent decree); United
    States v. Looksmart, Ltd., No. 01-606-A (E.D. Va., Apr. 23, 2001)
    (consent decree); United States v. Bigmailbox.com, Inc., No. 01-605-A
    (E.D. Va., Apr. 23, 2001) (consent decree); United States v. Monarch
    Servs., Inc., No. AMD 01 CV 1165 (D. Md., Apr. 20, 2001) (consent
    decree).
    ---------------------------------------------------------------------------
      --Bringing actions against fraudulent or deceptive spammers. In
            February of this year, the Commission launched a crackdown on
            deceptive junk email, or ``spam,'' and announced six
            settlements with seven defendants who allegedly continued to
            send deceptive chain email after being warned that the chain
            email scheme was illegal.\8\ The FTC maintains a special
            electronic mailbox, uce@ftc.gov, to which Internet customers
            can forward spam. This database currently receives 10,000 new
            pieces of spam every day. We will continue to use this mailbox
            to identify targets for law enforcement action.
    ---------------------------------------------------------------------------
        \8\ FTC v. Boivin, No. 8:02-CV-77-T-26 MSS (M.D. Fla., Jan. 15,
    2002) (consent decree); FTC v. Estenson, No. A3-02-10 (DND, Feb. 5,
    2002) (consent decree); FTC v. Larsen, No. 8:02-CV-76-T-26MAP (M.D.
    Fla., Jan. 16, 2002) (consent decree); FTC v. Lutheran, No. 02 CV 0095
    K (RAB) (S.D. Cal., Jan. 18, 2002) (consent decree); FTC v. Va, No. 02-
    60062-Civ-Zloch (S.D. Fla., Jan. 18, 2002) (consent decree); FTC v.
    Pacheco, No. 02-CV-31L (D.R.I., Jan. 22, 2002) (consent decree).
    ---------------------------------------------------------------------------
      --Challenging ``pretexting,'' the practice of fraudulently obtaining
            personal financial information, often by calling banks under
            the pretense of being a customer. Earlier this month, the
            Commission announced settlements in three federal district
            court actions against information brokers who allegedly engaged
            in illegal pretexting.\9\
    ---------------------------------------------------------------------------
        \9\ ``Information Brokers Settle FTC Charges,'' FTC Press Release
    (Mar. 8, 2002), available at <>.
    ---------------------------------------------------------------------------
      --Enforcing the privacy protections of the Fair Credit Reporting
            Act,\10\ which ensures the integrity and accuracy of consumer
            credit reports and limits the disclosure of such information to
            entities that have ``permissible purposes'' to use the
            information.
    ---------------------------------------------------------------------------
        \10\ 15 U.S.C. Sec. 1681 et seq.
    ---------------------------------------------------------------------------
                Privacy Rulemaking
        The Commission is engaged in the following rulemaking activities:
      --Considering proposed amendments to the Telemarketing Sale Rule,\11\
            which were announced in January 2002.\12\ Among other things,
            the proposed amendments would create a national do-not-call
            list to allow consumers to make one call to remove their names
            from telemarketing lists. The proposed amendments also would
            address the misuse of ``pre-acquired account information,''
            lists of names and credit card account numbers of potential
            customers. Misuses include billing consumers who believed they
            were simply accepting a free trial, or billing consumers for
            products or services that they did not purchase.
    ---------------------------------------------------------------------------
        \11\ See Telemarketing Sales Rule, 16 C.F.R. Part 310.
        \12\ 67 Fed. Reg. 4492 (Jan. 30, 2002).
    ---------------------------------------------------------------------------
      --Completing the current rulemaking on safeguarding consumers'
            financial information pursuant to the Gramm-Leach-Bliley
            Act.\13\
    ---------------------------------------------------------------------------
        \13\ The Gramm-Leach-Bliley Act, 15 U.S.C. Sec. Sec. 6801(b) and
    6805(b), requires the FTC to issue a rule establishing appropriate
    standard for safeguards to ensure the security, confidentiality, and
    integrity of customer records and information.
    ---------------------------------------------------------------------------
                Privacy- and Security-Related Consumer and Business
                        Education and Outreach
        The agency will continue to conduct workshops and other educational
    activities:
      --Training law enforcement officials about identity theft. On March
            14, 2002, the FTC, the U.S. Secret Service, and the Department
            of Justice kicked off a series of training seminars to provide
            local and state law enforcement officers with practical tools
            to enhance their efforts to combat identity theft.\14\
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        \14\ See Identity Theft and Assumption Deterrence Act of 1998, 18
    U.S.C. Sec. 1028. This Act makes the FTC a central clearinghouse for
    identity theft complaints. Under the Act, the FTC is required to log
    and acknowledge such complaints, provide victims with relevant
    information, and refer their complaints to appropriate entities (e.g.,
    the major consumer reporting agencies and other law enforcement
    agencies).
    ---------------------------------------------------------------------------
      --Collecting information about identity theft with the FTC's new ID
            Theft Affidavit. In February 2002, the FTC joined with several
            companies and privacy organizations to make available a
            universal identity theft affidavit that victims of identity
            theft can submit to creditors. This form will help victims
            recoup their losses and restore their legitimate credit records
            more quickly.
      --Continuing to explore and monitor the privacy implications of new
            and emerging technologies through workshops, reports, and other
            public meetings. Earlier this month, the FTC released a summary
            and update of the proceedings of a workshop sponsored by the
            Commission titled, ``The Mobile Wireless Web, Data Services,
            and Beyond: Emerging Technologies and Consumer Issues.'' \15\
            On May 20-21, 2002, the FTC will host a two-day public workshop
            to explore issues related to the security of consumers'
            computers and the personal information stored in them or in
            company databases.\16\
    ---------------------------------------------------------------------------
        \15\ The report is available at <>.
        \16\ See ``FTC to Host Public Workshop on Consumer Information
    Security,'' FTC Press Release, available at <>.
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    Internet law enforcement
        The FTC will continue aggressively to monitor the Internet to
    ferret out frauds and schemes. Since 1994, the early days of the
    Internet, the FTC has brought 222 Internet-related law enforcement
    actions against 688 defendants, stopping consumer injury estimated at
    more than $2.1 billion. These cases often pose novel challenges:
    tracking anonymous fraud artists, unraveling complex technological
    schemes, and responding at lightning speed to frauds moving just as
    rapidly.
        A growing number of these high tech schemes exploit the design and
    architecture of the Internet. A recent example is FTC v. Zuccarini,
    C.A. No. 01-CV-4854 (E.D. Pa., filed Sept. 25, 2001), in which the
    defendant allegedly used more than 5,000 copycat Web addresses to
    hijack surfers from their intended destinations to one of his Web
    sites, hold them captive, and pelt them with a barrage of ads, some of
    them pornographic. According to the FTC's complaint, the defendant was
    able to divert consumers who misspelled addresses of popular legitimate
    sites because he had registered multiple misspelled variations of those
    sites. Once he had lured consumers to his sites, the defendant
    ``mousetrapped'' them by disabling their browsers' ``back'' and
    ``exit'' commands. At the FTC's request, the court enjoined the
    defendant from continuing these activities. The FTC will seek an order
    requiring the defendant to disgorge as much as $1 million in ill-gotten
    gains.
        As in past years, the FTC's Internet fraud campaign is combating
    scams that jump from news headlines--this year, scams that have
    appeared since September 11th. The FTC, working with 30 State Attorneys
    General, the New York Better Business Bureau, the California Department
    of Health, the FDA, and other federal agencies identified more than 200
    Web sites pitching products to protect against, detect, or treat
    illnesses caused by biological or chemical agents, including anthrax.
    These products, most of them bogus or ineffective, include herbal
    remedies for anthrax, air filters, gas masks, and do-it-yourself kits
    to test mail for anthrax. After identifying these Web sites, the FTC
    sent warning letters to the operators of 121 sites, and published two
    consumer alerts to warn the public that fraudsters follow the headlines
    and tailor their offers to prey upon the public's latest fears. As of
    March 1, 2002, 62 percent of those warned had dropped the troubling
    claims from their Web sites, and the FTC continues to monitor the
    remainder of the Web sites. The FTC brought two law enforcement actions
    against the operators of Web sites engaging in more egregious
    practices. In one case, the FTC obtained a federal court order
    prohibiting a marketer from selling anthrax home test kits.\17\ In
    second, the FTC has issued a consent order prohibiting a vendor from
    making anthrax cure claims for a colloidal silver product.\18\ Because
    the Internet transcends national boundaries, future cases increasingly
    will involve cross-border scams. During the past fiscal year, the FTC,
    other federal agencies, state agencies and foreign agencies from nine
    countries participated in ``Operation Top Ten Dot Cons.'' Through this
    sweep, the largest in FTC history, the FTC and its partners filed 209
    actions around the world attacking the top 10 Internet scams, as
    identified by data received in our consumer complaint database.\19\
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        \17\ FTC v. Vital Living Products, Inc., Civ. No. 3:02CV74-MU
    (W.D.N.C., proposed consent decree filed with court, Feb. 25, 2002).
        \18\ Kris A. Pletschke, C-4040 (Feb. 22, 2002) (consent order).
        \19\ The top 10 targeted frauds were: Internet Auction Fraud,
    Internet Service Provider Schemes, Internet Web Site Design/Promotions
    (Web Cramming, Internet Information and Adult Services), Credit Card
    Cramming, Multi-level Marketing/Pyramid Schemes, Business Opportunities
    and Work-At-Home Scams, Investment Schemes and Get-Rich-Quick Schemes,
    Travel/Vacation Fraud, Telephone/Pay-Per-Call Solicitation Frauds
    (including modem dialers and videotext), and Health Care Frauds.
    ---------------------------------------------------------------------------
    Health, safety, and economic injury
        The Commission also will continue to bring law enforcement actions
    in cases involving consumers' health and safety, and in cases resulting
    in significant economic injury. Just two weeks ago, for example, the
    Commission announced consent agreements in cases challenging allegedly
    deceptive advertising claims that, as a good source of calcium, Wonder
    Bread helps children's minds work better and helps children remember
    things.\20\ In a recent case involving significant economic injury, the
    Commission announced that a group of ``buying clubs'' had agreed to pay
    $9 million to settle charges by the FTC and State Attorneys General.
    The defendants were charged with misleading consumers into accepting
    trial buying club memberships and obtaining consumers' credit card
    account numbers without the consumers' knowledge or authorization from
    telemarketers pitching the buying clubs. Consumers then were enrolled
    in the clubs and charged up to $96 in yearly membership fees.\21\
    ---------------------------------------------------------------------------
        \20\ Interstate Bakeries Corp., File No. 012 3182 I (consent
    agreement accepted subject to public comment, Mar. 6, 2002); Campbell
    Mithun LLC, File No. 012 3182 (consent agreement accepted subject to
    public comment, Mar. 6, 2002).
        \21\ FTC v. Ira Smolev, No. 01-8922-Civ-Zloch (S.D. Fla., consent
    decree entered as to all except two defendants, Nov. 28, 2001).
    ---------------------------------------------------------------------------
        In addition, last month the FTC obtained a stipulated preliminary
    injunction in a federal district court action against the promoters of
    ``Miss Cleo'' psychic services.\22\ The FTC's complaint alleges that
    the defendants misrepresented the cost of services both in advertising
    and during the provision of the services, billed for services that were
    never purchased, and engaged in deceptive collection practices, among
    other things. The FTC estimates that the defendants billed consumers at
    least $360 million in connection with this alleged scheme.
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        \22\ FTC v. Access Resource Services, Inc., No. 02-60226 Civ. Gold
    (S.D. Fla., stipulated preliminary injunction entered Feb. 20, 2002).
    ---------------------------------------------------------------------------
    Media violence, gambling, and children
        The FTC is continuing to monitor violent media directed toward
    children, and appreciates the leadership of Senators Hollings, McCain,
    Gregg, and other Subcommittee members on this issue. In a September
    2000 report, the agency reported that the entertainment industry
    targeted advertising and promotion of violent video games, movies, and
    music to children.\23\ We received requests from Congress to take a
    variety of steps to follow up on this report. In particular, this
    Subcommittee requested that the FTC continue its efforts in child
    protection through three related initiatives: consumer research and
    workshops, an underage shopper retail compliance survey, and marketing
    and data collection.\24\
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        \23\ Federal Trade Commission, Marketing Violent Entertainment to
    Children: A Review of Self-Regulation and Industry Practices in the
    Motion Picture, Music Recording & Electronic Game Industries (Sept.
    2000), available at <>.
        \24\ Conf. Rpt. on H.R. 2500 (fiscal year 2002 appropriations), H.
    Rep. No. 278, 107th Cong., 1st Sess. 162 (Nov. 9, 2001).
    ---------------------------------------------------------------------------
        In response to these requests, in April 2001 the FTC released a
    follow-up report outlining improvements in the movie and electronic
    game industries but finding no appreciable change in the music
    industry's target marketing practices.\25\ The agency released a second
    follow-up report in December 2001, finding that the movie and
    electronic game industries had made continued improvements. The
    December 2001 report also found that the music industry had made some
    progress in disclosing parental advisory label information in its
    advertising, but the Commission's review of advertising placement
    showed that the music industry had not altered its marketing practices
    since the September 2000 report.\26\ The December report also described
    the results of a second underage shopper retail compliance survey. The
    FTC will release a third follow-up report in June 2002. In addition, as
    requested by this Subcommittee, the Commission's staff is conducting
    research on appropriate consumer education messages for parents. The
    Commission is also working to respond to the language in last year's
    appropriations bill regarding the marketing of on-line gambling sites
    to children. We will be reporting our findings and announcing a
    consumer education initiative in the near future.
    ---------------------------------------------------------------------------
        \25\ Federal Trade Commission, Marketing Violent Entertainment to
    Children: A Six-Month Follow-Up Review of Industry Practices in the
    Motion Picture, Music Recording & Electronic Game Industries (April
    2001), available at <>.
        \26\ Federal Trade Commission, Marketing Violent Entertainment to
    Children: A One-Year Follow-Up Review of Industry Practices in the
    Motion Picture, Music Recording & Electronic Game Industries (Dec.
    2001), available at <>.
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    Globalization
        The FTC will continue to respond to the challenges created by the
    increasingly global marketplace. First, the FTC will participate in
    international efforts to craft policies and self-regulatory programs to
    protect consumers. Second, we will build new international partnerships
    to tackle cross-border fraud through information sharing and
    coordinated law enforcement. An example is the FTC's participation in
    the International Marketing Supervision Network (IMSN), a network of
    consumer protection and fair trade organizations from more than two
    dozen countries. The IMSN identifies worldwide enforcement issues,
    facilitates the sharing of information about cross-border commercial
    activities affecting consumer interests, and encourages international
    cooperation among law enforcement agencies. Another example is
    econsumer.gov, a joint effort by the United States and fifteen other
    countries to gather and share cross-border e-commerce complaints.
        Third, to meet the challenge of identifying critical consumer
    issues in the global marketplace, the FTC plans to continue to use its
    Consumer Information System, a consumer complaint database, to identify
    and target the most serious consumer problems. By sharing fraud
    complaints with a broad group of law enforcement partners through the
    secure Consumer Sentinel Web site, the FTC enhances the effectiveness
    of law enforcement agencies across the United States, Canada, and
    Australia. The FTC also will continue training enforcement officials on
    how to bring cases involving new technologies. Since fiscal year 2001,
    the FTC has educated more than 1,750 law enforcement personnel from
    more than 20 countries, 38 states, 23 U.S. federal agencies, and 19
    Canadian agencies on use of the fraud database.
    Consumer outreach
        Just as consumer outreach is a key component of the FTC's efforts
    to protect consumers' privacy, the FTC will continue to place great
    emphasis on consumer outreach involving fraud and deception. Our
    consumer education programs provide two key benefits. First, they
    inform consumers of their rights under various consumer protection
    laws. Second, they give consumers the information they need to identify
    and avoid fraud and deception in the marketplace. In fiscal year 2002,
    the FTC will use national and local media, state and local government
    agencies, business and consumer groups, and the ftc.gov and
    consumer.gov Web sites to reach millions of consumers across the
    country. The FTC also will continue to reach consumers through its
    Consumer Response Center and the hundreds of consumer protection
    organizations that distribute FTC materials and provide links to the
    FTC Web site. In fiscal year 2001, the FTC issued 77 publications,
    distributed more than 5.4 million print publications, and logged more
    than 9.6 million accesses of its publications on the ftc.gov Web site.
    The FTC also will continue to host workshops to highlight the FTC's
    activities and resources for Congressional district office staff. By
    July of this year, the FTC will have held workshops in each of its
    regional offices for all Congressional district offices.
                        maintaining competition mission
    Merger enforcement
        Merger enforcement will continue as a major focus of the
    competition agenda for fiscal year 2003. Stopping mergers that lessen
    competition ensures that consumers will have the benefit of lower
    prices and greater choice in their selections of goods and services.
    The recently revised Hart-Scott-Rodino Act (``HSR'') \27\ filing
    threshold, coupled with economic conditions during the last fiscal
    year, reduced the number of reportable filings by approximately two-
    thirds from their peak. Reported mergers, however, continue to increase
    in scope, complexity, and size. In fiscal year 2001 alone, the total
    value of all reported mergers was over $1 trillion. Large, multifaceted
    transactions--the ones still subject to HSR--are the ones most likely
    to raise antitrust issues, and typically involve a number of separate
    product and geographic markets, each requiring analysis.\28\ Further,
    mergers in high tech markets require careful analysis, because new
    technical issues continue to emerge.
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        \27\ 15 U.S.C. Sec. 18a, as amended, Pub. L. No. 106-553; 114 Stat.
    2762 (2000).
        \28\ For example, the FTC's settlement agreement in Chevron Corp./
    Texaco Inc., No. C-4023 (Jan. 2, 2002) (consent order), provided for
    relief in (1) retail gasoline markets in numerous metropolitan areas in
    various parts of the country, including Alaska and Hawaii, the western
    United States (including Arizona, Idaho, Nevada, New Mexico, Oregon,
    Utah, Washington, and Wyoming), and the southern United States
    (including Alabama, Florida, Georgia, Kentucky, Louisiana, Mississippi,
    North Carolina, Oklahoma, Tennessee, Texas, Virginia, and West
    Virginia); (2) marketing of CARB gasoline in California; (3) refining
    and bulk supply of CARB gasoline for sale in California; (4) refining
    and bulk supply of gasoline and jet fuel in the Pacific Northwest; (5)
    the bulk supply of RFG II gasoline into St. Louis; (6) terminaling of
    gasoline and other light petroleum products in several metropolitan
    areas in Arizona, California, Mississippi, and Texas, and on four
    Hawaiian islands; (7) transportation of crude oil from California's San
    Joaquin Valley; (8) transportation of crude oil in the eastern Gulf of
    Mexico; (9) pipeline transportation of natural gas in the Central Gulf
    of Mexico; (10) natural gas fractionating in Texas; and (11) marketing
    of general aviation gasoline in 14 states (Alaska, Alabama, Arizona,
    California, Florida, Georgia, Idaho, Louisiana, Mississippi, Nevada,
    Oregon, Tennessee, Utah, and Washington).
    ---------------------------------------------------------------------------
        We will devote resources to searching for mergers that are no
    longer subject to premerger reporting requirements under HSR, but that
    could be anticompetitive. While the revised HSR filing threshold
    eliminated the reporting requirement for smaller mergers, it did not
    change the substantive standard of legality under section 7 of the
    Clayton Act.\29\ The agency will be alert to smaller mergers that could
    harm consumers by substantially lessening competition. Since the fiscal
    year began, the FTC has opened investigations into mergers that were
    not reportable under the HSR Act, and has issued an administrative
    complaint challenging one merger that fell below the amended HSR
    threshold.\30\
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        \29\ 15 U.S.C. Sec. 18.
        \30\ MSC.Software Corp., No. D-9299 (complaint issued Oct. 10,
    2001) (alleging that a dominant supplier of a popular type of advanced
    computer-aided engineering software acquired its only two competitors).
    ---------------------------------------------------------------------------
        Litigation to challenge anticompetitive mergers requires
    significant resources. While the FTC resolves most merger cases through
    settlement (this fiscal year we have obtained settlements of ten
    administrative or court complaints),\31\ it is sometimes necessary to
    litigate challenges to certain proposed or consummated mergers. Since
    the fiscal year began, the Commission has authorized the staff to file
    complaints in five merger cases, three of which are in litigation \32\
    and two of which have settled.\33\ The FTC must have the resources and
    expertise needed to support effective challenges in complex and high-
    stakes cases to protect consumers from higher prices, limited choices,
    and thwarted innovation.
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        \31\ This fiscal year, the Commission has issued final consent
    orders in the following eight merger cases: Ina-Holding Schaeffler KG/
    FAG Kugelgischer Georg Schafer AG, No. C-4033 (Feb. 15, 2002); Nestle
    Holdings, Inc./Ralston Purina Co., No. C-4028 (Feb. 8, 2002); Diageo
    p.l.c./Vivendi Universal S.A., No. C-4032, (Feb. 8, 2002); Chevron
    Corp./Texaco Inc., No. C-4023 (Jan. 2, 2002); Valero Energy Corp./
    Ultramar Diamond Shamrock Corp., No. C-4031 (Feb. 19, 2002);
    Koninklijke Ahold N.V./Bruno's Supermarkets, Inc., No. C-4027 (Jan. 16,
    2002); Metso Oyj/Svedala Industri AB, No. C-4024 (Oct. 23, 2001);
    Airgas, No. C-4029 (Dec. 18, 2001). On March 7, 2002, the Commission
    accepted subject to public comment a settlement in the matter of
    Deutsche Gelatine-Fabriken Stoess AG/Goodman Fielder Ltd., File No.
    011-0117. In addition, the Commission obtained a consent decree in the
    matter of Hearst's acquisition of J.B.Laughery. FTC v. The Hearst
    Trust, No. 1:01CV00734 (D.D.C., Dec. 18, 2001).
        \32\ MSC. Software, supra n. 30; Chicago Bridge Iron Co., Inc.,
    Dkt. No. 9300 (complaint issued Oct. 25, 2001); Libbey, Inc./Newell
    Rubbermaid, Inc., No. 1:02CV00060 (D.D.C., complaint filed Jan. 14,
    2002).
        \33\ Diageo/Vivendi and Deutsche Gelatine-Fabriken Stoess/Goodman
    Fielder, supra n. 31.
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    Streamlining the merger review process
        The FTC has been working with the Antitrust Division at the
    Department of Justice to establish procedures to make the HSR merger
    review process more efficient and transparent. The FTC has focused on
    several areas for streamlining, including:
      --Electronic Premerger Filing.--As part of an overall movement to
            make government more accessible electronically, the FTC,
            working with DOJ, will accelerate its efforts in fiscal year
            2003 to develop an electronic system for filing HSR premerger
            notifications. E-filing will reduce filing burdens for
            businesses and government and create a valuable database of
            information on merger transactions to inform future policy
            deliberations.
      --Burden Reduction in Investigations.--The agencies have taken steps
            to reduce the burden in document productions responsive to
            requests for additional information under the HSR Act (``second
            requests''). In response to legislation amending the HSR
            Act,\34\ the FTC amended its rules of practice to incorporate
            new procedures. The rule requires Bureau of Competition staff
            to schedule conferences to discuss the scope of a second
            request with the parties and also establishes a procedure for
            the General Counsel to review the request and rule promptly on
            any remaining unresolved issues.\35\ Measures adopted include a
            process for seeking modifications or clarifications of second
            requests, and expedited senior-level internal review of
            disagreements between merging parties and agency staff;
            streamlined internal procedures to eliminate unnecessary
            burdens and undue delays; and implementation of a systematic
            management status check on the progress of negotiations on
            second request modifications. In addition, we recently have
            announced that agency staff will participate in a series of
            discussions with the bar and other interested parties to elicit
            suggestions on further improvements to the second request
            process, and to provide information on our investigation
            procedures.
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        \34\ 15 U.S.C. Sec. 18a, as amended, Pub. L. No. 106-553; 114 Stat.
    2762 (2000).
        \35\ 16 CFR Sec. 2.20. To date, two appeals have been filed under
    this procedure; both have been completed.
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      --Improved FTC/DOJ Clearance Process.--The achievement of an
            efficient division of work between the two federal antitrust
            enforcement agencies has occupied the energies of the
            Department of Justice and the FTC since the Commission began
            operating in March 1915. For many years, the two agencies have
            allocated matters mainly on the basis of their relative
            expertise. For the most part, this arrangement has worked
            smoothly. In the last decade, however, the convergence of
            industries increasingly has blurred the lines between the
            agencies' historical areas of responsibility. Consequently,
            clearance disputes have become both more common and, in the
            case of major clearance disputes, more contentious.\36\ On
            average, from 1982 through 1989, 10 clearance disputes arose
            each year. In contrast, between 1990 and 2001, the annual
            number of contested matters has equaled or exceeded 45, and in
            three years exceeded 100. On average, 83 clearance disputes
            occurred annually during this period.
    ---------------------------------------------------------------------------
        \36\ Perhaps the most notable example of industry convergence and
    resulting clearance disputes concerns electricity and natural gas.
    Historically, electricity matters have been handled by the DOJ, and
    natural gas matters have been handled by the FTC. Convergence of these
    industries has led to contentious clearance disputes. Each merger of an
    electricity company and a natural gas company has been hotly contested
    by the agencies. Disputes over these convergence mergers have accounted
    for approximately 10 percent of all clearance disputes since the
    beginning of fiscal year 2000. Moreover, to resolve clearance disputes
    generally, it became increasingly necessary to employ conditions--such
    as Chairman Pitofsky's agreement that, in return for receiving
    clearance to investigate the matter, the FTC would not cite its
    expertise in AOL/Time Warner as a source of expertise in future
    clearance disputes.
    ---------------------------------------------------------------------------
      --These disputes result in significant delays. Delays averaging three
            weeks occurred in 24 percent of the matters on which either
            agency sought clearance from the beginning of fiscal year 2000
            through January 28, 2002. Cumulatively, these investigations
            were delayed by 4,521 business days--more than 17 years. During
            this time, neither agency could investigate potentially serious
            allegations of illegal behavior.\37\ Recognizing the severity
            of the problem, FTC Chairman Robert Pitofsky and Assistant
            Attorney General Joel Klein attempted to negotiate a global
            clearance agreement for over a year, but could not reach
            consensus.
    ---------------------------------------------------------------------------
        \37\ The number of disputes has decreased somewhat recently,
    particularly since Chairman Muris and Charles James assumed office last
    summer and resolved a clearance dispute that had lasted for more than a
    year. In effect, they declared a cease-fire in the clearance war while
    attempting to negotiate a peaceful settlement. In any event, the
    Commission believes that its scarce resources should be spent on
    investigating allegations of misconduct, and in developing appropriate
    expertise, rather than in fighting with the Antitrust Division.
    Moreover, the recent decline in clearance disputes may reflect the
    recent decline in merger filings. Changing market conditions could lead
    to an increase in merger filings and, consequently, an increase in
    clearance disputes.
    ---------------------------------------------------------------------------
      --Consistent with his authority,\38\ Chairman Muris negotiated a new
            clearance agreement with Assistant Attorney General for
            Antitrust Charles James.\39\ The new agreement will allocate
            matters between the two agencies more efficiently, rationally,
            and predictably. This agreement allocates primary areas of
            responsibility for antitrust enforcement on an industry-wide
            basis, and implements expedited clearance dispute resolution
            procedures. The new agreement will enhance the quality of
            antitrust enforcement, and will benefit businesses, consumers,
            and taxpayers.\40\ Moreover, an agreement that allocates
            primary areas of enforcement responsibility enjoys overwhelming
            support within the antitrust and business communities.\41\ The
            clearance agreement requires that the agency heads review the
            allocation of industries in four years to determine whether the
            goal of efficiently and rationally allocating competition
            matters is being achieved.
    ---------------------------------------------------------------------------
        \38\ See Statement of Commissioners Orson Swindle and Thomas B.
    Leary on the Memorandum of Agreement Concerning Clearance Procedures
    for Investigations (Jan. 18, 2002) (stating that ``We are not troubled
    by the process by which the Agreement was fashioned. Not only was
    negotiation of the Agreement with Assistant Attorney General James the
    prerogative of Chairman Muris; it was also simply the most effective
    way to get the job done. Historically, the agencies employed a
    procedure for dealing with clearance issues that was based on a case-
    by-case approach, with the Chairman and the Assistant Attorney General
    making the ultimate decision when necessary (with little or no
    involvement by other Commissioners). This long course of interagency
    discussion and negotiation then established `precedent' for allocating
    antitrust review responsibilities between the agencies--a kind of
    `private law' for the kinds of matters that the Agreement was designed
    to describe publicly. It is proper that the agency heads were the ones
    to devise a new arrangement that would have injected greater efficiency
    and clarity into the allocating system--a system in which the Chairman,
    and not other Commissioners, will continue to have operational
    responsibilities.''), available at <>.
        \39\ See Memorandum of Agreement Between the Federal Trade
    Commission and the Antitrust Division of the United States Department
    of Justice Concerning Clearance Procedures for Investigations,
    available at <>.
        \40\ See Statement of Commissioners Orson Swindle and Thomas B.
    Leary on the Memorandum of Agreement Concerning Clearance Procedures
    for Investigations (Jan. 18, 2002), supra n.38; ``FTC Releases
    Antitrust Clearance Process Documents,'' FTC Press Release (Feb. 27,
    2002), available at <>;
    and ``FTC and DOJ Announce New Clearance Procedures for Antitrust
    Matters,'' FTC Press Release (Mar. 5, 2002), available at <>.
        \41\ See Letter from Robert Pitofsky, et al. to Timothy J. Muris
    and Charles A. James (Feb. 4, 2002), available at <>; Letter from Roxane C. Busey,
    Chair, Section of Antitrust Law, American Bar Association, to Timothy
    J. Muris and Charles A. James (Jan. 23, 2002), available at <>; and Letter from the
    Business Roundtable, the National Association of Manufacturers, and the
    U.S. Chamber of Commerce to Timothy J. Muris (Feb. 25, 2002), available
    at <>. Of course,
    most of the signatories to these three letters did not possess detailed
    knowledge of the recent, industry-specific expertise of the FTC and the
    DOJ. Accordingly, they could not, and did not, opine on specific
    allocations between the FTC and the DOJ. Some consumer groups, however,
    have expressed concerns about the agreement. See Jeffrey Chester,
    Center for Digital Democracy, ``FTC-DOJ Clearance Agreement Will Hurt
    Consumers,'' available at <>; Letter from Andrew Jay Schwartzman, President and
    CEO, Media Access Project, to Senator Ernest F. Hollings (Jan. 22,
    2002), available at <>.
    ---------------------------------------------------------------------------
      --In response to concerns about the agreement expressed by the
            Chairman of this Subcommittee, the agencies have provided
            information on clearance procedures, the historical allocation
            of matters, and clearance delays. We will, of course, provide
            any additional information that the Subcommittee desires.
    Nonmerger enforcement
        The FTC will continue the trend, begun last year, to devote more
    resources to nonmerger enforcement. In fiscal year 2001, the agency
    opened 56 nonmerger investigations, more than double the number of such
    investigations begun in the previous year, when deadline-sensitive HSR
    merger investigations siphoned away resources allocated for nonmerger
    work. Thus far in fiscal year 2002, the agency has opened 15 nonmerger
    investigations. The major focus of our nonmerger work will concern
    activities among competitors, reflecting the broad consensus in
    antitrust policy that horizontal arrangements that fix prices or
    restrict output are the ones most likely to harm consumers.
        Efforts in this area are producing benefits for consumers. Just
    last month, the FTC settled litigation against American Home Products
    (AHP) to resolve charges that Schering-Plough Corporation (Schering)
    illegally agreed to pay AHP millions of dollars in exchange for AHP's
    agreement to delay introduction of a generic potassium chloride
    supplement, which would have competed with Schering's branded K-Dur 20,
    used to treat patients with low potassium, which can lead to cardiac
    problems.\42\ In another recent matter, the agency achieved a
    settlement with one defendant in a price-fixing case last fiscal year,
    and is presently in litigation with the other defendant.\43\
    ---------------------------------------------------------------------------
        \42\ American Home Products Corporation, Dkt. No. 9297 (consent
    agreement accepted subject to public comment, Feb. 19, 2002).
    Complaints against Schering and Upsher-Smith are currently before an
    FTC administrative law judge. Schering-Plough Corporation, Upsher-Smith
    Laboratories, Inc., Dkt. No. 9297 (complaints filed Apr. 2, 2001).
        \43\ In September of 2001, the FTC entered into a consent agreement
    with Warner Communications to resolve charges that Warner and Polygram
    illegally agreed to fix prices for audio and video products featuring
    ``The Three Tenors.'' Warner Communications, Inc., No. C-4025 (Sept.
    17, 2001) (consent order). The case against Vivendi Universal S.A., the
    successor corporation to Polygram, is currently before an FTC
    administrative law judge, Dkt. No. 9298.
    ---------------------------------------------------------------------------
        The settlement with AHP marks the third instance in which the FTC
    has reached a settlement with generic or branded drug manufacturers
    regarding alleged anticompetitive conduct designed to delay generic
    entry.\44\ A major portion of the American health care dollar purchases
    prescription drugs, and we will continue our efforts to prevent firms
    from engaging in anticompetitive practices that raise drug prices. In
    particular, we will strive to ensure that anticompetitive practices do
    not delay market entry of generic drugs, which cost less than name-
    brand pharmaceuticals. We will seek to ensure that protections provided
    to drug innovators under the Hatch-Waxman Act are not abused to the
    detriment of consumers. As you know, Hatch-Waxman was designed to
    increase the flow of new pharmaceuticals into the marketplace by
    carefully balancing two public policy objectives: encouraging vigorous
    competition from generic drugs, while maintaining incentives to invest
    in the development of innovator drugs.
    ---------------------------------------------------------------------------
        \44\ The other two cases are Abbott/Geneva (Abbott Laboratories,
    No. C-3945 (May 22, 2000), and Geneva Pharmaceuticals, Inc., No. C-3946
    (May 22, 2000) (consent orders)) and Hoechst Marion Roussel, Inc./Andrx
    Corp., No. C-9293 (May 11, 2001) (consent order).
    ---------------------------------------------------------------------------
        In addition to agreements between makers of brand-name drugs and
    makers of generics, under which the generic entrant is essentially paid
    not to compete, the FTC continues to investigate unilateral conduct by
    branded manufacturers designed to forestall competition. For example,
    some branded manufacturers list additional patents in the FDA's
    ``Orange Book,'' often shortly before their original patents expire,
    which sets the stage for launching patent infringement suits against
    generic drug firms poised to enter the market. Under Hatch-Waxman, such
    litigation triggers an automatic 30-month stay on FDA approval of the
    generic drug. If the listings do not meet statutory and regulatory
    requirements, their inclusion in the Orange Book may constitute
    unlawful restraints on competition.\45\
    ---------------------------------------------------------------------------
        \45\ The FTC recently filed an amicus brief in the In Re Buspirone
    Patent Litigation that addresses some of these issues. The Buspirone
    litigation concerns whether Bristol-Myers Squibb Company (``BMS'')
    violated Section 2 of the Sherman Act by making false filings with the
    U.S. Food and Drug Administration that caused BMS's newly issued patent
    to be wrongfully listed in the FDA's Orange Book in order to block
    generic competition to its branded drug, BuSpar. BMS argued that a
    claim based on its allegedly improper filing of a patent in the FDA's
    Orange Book could not proceed because its actions were entitled to
    immunity under the Noerr-Pennington doctrine. The Noerr doctrine
    immunizes genuine petitioning activity directed at persuading
    government bodies to adopt a particular course of action. In its brief,
    the Commission argued that Orange Book filings, even when made
    properly, are decidedly not ``petitions.'' Rather, they are mechanical,
    informational filings that do not trigger any exercise of legal or
    discretionary judgment by the FDA and do not call for any agency
    decision-making. FDA's role in receiving and publishing Orange Book
    information is simply ministerial. As such, Orange Book filings are
    akin to tariff filings, which have consistently been held not to
    constitute immunized Noerr petitioning. The district court recently
    issued a decision on a motion to dismiss in this case that accepted the
    arguments made by the Commission and squarely held that Orange Book
    filings are not petitioning under Noerr. In Re Buspirone Patent
    Litigation, MDL Dkt. No. 1410, 2002 U.S. Dist. LEXIS 2625, (S.D.N.Y.,
    motion to dismiss granted in part and denied in part, Feb. 14, 2002).
    The Commission's amicus brief is available at <>.
    ---------------------------------------------------------------------------
        To uncover whether strategies such as these are isolated examples
    or represent patterns of anticompetitive conduct, the Commission has
    undertaken a study, as requested by Representative Henry Waxman, to
    provide a more complete picture of how generic competition has
    developed under the Hatch-Waxman Act. The Commission has issued nearly
    100 orders to innovator and generic drug companies to obtain documents
    related to the issues identified through investigations and to identify
    any other anticompetitive strategies that may exploit certain Hatch-
    Waxman provisions. The facts obtained through this study may provide a
    basis for policy recommendations in this area.
    Targeting resources for consumer impact
        In both its merger and nonmerger programs, the FTC will continue to
    focus competition resources in sectors of the economy that have a
    substantial impact on consumers' wallets. Because of the important cost
    implications for consumers, one critical area is health care. Health
    related products and services account for over 13 percent of gross
    domestic product, up from 10.9 percent in 1988.\46\ In addition to
    preserving opportunities for generic drugs to compete, the FTC's
    enforcement agenda also includes agreements among doctors and other
    health professionals to restrict competition, codes of conduct
    containing anticompetitive provisions, and mergers of hospitals and
    suppliers of health care products.
    ---------------------------------------------------------------------------
        \46\ Katharine Levit et al., ``Inflation Spurs Health Spending in
    2000,'' 21 Health Affairs 172 (Jan-Feb 2002).
    ---------------------------------------------------------------------------
        Another critical sector is energy. Representing a significant
    portion of the total U.S. economic output, energy is a vital input to
    virtually all parts of the economy. The FTC has garnered considerable
    experience with energy issues over the past two decades, investigating
    numerous oil mergers and bringing cases in appropriate instances.
    Recently, the FTC obtained two significant settlements to prevent loss
    of competition resulting from the Chevron/Texaco \47\ and Valero/
    Ultramar Diamond \48\ mergers.\49\ To understand current issues
    involving energy markets, the agency has recently announced that we
    will hold a second public conference to examine factors that affect
    prices of refined petroleum products in the United States. The agency
    held a preliminary conference on the subject last fiscal year. In
    addition, the FTC will continue to investigate pricing behavior, where
    appropriate, in energy markets. In just the past year, we investigated
    various price spikes or pricing anomalies in petroleum products. Staff
    also investigated the gasoline price spikes in the aftermath of the
    September 11th terrorist attacks. Thus far, we have found no evidence
    of collusive activity in violation of the antitrust laws. Commission
    investigations nonetheless both have a deterrent effect on wrongdoing
    and provide the basis for action when anticompetitive practices have
    occurred.
    ---------------------------------------------------------------------------
        \47\ Chevron Corp./Texaco Inc., No. C-4023 (Jan. 2, 2002) (consent
    order).
        \48\ Valero Energy Corp./Ultramar Diamond Shamrock Corp., No. C-
    4031 (Feb. 19, 2002) (consent order).
        \49\ Additionally, in recent years, the agency has achieved
    significant settlements, requiring divestitures of oil fields,
    refineries, pipelines, and gas stations to prevent loss of competition
    resulting from the Exxon/Mobil and BP/ARCO mergers. Exxon Corp./Mobil
    Corp., No. C-3907 (January 26, 2001) (consent order) and BP Amoco
    p.l.c./Atlantic Richfield Co., No. C-3938 (Aug. 29. 2000) (consent
    order).
    ---------------------------------------------------------------------------
        Yet another sector of the economy involves high tech industries.
    Our economy increasingly has become more knowledge-based; for some
    companies, patent portfolios represent far more valuable assets than
    manufacturing or other physical facilities. Thus, an increasing number
    of the FTC's competition matters require the application of antitrust
    law to conduct relating to intellectual property. Both antitrust and
    intellectual property law share the common purposes of promoting
    innovation and enhancing consumer welfare. On occasion, however, there
    have been tensions in how to manage the intersection between the
    doctrines, as well as questions about how best to spur innovation
    through competition and intellectual property law and policy. The FTC
    and DOJ currently are holding a series of hearings on competition and
    intellectual property law and policy to help understand the interplay
    between intellectual property and antitrust law.\50\ Issues to be
    addressed in the hearings include standard-setting, cross-licensing and
    patent pools, unilateral refusals to deal, proliferation of patents,
    and the changing scope of patents. In addition to the hearings, we
    continue to pursue antitrust investigations involving issues concerning
    intellectual property.
    ---------------------------------------------------------------------------
        \50\ See ``FTC/DOJ Hearings to Highlight Further Business and
    Economic Perspectives on Competition and Intellectual Property
    Policy,'' FTC Press Release (Mar. 12, 2002), available at <>; ``FTC/DOJ Hearings to
    Highlight Business and Economic Perspectives on Competition and
    Intellectual Property Policy,'' FTC Press Release (Feb. 15, 2002), at
    <>; ``FTC/DOJ Hearings to
    Focus on the Implications of Competition and Patent Law and Policy,''
    FTC Press Release (Jan. 30, 2002), at <>; ``Muris Announces Plans for Intellectual Property
    Hearings,'' FTC Press Release (Nov. 15, 2001), at <>.
    ---------------------------------------------------------------------------
    Outreach efforts
        The FTC will continue competition outreach to various
    constituencies during fiscal year 2003. Among these efforts, the agency
    strives to increase understanding and awareness of important emerging
    industries and issues, such as business-to-business (B2B) and business-
    to-consumer (B2C) electronic commerce. The FTC also increases awareness
    of antitrust law through guidance to the business community; outreach
    efforts to Federal, state and local agencies, business groups, and
    consumers; the development and publication of antitrust guidelines and
    policy statements; speeches; and publications. The agency will assess
    the need for additional workshops, and whether its ongoing outreach
    efforts effectively target audiences and address critical issues in the
    marketplace.
                       needed resources--fiscal year 2003
        To accomplish our mission in fiscal year 2003, the FTC requests
    $176,509,000 and 1,074 FTE. The increase of $20,527,000 over fiscal
    year 2002 includes:
      --$7,352,000 for base expenses (including pay raises, non-pay
            inflation, increased rental of space, and increased Consumer
            Response Center contract costs);
      --$5,000,000 for expenses related to generating a National Do-Not-
            Call List to protect consumers' privacy;
      --$3,265,000 for systems support and the increased physical security
            for staff; and
      --$4,910,000 to comply with proposed legislation (to require agencies
            to pay the full Government share of accruing costs of
            retirement for current CSRS employees and post-retirement
            health benefits).
        The FTC's fiscal year 2003 budget request is calculated based on
    using two sources of offsetting collections: an estimated $173,509,000
    from HSR Premerger Filing Fees and an estimated $3,000,000 from a new
    Do-Not-Call fee. The HSR fee estimate is based on a three-tiered filing
    rate structure mandated by Congress, with an effective date of February
    1, 2001. The new Do-Not-Call fee would be assessed, collected, and used
    to cover the costs of developing, implementing, and maintaining a
    national database of telephone numbers of consumers who choose not to
    receive telephone solicitations from telemarketers. This new fee
    structure will be subject to notice and comment as part of a rulemaking
    process.
        Mr. Chairman, the FTC appreciates your past support and that of
    this Subcommittee. I would be happy to answer any questions that you
    and other Members may have about the FTC's budget request and programs.

        Senator Hollings. Mr. Chairman, let us, like we have in the
    law, what we call a demurrer, where we assume everything you
    say is very true, you still do not state a cause of action.
    Wherein do you think you get the authority to change the
    authorizing statute?
        Mr. Muris. Mr. Chairman, I do not believe we have changed
    any authority. The----
        Senator Hollings. Oh, yes, you have. You just testified to
    it.
        Mr. Muris. Well, but----
        Senator Hollings. You said, look, we have to check one with
    the other and we are going to stop all that checking one with
    the other and so we are just going to have an understanding
    that we are not going to have any check on it and the Justice
    Department will have the check.
        Mr. Muris. No, sir, I do not think that is what we have
    done. What we have done is to explain that the clearance
    process, which has gone on for decades, has been based on
    experience. We have taken that experience and, for the first
    time, told the world this is what the experience means. The
    clearance agreement specifies which cases will be done by DOJ
    and which will be done by FTC.
        The DOJ has the experience in media. Even if we had never
    entered the agreement, the DOJ would still do the media cases.
    Under the clearance process we have to clear agreements with
    each other. Under the law only one agency can investigate a
    merger. We must have a process to make that determination.
        Senator Hollings. Then we can change that law, but we
    cannot abandon the public interest envisioned in the Federal
    Trade Commission. You have the authority over anticompetitive,
    deceptive, unfair trade practices, protecting consumers, public
    interest for general authority with respect to protecting the
    public interest, not necessarily the violation of an antitrust
    law. It could be anticompetitive, it could be deceptive, it
    could be unfair, but not in violation of antitrust, and so you
    have got to look at it.
        You are right, and that was the one point being checked
    out. We would have more confidence in what you have just said.
    On the one hand, we see here that the release with respect to
    the American Bar Association, speaking at the American Bar
    Association conference in Washington, Jones, Day, Reavis, and
    Pogue partner Joe Simms said that the FTC pushed for merger
    conditions that had nothing to do with any real antitrust
    violations. He did not talk about just one person to review and
    investigate it, not Joe Simms. He said, look, I am pushing for
    merger conditions that had nothing to do with any real
    antitrust violations.
        He also contended that the agency based its open access and
    interactive TV conditions on almost entirely unsupported
    theoretical claims that the new AOL-Time Warner colossus
    already controlled high-speed data, ITV and instant messaging
    markets and would move quickly to crush the competition in
    them. And so he sat about changing it and we have a headline in
    the Wall Street Journal, ``Lawyer's Ties Questioned in AOL
    Accord,'' nothing about this one agency investigating, mind
    you.
        I quote, ``An attorney general representing Time Warner
    helped write a controversial agreement between two agencies,
    dividing antitrust enforcement that steers future AOL merger
    reviews to the Justice Department Antitrust Division headed by
    one of his former law partners. Joe Simms, an antitrust expert
    and partner in Jones, Day, Reavis, and Pogue here was solicited
    by the Federal Trade Commission and Justice Department on how
    the two agencies should divide responsibility.'' I understand
    James is the man doing the soliciting, his former law partner--
    ``how the two agencies should divide responsibility for
    antitrust reviews.'' Mr. Simms had represented AOL against the
    Federal Trade Commission in its 2000 review of the merger with
    Time Warner and continues to represent the company.
        That is just outrageous. We do not talk about one reviewing
    and everything. I have been up here with the Federal Trade
    Commission for 35 years, never heard of what you just related
    in your testimony. We know what happened. I can tell you here
    and now, Mr. Chairman, that we know how to act. I studied my
    humility under Mendell Rivers down there and when he was over
    there in charge of Armed Services.
        So it is not authorized by law. If you think the problem is
    as you have stated it, the proper thing to do is not to go to a
    losing attorney with his former law partner and rewrite
    memorandums of understanding. Even if they had merit, we would
    not believe it. That is totally improper.
        What we will have to do is, by gosh, just come here and
    just cut that budget around so that we get their attention,
    whether we do away with the political positions, repeal 605,
    reprogramming authority to your Federal Trade Commission, or
    actually I am studying to see whether or not legally we can cut
    the pay. Sometimes when you cut pay, you get their final
    attention. But this idea, this administration has run amuck. We
    come up here, and to take the COPS program that is working and
    put it over to a relief agency, FEMA. We take the sea grant
    that you have just heard about and put it over into research
    that has nothing to do with education and so forth and the
    culture that we have developed there.
        We take the Border Patrol and everything else and how that
    is going to be jumbled up, I do not know, but the IMF has got a
    problem with the Immigration and Naturalization Service, so we
    have that lined up. Customs is working well. The Border Patrol
    is working well. But they are either going to bring Customs to
    Justice or put it all over to Customs, and they do all of this
    without even talking to the people who have been working in
    these disciplines, specifically you in the Federal Trade
    Commission. You just got there. We have been there a long, long
    time, and we have got to authorize it in committee and no one
    has mentioned any of this problem to us at the authorizing
    committee level, period.
        If you care to comment, we would be delighted to hear it.
        Mr. Muris. Yes, sir, Mr. Chairman. Mr. Chairman, I first
    started as a staff attorney at the Federal Trade Commission 28
    years ago. This is the fourth job I have had at the Federal
    Trade Commission. I have watched the deterioration of the
    clearance process to where, when I arrived, we had a matter
    that had been going on for over 1 year. I probably spent 2 full
    days, not in doing the public's business, but in trying to
    fight with the Antitrust Division over which one of us would do
    the public's business. I think it is better if we do not fight
    and if we investigate anticompetitive conduct. But let me
    respond to a few of your specific comments.
        There is nothing that prevents us, to the extent we have
    jurisdiction, and there are some areas where jurisdiction is
    weak, from investigating deceptive or unfair practices beyond
    the antitrust laws of any media company. The law that was
    involved in AOL-Time Warner is Section 7 of the Clayton Act. It
    is an antitrust law. Both agencies apply the exact same law and
    the exact same standard. I think Joe Sims was having sour
    grapes because he did not like Bob Pitofsky's interpretation of
    Section 7. But the Commission did not say that it was applying
    anything other than Section 7. And Section 7(a), which is an
    accompaniment to Section 7, requires that only one agency
    engage in these detailed investigations of mergers. It is the
    law.
        Two more points, one on Joe Sims. If Joe Sims was really
    interested in his pocketbook, he would have recommended that
    matters be sent to the FTC, not to the DOJ, because his former
    partner is recused from matters for 2 years. I was an ``of
    counsel'' to a law firm, and I know that law firm has lost
    business before the FTC because of my recusal.
        Finally, I do not understand how we could have violated
    reprogramming in this media matter area because with or without
    this agreement, the Department of Justice has much more
    experience than we do, and would do media mergers.
        Senator Hollings. Most respectfully, you have had 28 years,
    I have had 35 years, and perhaps we ought to assign you to the
    CIA because you have kept what you have pointed out top secret.
    I am also chairman of the authorizing committee and never heard
    what you just stated. So the procedure in Government is for
    this particular Appropriations Committee to appropriate in
    accordance with authority, not memorandums of understanding,
    and with that in mind, we will act accordingly, I can tell you
    that, if you folks go forward with a so-called memorandum of
    understanding.
        Senator Reed.
        Senator Reed. Thank you, Mr. Chairman, and thank you,
    Commissioner. As we have discussed previously, I have also
    concerns about the allocation of these different functions. You
    return again and again to the issue of experience, and I ask
    these questions not rhetorically but for information.
        It seems to me that Mr. Pitofsky's sort of aside that he
    would not count the experience of the AOL-Time Warner merger is
    irrelevant. In fact, the FTC was involved in that, probably one
    of the more complicated and one of the largest merger
    applications in the media companies, embracing not just one
    media but several, the Internet, television, you name it, they
    have got it there, I think. So I think if the benchmark is
    experience, certainly FTC is not without experience.
        And just again, for information, the six other cases that
    you referred to the DOJ, either for the record or now, could
    you tell us, what were those cases that the DOJ has on their
    side for experience?
        Mr. Muris. Well, there is AT&T's acquisition of Media One,
    AT&T's acquisition of TCI. There is the Primestar acquisition
    of DBS and MCI. They are currently reviewing Echostar-DirecTV.
    They are also looking at another major matter involving the
    same sets of issues.
        Part of our problem, Senator, is a lot of these issues
    arrive at the intersection of telephones and cable. They
    involve issues about broadband access and how to regulate that.
    We do not have jurisdiction over common carriers at the FTC. I
    think we should have jurisdiction. I have recommended that. But
    because we do not have jurisdiction over common carriers, the
    Justice Department Antitrust Division for decades has done
    these sorts of cases. It was the Antitrust Division that broke
    up AT&T. If you look just on a simple experience basis, they
    have done much more.
        We do have experience, but because the law requires the two
    of us to agree somehow, I am in the position of all past
    chairmen and heads of the Antitrust Division of honoring past
    promises. I agree that Chairman Pitofsky's promise does not
    seem to make a lot of sense, but the process had become so
    confrontational and fractious that those were the sorts of
    promises needed to keep the system going.
        No chairman who I have known would violate a promise like
    that of his predecessor, and I feel that I cannot violate it,
    either. But even if I did, the Antitrust Division has a lot
    more experience.
        Obviously, if the Congress wants to change the way media
    and telecom have been handled and give it to the FTC, we would
    love to be able to do that. But we have two antitrust agencies
    enforcing one statute, in this case, in terms of mergers, and
    because the law says only one of us can do it, we have to come
    to some sort of an agreement.
        Senator Reed. I will defer to the chairman in his
    understanding of the law and, indeed, the debate between the
    two of you. But I would note that, apparently, there are some
    other matters that you have looked into under mergers, Time
    Warner-Bell South 2001, the preliminary Section 7
    investigation. Is that something that FTC pursued?
        Mr. Muris. The rules for clearance are that only
    substantial investigations count. The FTC has only two
    substantial investigations. One was a very small deal involving
    so-called cable overbuild, where the Commission had a sensible
    case. It was small. It brought relief to several thousand cable
    subscribers. Preliminary investigations under the 1993
    clearance agreement are not significant and do not count.
        Senator Reed. It just, again, it seems to me that if there
    is statutory interpretation, that I will not opine on because I
    do not have the expertise, but if the touchstone is experience,
    I think, one, the FTC has it. Two, you can get it if you need
    it. So I do not know how you resolve this, but this issue
    continues to be of concern to me.

                             GENERIC DRUG INDUSTRY

        Let me turn to an unrelated point, and that is that the FTC
    is currently examining the competition of the generic drug
    industry under the Hatch-Waxman Act.
        Mr. Muris. Yes.
        Senator Reed. In the pilot study, you filed a citizen's
    petition with the FDA seeking guidance on the types of patents
    that can and cannot be appropriately listed in their so-called
    Orange Book. Could you give us an idea of the status of that
    investigation and have you received any response back from the
    FTC?
        Mr. Muris. We have been in discussions with the FDA,
    Senator. The FDA held a hearing, actually, on generic questions
    of Hatch-Waxman. I quite frankly think that no person who has
    been at the FTC is probably going to be more aggressive in
    pursuing those Orange Book investigations than we will be under
    my chairmanship. I think there is an enormous stake here for
    consumers. We put a lot of resources into it. We had great
    success with our BuSpar brief, which involved this issue, and
    we are hoping that the FDA, quite frankly, rules in that
    citizens' petition and we have been encouraging them to do so.

                                 TELEMARKETING

        Senator Reed. I commend you and the FTC for your proposal
    for the ``no call'' list, if you will, for telemarketing
    salespeople. That is one of the most annoying practices. If I
    took a poll in Rhode Island, it might be the only issue where
    you get 100 percent agreement.
        I would just ask whether you are prepared for the demand. I
    noted today in the Washington Post there was an article, ``FTC
    Anti-Telemarketing List Would Face Heavy Demand Based on the
    Experience in Missouri and Other Jurisdictions.'' Do you have
    the resources and the infrastructure to, I think, deal with
    this tsunami that is coming when people discover they can get
    their names off these lists?
        Mr. Muris. That is an excellent question, Senator, and we
    are at the mercy of the committee. We will need more money to
    do this. We can charge a fee for the lists, but we cannot spend
    the money unless the Congress allows us to spend the money. So
    we, in fact, have asked for that additional authority from you
    and we hope that you give it to us.
        Senator Reed. But that will not delay the imposition of
    this procedure?
        Mr. Muris. No. We are still in a rulemaking procedure. We
    obviously have not made final decisions yet, nor have I, but
    under the timetable that we are on, if Congress passes, and I
    assume because this is an election year you all will pass
    appropriations bills sometime by early in the next fiscal year,
    and that will give us enough time.
        Senator Reed. Thank you, Commissioner. Thank you, Mr.
    Chairman.
        Senator Hollings. Thank you very much.

                              prepared statements

        I would like to include in the record written statements
    submitted by FTC Commissioner Mozelle W. Thompson and FTC
    Commissioner Sheila F. Anthony.
        [The statements follow:]
    Prepared Statement of Mozelle W. Thompson, Commissioner, Federal Trade
                                   Commission
        Today, the Commission has voted to approve testimony before the
    Senate Commerce, Justice, State and the Judiciary Subcommittee of the
    Appropriations Committee. Although I concur with most of this
    testimony, I am compelled to dissent from the discussion of the
    recently executed agreement between the Assistant Attorney General for
    Antitrust Charles James and Chairman Timothy Muris. I have previously
    expressed my concern about the Agreement which, among other things,
    seeks to allocate to each agency exclusive jurisdiction over certain
    merger reviews and other antitrust investigations.\1\ I am unable to
    concur because of those concerns and my concern that the testimony's
    description of the facts and circumstances supporting the Agreement is
    misleading in several ways.
    ---------------------------------------------------------------------------
        \1\ See Statements of Mozelle W. Thompson, January 18, 2002 and
    March 5, 2002.
    ---------------------------------------------------------------------------
        First, the testimony overstates the necessity for the Agreement by
    claiming that ``major clearance disputes have become both more common
    and more contentious.'' \2\ While I continue to support an inter-agency
    agreement that would streamline our clearance process, I believe that
    our clearance history shows that the total number of clearance contests
    between the two agencies has actually decreased 28 percent from 81 to
    65 to 58 beginning in fiscal year 1999 and continuing through 2000 and
    2001.\3\ And more significantly, the agencies have improved the speed
    of granting clearances. This fact is demonstrated by the increased
    percentage of clearance requests cleared in 2001 compared to 1999 for
    three different time periods: 21 percent (in 1999) improved to 41
    percent (in 2001) for investigation requests cleared within 6 business
    days; 53 percent improved to 63 percent for clearance resolved within 9
    business days; and 90 percent improved to 94 percent for clearance
    resolved within 15 business days.
    ---------------------------------------------------------------------------
        \2\ Testimony at pages 13-14.
        \3\ As we approach the halfway point in fiscal year 2002, the
    agencies have contested clearance for only 18 matters.
    ---------------------------------------------------------------------------
        Perhaps more impressive than these facts is the fact that between
    1995 and 2001 only a handful--one percent--of clearance requests were
    not resolved within 20 business days. Accordingly, while there may be
    room for clearance process improvement, the testimony may misrepresent
    the nature of clearance contests because the simple fact is that the
    antitrust agencies have already improved the clearance process
    substantially over recent years. Morever, it is unclear whether
    reallocating industries from one agency to the other is necessary to
    achieve greater efficiencies.\4\
    ---------------------------------------------------------------------------
        \4\ Interestingly, the clearance testimony also implies that the
    convergence of certain technology and economic sectors has
    significantly increased clearance disputes and that allocating
    industries is needed to improve the clearance process. There is no
    evidence to show that drawing new industry lines will avoid future
    disputes when a product involved in a merger review or other
    investigation falls between any two assigned industries.
    ---------------------------------------------------------------------------
        Additionally, the Commission's clearance testimony omits important
    information about the process that led to the creation of the
    Agreement. For example, the testimony cites the January 18, 2002
    Statement of Commissioners Orson Swindle and Thomas B. Leary for the
    proposition that the Chairman has authority to unilaterally effect
    administrative changes. But the testimony fails to note that this
    Commission has never voted to deem clearance matters administrative,\5\
    nor has it voted to approve the Agreement or the process which led to
    its creation--including the empaneling of a non-public advisory panel
    consisting of private antitrust attorneys. Similarly, the testimony
    cites letters from the ABA Antitrust Section, former agency officials,
    and the business community as supporting the Agreement. However, the
    testimony fails to state that while the authors of those letters
    supported improved clearance procedures, they did not approve the
    substance of the James/Muris Agreement or the process by which it was
    reached.\6\
    ---------------------------------------------------------------------------
        \5\ I doubt whether altering the Commission's concurrent
    enforcement responsibilities under Section 5 of the Federal Trade
    Commission Act or affecting the use of our exclusive powers under
    Section 6 of the Act, can be characterized as merely administrative.
    Nor would I concur that the negotiation of the Agreement is an
    appropriate subject for the ``private lawmaking'' it embodies. Also, I
    have not been provided with any information that would enable me to
    measure the budgetary ramifications of altering the Commission's
    responsibilities under the Agreement.
        \6\ See, e.g., Letter to Charles A. James and Timothy J. Muris from
    Roxane C. Busey, Chair, Section of Antitrust Law (January 23, 2002)
    (``The Section supports the concept of such an agreement--without
    commenting on the specifics of the particular allocation agreement,
    which we have not seen, or the particular process by which it was
    reached.''); Letter to Charles A. James and Timothy J. Muris from
    Robert Pitofsky, et al. (February 4, 2002) (A letter drafted by private
    attorney Joe Sims for signature by former agency officials states:
    ``[The signatories take] no position on whether the assignments and
    reassignments in the draft proposal are appropriate . . . .'' See also
    Letter to Timothy Muris from The Business Roundtable, the National
    Association of Manufacturers, and the U.S. Chamber of Commerce
    (February 25, 2002) (Letter from business groups did not endorse the
    Agreement process and stated that the business groups believed it did
    not matter which agency reviewed particular matters). The fact that
    outside parties have expressed support for the concept of a procedural
    clearance agreement absent consideration of allocating industries casts
    doubt upon the necessity for an agreement as sweeping in scope as the
    one signed by Chairman Muris and AAG James.
    ---------------------------------------------------------------------------
        For all of these reasons, I am concerned that an important portion
    of the Commission's testimony--the clearance discussion--is misleading
    and falls short of what this Subcommittee and the public deserve to
    know. Accordingly, I respectfully dissent from the clearance portion of
    the testimony.
                                     ______

     Prepared Statement of Sheila F. Anthony, Commissioner, Federal Trade
                                   Commission
        I support the Commission's testimony before this Subcommittee,
    except that part which discusses the clearance procedures for merger
    investigations. While ``streamlining the merger review process'' is a
    laudable goal that deserves our attention, I am not convinced that the
    approach agreed to by Chairman Muris and Assistant Attorney General
    Charles James fully maximizes the unique makeup, experience, and
    institutional assets of the Commission.\1\
    ---------------------------------------------------------------------------
        \1\ See Statement of Commissioner Sheila F. Anthony on the
    Memorandum of Agreement Concerning Clearance Procedures for
    Investigations (Jan. 18, 2002), available at http://www.ftc.gov/opa/
    2002/01/ftcdojsa.htm for further discussion.
    ---------------------------------------------------------------------------

                         ADDITIONAL COMMITTEE QUESTIONS

        Senator Hollings. Senator Domenici has some questions that
    will be submitted for your response.
        [The following questions were not asked at the hearing, but
    were submitted to the Commission for response subsequent to the
    hearing:]
                Questions Submitted by Senator Pete V. Domenici
        Question. Why do you think it would be good government to repeal
    the common carrier exemption and allow the FTC to review the practices
    of such firms?
        Answer. The FTC does not have jurisdiction over ``common carriers
    subject to the Acts to regulate commerce'' (15 U.S.C. Sec. 45(a)(2)),
    including common carriers subject to the Communications Act of 1934 (15
    U.S.C. Sec. 44). When Congress originally exempted common carriers from
    FTC oversight, the telecommunications industry was controlled by a
    single, large telecommunications company subject to tight government
    regulation. The industry has undergone dramatic changes, however, since
    it was deregulated. Numerous telecommunication companies now offer an
    ever widening array of services and engage in fierce competition,
    sometimes resulting in deceptive advertising and marketing schemes.
    Because of the common carrier exemption, consumers in a very important
    segment of the economy telecommunications do not benefit from ordinary
    FTC action against deceptive and unfair marketing, advertising, and
    billing. Because the FTC, the primary agency responsible for consumer
    protection matters, does not have jurisdiction over telecommunications
    common carriers, consumers are not receiving the full benefit of the
    FTC's expertise and the agency is not being used to its fullest
    potential.
        Repealing the exemption would have a secondary benefit. The FTC has
    jurisdiction over charges on the phone bill that are not related to the
    transmission of telecommunications. We have been effective in attacking
    telephone bill ``cramming'' the placement of unauthorized charges for
    non-telecommunications services on consumer's phone bills. Acting as a
    common carrier with respect to some activities should not shield an
    entity from the FTC Act with respect to non-common carrier activities.
    Some ``cramming'' defendants try to cloak themselves with common
    carrier status, or claim immunity from the FTC Act based on common
    carrier activities unrelated to the practices at issue. While this
    defense has not been successful to date, countering the defense has
    proven expensive and time-consuming. Furthermore, there is the risk
    that a court could find that the FTC does not have jurisdiction over
    such defendants, thereby laying a foundation for fraudulent
    telemarketers and others to register as common carriers to shield
    themselves from FTC enforcement. In addition, repealing the exemption
    would permit the FTC to investigate and challenge the activities of all
    of the participants involved in a deceptive telecommunications-related
    scheme.
        Question. What authorities and what resources would you need to do
    the job of evaluating media competition issues?
        Answer. Prior to the execution of the new clearance agreement, the
    Department of Justice's Antitrust Division (DOJ) had handled the vast
    majority of media mergers based on its greater experience in the area.
    Much of this experience was accumulated because the DOJ has exclusive
    jurisdiction over anticompetitive practices by telecommunications
    common carriers, and those companies are becoming increasingly
    prominent in the media area. Without full jurisdiction over
    telecommunications common carriers, it remains inherently difficult for
    the FTC to garner the necessary level of experience within the broader
    media context to be able to prevail in a clearance dispute over a media
    merger with the DOJ. If Congress believes that the FTC should have full
    authority to investigate telecommunications matters, including media
    mergers, then a first step could be to repeal the common carrier
    exemption that prohibits the FTC from pursuing anticompetitive
    practices of telecommunications common carriers.
        Question. How much time has been spent fighting with the Department
    of Justice over who would review each merger or case involving issues
    of competition?
        Answer. Under the U.S. antitrust laws, both the FTC and the DOJ
    have jurisdiction to review proposed mergers as well as other
    competition matters. For mergers, 15 U.S.C. Sec. 18a provides that only
    one of the two agencies can conduct a detailed antitrust investigation.
    Therefore, it is necessary for the agencies to determine which one will
    review a specific matter to avoid duplication. Since 1948, the agencies
    have agreed that neither would proceed with an investigation until one
    agency ``cleared'' the matter to the other agency. This decision has
    been based primarily on one agency's greater expertise in a certain
    industry.
        Until recently, this process worked fairly well. From 1982 through
    1989, for example, there were only about 10 clearance disputes each
    year. However, as traditional industry boundaries have become blurred
    in the current high tech economy, this system has resulted in
    significant clearance delays as each agency argues for the ability to
    handle a specific matter. Subsequently, from 1990 through 2001, there
    has been an average of 83 clearance disputes per year. Delays averaging
    three weeks occurred in 24 percent of the matters on which clearance
    was sought from the beginning of fiscal year 2000 through January 28,
    2002. Cumulatively, these investigations were delayed by 4,521 business
    days more than 17 years. As an example of the system at its worst, when
    I arrived at the FTC last summer, one investigation had been delayed
    over a year because neither agency would ``clear'' it to the other.
        Question. How does the new ``clearance'' procedure meet the needs
    of the private sector and of consumers?
        Answer. The new clearance agreement will eliminate almost all of
    the delays of the previous system and will provide the public with a
    transparent understanding of how industries will be allocated. Instead
    of wasting time and resources on clearance disputes, the agencies will
    be able to devote that time to reviewing proposed transactions for
    possible anticompetitive consequences. In addition to the allocation of
    industries, the clearance agreement also improves the overall
    transparency of the process and institutes specific procedures for
    possible disputes. The agreement sets forth expedited time frames for
    review, provides for the development of a Clearance Manual that will be
    posted on each agency's Web site, and establishes a dispute process
    involving a Neutral Evaluator for clearance resolution all of which
    make the process more effective and efficient for the agencies,
    consumers and businesses.
        Question. What benefits accrue to the operation of the government
    under the new ``clearance'' procedures?
        Answer. The new clearance agreement represents good government.
    Because both agencies have jurisdiction to review proposed mergers
    while only one agency can actually conduct an antitrust investigation
    of the merger, the clearance agreement eliminates much of the conflict
    and inefficiencies in the previous system. In recent years, the
    clearance process had become more contentious as the convergence of
    industries blurred bright lines between industry boundaries. As each
    agency vied for clearance over particular matters in these converging
    industries, both the level of tension that developed between the
    agencies' staff and the delays associated with the prolonged process
    increased. The new agreement will significantly reduce the occurrence
    of clearance disputes through a clear delineation of industries and the
    establishment of a formal process for resolving any clearance issues.
    These policies will enhance the previous system by reducing the
    inefficiencies associated with the ensuing delays and virtually
    eliminating the possibility of protracted disputes between staff on
    clearance issues.
        The new agreement will remedy another inefficiency of the old
    process: division of matters even within a given industry between
    agencies based on historical experience with particular industry
    segments. Prior to the new agreement, one agency could not study the
    full array of related matters in some industries, and thereby maximize
    the breadth and depth of its expertise. It is not sound public policy
    for one agency to investigate cars, for example, while the other agency
    investigates trucks, or for one agency to investigate electricity
    mergers, while the other handles all other energy matters. The new
    clearance agreement allows for expertise in one industry to be
    developed as fully as possible by avoiding historical allocations to
    the agencies that divided different segments of the same industry. For
    example, the old allocations that divided cars from trucks, and divided
    electricity from other energy matters, will no longer be followed under
    the new agreement.
        Question. I understand that a request for an advisory opinion has
    been filed with the FTC seeking its guidance on advertising by a
    smokeless tobacco manufacturer that its products are a reduced risk
    alternative to smoking cigarettes. What steps will the Commission
    follow in reaching a determination on the advisory opinion request?
        Answer. The Federal Trade Commission received a request for an
    advisory opinion from the U.S. Smokeless Tobacco Company (``USSTC'')
    regarding the acceptability of communicating in advertising that
    smokeless tobacco products generally are considered to be a
    significantly reduced risk alternative as compared to cigarette
    smoking. The Commission has placed USSTC's request on the public
    record, along with letters received from the Campaign for Tobacco-Free
    Kids, the American Academy of Otolaryngology Head and Neck Surgery,
    Inc., and the California Department of Health Services, urging the
    Commission to deny the request. Commission staff is reviewing the
    request and supporting materials submitted by USSTC and is consulting
    with the federal government's science-based public health agencies.
    Following this review, the Commission will make a determination as to
    an appropriate response to USSTC's request.

                             CONCLUSION OF HEARINGS

        Senator Hollings. The subcommittee will be in recess,
    subject to the call of the Chair.
        [Whereupon, at 10:58 a.m., Tuesday, March 19, the hearings
    were concluded, and the subcommittee was recessed, to reconvene
    subject to the call of the Chair.]

    DEPARTMENTS OF COMMERCE, JUSTICE, AND STATE, THE JUDICIARY, AND RELATED
                  AGENCIES APPROPRIATIONS FOR FISCAL YEAR 2003

                                  ----------

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.

                           NONDEPARTMENTAL WITNESSES

        [The following testimonies were received by the
    Subcommittee on Commerce, Justice, and State, the Judiciary,
    and Related Agencies for inclusion in the record. The submitted
    materials relate to the fiscal year 2003 budget request for
    programs within the subcommittee's jurisdiction.]
                             DEPARTMENT OF COMMERCE

                  Prepared Statement of The Ocean Conservancy

        The Ocean Conservancy is pleased to share its views regarding the
    marine conservation programs in the National Oceanic and Atmospheric
    Administration's (NOAA) budget and the Department of State, and
    requests that this statement be included in the official record for the
    fiscal year 2003 Commerce, Justice, State, and the Judiciary
    Appropriations bill.
        The Ocean Conservancy (TOC) strives to be the world's foremost
    advocate for the oceans. Through science-based advocacy, research, and
    public education, we inform, inspire, and empower people to speak and
    act for the oceans. TOC is the largest and oldest nonprofit
    conservation organization dedicated solely to protecting the marine
    environment. Headquartered in Washington D.C., TOC has regional offices
    in Alaska, California, Florida, and Maine. TOC can not overstate the
    importance of this subcommittee to advance marine conservation and
    greatly appreciates the funding provided in fiscal year 2002. While TOC
    recognizes the subcommittee has many difficult choices to make this
    year, we urge you to continue to make ocean conservation a top
    priority.
                              department of state
        Implementation of the Inter-American Convention for the Protection
    of Sea Turtles (IAC).--The IAC, the first international treaty
    dedicated to sea turtle protection and conservation, was ratified by
    the United States in 2000. To date, eight nations, including Brazil,
    Costa Rica, Ecuador, Honduras, Mexico, the Netherlands, and Peru have
    ratified the IAC, and Costa Rica will host the first meeting of the
    Parties in August 2002. TOC requests $100,000 (within the International
    Fisheries Commission program account) in fiscal year 2003 for the State
    Department to assist the independent Secretariat and maintain the
    leadership of the United States on this treaty.
                national oceanic and atmospheric administration
    Conservation Spending Category
        In October of 2000, Congress established the Land Conservation,
    Preservation, and Infrastructure Improvement Fund (LCPIIF) to provide
    increased support for conservation activities. The fund dedicates an
    additional $480 million in the fiscal year 2003 budget, above fiscal
    year 2000, for critical coastal conservation activities within NOAA.
    TOC strongly encourages the subcommittee to make full use of this
    funding to provide additional support for high priority coastal
    conservation initiatives, as outlined below.
    Coral Reef Conservation
        Coral reefs are known as ``the rainforests of the sea,'' and are
    among the most complex and diverse ecosystems on earth. Coral reefs
    provide habitat to almost one third of marine fish species, serve as
    barriers to protect coastal areas, and provide an estimated $3 billion
    annually in economic benefits to the country from tourism and
    recreational fishing. Coral reefs are also extremely fragile and face
    serious threats from overutilizaiton and pollution around the world.
        NOAA serves on the successful Interagency Coral Reef Task Force and
    is responsible for implementing the National Action Plan to Conserve
    Coral Reefs. TOC appreciates this subcommittee's past support of NOAA's
    coral reef activities and requests $30.2 million in fiscal year 2003 to
    support critical monitoring, mapping, and restoration activities,
    especially those identified as priorities by the Task Force. This $2
    million increase above the Administration's request should be directed
    to the Coral Reef Conservation Fund established by the Coral Reef
    Conservation Act of 2000 (Public Law 106-562) to leverage an additional
    $2 to $4 million in public-private partnerships for on-the-ground coral
    reef conservation activities in the United States and its territories.
                             national ocean service
    National Marine Sanctuary Program
        TOC requests the subcommittee provide $37.6 million for sanctuary
    operations, $2 million above the Administration's request. Our nation's
    13 sanctuaries encompass almost 18,000 square miles of our most
    significant marine resources. This increase is critical to reducing
    staffing shortages and supporting conservation, community outreach,
    research, and education programs, and updating sanctuary management
    plans as required by law. TOC also supports the Administration's
    request of $10 million for construction, particularly for interpretive
    facilities to educate the general public about the role of the federal
    government in managing our nation's ocean and coastal resources.
    Marine Protected Areas
        TOC greatly appreciates this subcommittee's support of NOAA's
    marine protected areas (MPAs) initiative in fiscal year 2002 and
    requests $5 million in fiscal year 2003. This increase will allow NOAA
    to work more effectively with federal and state agencies and other
    partners to acquire data for the ongoing MPA inventory and support the
    forthcoming Marine Protected Areas Advisory Committee and its science
    advisory panel. In addition, this increase will allow NOAA to better
    assist stakeholders, including regional fishery management councils,
    states, and others by providing technical assistance and research to
    determine how best to design and implement MPAs.
    Nonpoint Source Pollution
        Nonpoint source pollution, or polluted runoff, continues to be the
    nation's largest source of water pollution. Last year there were over
    11,000 closings and advisories at U.S. beaches. TOC greatly appreciates
    the subcommittee's support of $10 million in fiscal year 2002 to help
    states address polluted runoff and requests $25 million in fiscal year
    2003. This will enable coastal states and territories with approved
    nonpoint plans to make continued progress in implementing their
    priority actions.
                       national marine fisheries service
    Expand Fisheries Stock Assessments
        The status of 78 percent of commercially-caught ocean fish
    populations is unknown due in large part to lack of funding for basic
    research and regular stock assessments. It is essential that we develop
    a better understanding of the status of our fish populations. Even with
    the Administration's request of $11.9 million, the NMFS still would
    lack the funding necessary to conduct nearly a quarter of its research
    days-at-sea. TOC urges the subcommittee to expand funding for stock
    assessments to $25 million in fiscal year 2003 to reduce this deficit.
    Fisheries Observers
        Along with stock assessments, reliable, objective information about
    how many fish are being caught, directly and as bycatch, is crucial to
    responsible management of our fish populations. Observers are a key
    means of collecting such information, yet current coverage is limited.
    TOC requests $25 million for fisheries observers in fiscal year 2003,
    $8 million above the Administration's request. TOC encourages the
    subcommittee to strengthen and establish the following observer
    programs.
                National Observer Program
        While encouraged by the Administration's proposal for expanding the
    national observer program to $4 million, TOC believes this funding is
    still inadequate and recommends additional support for NMFS to meet its
    national observer needs.
                West Coast Observers
        TOC appreciates the subcommittee's funding of $4 million for West
    Coast Observers in fiscal year 2002 and urges the subcommittee to
    reject the Administration's proposed cut and increase funding to $7.2
    million in fiscal year 2003.
                Gulf of Mexico Shrimp Fishery
        The shrimp fishery is believed to be the largest fishery in the
    Gulf of Mexico. Efforts to monitor the effort and catch are limited,
    and available data indicates that, Gulf-wide, an average of 80 percent
    of the catch by weight is bycatch, which include juvenile red snapper
    as well as sea turtles. TOC requests dedicated funding to establish an
    observer program to help managers better understand the region's
    fishery and better enforce the use of turtle excluder devices, which
    are required year-round in most shrimp trawl nets.
                Gulf of Mexico Longline Fishery
        Longlines capture a variety of ocean wildlife besides the reef fish
    they target, including marine birds, sea turtles and soft corals.
    Little reliable information is available on catch and effort for
    longline vessels in the federal waters of the Gulf. An observer program
    for this fishery would provide valuable information, facilitating
    science-based management decisions. TOC requests that the subcommittee
    identify and appropriate the necessary funds to establish this observer
    program.
                Atlantic Coast Gillnet Fishery
        In response to the more than 100 bottlenose dolphin mortalities in
    the gillnet fishery off North Carolina (over four times allowable
    levels), the Atlantic Bottlenose Take Reduction Team was established in
    2001. TOC urges the subcommittee to appropriate $3 million to establish
    an observer program for this fishery and support the efforts of the
    take reduction team to reduce dolphin mortalities.
    Enforcement and Surveillance
        In addition to better data, enforcement of our fishery management
    laws is critical. Unfortunately, enforcement has not kept pace with
    need, and has in fact dropped dramatically since the attacks of
    September 11th. TOC urges the subcommittee to address this shortfall so
    that our fisheries management laws can be better enforced. We request
    $46.9 million in fiscal year 2003, $11 million above the
    Administration's request, to hire more officers.
        Within these funds, TOC requests $12.4 million, $5 million above
    the Administration's request, for expanding the Vessel Monitoring
    System (VMS) program. VMS, a satellite-based fishery enforcement
    system, has the ability to provide real-time catch reporting throughout
    a number of different fisheries. This increase would allow for
    establishment and implementation of the VMS systems and place a VMS
    transponders onboard many of the estimated 10,000 boats in the U.S.
    commercial fishing fleet. VMS programs enhance data collection and
    safety at sea and can be beneficial to fisherman by allowing them to
    fish right up until a quota is reached. Finally, with VMS system is
    benificial to fishermen because it allows them in many fisheries to
    fish right up to the day the fishery is closed. Currently, some
    fisheries require boats to be tied up at dock when the announcement is
    made. with VMS systems, officials can tell when a fishing vessel is
    fishing in closed areas, or is fishing beyond the end of a regulated
    fishing season. This funding is one of The Ocean Conservancy's highest
    priorities.
    Marine Mammal Protection Act
        TOC believes the lack of adequate resources has severely hampered
    NMFS's ability to effectively implement the MMPA and requests $38
    million in fiscal year 2003, the amount authorized under the MMPA. This
    increase is necessary to fund top priority studies identified by the
    marine mammal take reduction teams: to design and implement fishery
    management plans that will not endanger marine mammals; conduct
    research on population trends, health, and demographics; and to carry
    out education and enforcement programs. It would also allow health
    assessment and research into the causes of strandings and die-offs and
    identification of mitigation measures to prevent such deaths in the
    future. TOC also asks that report language be included to direct NMFS
    to undertake research to develop reflective netting in the gillnet
    fishery to reduce harbor porpoise mortality.
    Essential Fish Habitat
        Protecting essential fish habitat (EFH) is key to ensuring healthy
    fish populations in the future. Given the need to better understand the
    impacts of fishing and other activities on these habitats, and the need
    to more fully comply with the Sustainable Fisheries Act requirement to
    minimize impacts to those habitats, TOC believes that increased funding
    is crucial. TOC greatly appreciates this subcommittee's increased
    support of EFH in fiscal year 2002 and requests $12.5 million in fiscal
    year 2003.
    Marine Debris Removal
        Derelict fishing gear and other marine debris has the potential to
    damage and kill coral and other marine animals, including the highly
    endangered Hawaiian monk seal. The NMFS marine debris removal program
    in the Northwestern Hawaiian Islands was successful in removing 110
    tons of derelict fishing gear in 2001. Studies show that debris
    continues to accumulate, indicating the need for further funding of $3
    million for removal of marine debris.
    Atlantic Coast Cooperative Statistics Program
        TOC greatly appreciates the subcommittee's support of $2 million in
    fiscal year 2002 for the Atlantic Coast Cooperative Statistics Program.
    This unique cooperative state and federal fisheries data collection
    program encompasses all marine fisheries sectors on the Atlantic Coast,
    including recreational anglers, charter and headboat operators,
    commercial fishermen and seafood processors/dealers. It has allowed
    resource managers from 15 states to develop a plan to cooperatively
    collect, manage and disseminate fishery statistics for the Atlantic
    coast. We request $3 million in fiscal year 2003 so that this program
    can be expanded and better implemented along the East Coast, thereby
    helping to ensure that data collection methods are more consistent and
    reliable.
    Endangered Species
        NMFS bears significant responsibility for administering the
    Endangered Species Act with respect to marine and anadromous species.
    NMFS is responsible not only for the recovery of already-listed species
    such as Northern Atlantic Right Whales (see below), Steller sea lions,
    and all species of sea turtles found in U.S. waters, but also for
    responding to petitions to list species, such as smalltooth sawfish,
    bocaccio rockfish, and green sturgeon. TOC is concerned about NMFS's
    ability to meet its responsibilities under the ESA, including
    responding to listing petitions in a timely fashion, consulting with
    federal agencies on proposed actions that may affect listed species and
    designated critical habitat, and coordinating up-to-date recovery
    planning and activities to ensure that the nation's most vulnerable
    marine species can progress towards full recovery. TOC urges the
    subcommittee to substantially increase NMFS's ESA funding to meet its
    fiscal year 2003 demands.
                North Atlantic Right Whales
        With approximately only 300 North Atlantic Right Whales remaining,
    funding is needed to improve our understanding of right whales and to
    develop fishing technologies to reduce entanglements. TOC thanks the
    subcommittee for its past support and requests $7 million in funding in
    fiscal year 2003.
    National Invasive Species Act
        Nonindigenous species infestations degrade natural resources of
    virtually every U.S. waterway and coastal area. Free of natural
    predators, alien species which become established in our waters often
    out-compete native organisms, destroy habitat and alter physical/
    chemical conditions in our coastal waters. Invasive species are
    regarded as a leading cause of diminished biodiversity and cost our
    economy millions of dollars each year. The leading vector of
    unintentional introductions of aquatic pest species is the discharge of
    ballast water by oceangoing vessels.
        The National Invasive Species Act (Public Law 104-332) coordinates
    federal efforts to prevent and combat the spread of invasive species
    through the interagency Aquatic Nuisance Species Task Force, which is
    co-led by NOAA and the Fish and Wildlife Service (FWS). Under the Act,
    NOAA is authorized at $7.5 million to help implement the Aquatic
    Nuisance Species Program and work with the FWS and the Coast Guard to
    develop and demonstrate environmentally sound ballast water treatment
    technologies. TOC appreciates this subcommittee's support of $6 million
    in fiscal year 2002 and, consistent with the National Research
    Council's recommendations on ballast water, urges you to reject the
    Administration's 87 percent proposed cut and fully fund the program at
    $7.5 million.
    Highly Migratory Shark Fisheries Research Program
        This effective multi-regional collaborative effort conducts
    research on shark and ray populations in the Gulf of Mexico, the
    Atlantic, and the Pacific. Information developed from this program has
    provided critical information for assessing the status of shark
    populations and their management. TOC greatly appreciates the
    subcommittee's support for the program in fiscal year 2002, urges the
    subcommittee to reject the Administration's proposed cut, and requests
    an increase in funding to $1.95 million.
    Pacific Highly Migratory Species Research
        TOC also supports funding for Pacific Highly Migratory Species
    Research, but believes the Administration's request of $0.75 million is
    inadequate. Funding for stock assessments and biological studies, as
    well as improving bycatch mitigation techniques for these fisheries,
    are critical for the long-term health of the fishery. TOC requests $1.5
    million in fiscal year 2003, with $0.5 million to be specifically
    dedicated to completion of the Pacific Fishery Management Council's
    Highly Migratory Species Fishery Management Plan.
    Marine Mammal Commission
        TOC requests that the subcommittee support the Marine Mammal
    Commission at its authorized level of $1.75 million in fiscal year
    2003.
        These programs are of the utmost importance to the stewardship of
    the nation's living marine resources. We greatly appreciate your
    support for these programs in the past and look forward to continued,
    responsible funding for these programs in fiscal year 2003. Thank you
    for considering our requests.
                                     ______

                  Prepared Statement of The Nature Conservancy

        The Nature Conservancy is escalating its focus on freshwater,
    coastal, and marine conservation by establishing Freshwater and Marine
    Initiatives that will employ the science, partnerships, ecosystem
    approach, and site-based conservation that has worked throughout our
    fifty-year history. These initiatives will strengthen the work that we
    are engaging in with partners to develop a ``conservation blueprint''
    identifying the places that, if conserved, will collectively protect
    the nation's plants, animals, and natural communities for the long-
    term. Several NOAA programs have been, or will be successful at
    conserving many places identified by our blueprint.
                            coastal zone management
        This unique federal-state-territorial partnership created under the
    Coastal Zone Management Act (CZMA) serves to protect, restore, and
    responsibly develop the nation's coastal communities and resources
    along 95,000 miles of shoreline. State and territorial CZM programs
    link national objectives with implementation and stewardship at the
    local level. Through a review of federal activities and permits, they
    also integrate resource protection and economic development activities
    with state coastal management plans. Increased funding for this program
    in fiscal year 2003 ($80 million Grants to States; $7 million Program
    Administration; $15 million Non-Point Pollution Implementation Grants)
    would advance protection of coastal, ocean, and Great Lakes species and
    their habitats; maintain natural shorelines; and enhance scientific
    research and education, while allowing for certain economic growth.
    This funding would also improve coordination and government efficiency.
    Finally, we also urge that the $2 million cap on state grants be
    eliminated so that all states can share equitably in funding increases.
                   national estuarine research reserve system
        Authorized as part of the Coastal Zone Management Act (CZMA), the
    twenty-five ``living laboratories'' making up the National Estuarine
    Research Reserve System (NERRS) require funding ($18 million for
    operations; $15 million for Procurement, Acquisition, and Construction)
    appropriate to the importance of estuaries to critical habitat and
    coastal economies. Adequate funding for the NERRS will permit
    individual reserves to better implement strong management, research,
    education, and stewardship activities within surrounding communities,
    and acquire key tracts of land and conservation easements that buffer
    development impacts. This funding would also facilitate implementation
    of system-wide monitoring and coastal training programs, and would
    enable expansion in order for the system to represent the suite of
    biogeographic regions that together comprise our nation's coastlines.
                          national marine sanctuaries
        The Nature Conservancy supports the President's funding request for
    the National Marine Sanctuary (NMS) program ($36 million for Program
    Administration; $10 million for Procurement, Acquisition &
    Construction). This funding would extend volunteer programs, provide
    for additional monitoring, and would fulfill a national plan for public
    outreach. It would also enable new investments in science needed to
    better manage complex issues surrounding sanctuaries. Finally,
    additional funding will enable implementation of revised and more
    detailed management plans. Eight sanctuaries are currently undergoing
    management plan reviews.
        The Conservancy is currently working with the Monterey Bay NMS to
    determine overlapping goals and opportunities for collaboration as the
    sanctuary reviews its management plan. However, our most extensive
    experience has been with the Florida Keys NMS where their management
    plan, developed in cooperation with the state of Florida and an
    Advisory Council, is being implemented. The Florida Keys NMS management
    plan has shown promising results as it focuses on education and
    outreach, enforcement, research and monitoring, and zoning. It also
    addresses significant issues facing the health of the Florida Keys
    ecosystem such as water quality, sewage treatment, live-aboards,
    hazardous spills, and pesticides.
                    coastal and estuarine land conservation
        The Coastal and Estuarine Land Conservation Program (CELCP) was
    authorized by Congress as part of the Commerce, Justice, State, and
    Judiciary Appropriations Act of 2002. In its first year, this new
    program directed $15.8 million to coastal and estuarine areas with
    significant conservation, recreation, ecological, historical, or
    aesthetic value that are threatened by conversion from their natural
    state to other uses.
        Nowhere in the nation are threats such as sprawl, habitat loss, and
    fragmentation more significant than along our nation's coasts. That is
    why a program providing grants that allow for land acquisition as a
    conservation strategy serves as an important addition to federal
    efforts focused on protecting valuable habitat for the long-term. As a
    result, the Conservancy supports a significant increase in funding ($60
    million) for the CELCP in fiscal year 2003. We also urge the adoption
    of guidelines that will allow organizations like the Conservancy to
    qualify for funding in order to forward CELCP goals across the nation.
    The development and land use pressures along the coasts and Great Lakes
    are immense, and they are projected to accelerate in the next ten
    years. If we do not act aggressively now, we may lose that opportunity
    forever.
                              habitat restoration
        The Nature Conservancy strongly supports NOAA's coastal habitat
    restoration efforts, and recommends funding levels of $18 million for
    Fishery Habitat Restoration. Most of this funding would ensure the
    continued success of NOAA's Community-based Restoration Program (CRP).
    This funding level would enable the CRP to direct more money to local
    communities for the restoration of vital habitats. Additionally, it
    would increase the geographic scope and rate at which it can encourage
    community ownership and restoration of critical and rapidly dwindling
    habitat. This program has not only leveraged up to $10 for every
    federal dollar invested at more than 500 projects, but has also
    leveraged a conservation ethic across the nation. As a national
    partner, the Conservancy has experienced first hand how the CRP
    inspires local efforts to conduct on-the-ground restoration of
    freshwater, coastal, and marine habitat. Since 2000, we have already
    directed $1 million to community-based projects in Florida, New York,
    Connecticut, North Carolina, Delaware, Virginia, California, and Texas.
    With two years remaining in our national partnership, we are excited
    about what lies ahead.
                                salmon recovery
        The Conservancy considers salmon conservation a critical aspect of
    our work in the Pacific Northwest, Alaska, and the Northeast. Given the
    complex life history of this keystone species--migrating hundreds of
    miles past forests and farms, cities and dams, from fresh to saltwater
    during their lifecycle--successful salmon conservation requires action
    across a broad landscape.
        History has demonstrated that money spent on habitat restoration
    and recovery could have been used more effectively and at less cost to
    the taxpayer if applied at a landscape-scale before systems were
    altered and degraded. However, habitat destruction, reduced
    streamflows, pollution, passage impediments, and overharvest have
    already played a role in the decline of salmon stocks. That is why
    generous funding to conserve and recover salmon in the Pacific
    Northwest and Alaska ($200 million for the Pacific Coastal Salmon
    Recovery Fund; $55 million for NMFS Agency Funding for Pacific Salmon
    Recovery), and in the Northeast ($30 million for an equivalent Atlantic
    Coastal Salmon Recovery Fund), is now critically needed.
        In the Pacific Northwest and Alaska, the Pacific Coastal Salmon
    Recovery Fund has enabled states and tribes to support local efforts to
    evaluate, protect, and restore key habitat while enhancing local
    economies. NMFS Agency funding enhances that support with scientific
    research and monitoring, and by spurring new cooperative efforts. In
    the Northeast, a significant amount of collaborative work among federal
    agencies, industry, private landowners, and other stakeholders has
    begun. However, a lack of comparable funding and capacity has hindered
    efforts in this region from addressing mounting stresses on dwindling
    salmon stocks. The time is right to establish a similar approach and
    complementary funding for USFWS and NMFS.
                             marine protected areas
        Marine protected areas (MPAs) are proven tools for rebuilding and
    sustaining fisheries, recovering threatened and endangered species, and
    providing recreational opportunities. The Conservancy has learned this
    first hand through work with scientists, community members,
    international governments, and federal agencies to establish MPAs in
    places such as the Florida Keys, the Exuma Cays Land and Sea Park in
    the Bahamas, and Kimbe Bay in Papua New Guinea. It is time to reserve
    more of these places for future generations, just as the nation has
    done on land with national parks and refuges, national forests, and
    other managed areas.
        The Conservancy recommends that $5 million be appropriated for MPAs
    so that NOAA can continue working with federal and state agencies and
    other partners to assess MPA design and effectiveness as a management
    tool that protects biodiversity while permitting use of the nation's
    valuable marine resources. Increased funding would also expedite
    information collection and collaborative efforts required for
    completion of the first nationwide inventory of MPAs. Additional funds
    would be employed to improve coordination and information sharing at
    regional and national levels; support training and technical assistance
    for communities, users, management agencies, and others; and increase
    public involvement through the MPA web site.
                            coral reef conservation
        The Nature Conservancy supports the President's budget for
    activities that benefit coral reefs ($16 million for NOS; $11 million
    for NMFS; $700,000 for NESDIS; $500,000 for OAR). This funding would be
    used to advance priorities identified by the U.S. Coral Reef Task Force
    including comprehensive mapping and monitoring of coral reefs, research
    into ecological processes upon which reefs depend, integration of human
    activities, and public education. With such funding, this
    scientifically-based effort will protect and restore coral reefs in the
    United States and its territories. It will serve as a model in
    intergovernmental coordination and coral reef protection for similar
    initiatives around the world.
        While NOAA's activities, guided by the Task Force, have made great
    strides in coral reef conservation, the Conservancy would like to see
    more funding dedicated to addressing this issue at an international
    scale. The combined effects of global climate change and human
    activities have led coral reef ecosystem health to decline severely all
    over the world in recent decades. It is now critical to take action
    before the tragedy becomes irreversible. Successful conservation of
    coral reefs will involve a broad-scale, global, and long-term
    commitment. The Conservancy has been working throughout the world with
    governmental and non-governmental partners to protect these fragile
    systems. We hope that NOAA funds dedicated to coral reefs in the future
    will be made more available for public-private partnerships at the
    international level.
                         estuarine restoration program
        The Estuary Restoration Act of 2000 created this program with the
    goal of restoring one million acres of estuary habitat by 2010. Subject
    to annual appropriations by Congress, the legislation authorized $275
    million over five years dedicated to public-private partnerships
    reversing the deterioration of estuaries through restoration of
    degraded habitat.
        The U.S. Army Corps of Engineers has primary jurisdiction over this
    program, and would receive the bulk of any funding. However, no funds
    have been appropriated to date. If funded, the program would encourage
    the restoration of estuarine habitats through enhanced coordination of
    Federal and non-Federal efforts, and through financing of innovative
    local, state, and regional projects focused on restoring healthy
    ecosystems that support wildlife, fish and shellfish; improve surface
    and groundwater quality, quantity, and flood control; and provide
    recreation. In hopes that the program will receive full funding in
    fiscal year 2003, the Conservancy urges that $1.2 million be
    appropriated to NOAA for their duties related to this program.
                                   conclusion
        Thank you for the opportunity to submit these remarks. Conserving
    freshwater, coastal, and marine habitat is challenging and requires a
    variety of innovative strategies at every level. The Nature Conservancy
    looks forward to working with NOAA, other federal agencies, state and
    local governments, non-governmental organizations, and the private
    sector to ensure the long-term protection and sustainable use of our
    productive and diverse coastal waters.
                                     ______

      Prepared Statement of the Yukon River Drainage Fisheries Association

                                    abstract
        The Yukon River Drainage Fisheries Association (YRDFA) requests a
    reauthorization of a $500,000 appropriation to the YRDFA for salmon
    habitat and stock restoration projects, to conduct research on the
    marine bycatch of salmon and to assess salmon productivity in the
    marine environment. Funds would be transferred to the YRDFA through a
    National Oceanographic and Atmospheric Administration /National Marine
    Fisheries Service grant.
                       current research efforts by yrdfa
        In the fiscal year 2000, 2001, 2002 budget Congress authorized a
    $500,000 appropriation to YRDFA for ``habitat restoration, monitoring
    projects, stock assessments and bycatch research.'' YRDFA's previous
    and current research plans for the years 2000--2004 are divided into
    seven objectives:
      --Objective I.--Stock origins, migration patterns and marine
            productivity of Bering Sea Chinook salmon,
      --Objective II.--Habitat restoration of Yukon River drainage salmon
            streams,
      --Objective III.--Stock restoration through instream incubation
            technology,
      --Objective IV.--Chinook smolt productivity and out-migration
            analysis,
      --Objective V.--Coho salmon spawning surveys,
      --Objective VI.--Capacity building of local residents in salmon
            research,
      --Objective VII.--Program reporting and coordination with other
            research agencies.
    Stock origins, migration patterns and marine productivity of Bering Sea
            chinook
        Analysis is focusing on scales from chinook collected by observers
    in the Bering Sea trawl fisheries from 1997-1999. The first year of the
    study has involved processing observer program samples, getting
    baseline scales from agencies, digitizing baseline scales, and
    developing and testing classification models. The second would focus on
    digitizing and analysis of observer program samples and report writing.
        Anticipated results include: identification of trawl salmon bycatch
    into broad regional stock groupings that will enable managers to adjust
    trawl fishing effort to avoid stocks that are having conservation
    problems, improved understanding of migration patterns and marine
    productivity of Bering Sea chinook that will enable managers to better
    forecast returns of adult chinook salmon and to assess impacts of
    changing ocean conditions on Chinook stocks.
    Habitat restoration of Yukon River drainage salmon streams
        Efforts are focusing on improving access of chinook and chum salmon
    to spawning and rearing areas currently impeded due to historical
    mining activity. Methods will include realignment and regarding of
    stream channels, streambank reclamation, floodplain modification,
    construction of fish habitat structures and enhancement of fish passage
    to access spawning and rearing habitat. Likely project locations
    include Sourdough, Ruby, Faith and Hope Creeks, the Birch Creek
    watershed and the Minook Creek watershed. As part of this effort YRDFA
    will also work with local miners--many of who still have active claims
    in these areas--to educate them on the importance of protecting and
    restoring fisheries habitat.
    Stock restoration through instream incubation technology
        Habitat restoration activities such as those described above as
    well as USFWS and BLM efforts to build an access channel around the FE
    dam (Davidson Ditch) on the Chatanika River will open up new areas for
    salmon. In some cases, however, salmon spawning in these areas would
    benefit from a ``jump-start'' through the use of instream egg
    incubation boxes to greatly improve winter egg-fry survival rates.
    YRDFA will also survey other road-connected streams for possible
    installation of incubation boxes to serve as demonstration projects and
    feasibility tests. Additional streams to be surveyed include the
    Nenana, Delta, Chena, Salcha and Goodpaster.
    Chinook smolt productivity analysis and outmigration
        Trapping of juvenile chinook near the Chena River flood control dam
    and other streams will enable us to gain a better understanding of
    their overall health and to collect baseline data which will enable
    fishery managers to make better forecasts of salmon returns in future
    years. While the database on the number of adult spawners has been
    steadily improving since 1994, little data is available, other than
    that collected by USGS, on egg-to-fry survival rates and general health
    of smolt and juvenile salmon. In addition to the Chena River YRDFA will
    attempt to survey select index streams in different sections of the
    drainage such as the lower Yukon and the Koyukuk River.
        To maximize the effectiveness of research funding, YRDFA is working
    closely with various agencies and researchers. Cooperating entities
    include: the Alaska Department of Fish & Game, the U.S. Fish and
    Wildlife Service, the Bureau of Land Management, the U.S. Geological
    Service, and the University of Washington, School of Fisheries.
    Coho salmon spawning surveys
        Identified in the 1998 Yukon River Comprehensive Salmon Management
    Plan as an important research need, very little is known about coho
    salmon spawning in the Yukon River. YRDFA staff is working with state
    and federal fisheries research staff to design effective survey
    methodology for learning more about the distribution and abundance of
    coho salmon spawning. Survey efforts will be planned to maximize
    usefulness to managers and be directed toward those areas (tributary
    streams) identified through traditional knowledge and sport fishing
    reports to support spawning coho. Field surveys will be led by YRDFA
    biologists and technicians hired from local villages.
    Capacity building of local residents in salmon research
        Building capacity among village organizations and individuals to
    participate in and eventually develop salmon research projects presents
    a valuable opportunity for collaboration among resource users, local
    and regional groups, biologists, and managers.
        YRDFA is planning two capacity building seminars in appropriate
    regional centers along the river--using local projects as examples--
    with hopes of promoting increased involvement in current research and
    encouraging future efforts. Funds would be used for lodging, meals,
    transportation, stipend for students, travel costs for some
    instructors, as well as for YRDFA administration, staff and travel
    costs. Such activities would strengthen communication among
    stakeholders and lead to improved salmon management on the Yukon River.
    Research & management policy monitoring
        YRDFA is committed to disseminating knowledge gained through its
    research activities to affected communities. Recognizing that
    communication among villages in rural Alaska can be challenging,
    through newsletters, meetings and other outreach media, YRDFA will
    distribute reports in a timely manner. Similarly, YRDFA staff will
    continue to reach out to others involved in Yukon River fisheries
    management--keeping abreast of what other groups and agencies are
    working on and sharing its research with others.
        Monitoring management and regulatory actions will enable YRDFA to
    contribute its knowledge to the process of adaptive management wherein
    lessons learned through research and the management process are
    incorporated into new management measures. This will create a feedback
    information loop so that the effects of regulations can be monitored
    and if necessary changed to be more effective.
        Tasks accomplished or in progress with the fiscal year 2001 and
    fiscal year 2002 funds are as follows:
      --A report on ``Ocean Distribution and Migration of Yukon River
            Chinook Salmon''
      --Restoration of salmon habitat on Ruby Creek in the lower Chatanika
            River
      --A Report on ``Feasibility Testing of In-Stream (Streamside)
            Incubation Technology''
      --Habitat restoration opportunity surveys of Minook and Birch Creeks
      --Salmon egg incubation opportunity surveys in Tanana River
            tributaries
      --Installation of an egg incubation feasibility test on the Chatanika
            River
      --Out-migrating salmon smolt survival studies in Tanana and Koyukuk
            River tributaries
      --New salmon smolt survival studies in the Andreafski River tributary
      --New coho salmon spawning surveys in the Anvik River tributary.
                            fiscal year 2003 request
        For fiscal year 2003 the YRDFA requests a reauthorization of
    $500,000 in funding. If these funds were received YRDFA would be able
    to:

    Budget request breakdown

                                                                 Fiscal year
                                                                2003 request

    YRDFA staff and field researchers.............................  $150,000
    Marine productivity assessment................................    30,000
    By-catch analysis and reduction...............................    20,000
    Smolt survival studies........................................   100,000
    Coho salmon escapement monitoring.............................    50,000
    Salmon research education for villagers.......................    50,000
    Habitat monitoring and restoration............................    50,000
    Traditional Knowledge Research................................    50,000
                        --------------------------------------------------------------
                        ____________________________________________________

          TOTAL...................................................   500,000
                               closing statement
        Our funding requests propose to conduct research and educational
    efforts aims that will fill information gaps not addressed by current
    agency research plans. Yukon River salmon are a vital resource to more
    than 14,000 Alaska residents in 42 different communities. The annual
    wholesale value of the commercial salmon fishing industry approaches
    $10,000,000. Yukon River Chinook and fall chum salmon also spawn in
    Canada and are currently the subject of an Executive Agreement between
    the two countries.
        Our research program will aid significantly in the management of
    this resource and the continuation of fishing families and communities
    in rural Alaska. Thank you for this opportunity to submit written
    testimony.
                                     ______

        Prepared Statement of the Northwest Indian Fisheries Commission
        Mr. Chairman, and Honorable Members of the Committee, I am Billy
    Frank, Jr., Chairman of the Northwest Indian Fisheries Commission
    (NWIFC). On behalf of our twenty member tribes I would like to thank
    you for the opportunity to offer written testimony concerning the
    Department of Commerce and Department of State fiscal year 2003
    appropriations that pertain to Pacific Salmon Recovery funding needs.
               summary of fiscal year 2003 appropriations request
        We would like to ensure that the following items be included in the
    fiscal year 2003 appropriations:
    Department of Commerce
        $110 million for the Pacific Coastal Salmon Recovery Fund
    Initiative, with a set aside of $15 million to affected tribes for
    their management responsibilities. A specific allocation of the set
    aside for the Northwest Indian Fisheries Commission of $9 million is
    requested.
        $20 million for the Pacific Salmon Agreement's Restoration and
    Enhancement Funds consistent with the treaty annexes.
        $3 million for a Displaced Tribal Fishers Program.
        Support additional ESA Program Funding to National Marine Fisheries
    Service (NMFS) and Earmark $530,000 for National Marine Fisheries
    Service Tribal/NMFS ESA Task Force.
    Department of State
        $309,000 additional funding for implementation of Pacific Salmon
    Agreement.
        $20 million for Pacific Salmon Agreement's Restoration and
    Enhancement Funds consistent with the treaty annexes.
                                  introduction
        Twenty-seven years ago, the U.S. v. Washington case was decided by
    the federal court system. This decision, respecting the treaty rights
    of our member tribes, propelled major changes in fisheries management
    in the Pacific Northwest. These changes have altered the legal,
    political, social and economic institutions of the State of Washington,
    and have also fostered a nationwide quest for tribal self-determination
    and self-governance led in part by the Northwest tribal leadership.
        We have made great strides in institutionalizing tribal management
    consistent with tribal values, treaty rights and federal court
    decisions. We have developed great professional capabilities and policy
    respect. We are efficient and effective, but we have significant unmet
    needs, and the management obligations are many. New and highly
    difficult complexities abound, many of which have been precipitated by
    the demands of the Endangered Species Act.
        In late February 1999, a number of species of Pacific Salmon were
    ``listed'' by the National Marine Fisheries Service as ``threatened''
    under the terms of the Endangered Species Act (ESA). This ESA listing
    process has triggered a cascading chain of events which have resulted
    in significant changes to harvest, hatchery, and habitat practices for
    the region and its inhabitants.
        Tribes are affected by this federal process. As fishers, the
    listings raise serious questions about the status of the stocks and
    poses a threat to the opportunity for these individuals to continue to
    harvest salmon, a treaty secured resource. As governments, the ESA
    process now places enormous bureaucratic demands upon the tribes as co-
    managers of the resource. In addition, the tribes are working hard to
    provide much needed technical and policy leadership to protect and
    recover Puget Sound salmon. Continued and expanded tribal funding is
    essential to address endless issues raised by the ESA and to fulfill
    the tribes' unwavering commitment to salmon recovery.
        Additional funding is also needed for the National Marine Fisheries
    Service so that they can actively participate in the many ESA functions
    that exist in the Pacific Northwest. To our knowledge, never before has
    a resource--in this case, salmon--been both secured to tribes by
    treaties and regulated by the federal government under the ESA. The
    relationship raises vexing issues relating to the federal government's
    fiduciary responsibilities to the tribes in the context of the ESA. As
    the federal agency charged with implementing the ESA for salmon, NMFS
    requires additional funding to properly discharge their trust
    responsibilities to the tribes. Furthermore, the tribes require funding
    to ensure the federal-tribal trust relationship is properly discharged.
    As a result, we would like the Subcommittee to earmark $530,000 for a
    Tribal/NMFS ESA Task Force that brings tribal and NMFS technical and
    policy representatives together to implement the ESA in the context of
    tribal treaties.
     $110 million for the pacific coastal salmon recovery within the lands
                legacy program with $15 million tribal set aside
        Tribes have been greatly appreciative of the Committee's efforts to
    include Pacific Coastal Salmon Recovery funding in last year's
    appropriation. We have long advocated for such a concerted partnership
    approach between federal, state, local, and tribal governments to save
    the Pacific Salmon. We wish to support a funding level of $110 million
    for the Pacific Coastal Salmon Recovery Initiative.
        For many years, the tribes have sounded alarms about the declining
    status of the salmon resource. Tribes have actively participated in the
    implementation of the Northwest Forest Plan and have also worked
    diligently to implement the Pacific Salmon Treaty. Locally, tribes have
    linked their work with county and city governments to develop watershed
    recovery strategies. Connections between tribes and private interests,
    including the timber industry, environmental community, and volunteer
    organizations are in place, and expanding regularly. All of these
    efforts require a consistent source of funding that allows tribes to
    actively work salmon restoration efforts. That is why a continued set
    aside for the tribes is essential. We support $15 million set aside for
    the Pacific Coastal tribes for salmon restoration work. We also seek a
    specific allocation of $9 million from this amount for the Northwest
    Indian Fisheries Commission for the work described below.
        As noted earlier, treaty tribes in western Washington have court-
    affirmed fisheries co-management authority and responsibility for
    salmon, which includes not only harvest and hatchery management
    activities, but also habitat protection. This collection of rights
    places the tribes in a principal management role with the State of
    Washington to ensure that the salmon resource is managed wisely for the
    benefit of all.
        This obligation for sound resource management weighs heavily on the
    tribes as more than three-quarters of the state is affected by several
    Endangered Species Act (ESA) listings, with many of the remaining areas
    experiencing declining levels of many salmon species.
        Each tribe has an existing fisheries management program, and will
    utilize its program as a base for salmon recovery efforts. Fiscal year
    2002 funds have increased each tribe's ability to engage in salmon
    restoration activities and programs. This increased capacity has
    enabled the tribes to dedicate necessary staff and policy attention to
    work through various reviews, listings, consultations, rule
    developments, and conservation planning processes that have already
    begun as the National Marine Fisheries Service moves forward with legal
    requirements under the Endangered Species Act. Moreover, this
    infrastructure has also provided the tribes with additional
    capabilities to provide leadership and scientific direction in various
    salmon restoration projects and efforts that are under way within the
    region and individual watersheds.
        A coordinated tribal effort is necessary on a variety of
    ``statewide'' and ``regional'' issues. Using the expanded capacity
    described above, tribes and their policy and technical staff will be
    able to increase the time and effort dedicated toward developing salmon
    conservation and recovery planning processes that are essential to
    salmon restoration.
        One of these new efforts--the Shared Strategy for Recovery of Puget
    Sound Salmon--is an example of the leadership the tribes are providing
    in salmon recovery. Working with state, federal, and local government
    leaders, and former EPA Administrator William Ruckleshaus, the tribes
    are developing salmon recovery goals for each Puget Sound watershed and
    identifying means to achieve those goals. This is an exciting new
    initiative that promises much needed direction, coordination, and
    strategic planning to the region's salmon recovery challenges. But
    without additional funding, the tribes' ability to participate in and
    properly manage this growing initiative will be impaired.
        In addition, tribes, along with the State of Washington, will
    develop comprehensive species management plans for coastal river
    systems, Puget Sound chinook, Hood Canal summer chum, and Lake Ozette
    sockeye salmon. They will also work on conservation concerns for coho
    salmon, which in some areas are listed by NMFS as a ``candidate''
    species for potential listing in the future.
        Tribes will develop new hatchery genetic guidelines, stock
    productivity models, fishery guidelines and standards for local salmon
    recovery. Tribes will continue work to update the Salmon and Steelhead
    Stock Inventory (SASSI) and will complete the Salmon and Steelhead
    Habitat Inventory and Assessment Project (SSHIAP). These two data
    systems integrate stock status and habitat information, essential
    knowledge for effective salmon restoration and protection activities.
    SSHIAP is also an essential component for long-term habitat monitoring
    programs, including that of the recently enhanced forest practices
    program.
        To make these activities complete, however, requires coordination
    and integration of the tasks at a number of levels. In some cases,
    special studies and assessments must be done. In other cases, regional
    and/or case-area-wide coordination must occur to ensure project
    completion.
        This broad array of activities will allow the maximum flexibility
    for locally driven processes to determine which activities are most
    important for each watershed. This is essential as the current status
    of habitat inventories, wild stock assessments and hatchery impacts in
    each watershed are highly variable.
        The following is a partial list of salmon restoration projects and
    activities that may be conducted: Watershed assessments, including
    habitat conditions, in-stream flow studies, water quality and quantity
    analysis pertaining to salmon productivity; develop/design projects to
    address limiting factors; compliance monitoring for regulatory
    components of salmon recovery; habitat monitoring; stock monitoring;
    and, adaptive management monitoring, research, assessment and
    application.
        It must be recognized that tribes also anticipate accessing various
    funds that are available to state governments for active watershed
    restoration and protection projects. These funds would come from the
    Coastal Salmon Recovery monies provided by the subcommittee to state
    governments. In many cases, tribes will be in the best position to
    protect and preserve habitat through the purchase of riparian habitat.
    In other cases, tribes will have the best expertise and infrastructure
    in place to effectively complete restoration projects.
               pacific salmon agreement requires further funding
        Many new demands have been placed on the United States and Canada
    as a result of the 1999 Pacific Salmon Agreement. This agreement
    resulted in an increase of fisheries management demands on the Pacific
    Salmon Commission. We support the U.S. Section's recommendations for
    the Commerce and State Departments' budgets, which includes increasing
    the State Department's funding level by $309,000 to address their
    increased responsibilities.
        The tribes also support the congressional appropriations of a
    funding package of $40 million for fiscal year 2003 for the two
    Restoration and Enhancement Funds. We are appreciative of the continued
    support by Congress to fulfill this obligation of the 1999 Pacific
    Salmon Agreement. This authorization represents the final installment
    for this agreement. These monies will be handled as an endowment and
    administered by the Pacific Salmon Commission for habitat, stock
    enhancement, science and salmon management initiatives in both
    countries.
        These funds are essential in order to implement the Agreement.
    Clearly, there have been very significant harvest reductions taken by
    all parties involved as a result of this new Agreement. Unfortunately,
    harvest reductions alone will not bring back the salmon. The new
    Restoration and Enhancement Funds will provide long term funding
    resources to the two countries to target a multitude of recovery
    efforts that are complimentary to the harvest reductions.
    tribal fishers bear a huge burden and funds should be found to support
                       them while salmon recovery occurs
        Tribes are very concerned about our displaced fishers. Unemployment
    rates on some reservations, which depend heavily on salmon fisheries
    now seriously curtailed due to low stock abundance, are as high as 80
    percent. We would like the Committee to consider an extension of the
    successful federal ``Jobs In the Woods'' Initiative of the Northwest
    Forest Plan which utilized unemployed loggers. This program could be
    expanded for specific inclusion of tribal fishers. New funds for
    ``fishers support'' should also be found to ensure that tribal fishers
    could continue to make boat payments and leases during these low
    abundance periods. These funds could be earmarked from within the
    existing Department of Commerce budget, so long as they become
    available to the Tribal Fishers. It is expected that this program would
    cost about $3 million per year for the next decade.
                                   conclusion
        We strongly urge the Committee to provide $110 million in funding
    for Pacific Coastal Salmon Recovery. We ask the Committee to support
    the use of $15 million of these funds for use by the Pacific Coastal
    Tribes. Language directing $9 million of these funds to the Northwest
    Indian Fisheries Commission will enable us to actively engage in all
    phases of salmon recovery efforts in western Washington. These monies
    would be carefully managed to ensure results and accountability.
    $530,000 is needed to fund a tribal/NMFS ESA Task Force.
        The new Pacific Salmon Agreement requires $40 million during fiscal
    year 2003 to fully fund the Restoration and Enhancement Funds. $309,000
    in new funding is needed for State Department implementation of the
    Pacific Salmon Treaty Agreement. A new initiative to support tribal
    fisheries and ameliorate their financial burden will cost $3 million.
        We thank you for your consideration of our request. We are
    available to answer any questions.
                                     ______

    Prepared Statement of the Airports Council International--North America
               and the American Association of Airport Executives

        On behalf of Airports Council International--North America (ACI-NA)
    and the American Association of Airport Executives (AAAE) we appreciate
    the opportunity to offer the views of the airport community regarding
    the fiscal year 2003 Departments of Commerce, Justice, and State, the
    Judiciary, and Related Agencies Appropriations bill. ACI-NA represents
    local, regional and state governing bodies that own and operate
    commercial airports in the United States and Canada. AAAE is the
    world's largest professional organization representing the men and
    women who manage primary, commercial service, reliever and general
    aviation airports.
        We would like to begin by thanking Chairman Hollings, Ranking
    Member Gregg and all those who served on the Subcommittee last year for
    the leadership they provided on H.R. 2500, the fiscal year 2002
    Commerce-Justice-State Appropriations bill. Because of your efforts,
    that bill included a provision to allow the Immigration and
    Naturalization Service (INS) to charge cruise line passengers who enter
    the United States a $3 inspection fee and increase the fee on airline
    passengers from $6 to $7.
        Like many on this Subcommittee, ACI-NA and AAAE made the case that
    the INS needs additional inspectors and equipment to meet the increased
    demand for inspection services at congested international airports. One
    of our top priorities was convincing Congress to lift the current
    cruise line exemption as a way to pay for additional inspectors at
    international airports. That is why we were pleased that the fiscal
    year 2002 Commerce-Justice-State Appropriations bill lifted the cruise
    line exemption and included report language stating that the user fee
    increase should be used, in part, to hire additional inspectors at new
    and existing airport terminals as well as at high growth terminals.
        Additional Inspectors.--This year, AAAE and ACI-NA strongly urge
    this Subcommittee to approve funding for the INS to deploy additional
    inspectors at air ports-of-entry. Prior to the tragedies that occurred
    on September 11, INS officials expected the new user fees would
    generate as much as $100 million per year. At that level, revenue from
    the fees would allow the INS to hire 283 new inspectors at airports.
    The fees would also allow the INS to hire 60 inspectors to expand the
    INS/U.S. Customs Service passenger analysis units at airports to
    analyze traveler information in advance of plane arrivals.
        Because of the temporary decline in passengers that occurred after
    the terrorist attacks, the new inspection fee will not generate as much
    revenue as previously expected. That is why AAAE and ACI-NA strongly
    support a provision in the Administration's fiscal year 2002
    Supplemental Appropriations Request that would provide $35 million to
    the INS to enable the agency to fully implement increased air and sea
    port initiatives.
        The Administration's fiscal year 2003 budget request includes $85.5
    million to hire, train and deploy 1,160 additional Immigration
    inspectors. We see this as a step in the right direction. Under the
    Administration's proposal, INS would deploy some 615 inspectors to
    international airports, 460 to land border ports, and 65 to seaports.
    Approximately $362 million would also be used to fund a multi-year
    effort to provide a comprehensive land, sea, and air entry/exit system
    for the United States. INS expects to meet traffic management goals of
    processing 79 percent of commercial airline passengers within 30
    minutes.
        Since September 11th, the INS and U.S. Customs suspended all
    international-to-international (ITI) transit, progressive clearance,
    technical fuel stops and the use of in-transit lounges placing an even
    greater strain on both agencies. Consequently, inspectors from both
    agencies were required to inspect international passengers who they
    were not previously required to inspect--either because those
    passengers were traveling to another foreign country or because they
    would be inspected at another destination in the United States. In
    either case, before September 11, those passengers were required to
    remain in sterile in-transit lounges until boarding their next flight.
        In November of last year, the INS and U.S. Customs allowed ITI to
    resume under new and strict criteria. For instance, carriers were
    required to provide 100 percent Advanced Passenger Information prior to
    the aircraft's arrival. Moreover, both INS and U.S. Customs inspectors
    could require all passengers, crew and baggage to be inspected.
        Last week, the INS announced that it would be modifying the ITI
    transit procedures and reinstating progressive clearance, again under
    new and strict criteria. Carriers will now be allowed, under certain
    circumstances, to present their ITI and progressive passengers to INS
    inspectors at INS-approved in-transit lounges. While these new
    procedures may help speed up the inspection process for those
    particular passengers, they will require the INS and U.S. Customs
    Service to deploy more inspectors at air ports-of-entry.
        The number of passengers that the INS and U.S. Customs will be
    required to inspect is also increasing because more international
    passengers are traveling to the United States. The FAA predicts that
    international passengers will increase slightly this year and increase
    by 6.8 percent in calendar year 2003. The FAA also predicts that the
    number of passengers traveling between the United States and the rest
    of the world will increase from approximately 131 million passengers in
    calendar year 2001 to approximately 226 million by 2013.
        45-Minute Clearance Time.--Considering that 30-minute goal, we are
    surprised and disappointed that INS is proposing to eliminate the 45-
    minute clearance time for the inspections of passengers arriving on
    international flights. Under current law, the INS is required to
    inspect passengers who arrive in the United States on scheduled airline
    flights within 45 minutes of their presentation for inspection.
    Airports around the country fear that eliminating the 45-minute
    clearance time will reduce the pressure on INS to deploy enough
    inspectors and new technology at international airports to enhance
    security and process passengers in a thorough and timely manner.
        Repeatedly, Congress has given INS the resources and information it
    needs to inspect passengers. As we mentioned previously, Congress
    increased the INS inspection fee on airline passengers from $6 to $7 so
    the agency can deploy more inspectors at international airports.
    Moreover, the aviation security bill that Congress passed last year
    requires airlines to submit detailed passenger information including
    passport and visa numbers to the U.S. Customs Service--which shares
    that information with INS--before an aircraft even lands in the United
    States.
        The report accompanying the House version of the fiscal year 2002
    Commerce-Justice-State Appropriations bill stated that a number of
    airports around the country are short of inspections personnel and that
    it ``expects that this fee increase will enable the INS to meet
    increasing staffing demands and meet the mandated 45 minute inspection
    timeframe at all airports.'' With additional funding, additional
    inspectors and additional passenger information, we agree that the INS
    should be capable of meeting the 45-minute clearance time that Congress
    created ten years ago.
        A lot has changed since then, and continuing to improve security is
    now more important than ever. Airports realize that there will be
    passengers who raise red flags with the INS and who will require
    additional inspections. INS inspectors should focus on those passengers
    and take as much time as they need to inspect them. Airports understand
    that it may be necessary to eliminate the 45-minute clearance time for
    those passengers who are identified by immigration officers as
    requiring secondary inspections.
        Again, however, airports fear that eliminating the time limit for
    all passengers--including those who do not require a secondary
    inspection--will reduce the pressure on the INS to deploy enough
    inspectors and new technology at international airports. Congress has
    given INS additional funding, additional inspectors and additional
    passenger information in the past. It should continue to require the
    agency to use those valuable resources to enhance security at
    international airports and process passengers in a thorough and timely
    manner. We encourage the Subcommittee to include language in the fiscal
    year 2003 Commerce-Justice-State Appropriations bill that will require
    the INS to inspect passengers within 45 minutes unless they are
    identified by immigration officers as requiring secondary inspections.
        Automated Technologies.--In addition deploying an adequate number
    of inspectors and being held to a firm 45-minute clearance time, INS
    needs to introduce automated technologies and risk-based analysis tools
    into its inspections process. These mechanisms will improve customer
    service, assist inspectors in their duties and allow INS to process
    most passengers within 45 minutes.
        In the report accompanying the fiscal year 2002 Commerce-Justice-
    State Appropriations bill, the user fees increases will allow the INS
    to invest funds in its automated entry/exit system that tracks alien
    arrivals and departures at airports. It will also allow the agency to
    upgrade the National Automated Inspection Lookout System and deploy
    additional Live Scan Devices that can send electronic fingerprints to
    the Federal Bureau of Investigations. We hope this Subcommittee will
    include funding in the fiscal year 2003 Commerce-Justice-State spending
    bill to allow INS to improve the inspection system by using new
    technology.
        Toward that goal, ACI-NA and AAAE urge Congress to appropriate
    funds for the INS to conduct research and development on technologies
    that will enhance the inspections process. Technologies that should be
    given strong consideration include so-called ``smart credentials'' and
    biometrics. These are tools that airports are urging the newly created
    Transportation Security Administration (TSA) to use to identify
    domestic passengers at airports.
        Airports would like to assist INS on ``smart credentials,'' and we
    think the agency should coordinate its research and development and
    future activity on this initiative with stakeholders including airports
    and airlines. Moreover, we think Congress should direct INS to
    coordinate this activity with TSA and the Department of Transportation.
    INS coordination with those two transportation agencies is vital to
    ensuring that smart credentials can be used efficiently to satisfy the
    requirements of multiple government interests.
        Recruitment, Training and Retention.--In addition to hiring more
    inspectors and using better technology, INS needs to do a better job of
    recruiting, training and retaining the inspectors it already has. ACI-
    NA and AAAE urge Congress to appropriate the necessary funds to ensure
    that the INS can improve the recruitment, training, retention of its
    inspectors. While mindful that a small percentage of individuals
    entering the United States may pose a risk, INS must continue to train
    and enhance the customer service mission of inspectors. Foreign
    visitors and tourists are vital to sustaining the nation's economy.
        Enhanced recruitment and training efforts must also be accompanied
    by competitive salaries for INS inspectors. The average entry-level
    annual salary for an INS inspector is under $23,000. That puts INS
    inspectors at the bottom of the pay scale for similar inspectors in
    other agencies. The average entry-level salary for a U.S. Department of
    Agriculture Animal and Plant Health inspector is $34,000 per year.
    Screeners hired by TSA are expected to make up to $35,400 per year. Law
    enforcement officers hired by TSA are expected to make at $45,000 and
    above per year.
        It is imperative that the INS provide a more competitive salary
    package and allow for upward mobility within the inspections program.
    This mobility allows more individuals to enter the Service with a
    career-oriented focus and reduces the possibility that other federal
    agencies will hire individuals trained by INS. INS suffers annual
    financial losses due to individuals leaving the inspections program
    after completion of training. A large number of individuals leaving the
    program are hired by other federal agencies that pay better wages.
        Chairman Hollings, Ranking Member Gregg and Members of the
    Subcommittee, thank you again for your assistance last year and for
    inviting us to submit our testimony on the fiscal year 2003 Commerce,
    Justice, State appropriations bill. All of us at ACI-NA and AAAE look
    forward to working with you during the 107th Congress as you continue
    to work to improve the inspection process and security at airports
    around the country.
                                     ______

                  Prepared Statement of National Public Radio

                                  introduction
        Thank you Chairman Hollings and Senator Gregg for giving National
    Public Radio and its hundreds of member stations the opportunity to
    submit written testimony for the record in support of the Public
    Telecommunications Facilities Program (PTFP) and its fiscal year 2003
    appropriation. This year, public broadcasting is requesting that $110
    million be allocated to PTFP. This level of funding will ensure that
    there is sufficient money available to help public broadcasters in
    their conversion to digital audio broadcasting and to maintain and
    expand service.
                                      ptfp
        PTFP is a competitive matching grant program to help public
    broadcasters, state and local governments, and Indian tribes construct
    facilities to bring educational and cultural programs to the public.
    Run by the National Telecommunications and Information Administration
    (NTIA) under the Department of Commerce, this program provides
    financial assistance to stations for capital projects such as replacing
    outdated hardware, purchasing new equipment to expand service to
    unserved areas, and converting to digital technology. It is the only
    capital grant program available to public broadcasters, many of whom
    are constrained in their ability to finance capital expenditures.
    Stations cannot pass their costs on to their listeners, and most cannot
    take out loans for such projects, especially those in rural areas. The
    matching-grant structure of PTFP allows public radio stations to
    leverage funding from local government and private entities while
    providing the money needed to help defray the high costs of capital
    projects.
        The demand for PTFP funding far exceeds the amount of funds
    available. In fiscal 2001, there were 246 applications requesting a
    total of $120 million in funding through PTFP--88 from public radio
    stations and 111 from public television stations--yet only $42 million
    were available. Of those applications, only 105 were awarded money.
        Unfortunately, budget constraints have limited the amount of funds
    available for PTFP grants. Appropriations for the program in fiscal
    year 2002 increased only slightly from fiscal year 2001. Funding PTFP
    at $110 million this year will help to meet the demand for this small,
    but important program, which will help many stations with their
    transition to digital radio as well as help them expand coverage to
    unserved areas.
                            digital radio conversion
        Public radio will soon begin the process of converting to digital
    audio broadcasting. Stations are preparing to upgrade their equipment
    and digitize their programming in anticipation of the Federal
    Communication Commission's impending decision on the creation of a
    digital FM radio standard.\1\ Once the Commission issues its final rule
    later this summer, public radio broadcasters will begin the expensive
    process of converting to a digital format, which is currently estimated
    to cost about $116 million. That amount is solely for the cost of
    transmission and does not include the cost of digitizing production.
    ---------------------------------------------------------------------------
        \1\ Industry testing is currently occurring on AM-IBOC technology.
    ---------------------------------------------------------------------------
        Digital radio is expected to transform the radio industry and allow
    it to compete on equal footing with other digitized media. Digital
    technology will allow stations to broadcast near CD quality sound free
    of interference to listeners, as well as help utilize spectrum more
    efficiently. Developed by the industry, In-Band, On-Channel (IBOC)
    technology will allow stations to simultaneously broadcast their analog
    and digital signals using their existing analog AM and FM frequency.
    Unlike television stations, radio stations will not require additional
    spectrum to convert to a digital format.
        In addition to providing near CD quality sound and the efficient
    use of spectrum, digital radio will afford new service opportunities.
    IBOC technology has the potential to provide important new public
    interest programming such as:
      --Assisted-living services, such as radio reading services for the
            print-impaired and radio captioning;
      --Public safety services such as weather alerts, traffic safety, and
            national security notifications;
      --Foreign language programming; and
      --Audio-on-demand
        Digital radio will also enable new functions such as the ability to
    search program formats, scan selective programming, and read music
    lyrics and song titles.
        PTFP will play an important role in the public radio system's
    conversion to digital radio technology. Once a FM IBOC standard is
    adopted, many stations will quickly begin the process of converting,
    which will involve high capital costs. PTFP funding will help public
    radio stations finance their projects as well as leverage vital funding
    from other sources.
                                 expand service
        NTIA has established a priority system for issuing PTFP awards.
    Stations expanding service to new areas have the top priority in the
    selection process followed by equipment replacement for stations that
    are the only public radio station in a community (level 2), stations
    upgrading their transmitter (level 3), and finally, stations replacing
    equipment (level 4).
        Expansion of public broadcasting to unserved areas is PTFP's first
    priority when issuing grants. For more than 35 years, the program has
    played a major role in the development and expansion of public radio
    throughout the country. Today, more than 90 percent of the American
    public can listen to a public radio station in their community.
        In fiscal year 2001, PTFP awarded eight grants to extend public
    radio signals to over 300,000 unserved individuals. Areas benefiting
    from these awards include Lakeport, California; Lake Okoboji, Iowa;
    Fergus Falls, Minnesota; Altus, Oklahoma; Pelham, North Carolina; rural
    areas east of Charlotte, North Carolina, and 12 interior Alaska
    villages.
                                maintain service
        Maintaining service is also one of PTFP's main priorities. In
    fiscal year 2001, the program awarded 28 grants to help stations
    replace basic equipment. For example, in 2001 PTFP awarded Ohio State
    University $149,491 to replace the 63-year-old broadcast tower and
    concrete base supports of WOSU, which serves approximately six million
    people in the greater Columbus, Ohio area, and to purchase EAS
    emergency warning equipment for the four repeaters of WOSU-FM, which
    serve a population of roughly 1.6 million individuals.
        PTFP also funds the radio reading service for the blind and
    descriptive video services for the disabled. Last year, the Nevada
    Public Radio Corporation was awarded $47,926 to extend the Radio
    Reading Service of KNPR, 89.3 MHz, in Las Vegas, to Reno/Carson City,
    Elko, Ely, and Tonopah, Nevada by acquiring subcarrier generators, STL
    interfaces, an audio-vault, audio receivers, satellite receivers, and
    SCA receivers. The project will provide new radio reading service to an
    estimated 15,000 visually handicapped listeners in the state.
                                   conclusion
        For 35 years, PTFP has played a major role in the development of
    public broadcasting throughout the United States. Through the
    assistance the program provides, public radio has grown considerably
    and now reaches just over 90 percent of the U.S. population. That
    funding is even more important now than ever before.
        NPR thanks the Subcommittee for allowing written statements to be
    submitted for the record, and for its long-standing support of public
    broadcasting.
        NPR is a private, nonprofit corporation that produces and
    distributes award-winning programming such as Morning Edition, All
    Things Considered, Performance Today, and Car Talk. NPR is also a
    membership organization. NPR member stations are independent entities
    licensed to a variety of nonprofit organizations, local communities,
    colleges, universities, and other institutions. Public radio stations
    independently select and produce community appropriate programming that
    best serve their listening areas.
                                     ______

               Prepared Statement of the National Audubon Society

        On behalf of the National Audubon Society and our one million
    members and supporters, we appreciate the opportunity to submit
    testimony regarding funding priorities for the fiscal year 2003 budget
    of the National Marine Fisheries Service (NMFS), and the National Ocean
    Service (NOS). The mission of the National Audubon Society is to
    conserve and restore natural ecosystems, focusing on birds and other
    wildlife and their habitat for the benefit of humanity and the earth's
    biological diversity. Audubon's Living Oceans Program is dedicated to
    protecting and restoring the living communities and special places of
    the seas for fish, seabirds, and other marine life and for the benefit
    of humankind
        To adequately execute their mandates, NMFS and NOS need additional
    monies over those provided in fiscal year 2002. Below is a detailed
    list of those programs Audubon sees as critical funding priorities
    within these agencies, accompanied by what Audubon views as minimum
    necessary appropriations levels at the current time.
                       national marine fisheries service
    Science
                Expand Annual Stock Assessments
        The Administration has requested $11.9 million for expanding annual
    stock assessments. This represents an increase of $9.9 million over
    fiscal year 2002 enacted levels. While this level of funding would
    represent an important step in the right direction, it falls well short
    of what is actually needed to improve the science upon which management
    should be based. Accurate stock assessments are the foundation of
    proper management of fishery resources. Without them, rational
    management of fish populations is not possible. With that
    understanding, it is unacceptable that the status of 78 percent of fish
    stocks in U.S. waters remains unknown largely because of inadequate
    funding.
        The Administration's plan to dedicate just $2.4 million toward at-
    sea research days is inadequate. This level of funding will purchase
    only 260 at-sea research days, reducing the annual deficit to 1,573
    research days, based on recommendations made in NMFS' Stock Assessment
    Improvement plan. The Committee should, at a minimum, appropriate funds
    adequate to eliminate fully half of the annual research days deficit
    ($8.5 million). Audubon supports the $5.1 million increase intended to
    provide for the recruitment and training of stock assessment biologists
    and staff to produce annual stock assessments.
        Recognizing the shortcoming with regard to days-at-sea research
    dollars and noting that the fiscal year 2002 appropriation fell $14.7
    million below the Administration's request, Audubon urges the Congress
    to allocate $18.0 million toward improving stock assessments. Such an
    allocation would demonstrate a commitment toward more informed science-
    based management of our nation's fish populations.
                Highly Migratory Shark Fisheries Research Program
        Audubon strongly urges restoration of funding for the Highly
    Migratory Shark Fisheries Research Program. In fiscal year 2002 the
    Administration requested $1 million for this program and Congress
    appropriated $1.5 million. However, in the Administration's fiscal year
    2003 request the program was zeroed out. An effective multi-regional
    collaborative effort, this program conducts fisheries relevant research
    on shark and ray populations in the Gulf of Mexico, Atlantic, and
    Pacific Oceans. The information developed from this program provides
    data that are critical for assessing the status of shark populations
    and management activities. Audubon urges the Committee not only to
    restore funding to this program, but to increase it to $1.95 million
    for fiscal year 2003.
                Pacific Highly Migratory Species Research
        The Administration's request of $750,000 for Pacific highly
    migratory is inadequate. Funding for stock assessments and biological
    studies, as well as improving bycatch mitigation techniques for these
    fisheries, are critical for the long-term health of the fishery. Of
    vital importance to improving management of these species in both the
    near and long-term is the completion of the Pacific Fishery Management
    Council's Highly Migratory Species Fishery Management Plan. To
    guarantee the timely completion of this plan, Audubon proposes that
    appropriations for Pacific highly migratory species research be raised
    to $1.5 million with $500,000 of these appropriations specifically
    dedicated to completion of the Pacific Fishery Management Council's
    plan. These monies should be used, in part, to fund the work necessary
    to make maximum sustainable yield determinations for bigeye and pelagic
    thresher sharks.
                Bluefin Tuna Tagging
        The Administration's request of $850,000 for bluefin tuna research
    is below the level needed to conduct appropriate and necessary
    scientific research. Audubon strongly urges the Congress to appropriate
    $1.15 million and ensure that these research dollars be evenly
    distributed between Stanford University's Hopkins Marine Station and
    the New England Aquarium. The Stanford University research team has
    traditionally led the field in Atlantic bluefin tuna research and their
    expertise should be not be forfeited. In fiscal year 2001 all federal
    bluefin tuna research dollars were allocated to the New England
    Aquarium without explanation or warning, jeopardizing the continuation
    of Stanford University's Atlantic bluefin tuna research program.
    Audubon suggests that $150,000 should be dedicated toward the current
    NMFS program to determine if there is a discrete spawning ground for
    bluefin tuna in the Gulf of Mexico.
                Sea Turtle Research
        Audubon supports the Administration's request of $6.5 million for
    Endangered Species Act Sea Turtle Research, which represents an
    increase of $2.0 million over the fiscal year 2002 enacted levels. With
    sea turtles threatened or endangered on both coasts, it is critical to
    develop information to better recover these animals and to implement
    identified management strategies to reverse declining population
    trends.
                Fisheries Research Vessel
        Audubon supports the Administration's request of an additional
    $45.5 million over fiscal year 2002 enacted levels for the purpose of
    constructing a second NOAA fisheries research vessel. As research
    vessels around the country age, it is critical to give NOAA the
    capacity to continue fisheries research so as not to disrupt time-
    series data streams. The new vessel will provide NOAA with the
    capability to continue current research programs and better meet data
    gathering needs in the future.
                Essential Fish Habitat
        The additional $1.5 million within NMFS' $4.8 million base for
    designation and protection of essential fish habitat (EFH)--those
    waters and substrate on which fish depend--is inadequate. The
    Sustainable Fisheries Act of 1996 gave NMFS a clear mandate to identify
    and conserve essential fish habitat. While progress has been made in
    identification of EFH, too little has been done to protect these
    habitats. Audubon recommends that the Congress allocate $11.0 million
    to further refine EFH designations and to take action to conserve EFH.
                Fisheries Oceanography
        The Administration requested $1.0 million for fisheries
    oceanography for fiscal year 2003. This sum is equal to fiscal year
    2002 enacted dollars but $1.0 million less than the Administration's
    fiscal year 2002 request of $2.0 million. Audubon supports dedicating
    $2.0 million for fisheries oceanography as per the Administration's
    fiscal year 2002 request. It is critical to further our understanding
    of how long-term environmental factors affect fish stocks through
    continuing research and development new tools and techniques as
    increasing pressure is brought to bear on fish stocks.
                Horseshoe Crab and Migratory Shorebird Survival Research
                        Funding
        Audubon urges the Committee to provide $700,000 in fiscal year 2003
    to establish the Horseshoe Crab Population Dynamics Research Program.
    This proposal builds on the recent action by the Commerce Department to
    create a horseshoe crab sanctuary off of the mouth of Delaware Bay.
    This proposed public-private partnership between the Atlantic States
    Marine Fisheries Committee and the Virginia Polytechnic Institute and
    State University's Horseshoe Crab Research Center is critical to
    monitoring the status of declining horseshoe crab populations,
    determining the impact of coastal habitat degradation on them, and
    protecting endangered migratory shorebirds that are dependent on
    horseshoe crabs as a primary food source during migration. The Delaware
    Department of Natural Resources and Environmental Control is also an
    important partner in the research process. Funding is sought through
    the Atlantic States Marine Fisheries Commission, with 100 percent of
    the funds to be passed to the researchers.
    Management
                Fishery Observers
        The administration's request of $16.95 million for fisheries
    observer programs represents a modest but inadequate increase of $2.85
    million for fishery observer programs. Because of fiscal constraints,
    observer coverage levels in some fisheries, such as the Atlantic
    pelagic longline fishery, have been below levels mandated by
    international agreements that the United States are a party to, as well
    as below levels dictated by biological opinions issued under the
    authority of the Endangered Species Act. To ensure that observer
    coverage occurs at a statistically reliable level within all areas
    fished, at levels mandated by international agreements and biological
    opinions issued under the ESA, Congress must provide additional money
    to NMFS for fishery observers. Audubon recommends an increase to $25
    million ($11.4 million above fiscal year 2002 enacted levels) to ensure
    that adequate observer programs are implemented without further delay.
                Regional Fishery Management Councils
        The Administration has requested $16.0 million for the Regional
    Fishery Management Council system, which represents an increase of $1.8
    million over the fiscal year 2002 enacted level. Audubon is supportive
    of the proposed increase, however we note that this level of
    appropriations falls short of what is needed to support the work load
    of the eight regional councils. The regional council system is in need
    of significant reform. Needed changes include a more balanced
    distribution of seats between representatives of the commercial,
    recreational, and public interest in marine conservation--currently
    there is only one representative of the conservation community serving
    on the eight councils in aggregate--and more stringent regulations
    regarding recusal of council members from votes where they have a
    financial interest. Nevertheless, Audubon recognizes that despite the
    present Council system's serious flaws, it is under-funded and
    recommends that the Congress increase appropriations to $20.5 million
    for fiscal year 2003. This level of funding represents the aggregate
    fiscal year 2002 request of the eight councils plus $1.5 million to
    close the shortfall stemming from enacted fiscal year 2002 monies. This
    higher level of funding more accurately reflects the appropriations
    necessary for the councils to fully execute their responsibilities.
                International Fisheries Commissions
        The Administration's request of $400,000 for international
    fisheries commission work is insufficient and represents an increase of
    just $1,000 over fiscal year 2002 enacted levels. Fishing vessels of
    many nations are ranging further afield on the oceans to find fish
    every year. The importance of international cooperation in managing
    highly migratory and transboundary species has never been more
    important and the difficulty never greater. Budgetary constraints limit
    the role U.S. scientists play in working on issues of critical
    importance to the United States and the various commissions of which
    the United States is a party. Furthermore, U.S. delegations are often
    understaffed because of travel budget constraints. Audubon urges the
    Congress to allocate an additional $100,000 which will allow a more
    appropriate level of commitment of U.S. resources to international
    negotiations.
                Enforcement and Surveillance
        The Administration's overall request of $50.9 million for
    enforcement and surveillance appropriations represents an important
    commitment toward reigning in illegal fishing activities which
    undermine conservation and management measures established by the NMFS.
    The request represents an increase of $9.6 million over fiscal year
    2002 enacted levels, however, it still falls short of what is needed to
    allow for effective enforcement of current fisheries regulations.
        Vessel Monitoring System (VMS).--VMS is an indispensable satellite
    based fishery monitoring and enforcement tool. Given the increased use
    of large-scale fishery area closures it is the only viable mechanism to
    monitor compliance with time-area closures. Enforcement/monitoring
    alternatives to VMS would be immensely more costly and include 100
    percent observer coverage in some fisheries and the procurement of
    significant numbers of additional enforcement personnel, aircraft and
    ships to patrol area closures. VMS also provides the added benefit of
    improving fisheries management by providing refined real-time data
    regarding spatial and temporal distribution of fishing effort. Within
    the Enforcement and Surveillance account, we are encouraged to see the
    proposed increase to $7.4 million for vessel monitoring systems (VMS).
    This represents an increase of $5.4 million over fiscal year 2002
    enacted levels, and will allow coverage of roughly 1,500 vessels.
    Nevertheless, the coverage afforded by these new dollars would be
    substantially below what is needed on a nationwide basis. An increase
    of $10.4 million over fiscal year 2002 enacted levels to $12.4 million
    is necessary to ensure VMS coverage for a noticeable portion of the
    U.S. commercial fishing vessels.
                Pacific Coastal Salmon Recovery
        The Administration's request of $90 million for the Pacific Coastal
    Salmon Recovery represents a $20 million decrease from fiscal year 2002
    enacted levels. This level is insufficient to adequately execute the
    wide range of activities needed including habitat restoration and
    protection, research, monitoring and evaluation, and salmon recovery
    planning. Audubon recommends that the Committee restore funding to
    fiscal year 2002 enacted levels ($110 million) and that these restored
    funds be dedicated toward establishing a comprehensive regional
    monitoring program. Without a comprehensive region-wide system in place
    it will be impossible to full evaluate the effects of recovery efforts.
                Energy Permit Rapid Response
        The Administration's request of $2.0 million and 13 fulltime
    equivalents (FTE) to support establishment of a streamlined energy
    permit review process for energy related project approvals represents
    an inappropriate diversion of badly needed funds from priority
    programs. Many departments within NMFS are badly under-funded and
    understaffed and unable to meet existing mandates. The diversion of
    this significant amount of money and personnel to expedite energy
    permit review when the agency is unable to meet its current mandates is
    unacceptable. Audubon recommends redirecting these monies toward
    resource management or data collection programs.
    National Ocean Service
                Marine Protected Areas Program
        The administration has requested $3 million for the Marine
    Protected Areas (MPA) Program, which represents status quo with regard
    to fiscal year 2002 enacted and requested levels. This amount is
    insufficient and proposes an additional $3.4 million in funding for
    fiscal year 2003, resulting in an aggregate of $6.4 million for the NOS
    MPA program. Of this, we recommend that $1.4 million be dedicated to
    the West Coast marine reserves initiative with $1.0 million going to
    the National MPA Center for natural and social science work and $.4
    million earmarked for the Pacific Council to conduct stakeholder work.
    Preparation of a supporting framework for collaboration between the
    stakeholders, as well as execution of the first comprehensive inventory
    and assessment of existing MPAs in U.S. waters are critical to the
    success of the program and cannot be adequately carried out without
    additional monies beyond those proposed by the Administration.
                Coral Reefs Coral Reef Conservation
        Audubon recommends that the Congress supplement the
    Administration's request of $30.2 million for coral reef conservation
    by an additional $2.0 million. Support for continued monitoring,
    mapping and restoration activities, especially those identified by the
    Interagency Coral Reef Taskforce are critical. Audubon suggests that
    the new monies be directed to the Coral Reef Conservation Fund as
    established under the Coral Reef Conservation Act of 2000. This program
    leverages additional money through public-private partnerships for on-
    the-ground coral reef conservation activities.
                National Marine Sanctuaries Program
        Audubon supports the Administration's fiscal year 2003 request of
    $10 million for construction of facilities to educate the public about
    the ocean and the importance of special places in the sea as well to
    reduce the operations and maintenance backlog. The Administration's
    request of $35.6 million for sanctuary operations is below what is
    needed to inventory natural and cultural resources, maintain facilities
    and equipment, and effectively implement and enforce management plans.
    Audubon recommends that the subcommittee provide an additional $2.0
    million over the Administration's request ($37.6 million) for sanctuary
    operations.
        Mr. Chairman and Members of the Committee, thank you for providing
    Audubon the opportunity to comment on funding priorities for the
    National Marine Fisheries Service and the National Ocean Service. I
    understand that it is a large agenda, but the problems facing America's
    marine resources are significant. We look forward to working with you
    to secure a legacy of living oceans for future generations.
                                     ______

                   Prepared Statement of the American Rivers

        This year, American Rivers was joined by over 600 local, regional
    and national conservation organizations \1\ from all 50 states in
    calling for significantly increased funding for the following programs
    in the Commerce, Justice, State and the Judiciary (CJS) Appropriations
    bill. I urge that these requests be incorporated in the CJS
    Appropriations bill for fiscal year 2003.
    ---------------------------------------------------------------------------
        \1\ These groups have endorsed ``The River Budget 2003'', a report
    of national funding priorities for local river conservation. A list of
    groups endorsing the River Budget can be viewed at http://
    www.americanrivers.org/riverbudget/default.htm.
    ---------------------------------------------------------------------------
             federal salmon plan for the columbia and snake rivers
        Several Members of Congress from the Northwest, as well as the
    Administration, have pledged to work to restore twelve Endangered
    Species Act listed stocks of Snake and Columbia river salmon without
    partially removing the lower four Snake River dams. Congress can help
    honor that commitment by funding the necessary salmon recovery
    measures. More than a year since the release of the 2000 Federal Salmon
    Plan for the Columbia and Snake rivers, federal agencies have failed to
    fulfill three-quarters of its requirements.
        The Salmon Plan relies primarily on improving tributary and estuary
    habitat and reforming hatchery and harvest practices. While most
    fisheries scientists and conservationists believe that partial removal
    of the lower Snake River dams must be the cornerstone of a larger
    strategy to recover Snake River salmon, many elements of the Salmon
    Plan are also necessary to achieve salmon recovery.
        If the Salmon Plan's non-breach recovery package is not funded and
    implemented, or if these actions do not yield the needed biological
    benefit for Snake River stocks, the plan contemplates seeking
    congressional authorization--as soon as next year--to partially remove
    the four lower Snake River dams.
        So far, Salmon Plan implementation has fallen well behind schedule,
    due in part to inadequate federal funding. Full funding for fiscal year
    2003 will require $455.4 million distributed among nine different
    federal agencies through four different appropriations bills. The CJS
    Appropriations bill governs funding for the National Marine Fisheries
    Service (NMFS), which is charged with pursuing and administering the
    Salmon Plan's crucial science and monitoring activities, as well as
    implementing hatchery and harvest reform measures. The administration
    has proposed increasing the NMFS budget for Columbia River salmon by
    nearly 50 percent this year, to $36.6 million. While this increase
    would be helpful, internal NMFS estimates call for funding NMFS
    Columbia Basin salmon programs at nearly twice the level proposed by
    the Administration. To ensure full development of the scientific
    standards, reforms, and restoration activities required by the Federal
    Salmon Plan, Congress should fund NMFS Columbia Basin salmon programs
    at $69.8 million.
                      pacific coastal salmon recovery fund
        Pacific salmon are a national treasure with enormous economic,
    cultural, and environmental significance in the Pacific states of
    Washington, Oregon, California, Idaho, and Alaska. A century ago,
    salmon were an anchor of the region's economy. Unfortunately, past and
    present mismanagement of our rivers, lands, and salmon fisheries have
    caused populations of salmon to decline dramatically over the past
    century, and 26 runs of Pacific salmon and steelhead are now listed
    under the Endangered Species Act.
        One important program aimed at restoring imperiled runs of chinook,
    coho, sockeye, and chum salmon, as well as steelhead trout, is the
    Pacific Coastal Salmon Recovery Fund, funded through the National
    Oceanic and Atmospheric Administration. For the past three years, this
    program has provided much-needed assistance to state, local, and tribal
    governments in Washington, Oregon, California, and Alaska for salmon
    recovery projects. This year we urge Congress to make the State of
    Idaho and Snake River salmon and steelhead eligible to benefit from
    this program as well.
        By substantially increasing funding for the Pacific Coastal Salmon
    Recovery Fund in fiscal year 2003, Congress can help preserve this
    economically, culturally, and ecologically valuable resource and help
    the Northwest states and local communities to adopt and embrace the
    measures needed to restore Pacific salmon and steelhead. Restoring
    salmon will also allow the United States to satisfy treaty obligations
    with Northwest Indian tribes and Canada.
        We urge Congress to fund the Pacific Coastal Salmon Recovery Fund
    at $200 million.
                         fisheries habitat restoration
        The fisheries habitat provided by estuaries and coastal wetlands
    serves many essential functions for communities across the nation.
    Eighty to 90 percent of all recreational fish catch and 75 percent of
    all commercial harvest depends upon healthy coastal and estuarine
    habitats. More than half the coastal wetlands in the lower 48 states
    have been lost, and almost 40 percent of estuarine habitat has been
    impaired by damming and diverting countless rivers and streams.
        The Fisheries Habitat Restoration program, funded through the
    National Oceanic and Atmospheric Administration (NOAA) Restoration
    Center, reaches out to local constituencies to accomplish on-the-
    ground, community-based projects to restore estuaries and coastal
    habitats. Partnerships and local involvement are fundamental to the
    success of this program. Partners typically match federal dollars 1:1
    and leverage those dollars up to 10 times more through state and local
    participation. To date, the program has funded 179 projects in 25
    states, promoting fishery habitat restoration in coastal areas with a
    grassroots, bottom-up approach.
        We urge Congress to provide the NOAA Fisheries Habitat Restoration
    Program with $18,000,000 to help more communities restore and protect
    and restore the health of their estuaries and coastal habitats.
                             hydropower relicensing
        The National Marine Fisheries Service (NMFS) would greatly benefit
    from additional funding to address the growing number of hydropower
    dams that need renewal of their operating licenses from the Federal
    Energy Regulatory Commission (FERC). Under the Federal Power Act, NMFS
    plays a role in setting license conditions to protect and conserve
    anadromous (sea-run) fisheries such as Pacific and Atlantic salmon,
    steelhead and sea-run cutthroat trout, and shad. Licenses are nearing
    expiration at hundreds of dams around the country, and workloads are
    increasing for NMFS and other resource agencies. Increasing NMFS's
    limited hydropower relicensing budget would help ensure a more
    efficient licensing process, benefit the hydropower industry, and
    further efforts to protect and restore our nation's anadromous
    fisheries. Congress should provide NMFS with a $2 million increase to
    its Habitat Conservation line item specifically for hydropower
    relicensing.
                                     ______

       Prepared Statement of the National Recreation and Park Association

        The National Recreation and Park Association appreciates the
    opportunity to comment on programs administered by the departments of
    Commerce, Justice, and State. As the largest single provider of non-
    school recreation services in the country, public park and recreation
    entities offer youth in underserved communities, including individuals
    with disabilities, expansive opportunities to engage in positive,
    enriching activities, learning, and community service. Collectively,
    recreation services are provided at over 80,000 sites by a combination
    of professionally and technically trained staff supplemented by
    volunteers. In many jurisdictions public parks and recreation
    coordinate services with law enforcement agencies, schools, and social
    services agencies, resulting in effective prevention and crime
    reduction.
        With this background in mind, the Association urges the
    Subcommittee to consider the following.
                                recommendations
        Reinstatement of authorized funds for the Technology Opportunities
    Program within the Department of Commerce. The digital divide remains a
    serious impediment to communications and learning for millions of
    Americans. Increasingly, but only in small increments, youth and adults
    are gaining access to these technologies and services at local public
    park and recreation sites that also serve as community technology
    centers. Through these opportunities individuals are developing skills
    required for employment and living in the 21st Century.
        Inclusion of public parks and recreation as local eligible agencies
    to receive Justice Assistance Grant (JAG) program funds. The
    Administration proposed that the JAG program replace the Byrne Formula
    Grant Program and the Local Law Enforcement Block Grant program. The
    Administration also proposed that $15 million of JAG funds be set aside
    to support citizen volunteer programs to improve communities' terrorism
    preparedness. Public park and recreation agencies are already
    coordinating disaster preparedness activities, including terrorism
    preparedness. Public park and recreation agencies also coordinate youth
    programs within public housing communities. The Local Law Enforcement
    Block Grant (LLEBG) program of fiscal year 2002 included an earmark of
    $60 million for Boys and Girls clubs in public housing communities. Yet
    public recreation centers run by local governments in these same
    communities are not eligible for these funds. Public recreation and
    park services are typically more far-reaching then individual private
    groups. Thus, they are extremely effective at improving protective
    factors for youth and play a pivotal role in crime prevention. Public
    services are typically jurisdiction-wide including services to
    individuals in public housing communities. The subcommittee should
    specifically reference public agencies as being just as instrumental as
    Boys and Girls clubs in reducing crime and improving youth development
    in public housing communities. We ask the Subcommittee to include
    public recreation and park agencies as eligible entities to receive JAG
    or LLEBG funds.
        An increase in funding for the Juvenile Justice and Delinquency
    Prevention Title V program to $130 million. The Subcommittee reported
    this level of funding for fiscal year 2002. This year, with three
    earmarks of $32 million, only $63 million of Title V funds are actually
    available for the core prevention activities, including public
    recreation, authorized by the Juvenile Justice and Delinquency
    Prevention Act of 1973.
        An increase in Title IID Gang Prevention and Intervention funds to
    $20 million would bolster prevention efforts nationwide. For each youth
    diverted from incarceration, the government saves approximately $43,000
    each year. Prevention services are fully cost-effective; they assist
    youth in developing individual capacities and ability to contribute to
    society.
        Restoration of funds for the Juvenile Accountability Incentive
    Block Grants (JAIBG) program from $215 million to $250 million. The
    Administration's proposed use of these funds includes an earmark of $75
    million for Project Child Safe trigger locks, leaving only $235 million
    for other activities. Legislation reported in the 107th Congress would
    authorize the utilization of JAIBG funds to establish accountability-
    based programs that reduce recidivism. Graduated sanctions would
    include: counseling, restitution, community service, or supervised
    probation. Park and recreation agencies already work with law
    enforcement officials to develop accountability-based programs and
    graduated sanctions for youth offenders.
                     perspectives on programs and services
        Youth offenders are four times more likely than non-offending youth
    to commit suicide. Former Surgeon General David Satcher, M.D. observed
    that up to two-thirds of youth in the juvenile justice system actually
    suffer from mental health problems. Higher levels of physical activity
    are associated with lower levels of mental health among young people,
    including anxiety, depression and stress. Research suggests that
    adolescents are also less likely to use substances, including tobacco,
    if they participate in physical activity programs that incorporate life
    skills (not boot camps). The more time youth spend being highly active,
    the greater their self-efficacy and self-esteem are found to be.
        Public park and recreation services emphasize active recreation and
    the contributions of youth to communities through service-learning
    projects and youth advisory committees/councils. Often park and
    recreation agencies collaborate with law enforcement and social service
    agencies. Programs of this type empower youth and frequently spur the
    development of community-wide plans to address developmental,
    vocational, and academic needs of youth as well as their needs for
    health resources.
        Researchers for the 2002 National Research Council's Community
    Programs to Promote Youth Development study assert that workforce
    development programs help youth avoid substance abuse, adolescent
    pregnancy, school failure, and delinquency. Park and recreation-
    sponsored workforce development programs, based on proven practices,
    provide urban youth with opportunities to connect with caring adults,
    to develop job skills, and to contribute to their communities. But
    these programs need to include technology skills in order to help youth
    leave poverty through employment; thus the Technology Opportunities
    Program is critical.
        The Parks and Recreation Department of McAllen, Texas, for example,
    operate a computer center in collaboration with the Public Library
    Department. These agencies work together to make classes in a variety
    of ``computer use topics'' available throughout the year to underserved
    populations. Also in Texas, the Austin Park and Recreation Department
    hosts a computer technology center where underserved youth use the
    technologies available to make films about their lives. At a library
    outreach/computer center in North Aurora, Colorado, Parks and
    Recreation for People sponsored a ``Teen Library Corps'' (TLC) to help
    users on the computers, and assist customers with library card
    applications. In addition, the park and recreation department in Taos,
    New Mexico works with a local non-profit, La Plaza Telecommunity, to
    make computers with Internet access available for both adult and youth
    use. These programs are extremely popular and illustrate innovations
    that could be expanded with the help of the Technology Opportunities
    Program. The skills individuals learn at community technology centers
    will enable them to be more competitive for technology based private
    and public sector jobs.
        With the assistance of federally sponsored delinquency prevention
    and technology programs, public park and recreation agencies, staff,
    and civic leaders can strengthen their collective commitment to
    creative, results-oriented programs for underserved communities. The
    Subcommittee can help youth that have access to vital community
    resources to become productive citizens.
        National Recreation and Park Association contacts: Erica Shane
    Hamilton, Policy Associate and Barry Tindall, Director of Public
    Policy, 202/887-0290, nrpapolicy@aol.com.
                                     ______

         Prepared Statement of The Humane Society of the United States
        As the largest animal protection organization in the country, we
    appreciate the opportunity to provide testimony to the Appropriation
    Subcommittee on Commerce, Justice, State, and the Judiciary on fiscal
    year 2003 funding items of great importance to The Humane Society of
    the United States and its more than 7 million supporters nationwide.
    Protection For Right Whales
        Right whales are arguably the most endangered whale species in U.S.
    jurisdiction. The Scientific Committee of the International Whaling
    Commission has acknowledged the need for urgent action to reduce human-
    related causes of mortality in right whales--specifically ship strikes
    and entanglement in fishing gear. The HSUS supports the need for
    additional research and action to protect this fragile species. We
    request $1 million to be allocated to the Department of Transportation
    for the purpose of developing and implementing regulations that would
    either shift shipping lanes to areas with less risk to right whales or
    slow ship speeds through areas in which right whales are known to
    congregate. We ask that $1.5 million be directed to the Department of
    Commerce, National Marine Fisheries Service, for the purpose of
    establishing cooperative enforcement agreements with the States of
    Florida, Georgia, Rhode Island, Massachusetts and Maine. Providing
    funds to assist states in enforcing fishery compliance with federally
    mandated risk reduction measures is important to assuring that
    projected risk reductions are realized. In addition, $2 million should
    be directed to fund research into additional risk reduction measures
    that can be used by commercial fisheries. This money is for several
    purposes including: funding a workshop that would incorporate
    engineering and technical expertise from outside the normal sphere of
    fishery technology to help generate innovative ideas for modifying
    fishing gear; further development of modeling that can help predict
    right whale aggregations; funding of field trials and implementation of
    promising technological developments; and additional aerial surveys of
    the mid-Atlantic right whale migratory corridor.
    Protection For Bottlenose Dolphins
        The HSUS also requests that $1.5 million be added to the Department
    of Commerce, National Marine Fisheries Service budget for the purpose
    of expanding research on bottlenose dolphins in the mid-Atlantic. These
    monies would fund expanded survey efforts to estimate population
    abundance, increase biopsy sampling and telemetry efforts to further
    refine understanding of stock boundaries; and to fund additional
    experiments with innovative fishing gear to reduce risk of
    entanglement.
        An additional $1 million should be directed to the National Marine
    Fishery Service to increase the level of coverage of marine mammal
    fishery observers or alternate platforms for quantifying mortality
    levels resulting from interactions with fishing gear.
        We need more and better information if we are going to be
    successful is saving these magnificent animals.
        Thank you in advance for your consideration of our views and we
    would be pleased to talk with you or your staff about our
    recommendations.
                                     ______

    Prepared Statement of the International Research Institute for Climate
                                   Prediction

        Mr. Chairman, thank you for this opportunity to submit testimony
    for the Subcommittee's consideration concerning the fiscal year 2003
    Appropriations Bill for the Office of Global Programs within NOAA/
    Department of Commerce.
        Columbia University's Earth Institute houses the International
    Research Institute for Climate Prediction, (IRI), located at the
    Lamont-Doherty Campus of Columbia University. The IRI was selected
    through an intense, competitive process in 1994 by NOAA (1) to produce
    long range, seasonal to interannual forecasts based on major climate
    events such as El Nino, and (2) to develop experimental climate models
    for improvement of climate forecasting and predictions on a global and
    regional scale. NOAA last year extended the original five-year
    agreement to include additional long- range goals and research targets.
        The requests in this statement represent the generic need for the
    maintaining ongoing programs and additional resources needed for NOAA
    and its extramural research collaborators to advance the science and
    accuracy of climate and weather forecasting.
                                    summary
        The components of this statement are:
        (1) Maximum support for the Office of Global Programs, funded at a
    minimum at the fiscal year 2003 request level of $72.835 million;
        (2) Funding of $20 million for a Supercomputer to be shared by
    universities/institutions for high end climate modeling and research;
        (3) Funding of $20 million for a Supercomputer for NOAA to be used
    as a backup for National Weather Service and other NOAA forecasting
    purposes, including research.
                         maximum support for ogp budget
        This Committee has supported full funding of the budget request of
    the OGP through the past several appropriations acts. Built in to the
    OGP budget request are the ongoing research initiatives of several
    multiyear efforts, such as the IRI. To maintain continuity and the
    essential research core of NOAA's multi-tiered agenda, assurance of
    continuity and a stable base of funding are paramount. All of NOAA's
    intramural and extramural research initiatives have been determined and
    planned by nonpartisan, scientific experts whose goals have been to
    improve the science, accuracy and lead-time of long range climate
    forecasts, and to improve regional warning systems through down-scale
    modeling from IRI global forecasts.
        The importance of maintaining and sustaining this comprehensive,
    integrated and balanced approach to understanding our climate system
    will permit improved and longer lead time forecasting. This in turn
    will allow better planning for the effects of climate forced events,
    resulting in saved lives, minimized property losses, and improved
    planning in resource allocation and crop planting.
        This request is for maximum funding for NOAA's OGP activities. At a
    minimum, the level for consideration should begin with the fiscal year
    2003 request level of $72.835 million.
                            high end supercomputing
        Current climate modeling in the United States is limited by
    computer capacity.
        The Japanese and European advances in climate modeling and
    forecasting have been enabled through the availability of government
    funded and provided Supercomputers. U.S. climatologists have now
    reached the capacity of currently utilized computer systems in the
    high-end tasks associated with water and atmospheric modeling. The
    ability to process massive amounts of data can be only achieved through
    the acquisition of vector analysis Supercomputers. Vector analysis
    Supercomputers are capable of managing and analyzing large databases,
    such as those involved in multiple climate modeling on a worldwide
    scale.
        Vector analysis computers were not available to U.S. government-
    funded institutions until recently, when Cray gained the U.S. marketing
    rights for NEC (Japanese manufactured) vector analysis Supercomputers.
    The current United States approach, using Massive Parallel Processing
    (MPP) technology, cannot process the whole of computer modeling tasks
    associated with water and atmospheric data on a global scale. The
    inherent limitations of the MPP computer architecture cannot embrace
    the data as one complex set of variables and adequately process the
    multiple paths and variables associated with global modeling.
        Generically, scientists acknowledge that the facility must be
    located apart and distinctly separate from NOAA's ongoing computer
    functions, due to the need for a dedicated Supercomputer specifically
    configured for high-end climate and modeling and research. A shared
    computer with NOAA for NOAA's use, whether part-time or back up, does
    not provide the capability and sustained processing power needed for
    the demands associated with high-end climate modeling. This request for
    $20 million in fiscal year 2003 is for a computer to be competitively
    bid and awarded, and for institutions, like the IRI, to have access for
    sharing the use of Supercomputing capacity.
                     national weather service supercomputer
        There is widespread recognition among the extramural research
    community for the necessity of improved capacity and backup among
    computers for the National Weather Service. There is also a recognized
    and documented need in NOAA for a backup computer for the NWS. Last
    year's shutdown of NOAA's main computer, and subsequent loss of
    forecasting ability, left the NWS unable to provide the services upon
    which U.S. citizens, state and local governments, and private industry
    have come to rely. The necessity of a backup is clear, and in times of
    non-use as a backup, NOAA's internal research demands for this capacity
    exist. This statement concerning NOAA's needs represents consensus
    among the extramural community for additional resources and
    Supercomputer capacity for NOAA and the NWS.
        Thank you for this opportunity to present and articulate the needs
    and request for climate modeling and research in the United States.
                                     ______

                             DEPARTMENT OF JUSTICE

        Prepared Statement of the National Congress of American Indians

        On behalf of the National Congress of American Indians (NCAI) and
    its more than 200 member tribal nations, we are pleased to have the
    opportunity to present written testimony on fiscal year 2003
    appropriations for Commerce-Justice-State.
        The tragic events of September 11 brought forth the strength and
    the determination of our nation to survive in the face of adversity. It
    is this same spirit that has carried Indian Country through years of
    annihilation and termination. It is this same spirit that has propelled
    Indian Nations forward into an era of self-determination. And it is in
    this same spirit of resolve that Indian Nations come before Congress to
    talk about honoring the federal government's treaty obligations and
    trust responsibilities throughout the fiscal year 2003 budget process.
        The federal trust responsibility represents the legal obligation
    made by the U.S. government to Indian tribes when their lands were
    ceded to the United States. This obligation is codified in numerous
    treaties, statutes, Presidential directives, judicial opinions, and
    international doctrines. It can be divided into three general areas--
    protection of Indian trust lands; protection of tribal self-governance;
    and provision of basic social, medical, and educational services for
    tribal members.
        NCAI realizes that Congress must make difficult budget choices this
    year. As elected officials, tribal leaders certainly understand the
    competing priorities that members of Congress must weigh over the
    coming months. However, the fact that the federal government has a
    solemn responsibility to address the serious needs facing Indian
    Country remains unchanged, whatever the economic or political climate
    may be. We at NCAI urge you to make a strong commitment to meeting the
    federal trust obligation by fully funding those programs that are vital
    to the creation of vibrant Indian Nations. Such a commitment, coupled
    with continued efforts to strengthen tribal governments and to uphold
    the government-to-government relationship, will truly make a difference
    in helping us to create stable, diversified, and healthy economies in
    Indian Country.
        NCAI's statement focuses on our key areas of concern surrounding
    the President's budget request. Of course, there are numerous other
    programs and initiatives within the Commerce-Justice-State
    appropriations bill that are important to American Indians and Alaska
    Natives. Attached to this testimony is a breakdown of key programs for
    which we urge your support at the highest possible funding level as the
    appropriations process moves forward.
                                 public safety
        More than 200 police departments, ranging from tiny departments
    with only two or three officers to those with more than 200 officers,
    help to maintain public safety in Indian Country. According to a recent
    Justice Department \1\ study, the typical Indian Country police
    department has no more than three and as few as one officer patrolling
    an area the size of the state of Delaware.
    ---------------------------------------------------------------------------
        \1\ U.S. Department of Justice, Office of Justice Programs,
    National Institute of Justice, Policing on American Indian
    Reservations, September 2001.
    ---------------------------------------------------------------------------
        The same study found that inadequate funding is ``an important
    obstacle to good policing in Indian Country.'' According to DOJ, the
    appropriate police coverage comparison may be between tribal
    departments and communities with similar crime problems. Because the
    violent crime rate in Indian Country is more than double the national
    average, we should compare our police coverage with large urban areas
    with high violent crime rates. According to the Bureau of Justice
    Statistics, cities like Baltimore, Detroit, and Washington have high
    police-to-citizen ratios of 3.9 to 6.6 officers per 1,000 residents. On
    the other hand, virtually no tribal police department has more than 2
    officers per thousand residents.
        We can certainly point to the lack of an adequate police presence
    as a contributing factor to the crime rate that plagues many of our
    communities. The Bureau of Justice Statistics has just released
    findings that the violent crime rate for American Indians and Alaska
    Natives is twice as high as the rate reported by Hispanics and Whites
    and one and one-half times that of African-Americans.
        Another contributing factor is our extremely limited jails space in
    which to house adult and juvenile offenders. According to the Bureau of
    Justice Statistics, tribal jail capacity exceeded 118 percent in 2000,
    an increase of seven percent from the previous year.
        Given that the Justice Department itself just published a study
    that justifies the need to increase resources for Indian Country law
    enforcement, it is astounding to see that our law enforcement programs
    actually took a $40 million direct hit in the fiscal year 2003 budget
    request. The budget would eliminate all $35 million in tribal jail
    construction funding and would cut $5 million in tribal law enforcement
    personnel funds. We strongly oppose these cuts, and request an increase
    to the fiscal year 2002 funding levels for Indian Country law
    enforcement programs.
                              economic development
        The Census Bureau's Poverty in the United States for 2000 showed
    that American Indians and Alaska Natives remain at the bottom of the
    economic ladder--with 25.9 percent of our population falling below the
    poverty line. This compares to an 11.9 percent poverty rate for all
    races combined. Today, unemployment rates in Indian Country are the
    highest in the nation, sometimes topping 50 percent. The development of
    new and diverse businesses in Indian Country is one cornerstone of
    self-sufficiency.
        Many economic development programs that assist tribes would be cut
    or eliminated in the budget. The request for the Small Business
    Administration would eliminate One Stop Capital Shops, Micro-Loan
    Technical Assistance, New Markets Venture Capital, and BusinessLINC.
    The Administration also failed to request any funding whatsoever to
    establish the Office of Native American Business Development, as
    authorized in the Native American Business Development, Trade
    Promotion, and Tourism Act of 2000.
        Furthermore, programs designed to help tribes close the ``dial-tone
    divide'' and improve the telecommunications infrastructures in their
    communities are eliminated outright or severely reduced in the
    President's budget. Nowhere is the lack of telecommunications
    infrastructure more apparent than in Indian Country. According to
    Commerce Department statistics, nearly forty percent of rural Native
    American households lack basic telephone service, and less than ten
    percent have a personal computer or any kind of access to the Internet.
        Since 1994, the Technology Opportunities Program (TOP) has helped
    to improve the technology infrastructure in American Indian and Alaska
    Native communities. In fiscal year 2002, a record $4.23 million was
    provided to projects directly benefiting Indian Country. These grants,
    combined with contributions from the private sector and state and local
    organizations, extend the benefits of advanced telecommunications
    technologies to underserved communities.
        Reducing or eliminating economic development tools for Indian
    Country is unthinkable in the face of the compelling needs that exist.
    NCAI has approved numerous resolutions \2\ calling for increased
    support of economic development programs within the Small Business
    Administration and Department of Commerce, and we urge that these
    programs and others that are designed to promote tribal community
    development be fully funded.
    ---------------------------------------------------------------------------
        \2\ See attached resolutions SPO-01-019, SPO-01-020, SPO-01-022,
    SPO-01-024.
    ---------------------------------------------------------------------------
                                   conclusion
        Thank you for this opportunity to present written testimony
    regarding Commerce-Justice-State appropriations programs that benefit
    Indian Country. The National Congress of American Indians calls upon
    Congress to fulfill the federal government's fiduciary duty to American
    Indians and Alaska Native people. This responsibility should never be
    compromised or diminished because of any political agenda or budget cut
    scenario. Tribes throughout the nation relinquished their lands and in
    return received a trust obligation, and we ask that Congress maintain
    this solemn obligation to Indian Country and continue to assist tribal
    governments as we build strong, diverse, and healthy nations for our
    people.
     Attachment A.--Commerce-Justice-State Appropriations Benefiting Tribes
                             department of commerce
        The budget request for the Commerce Department is approximately
    $5.2 billion, $14 million less than the estimate for the current year.
    Like last year, the Administration has proposed elimination of the
    Technology Opportunities Program, which in fiscal year 2001 provided
    $4.2 million in competitive grants to tribes and tribal organizations
    for the purpose of expanding telecommunications and technology in their
    communities. No funds were requested to establish the Office of Native
    American Business Development, as authorized in the Native American
    Business Development, Trade Promotion, and Tourism Act of 2000.

                                                [In millions of dollars]
    ----------------------------------------------------------------------------------------------------------------
                                                                        Fiscal year     Fiscal year     Fiscal year
                                Commerce                               2001 enacted    2002 enacted    2003 request
    ----------------------------------------------------------------------------------------------------------------
    Economic Development Administration.............................           412.0           335.0           317.2
    Minority Business Development Agency............................            27.0            28.4            29.8
    Public Telecommunications Facilities............................            43.5            43.5            43.6
    Technology Opportunities Program................................            43.5            15.5  ..............
    ----------------------------------------------------------------------------------------------------------------

        NCAI Resolution #SPO-01-020--Supports a $300 million increase to
    the Economic Development Administration in fiscal year 2003 to support
    increased financial assistance to tribal economic and development and
    planning projects, including tribal manufacturing.
        NCAI Resolution #SPO-01-022--Supports funding for the Office of
    Native American Business Development.
        Department of Justice Indian Country law enforcement programs took
    a hit in the fiscal year 2003 DOJ request, with the Administration
    proposing to eliminate all $35 million in tribal jail construction
    funding and to cut $5 million in tribal law enforcement personnel
    funds.

                                                [In millions of dollars]
    ----------------------------------------------------------------------------------------------------------------
                                                                        Fiscal year     Fiscal year     Fiscal year
                                   DOJ                                 2001 enacted    2002 enacted    2003 request
    ----------------------------------------------------------------------------------------------------------------
    U.S. Attorneys..................................................            5.00  ..............  ..............
    Jail Construction...............................................           33.93           35.19  ..............
    Tribal Courts...................................................            7.98            7.98            7.98
    Alcohol and Substance Abuse.....................................            4.99            4.99            4.99
    Juvenile Justice \1\............................................           12.47           12.47           12.47
    Law Enforcement Personnel (COPS Grants) \2\.....................           40.00           35.00           30.00
    ----------------------------------------------------------------------------------------------------------------
    \1\ Fiscal year 2002 Juvenile Justice Funds also can be used for prevention activities focusing on alcohol and
      drugs.
    \2\ As in previous years, fiscal year 2002 law enforcement personnel funds can be used for equipment and
      training.

                         small business administration
        The fiscal year 2003 request for the SBA is $798 million, down from
    $1.1 billion in fiscal year 2002 spending. While funding for Small
    Business Development Centers would rise under the President's proposal,
    many other programs that assist tribes would be eliminated.

                                                [In millions of dollars]
    ----------------------------------------------------------------------------------------------------------------
                                                                        Fiscal year     Fiscal year     Fiscal year
                                   SBA                                 2001 enacted    2002 enacted    2003 request
    ----------------------------------------------------------------------------------------------------------------
    Small Business Development Centers..............................              88              88             161
    One Stop Capital Shops..........................................               3  ..............  ..............
    Micro-Loan Technical Assistance.................................              20              18  ..............
    New Markets Venture Capital.....................................              37  ..............  ..............
    BusinessLINC....................................................               7               2  ..............
    ----------------------------------------------------------------------------------------------------------------

        NCAI Resolution #SPO-01-019--Support $25 million for SBA Office of
    Native American Affairs in fiscal year 2003 to provide training and
    technical assistance and to develop and expand Tribal Business
    Information Centers.
        NCAI Resolution #SPO-01-024--Supports $750,000 in fiscal year 2003
    to the SBA Office of Women-Owned Businesses to establish an American
    Indian, Alaska Native, and Native Hawaiian Women Entrepreneur Outreach
    and Technical Assistance Pilot Project.
                                     ______

     Prepared Statement of the Middle Atlantic-Great Lakes Organized Crime
                            Law Enforcement Network
        The Regional Information Sharing Systems (RISS) Program
    respectfully requests that Congress, as authorized in the USA PATRIOT
    ACT of 2001 (Public Law 107-56) appropriate for fiscal year 2003, $50
    million to continue their support in combating drug trafficking and
    organized crime.
        These funds will enable RISS to continue its mandate of assisting
    law enforcement in identifying, targeting, prosecuting, and removing
    criminal conspirators involved in terrorism activity, drug trafficking,
    organized criminal activity, criminal gangs, and violent crime that
    span multijurisdictional boundaries. Funds will allow RISS to continue
    to support the investigation and prosecution efforts of almost 6,000
    local, state, and federal law enforcement member agencies across the
    nation comprising 675,000 sworn law enforcement personnel.
        Through funding from Congress, RISS has implemented and operates
    the only secure Web-based nationwide network--called riss.net--for
    communications and sharing of criminal intelligence by local, state,
    and federal law enforcement agencies. Funds will allow RISS to upgrade
    the technology infrastructure and resources to support increased use
    and reliance on the system by member law enforcement agencies and
    support the integration of other systems connected to riss.net for
    information sharing and communication. Using Virtual Private Network
    technology, the law enforcement users access the public Internet from
    their desktop and have a secure connection over the private riss.net
    intranet to all RISS criminal intelligence databases and resources.
    RISS member law enforcement agencies accessed riss.net an average of
    3.6 million times per month during fiscal year 2001. Riss.net is a
    proven, highly effective system that improves the quality of criminal
    intelligence information available and puts it in the hands of the law
    enforcement officers to make key decisions at critical points in their
    investigation and prosecution efforts.
        The Office of Justice Programs (OJP), Regional Information Sharing
    Systems (RISS) is a federally funded program comprised of six regional
    intelligence centers. The six centers provide criminal information
    exchange and other related operational support services to local,
    state, and federal law enforcement agencies located in all fifty
    states, the District of Columbia, U.S. territories, Canada, England,
    and Australia. These centers are:
      --Middle Atlantic-Great Lakes Organized Crime Law Enforcement Network
            (MAGLOCLEN): Delaware, District of Columbia, Indiana, Maryland,
            Michigan, Pennsylvania, Ohio, New Jersey, and New York, as well
            as Canada and England.
      --Mid-States Organized Crime Information Center (MOCIC): Illinois,
            Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota,
            South Dakota, and Wisconsin, as well as Canada.
      --New England State Police Information Network (NESPIN): Connecticut,
            Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont,
            as well as Canada.
      --Regional Organized Crime Information Center (ROCIC): Alabama,
            Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi,
            North Carolina, Oklahoma, South Carolina, Tennessee, Texas,
            Virginia, and West Virginia, as well as Puerto Rico and the
            U.S. Virgin Islands.
      --Rocky Mountain Information Network (RMIN): Arizona, Colorado,
            Idaho, Montana, Nevada, New Mexico, Utah, and Wyoming, as well
            as Canada.
      --Western States Information Network (WSIN): Alaska, California,
            Hawaii, Oregon, and Washington, as well as Canada, Guam, and
            Australia.
        Since the September 11th attacks, the idea of putting the right
    information in the right hands has been offered as a solution to the
    war on terrorism. Because of this, information technology will play a
    key role. The RISS secure Intranet; a proven, trusted law enforcement-
    sharing network will play a vital role in responding to terrorist
    activity.
        RISS is also a force multiplier in responding to increased violent
    criminal activity by street gangs, drug traffickers, sophisticated
    cyber criminals, and emerging criminal groups that require a
    cooperative effort by local, state, and federal law enforcement. There
    is a rising presence of organized and mobile narcotics crime,
    distinguished by increases in drug-related emergency room incidents,
    increases in drug purities (especially heroin, methamphetamine,
    ecstasy, cocaine, GHB, and marijuana), and increasing communications
    sophistication by the criminal networks. Interagency cooperation has
    proven to be the best method to combat the increasing criminal activity
    in these areas. The RISS centers are filling law enforcement's need for
    rapid, but controlled sharing of information and intelligence
    pertaining to known or suspected drug traffickers and criminals.
    Congress funded the RISS Program to address this need as evidenced by
    its authorization in the Anti-Drug Abuse Act of 1988 and the USA
    PATRIOT ACT of 2001.
        The success of RISS has been acknowledged and vigorously endorsed
    by the International Association of Chiefs of Police (IACP), as well as
    other national law enforcement groups such as the National Sheriff's
    Association (NSA) and the National Fraternal Order of Police (NFOP).
    These groups have seen the value of this congressional program to law
    enforcement nationally and have worked with the National Association of
    Attorneys General (NAAG), the National District Attorneys Association
    (NDAA), and the National Criminal Justice Association (NCJA) to further
    strengthen the awareness of RISS. In fact, the National Association of
    Attorneys General passed a resolution calling for full funding for RISS
    and increased funding for the Bureau of Justice Assistance (BJA).
        According to the Executive Working Group for Federal-State-Local
    Prosecutorial Relations, in its publication titled, Toward a Drug Free
    America: A Nationwide Blueprint for State and Local Drug Control
    Strategies, ``Each state should develop a computerized capacity to
    store, collate, and retrieve intelligence and historical information
    concerning drug offenders. Before initiating new computer projects,
    each state should take advantage of existing computerized information
    exchange and pointer systems, such as the Regional Information Sharing
    Systems (RISS). Each state should actively participate in multi-state,
    regional, and national information networking projects.''
        RISS is operating current state-of-the-art technical capabilities
    and systems architecture that allow local, state, and federal law
    enforcement member agencies to interact electronically with one another
    in a secure environment. The RISS system has built-in accountability
    and security. The RISS secure intranet (riss.net) protects information
    through use of encryption, smart cards, Internet protocol security
    standards, and firewalls to prevent unauthorized access. The RISS
    system is governed by the operating principles and security and privacy
    standards of 28 CFR Part 23 (Criminal Intelligence Systems Operating
    Policies). The technical architecture adopted by RISS requires proper
    authorization to access information, but also provides flexibility in
    the levels of electronic access assigned to individual users based on
    security and need-to-know issues. Riss.net supports secure e-mail and
    is easily accessible using the Internet. This type of system and
    architecture is referenced and recommended in the General Counterdrug
    Intelligence Plan (GCIP).
        The GCIP promotes federal, state, local, and tribal law enforcement
    information sharing, and leveraging resources and existing cooperative
    mechanisms. RISS fully supports the GCIP and the following initiatives
    are underway related to action items in the Plan. RISS has entered into
    a partnership with the High Intensity Drug Trafficking Areas (HIDTA) to
    electronically connect all of the HIDTAs to riss.net for communications
    and information sharing. Currently 13 HIDTAs are electronically
    connected as nodes to riss.net and RISS is working to complete the
    connection of the remaining HIDTAs. Seven state agencies are currently
    connected as nodes on riss.net with an additional ten states pending
    connection. The National Drug Intelligence Center (NDIC) is a member of
    RISS and uses the RISS network as a communications mechanism for
    publishing counterdrug intelligence products to federal, state, and
    local law enforcement members. RISS and the El Paso Intelligence Center
    (EPIC) officials entered into a partnership and have electronically
    connected EPIC as a node to riss.net to capture clandestine laboratory
    seizure data from RISS state and local law enforcement member agencies.
    Riss.net has also been recommended by Attorney General Ashcroft as the
    communications link to the ninety-three U.S. Attorney's offices for
    instant communication regarding terrorist activities. RISS needs funds
    to purchase hardware and software to support and integrate these
    systems that improve the accessibility to critical criminal
    intelligence for law enforcement agencies throughout the country.
        RISS continues to promote interagency investigations by improving
    capabilities for member agencies to quickly and easily access RISS
    databases by expanding the enrollment of member agencies for access to
    riss.net through distribution of security hardware and software. Web
    browser technology has been implemented for use by member agencies in
    accessing the RISS intelligence database pointer system and the RISS
    National Gang Database. At the direction of Congress, dial-up (800)
    access capability to the RISS secure intranet will be provided for
    member agencies in geographic areas where access to Internet Service
    Providers is not available. Funds are required to increase the
    distribution of security hardware and software to additional RISS
    member agencies that need electronic access to riss.net.
        In fiscal year 2002, Congress invested $28.3 million in the RISS
    Program. During the past 5 fiscal year funding cycles and up to the
    current time, RISS has furnished case specific support to hundreds of
    local and state police, as well as sheriff departments. These
    investigations have had an unrivaled impact on the local jurisdictions
    of main street America, the grass roots of law enforcement in the
    nation. During this same time period, RISS implemented the secure
    intranet providing Web-based access for communications and information
    sharing to almost 6,000 law enforcement agencies nationwide--a network
    which is now electronically linked to 13 HIDTAs, seven state law
    enforcement systems, and the EPIC Clandestine Laboratory Seizure
    System. The Southwest Border States Anti-Drug Information System
    (SWBSADIS) initiative encompassing the states of Arizona, California,
    New Mexico, and Texas is also integrated with riss.net. RISS is
    currently working to connect the Bureau of Land Management, Department
    of Interior, NW3C, and FINCen to riss.net as nodes. To support this
    increased need to integrate other systems and the increased demand for
    RISS services, RISS is requesting an increase in funding to $50 million
    for fiscal year 2003.
        In view of today's increasing demands on federal, state, and local
    law enforcement budgets, requests for RISS services have risen. The
    Institute for Intergovernmental Research (IIR) report on the RISS
    Program showed that as of December 31, 2001, the number of criminal
    subjects maintained in the RISSIntel intelligence databases for all
    centers combined was 882,679 with 159,035 new subjects being added in
    2001. The combined databases of all six RISS centers also maintained
    data on 1,491,827 locations, vehicles, weapons, and telephone numbers
    for a grand total of 2,374,506 data entries available for search. For
    the twelve-month period January through December 2001, the total number
    of inquiries by law enforcement member agencies to the RISSIntel
    database for all six regional intelligence centers combined was
    618,262. These inquiries resulted in hits or information to assist law
    enforcement agencies in their criminal cases. All RISS centers combined
    delivered 11,169 analytical products to member agencies in support of
    their investigation and prosecution efforts in 2001.
        This support of law enforcement has had a dramatic impact on the
    success of their investigations. Over the three-year period 1999-2001,
    RISS generated a return by member agencies that resulted in 11,772
    arrests, seizure of narcotics valued over $242 million, seizure of
    almost $15 million in currency, and recovery or seizure of property
    valued at over $24 million. In addition, almost $4 million was seized
    through RICO civil procedures. In the 21-year period since 1980 when
    the Program was fully implemented, the RISS Program has assisted its
    member agencies with their investigations. Results of these
    investigations have amounted to over $12.6 billion in recoveries at a
    total cost that approximates 2.52 percent of that amount, or a $40
    return for every dollar spent.
        RISS is continuing initiatives with the Federal Bureau of
    Investigation and with the Bureau of Alcohol, Tobacco and Firearms,
    U.S. Department of the Treasury to assist in their efforts to
    facilitate the exchange of criminal intelligence with state and local
    law enforcement. RISS continues to work with federal and state
    corrections departments to strengthen cooperation and information
    sharing with the law enforcement community, and to maintain a national
    prison gang database to identify prison gang criminal activity, both
    within and outside the prison environment. We have established a
    working relationship with gang investigators across the nation to
    identify and maintain information on violent street gangs, as well as
    their membership, organization structure, migration trends, and their
    propensity for violence.
        RISS has also assisted the Office of Juvenile Justice and
    Delinquency Prevention, and continues to work with federal, state, and
    local agencies in their efforts to combat the menace of drugs on our
    street, and the growing influence of youth gangs in the distribution
    and sale of drugs.
        The Bureau of Justice Assistance administers the RISS Program and
    has established guidelines for provision of services to member
    agencies. The RISS regional intelligence centers are subject to
    oversight, monitoring, and auditing by the U.S. Congress, the General
    Accounting Office, a federally funded program evaluation office; the
    U.S. Department of Justice, Bureau of Justice Assistance; and local
    government units. The Intelligence Systems Policy Review Board also
    monitors the RISS centers for 28 CFR Part 23 compliance. This 28 CFR
    Part 23 regulation places stricter controls on the RISS intelligence
    sharing function than those placed on federal, state, or local
    agencies. Evaluation of RISS center operation has been very positive.
        Full funding of the RISS Program is necessary in order to permit
    membership growth and improve service capabilities to the membership
    nationwide. In the past five years, RISS membership has increased 25
    percent to almost 6,000 local, state, and federal law enforcement
    agencies at present. It is respectfully requested that the Congress
    fully fund the RISS Program as a line item in the congressional budget,
    in the requested amount of $50 million.
        We are grateful for this opportunity to provide the committee with
    this testimony and appreciate the support this committee has
    continuously provided to the RISS Program.
                                     ______

     Prepared Statement of the National, Coordinated Law-Related Education
                                    Program
        I am Lee Arbetman, the Coordinator of the National, Coordinated
    Law-Related Education Program. I am submitting this testimony on behalf
    of Youth for Justice, the National, Coordinated Law-Related Education
    Program (LRE). The National, Coordinated Law-Related Education Program
    received an appropriations earmark for fiscal year 2002 in the amount
    of $1.9 million.\1\ The need for the Program continues to substantially
    exceed the Program's resources. Accordingly, for fiscal year 2003, the
    National, Coordinated Law-Related Education Program respectfully
    requests the Subcommittee's appropriations support at a level of $2.4
    million. In addition to helping LRE to meet the increasing demands on
    the Program, this increased funding level would also (1) allow the
    Program to increase its funding to state LRE programs; and (2) make
    expansion of the Program possible in three critical areas including
    teaching students about terrorism; youth offender reentry programs; and
    school safety.
    ---------------------------------------------------------------------------
        \1\ Ten percent of the fiscal year 2002 earmark will be set aside
    for an independent evaluation of the Program as required by the
    Conference Report accompanying the fiscal year 2002 appropriations act
    for the Departments of Commerce, Justice, and State, the Judiciary and
    Related Agencies.
    ---------------------------------------------------------------------------
     lre/youth for justice--helping young people to identify and implement
                             solutions to violence
        LRE/Youth for Justice is committed to involving young people in
    each state directly in identifying and implementing solutions to this
    nation's epidemic of violence. The Program's approach is to teach young
    people about the law so that they can lead their lives within the law.
    In the last decade, the National Program has reached millions of at-
    risk children and trained thousands of teachers, juvenile justice
    counselors, and law enforcement officials.
        Law-Related Education, despite its name, has nothing whatsoever to
    do with legal or pre-legal training. The National, Coordinated Law-
    Related Education Program has a proven record of success in juvenile
    delinquency and violence prevention. Law-related lessons reach at-risk
    children and juvenile offenders in school and juvenile justice settings
    in urban, suburban and rural environments. Youth for Justice meets its
    goals by developing and maintaining strong, viable LRE centers in each
    state. The National Program leverages a tiny federal investment, $1.9
    million in fiscal year 2002, many times over in private sector and
    state and local money and in in-kind support from the criminal justice
    and juvenile justice communities.
        The program has two components. The first component of the program
    is intervention. This part of the program operates primarily in various
    kinds of juvenile justice facilities. In settings ranging from
    detention centers to training schools and after-care, Law-Related
    Education Programs help youth develop problem-solving, conflict
    resolution, and communication skills in the context of engaging lessons
    that focus on personal responsibility.
        The second component, prevention, operates primarily in elementary
    and secondary schools. When you visit a school involved in this
    program, you are very likely to see a teacher, a judge, a lawyer, the
    town's police chief, a law student or a probation officer working with
    a class of students. In some of the best Youth for Justice classrooms,
    police officers co-teach with classroom teachers on a daily basis.
      the national, coordinated law-related education program is a vital,
                             cost-effective program
        The National, Coordinated Law-Related Education Program is
    comprised of five not-for-profit corporations, each of which is
    recognized nationally and internationally as a leader in the field of
    law and civic education: The American Bar Association's Division for
    Public Education; the Center for Civic Education; the Constitutional
    Rights Foundation; Street Law, Inc.; and the Phi Alpha Delta Public
    Service Center. By combining their expertise and experience as
    teachers, school administrators, juvenile justice professionals,
    attorneys and professors, these five organizations have successfully
    administered the nationwide program.
        Thanks to the continued commitment of this Subcommittee, Youth for
    Justice, the National, Coordinated Law-Related Education Program, has
    built a vital, cost-effective program. This program:
      --Involves young people in identifying and implementing solutions to
            violence;
      --Promotes research-based educational programs that strive for safe,
            disciplined and drug-free schools and communities;
      --Teaches young people acceptable ways to resolve conflicts;
      --Fosters constructive attitudes towards authority figures;
      --Provides young people with meaningful opportunities to serve their
            communities;
      --Promotes understanding of and reasoned commitment to the rule of
            law along with tolerance for varied points of view in a free
            and diverse society; and
      --Helps young people understand the democratic process and develop
            the decision-making and problem-solving skills to enable their
            full participation in that process.
        LRE/Youth for Justice uses technology as a cost-effective way to
    expand its reach to the LRE field. For example, LRE has posted a
    planning guide for its Youth Summits on the Internet as well as free
    competition mock trials and descriptions of and contact information for
    state LRE programs.
        Youth for Justice is committed to providing leadership in the
    national effort to stop the outrage of violence committed by and
    perpetrated against this nation's youth. Each Spring, thousands of
    young people from both the school and juvenile justice settings gather
    with public officials to participate in Youth Summits designed to help
    develop public policy to help prevent violence by and against youth.
    Law-Related Education is an extraordinarily effective prevention
    program, but it is also an extraordinarily effective intervention
    program--Law-Related Education also reaches juvenile offenders in
    halfway houses, detention centers, and other non-school settings.
          expansion of the national program is critical in three areas
        The National, Coordinated Law-Related Education Program has
    identified three areas in which expansion of the National Program is
    critical. In addition to allowing the Program to increase its funding
    to state LRE programs, funding at the $2.4 million level would make
    expansion in the following three areas possible: (1) teaching students
    about terrorism; (2) youth offender reentry programs; and (3) school
    safety.
        Teaching Students About Terrorism.--The expanded program would
    allow state centers to link with homeland security efforts.
    Specifically, the National Coordinated Law-Related Education Program
    would use the national network of statewide LRE centers to provide
    specially developed educational materials for teaching students about
    terrorism, including the constitutional powers of the executive and
    legislative branches in dealing with war and foreign affairs. In
    addition, specially developed educational materials would also address
    the role of the judicial branch in analyzing the tension between the
    compelling need to protect against terrorism while, at the same time,
    protecting individuals' civil liberties.
        Youth Offender Reentry Programs.--Additional funding for fiscal
    year 2003 would allow Youth for Justice to expand its pilot efforts to
    add cutting-edge life skills and civic participation educational
    components to youth offender reentry programs being promoted by the
    U.S. Department of Justice around the country. As part of the
    Department of Justice's efforts to strengthen reentry programs, Youth
    for Justice would customize lesson plans for use in reentry programs in
    correctional settings as well as in community-based settings.
        Increased Focus on School Safety.--The Program also plans to
    increase its focus on school safety through special training for school
    resource officers and other school officials as well as through a
    partnership with the National Resource Center for Safe Schools.
               assistance to state law-related education programs
        Assistance from the National, Coordinated Law-Related Education
    Program continues to enhance state Law-Related Education programs. For
    example--
        South Carolina.--In South Carolina, students participate in mock
    trials, mock congressional hearings through the We the People Program,
    and learn conflict resolution skills from teachers who receive training
    through LRE. In May 2000, the South Carolina Bar hosted the 17th Annual
    National High School Mock Trial Championships in Columbia. In July
    2002, the South Carolina Bar will host the Southeastern Regional We the
    People Summer Institute for classroom teachers. The LRE Division of the
    South Carolina Bar also enjoys collaborative efforts with such groups
    as the South Carolina Department of Education, the South Carolina
    Council for Social Studies, the South Carolina Middle School
    Association, the South Carolina Department of Juvenile Justice, the
    South Carolina Association of School Resource Officers/State
    Association of Crime Prevention Officers, and the South Carolina
    Criminal Justice Academy.
        Hawaii.--The LRE program in Hawaii provides training and funds for
    several education projects in Hawaii's public and private schools
    including We the People, Project Citizen, and Kids Voting Hawaii. This
    year's LRE support allowed the Hawaii State Judiciary and non-profit
    Hawaii Friends of Civic and Law-Related Education to continue Parents
    and the Law (PAL), a project providing legal information to at-risk
    parents at every public high school teen parenting class in the state,
    as well as several juvenile detention facilities, adult corrections
    settings, and social service agencies.
        New Hampshire.--The LRE program in New Hampshire operates statewide
    and helps thousands of young people throughout the state each year to
    appreciate our democracy and participate in our democracy as law-
    abiding, effective citizens. The LRE program in New Hampshire has a
    busy 2002 schedule. The Nashua High School team won the statewide We
    the People competition in January, and the mock trial competition was
    held in early April. Both winning teams will participate in the
    national competitions. The Lawyer in Every School project is well
    underway for the first week of May.
        Colorado.--In Colorado, over 300 teachers attended the 2001 annual
    public-private partnership conference--the largest number in the past
    sixteen years. The conference theme, Balancing Liberty and Security,
    provided an opportunity for teachers to renew their commitment to teach
    about our democratic institutions in the wake of the terrorist attack
    on the United States. In addition, in May, for the eighth year in a
    row, at-risk youth from Colorado schools will participate in a Colorado
    Project Citizen Showcase where they meet with federal, state, and local
    policymakers to present youth perspectives on policy issues that impact
    their lives. Hundreds of students participate in this youth-empowering
    program.
                evaluations and studies of law-related education
        For the past two decades, researchers have consistently reported
    that law-related curricula and instruction make a positive impact on
    youth when compared with traditional approaches to teaching and
    learning law, civics, and government:
      --The Office of Juvenile Justice and Delinquency Prevention has noted
            that evaluations of the Law-Related Education Program have been
            ``encouraging . . . confirming the previous findings that such
            education serves as a significant deterrent to delinquent
            behavior''. Eighth Analysis and Evaluation of Federal Juvenile
            Delinquency Programs, U.S. Department of Justice, OJJDP, p. 60
            (1985). The Twelfth Analysis and Evaluation of Federal Juvenile
            Delinquency Programs published in 1988 similarly states, ``[A]
            national study suggests that Law-Related Education, when
            properly implemented, can reduce the tendency to engage in
            delinquent behavior.''
      --A review of the research in Law-Related Education and related
            fields conducted by Dr. Jeffery W. Cornett (April 1997)
            concludes that LRE programs have a positive effect on student
            knowledge about law and legal processes, and about individual
            rights and responsibilities. Research studies indicate that
            effective LRE programs have improved juveniles' attitudes
            toward the justice system and toward authorities.
      --In January 2001, Caliber Associates, the Office of Juvenile Justice
            and Delinquency Prevention's evaluation contractor, analyzed
            Law-Related Education in terms of programs proven to be
            effective in delinquency prevention and intervention. The
            results of this study demonstrate the promise of Law-Related
            Education with respect to delinquency prevention and
            intervention.
                                   conclusion
        The National, Coordinated Law-Related Education Program has a
    unique and remarkable record of achievement and continued support is
    crucial for the following reasons:
        First, congressional support for Law-Related Education is vital to
    its survival.
        Second, the federal government and, in particular, the Congress,
    has made a substantial investment over more than a decade in the
    creation of a National, Coordinated Law-Related Education network and
    infrastructure including state coordinating organizations.
        Third, only a national program will undertake national initiatives
    that benefit the entire country, such as national training; national
    technical assistance; state financial assistance; new program and
    curriculum development such as Law-Related Education's highly
    successful and acclaimed Youth Summits; and the replication of
    successful state programs and the avoidance of unsuccessful pilot
    programs.
        Fourth, federal money is seed money used to sustain a national
    program which raises approximately seven times the federal support
    through state legislative support, private donations and in-kind
    support.
        For all of these reasons, the National, Coordinated Law-Related
    Education Program is seeking earmark support at the $2.4 million level.
    We thank you, Mr. Chairman and the members of this Subcommittee, for
    your support over all these many years and we ask for your continued
    support.
                                     ______

     Prepared Statement of The National Consortium for Justice Information
                                 and Statistics
        The Membership Group of SEARCH submits this testimony seeking
    appropriation support for our National Technical Assistance and
    Training Program in the fiscal year 2003 Byrne discretionary program
    appropriation for the Bureau of Justice Assistance (BJA), U.S.
    Department of Justice (DOJ). The National Technical Assistance and
    Training Program received an appropriations earmark in fiscal year 2002
    in the amount of $2.0 million. For the reasons described below, we
    respectfully submit this testimony to request funding at the $4.0
    million level for fiscal year 2003.
        SEARCH is a nonprofit criminal justice organization governed by a
    Membership Group comprised of one gubernatorial appointee from each of
    the 50 states, the District of Columbia, Puerto Rico and the U.S.
    Virgin Islands. For over 30 years, we have dedicated our efforts to
    assisting state and local justice agencies combat crime and administer
    justice through the effective and responsible use of information and
    identification technologies.
        SEARCH's National Technical Assistance and Training Program
    provides no-cost assistance to all components of the state and local
    criminal justice system with respect to the development, operation,
    improvement and/or integration of all types of justice information
    systems. This significant program helps state and local agencies work
    more efficiently and effectively through the use of advanced
    information technology, and it also creates the foundation for a
    national information infrastructure for justice systems.
        SEARCH continues to experience steady growth in demand for the
    program. We are also experiencing a marked increase in the complexity
    of these efforts, as many involve multiple agencies or jurisdictions
    and an increase in the amount of time spent on research and site
    visits--often as many as four visits per assistance effort. There are a
    number of reasons for this demand, including the success of grant
    programs such as the Edward Byrne Memorial State and Local Law
    Enforcement Assistance Program, the Local Law Enforcement Block Grants
    Program, the COPS Technology Grant Program and the Crime Identification
    Technology Act, which have provided seed money for justice information
    systems automation and integration.
        Also impacting the continued demand for SEARCH technical assistance
    and training services is the critical need of the nation's criminal
    justice agencies to share complete and accurate information quickly.
    The need to share information quickly has dramatically escalated as a
    result of the terrorist attacks of September 11, 2001. Criminal justice
    agencies need to share information in order for the system of justice
    to function, and for purposes of national security. These agencies are
    now confronted with an urgency to exchange information that they have
    not previously experienced. The need to capture, analyze and share
    information among federal, state and local justice agencies (and other
    government agencies involved in homeland security efforts) has never
    been more evident or more important.
        We want to commend BJA and its fine, professional staff. Working in
    partnership with SEARCH, BJA has provided strong, national leadership
    to create opportunities for information systems training and technical
    assistance for state and local criminal justice officials.
    Technical Assistance Program Benefits all States
        SEARCH provides technical assistance via written correspondence,
    telephone consultaions, electronic mail, an Internet Website and onsite
    visits to agencies nationwide (including assistance focusing on
    statewide or regional justice integration efforts), as well as
    assistance provided at our National Criminal Justice Computer
    Laboratory and Training Center in Sacramento, California. SEARCH is
    responsive to technical assistance requests from every state, assisting
    agencies from all branches of government (state, county, city,
    regional) and providing guidance to every discipline in the justice
    system, including law enforcement, courts, prosecution, probation,
    parole, corrections and other case management agencies.
        Integrated systems assistance typically involves being onsite to
    help a state or region establish an automated justice information
    system, or evaluate and plan for multiagency integration of existing
    systems. These efforts are typically significant and complex, can
    involve multiple agencies and site visits, and deal with issues with
    far-reaching impact on state and local governments. SEARCH is currently
    providing such long-term assistance to agencies in Colorado, Hawaii,
    Kentucky, Texas, Washington and Wisconsin, among others.
        In the past year, SEARCH has provided hundreds of technical
    assistance efforts via telephone, letter and email; thousands of
    Internet-based assistance efforts; and dozens of technical assistance
    efforts provided onsite at justice agencies or at our Sacramento
    facility. In fiscal year 2003, as mentioned earlier, we expect those
    numbers to increase dramatically as demand for our technical assistance
    services rises.
    National Training Program Can Help Justice Agencies Enhance Their
            Information-sharing Capabilities, Which is Vitally Important to
            Homeland Security
        In light of the terrorist attacks of last September 11, it is
    critical that state and local criminal justice agencies be able to use
    information technology in the fight against terrorism and, in
    particular, to share information with federal, state and local agencies
    with homeland security responsibilities. The nature of the technical
    assistance requests that SEARCH receives is expected to broaden and
    involve problems associated with the automated sharing of information
    related to: The deployment and support of first responders; the
    prediction of terrorist activity; and the identification and
    investigation of individual terrorists or terrorist groups.
        Agencies needing information from state and local criminal justice
    agencies include, for example, the White House Office of Homeland
    Security and state and local offices of homeland security and defense;
    the Federal Emergency Management Agency and state and local offices of
    emergency preparedness; the Immigration and Naturalization Service; and
    the U.S. Department of Transportation and its Transportation Security
    Administration.
        SEARCH's request for a funding increase of $2.0 million over its
    fiscal year 2002 earmark would allow the National Technical Assistance
    and Training Program to meet approximately 40 additional technical
    assistance requests.
    National Training Program Continues to be Responsive to Cybercrime
            Threats
        SEARCH continues to help the nation's law enforcement agencies
    combat the escalating problem of computer crime by training and
    equipping them with the skills needed to investigate cybercrime, make
    arrests and prosecute offenders. Since its inception, SEARCH's National
    Technical Assistance and Training Program has trained more than 31,000
    criminal justice officials from every state in the use of computers and
    other information technologies. In fiscal year 2002, SEARCH will train
    more than 3,000 state and local criminal justice officials across the
    nation, both at agencies and at our National Criminal Justice Computer
    Laboratory and Training Center in Sacramento. SEARCH has implemented a
    Mobile Training Center, which uses laptops and other mobile equipment,
    to provide training at more sites nationally.
        Training courses focus on providing investigators with critical
    operational skills, knowledge and techniques that will have a real-
    world impact, enabling them to gain a technological edge over the new
    breed of criminals who use computer technology to commit crimes such as
    fraud, theft and the online sexual exploitation of children. SEARCH's
    training courses, which range from one day to two weeks in length,
    include: The Investigation of Computer Crime; The Seizure and
    Examination of Microcomputers; Basic Local Area Network Investigations;
    Introduction to Internet Crime Investigations; Advanced Internet
    Investigations; and The Investigation of On-line Child Exploitation.
        To help our trainees keep pace with the ever-changing environment
    of cybercrime, SEARCH has developed two new courses, which will debut
    in 2002: Digital Media Analysis and The Investigation of Online Child
    Exploitation II. We are also beginning development of an Advanced
    Computer Forensics course, which we expect to debut in 2003. In the
    past year, among those attending SEARCH training were staff from
    justice agencies in Alaska, Colorado, Hawaii, Kentucky, Maryland, New
    Hampshire, New Mexico, Rhode Island, South Carolina, Texas, Vermont,
    Washington and Wisconsin.
    Selected Examples of Assistance
        The following illustrates just a few examples of SEARCH technical
    assistance and training efforts in the past year and the broad range of
    agencies served.
        South Carolina.--A team of justice officials, including
    representatives of the South Carolina Judicial Department and
    Department of Corrections, attended SEARCH training on integrated
    justice information systems (IJIS) issues, such as strategic planning;
    developing governance structures; funding, leadership and management
    strategies; and technology standards. SEARCH also provided hardware and
    Internet connectivity training to prosecutors from throughout the state
    at a ``cybersleuth'' seminar presented at the National Advocacy Center
    on the University of South Carolina campus in Columbia. SEARCH also
    assisted a local prosecutor's office on legal issues involving computer
    forensics.
        Hawaii.--SEARCH is providing assistance to a statewide justice
    integration effort spearheaded by the Department of the Attorney
    General. SEARCH is helping the state with integration planning; setting
    vision, mission, goals and objectives for the integration initiative;
    and determining operational requirements. In another statewide effort,
    SEARCH is assisting the Department regarding strategic planning for and
    integration of the state's Juvenile Justice Information System. SEARCH
    also assisted the Kauai Police Department with the acquisition of a
    computer-aided dispatch/record management system (CAD/RMS), helping to
    draft a Request for Proposal and functional specifications. Officials
    of the Hawaii County Police Department attended SEARCH training on The
    Investigation of Online Child Exploitation, a weeklong course that
    provides law enforcement investigators and support staff with the
    skills needed to conduct proactive Internet investigations involving
    child exploitation. In addition, this very week, April 29-May 3, 2002,
    SEARCH trained 22 justice officials onsite in Hilo, Hawaii, in The
    Investigation of Computer Crime, which teaches how to investigate high-
    technology theft and computer-related crime.
        Vermont.--In a statewide effort, SEARCH provided onsite integration
    assistance to the Vermont Department of Public Safety (DPS) regarding a
    strategic direction for its integrated CAD/RMS used by nearly all local
    law enforcement agencies in the state. A 12-member team of justice
    officials, representing the state DPS, Department of Corrections (DOC),
    Office of Court Administration, Supreme Court and Office of the Chief
    Information Officer, among others, attended SEARCH training on IJIS
    issues, including emerging trends in biometric technologies for
    identification, identity verification and secure access/authorization
    for physical and data security, and critical success factors and the
    risk management strategies employed by project leaders in integration
    initiatives. SEARCH also assisted the Burlington Police Department on
    issues related to computer forensics issues and CAD/RMS/mobile
    computing system acquisition. In addition, officers of the Rutland
    Police Department attended SEARCH training on The Investigation of
    Computer Crime.
        New Hampshire.--A team of 14 justice officials, representing such
    agencies as the Office of the Attorney General, the state DPS, the
    Administrative Office of the Courts, the State Police, State
    Legislature and DOC, attended SEARCH training on IJIS issues, such as
    performance metrics, security technologies, techniques for undertaking
    regional integration efforts, procurement, outsourcing, Web-based
    justice applications and IT project management strategies. Over a dozen
    officers from New Hampshire police and sheriff's departments also
    attended a weeklong SEARCH training session on The Investigation of
    Computer Crime, held in Concord. In addition, SEARCH assisted the New
    London Police Department regarding the setup of a computer forensics
    laboratory.
        Colorado.--Colorado has benefited from a number of SEARCH technical
    assistance and training efforts. For example, SEARCH is helping the
    state work toward integration planning in an initiative that involves
    the State Judicial Branch, Department of Human Services' Division of
    Youth Corrections, Department of Public Safety's Bureau of
    Investigation, Department of Corrections and the Colorado District
    Attorneys' Council. SEARCH also helped the Colorado Bureau of
    Investigation and the Arvada County Sheriff's Office with computer
    forensics issues; the Colorado State University Police Department with
    computer crime investigation materials and best practices for law
    enforcement investigative training; the Greeley Police Department on
    setting up a computer forensics laboratory; and the Colorado District
    Attorneys Council regarding the future of court information technology.
    Colorado agencies also benefited from SEARCH training: the Aurora
    Police Department attended SEARCH training on Introduction to Internet
    Crime Investigations, which teaches investigators the basic techniques
    for successfully cracking cases involving crimes committed using the
    Internet. Officials from the 18th Judicial District Attorney's Office
    attended an intensive, two-week course on Advanced Internet
    Investigations, which teaches investigators how to investigate crimes
    online and track intruders. In addition, representatives of the
    Colorado State University Police, Arvada Police Department and Weld
    County Sheriff's Office attended SEARCH training on The Investigation
    of Computer Crime.
    Technical Assistance and Training Program Materials
        SEARCH's National Technical Assistance and Training Program also
    includes the preparation, publication and national dissemination of
    materials and reports that assist criminal justice agencies in
    acquiring and using computers and other information technology. For
    example, SEARCH publishes Technical Bulletins that identify and
    evaluate information systems and technologies that have existing or
    potential application in criminal justice management. SEARCH also
    offers an online resource, the Integrated Justice Information Systems
    Website (www.search.org/integration), which features state and local
    profiles of justice integration efforts, including links to information
    on governance structures, funding, technical overviews, project
    documents and more, as well as links to useful integration
    publications, articles and other resources. SEARCH's Website received
    an average of 12,350 hits per day in 2001.
    Conclusion
        Without question, federal support for the National Technical
    Assistance and Training Program makes a vital contribution to the war
    on crime. For a modest federal investment, leveraged many times over by
    state and local funds, a critical contribution is made to the ability
    of state and local criminal justice agencies to provide--and to share--
    timely, accurate and compatible information for use in apprehending,
    prosecuting and sentencing offenders.
        Accordingly, we respectfully request that the Subcommittee act to
    provide fiscal year 2003 funding of SEARCH's National Technical
    Assistance and Training Program at the $4.0 million level. Supporting
    state and local criminal justice agencies' information systems and
    their ability to share information is a matter of public safety and
    national security. The National Technical Assistance and Training
    Program can help state and local law enforcement agencies meet those
    expectations. We thank you, Mr. Chairman, the members of your
    Subcommittee and the Subcommittee staff for your continued support.
                                     ______

                              DEPARTMENT OF STATE
     Prepared Statement of the Alliance for International Educational and
                               Cultural Exchange
    Introduction
        The Alliance for International Educational and Cultural Exchange
    appreciates the opportunity to submit testimony in support of the
    educational and cultural exchange programs administered by the
    Department of State.
        The Alliance is the leading policy voice of the United States
    exchange community, and has worked closely with the subcommittee on
    exchange issues. We note with gratitude the subcommittee's role in
    increasing exchange appropriations in recent years.
        The Alliance comprises 65 nongovernmental organizations, with
    nearly 7,500 staff and 1.25 million volunteers throughout the United
    States. Through its members, the Alliance supports the international
    interests of 3,300 American institutions of higher education.
        With grassroots networks reaching all 50 states, Alliance members
    help advance the United States national interest by putting a human
    face on American foreign policy, transmitting American values,
    fostering economic ties with rapidly developing overseas markets, and
    assisting individuals with the development of critical foreign
    language, cross-cultural, and area studies expertise. Our members also
    leverage considerable private resources--in cash and in kind--in
    support of these critical programs.
        By engaging a very broad array of American individuals and
    institutions in the conduct of our foreign affairs, exchange programs
    build both enhanced understanding and a web of productive contacts
    between Americans and the rest of the world.
        Two years ago, German Chancellor Gerhard Schroeder described his
    experience as an International Visitor in an on-air interview with a
    Berlin news anchor. Schroeder described himself as a young politician
    with a vague but fashionable anti-American bias, and recounted that his
    trip to the United States as an International Visitor altered his
    views. ``This is one of the most intelligent ways of giving young
    politicians a positive attitude about America,'' Schroeder said.
    Our request
        As a nation, we need to provide more opportunities for emerging
    leaders around the world to experience first-hand our society, our
    values, and our people. The Alliance therefore urges the subcommittee
    to provide substantial increases in funding for exchange programs.
    While appropriations for these programs have moved up in recent years,
    this account still lags well behind its historic levels in constant
    dollars due to the deep cuts of the mid-nineties. Coupled with the
    increases in fixed program costs such as airfare and accommodation
    costs, reduced appropriations have resulted in significantly diminished
    participant levels in programs consistently cited by our embassies as
    one of their most effective means of advancing U.S. policy interests.
        While the need for increased funding is worldwide, increased
    exchanges with the Islamic world are particularly critical as we pursue
    the war on terrorism. To defeat terrorism, the United States will need
    more than the might and skill of our armed forces. To ultimately defeat
    terrorism, we must also engage the Muslim world in the realm of ideas,
    values, and beliefs.
        No previous foreign affairs crisis has been so deeply rooted in
    cultural misunderstanding. One of the lessons of September 11 is that
    we have not done an adequate job of explaining ourselves, our culture,
    and our values to the Muslim world. Doing so will require a sustained,
    serious effort if we are to succeed in our quest for lasting peace and
    security, stable bilateral relationships, and an end to terrorism. We
    believe that significant new funding is needed for an Islamic Exchange
    Initiative, designed to broaden the range of meaningful relationships
    based on shared interests with current and emerging leaders and key
    institutions in Muslim countries.
        Given the broad arc of countries we will need to engage, stretching
    from Africa to Southeast Asia, and the importance and urgency of the
    task, we urge the subcommittee to appropriate $95 million for this
    purpose. Including a modest but important increase in worldwide
    exchange funds, we propose an fiscal year 2003 level for State
    Department exchange programs of $345 million.
        In the Islamic world, we envision this initiative engaging the full
    range of programs and activities managed by the Bureau of Educational
    and Cultural Affairs: Fulbright and Humphrey exchanges that will
    stimulate broader cultural understanding, joint research and teaching,
    and foster positive relationships with a new generation of leaders;
    university affiliations targeted toward key fields such as mass media
    and economic development; International Visitor and other citizen
    exchange programs designed to bring emerging leaders into significant
    and direct contact with their professional counterparts and the daily
    substance of American life; youth and teacher exchanges and enhanced
    English teaching programs, all designed to bring larger numbers of
    young people a direct and accurate picture of our society, based on
    personal experience rather than vicious stereotyping.
        The need for an intensive new focus on the Islamic world is great,
    but it should not distract us from the importance of maintaining and
    increasing our public diplomacy and exchange activity elsewhere in the
    world. As we engage in what promises to be a lengthy and difficult
    struggle against terrorism, we will benefit greatly from the support
    and participation of our friends and allies around the world. We must
    not neglect these important relationships, or succumb to the temptation
    to shift resources from other regions of the world to meet our needs in
    Islamic countries. Should we do so, we will not find resources adequate
    to the task at hand, and we will lessen our engagement with other
    crucial regions of the world at a time when we can ill afford to do so.
        In considering worldwide exchanges, in addition to the valuable
    programs already cited in the context of the Islamic initiative, we
    particularly wish to draw the subcommittee's attention to the
    importance of overseas advising and the Gilman scholarship program. Our
    advising centers, funded at slightly more than $3 million annually,
    struggle with minimal resources to provide comprehensive, unbiased
    information to prospective students. The foreign students in the United
    States provide an enormous foreign policy asset--the opportunity to
    educate the next generation of world leaders--and they contribute to a
    trade surplus estimated at $12 billion. Other countries--notably the
    United Kingdom, Australia, Canada, Germany, and Japan--recognize the
    policy and economic benefits of foreign students and are making serious
    and successful efforts to erode our market share. We encourage the
    subcommittee to increase funding for our advising centers.
        The Gilman scholarship program has been a remarkable success in its
    first year, with many more qualified applicants than available grants.
    This program, which provides modest funding to allow American students
    with financial need to study abroad, directly addresses a critical
    national need. We need to develop more American expertise with key
    countries, cultures, and languages, and the Gilman program expands the
    pool of students with the means to study abroad. The program has
    increased study abroad numbers, and the diversity of participants and
    locations, coupled with its performance to date, deserves a funding
    increase.
        We also ask that the subcommittee include in its report language
    support for the creation of a national policy on international
    education. Such a policy would place appropriate priority on government
    and private efforts to prepare Americans to succeed in a rapidly
    globalizing world. It would include several elements: strengthening
    American capacity to develop specialists in foreign languages, area
    studies, and international business studies; building a broader
    international knowledge base among American non-specialists whose work
    has international dimensions; increasing the number of Americans
    studying abroad and encouraging more of our students to study in non-
    traditional locations; developing a more effective strategy for foreign
    student recruitment; and strengthening exchange programs at all levels.
    In the last session of Congress, the Senate unanimously passed a
    resolution introduced by Senators Lugar and Kerry calling for a
    national policy on international education. A similar resolution has
    been introduced in the House.
        Mr. Chairman, the Alliance appreciates the opportunity to submit
    its views to the subcommittee, and looks forward to working with you,
    your colleagues, and staff to maximize the contributions that exchange
    programs make to our foreign affairs. We would be happy to provide
    additional information, or to respond to any questions that you might
    have.
                                     ______

         Prepared Statement of the American Foreign Service Association
        Mr. Chairman and Members of the Subcommittee, on behalf of the
    American Foreign Service Association (AFSA) and the 23,000 active-duty
    and retired members of the Foreign Service that AFSA represents, I wish
    to thank you for the continuing opportunity to share our views with you
    regarding the funding of the Department of State and its programs. As
    we have said in previous years, and it continues to be true, the
    decisions that you and your colleagues in Congress make directly affect
    our professional and personal lives as we serve our nation abroad,
    therefore we have a direct interest in your work.
        Let me state from the beginning that we are fully supportive of the
    Administration's 2003 request, but we also believe it should be
    considered as the floor and not the ceiling for fiscal year 2003
    appropriations. We believe that more should have been proposed in the
    funding of the Department of State and its programs. We appreciate the
    difficult spending constraints facing the Subcommittee as it does its
    important work. We acknowledge that yours is not an easy task.
        But we would emphasize that national security is one of the
    principle, non-delegatable functions of the federal government and that
    diplomats, their programs, and the State Department are as critical to
    our national security structure as are the soldier, the smart bomb, and
    the Pentagon. As we well know, international problems can quickly
    become domestic problems. Diplomacy is on the front lines addressing
    these problems before they reach our shores. As is true for the Defense
    Department, to achieve our national security tasks, the Department of
    State and its programs require adequate resources.
        AFSA fully agrees with Secretary of State Powell when he said on
    March 7, 2002:

        ``I think it is important, and part of my responsibility, and the
    responsibility of * * * all the Members of Congress, to make the case
    to the American people that if we are going to live in the kind of
    world we all want to live in, if we are going to want to see our values
    adopted by more and more nations--not because they are American values,
    but because they are universal values--it is important that we give our
    diplomatic efforts the support that they deserve through significant
    increases in the 150 Account.''

        Last year, with the support of the Congress, the Secretary of State
    began the difficult work of rebuilding the infrastructure of our
    country's foreign affairs apparatus. At that time, he said that its
    deterioration has become a ``major impediment to the conduct of
    American foreign policy.'' As you know, the State Department's request
    for fiscal year 2003 is a continuation of these efforts in terms of
    people, technology, and security.
        People.--The availability of resources determines whether we have
    the talent, tools, and work environment necessary to effectively
    represent and protect this nation. It affects the recruitment of
    talented young people to this profession. It affects how thinly we are
    stretched in manning the 250 posts and missions in which we serve
    around the world, and it affects how well we are trained to do our
    jobs. Funding also affects the quality of life for our families as they
    accompany us around the world.
        In the 1990s, insufficient funding created a shortfall of over
    1,100+ overseas personnel. This staffing shortage strained the Foreign
    Service in its ability to fully represent and advance the national
    security interests of our nation. It reduced the amount of training
    that our people could take because it forced both the Department and
    individuals to choose between leaving positions vacant while personnel
    took the necessary training or sending the person to post without
    training. And the personnel shortfall adversely affected Foreign
    Service morale as people were constantly being asked to do more with
    less, even while they and their families often served in hardship and
    dangerous locations.
        In order to fill this shortfall, the Department is requesting
    sufficient funds to recruit, hire, train and deploy 399 new foreign
    affairs and 186 new security professionals above attrition. AFSA fully
    supports the Secretary in this rebuilding effort and urges this
    Subcommittee and the Senate to provide the necessary resources
    requested. We also urge that next year, the request continue to be
    supported so that we can continue and complete this three-year
    rebuilding effort.
        There is one area that we would ask be addressed in the Committee's
    report accompanying CJS appropriations bill. Last year, when the
    Department explained its request in the Budget in Brief for Fiscal Year
    2002, amounts in the personnel account were identified to address
    concerns about morale, recruitment and retention of Foreign Service
    personnel. For instance, the Administration proposed to allocate funds
    to continue a pilot program in Mexico for increased spousal employment
    and possibly expand it worldwide. Although unmentioned in the
    Administration's fiscal year 2003 request, these proposals are still
    important initiatives, and we urge the Committee to encourage the
    Department to continue and expand these programs.
        Finally, Mr. Chairman, as the ``Voice of the Foreign Service,''
    there is one more issue that we believe needs to be discussed. We
    understand that the Department and the Office of Personnel Management
    are seeking to correct inequities arising from the fact that Foreign
    Service personnel lose their locality pay adjustments when they serve
    abroad. AFSA strongly endorses these efforts to convince the Office of
    Management and Budget to support implementation of an overseas
    comparability adjustment based upon D.C. area locality pay. There is a
    huge financial disincentive to serve abroad because of the loss of
    locality pay. Since allowances and differentials do not count in
    determining retirement annuities, the annuities of our members who
    retire following an overseas assignment are computed at a lower level
    than D.C.-posted counterparts. This affects our annuities in terms of
    both the formula for computation and the amount that can be contributed
    into the Thrift Savings Plan (TSP). Further, since allowances and
    differentials are computed as percentages of base pay, their value can
    be lost or seriously decreased when compared to what our D.C.-posted
    counterpart is receiving in base pay plus locality pay. Thus,
    compensation for serving in a hardship or danger post is decreased when
    compared to what we could earn by serving in Washington. There was a
    time when the difference was minor. Today, when we serve abroad, we
    take an 11.43 percent cut in salary and possible TSP contribution
    levels. There is no authorization for this program as of yet. We ask
    that when it is requested, the Subcommittee give favorable
    consideration to the idea of an overseas comparability pay adjustment
    for Foreign Service personnel posted abroad
        Technology.--Mr. Chairman, AFSA receives monthly briefings from the
    Department on its progress in improving its information and
    telecommunications system. More importantly, we get reports from our
    members in the field when things go wrong. As an independent voice,
    AFSA is pleased to report to you that we are satisfied with the
    Department's progress to date in bringing the Department and its people
    into the 21st century telecommunications world. Funding requested in
    fiscal year 2003 will allow this needed progress to continue.
        Security.--For the second year in a row, the Department has
    requested $1.3 billion for worldwide embassy security funding. This is
    generally at the annual level recommended by the Overseas Presence
    Advisory Panel (OPAP) and the Accountability Review Boards established
    to investigate the 1998 East Africa embassy bombings. The
    recommendation for this funding was $13-$14 billion over ten years.
    When the work started, fully 80 percent of our posts and missions did
    not meet minimum Departmental security standards. Today, about 60
    percent meet the minimum standards but need major improvements.
        What concerns us, however, is that while the overall request for
    personnel, software, equipment, and ``bricks and mortar'' work reaches
    the $1.3 billion level, the request for the ``bricks and mortar''
    portion is $61 million below amounts appropriated in fiscal year 2002.
    It seems to us that since the Department was able to utilize the full
    $815.9 million appropriated last year, the request should have been at
    a similar level to continue improvements to the physical situation of
    our posts and missions. We ask that the Senators consider increasing
    the request for this part of the ``Worldwide Security Upgrades'' from
    $755 million to last year's level of $815.9 million.
        Mr. Chairman, in the area of security, there is one concern to
    which we wish to draw the Subcommittee's attention. When both the
    Accountability Review Board and the Overseas Presence Advisory Panel
    made their recommendations, the emphasis was placed on protecting
    government facilities abroad from future terrorist attacks. There was
    always concern, though a generally unspoken concern that, as we
    ``hardened'' our missions, terrorists would go after Americans, and
    particularly representatives of the U.S. government, in ``softer''
    targets. The recent terrorist bombing of the church in Islamabad that
    killed a member of the embassy staff and her teenage daughter puts a
    harsh light on that concern. We believe the concept of embassy security
    needs to be expanded to encompass the embassy community. In part, AFSA
    believes that this will entail the continued hiring of security
    professionals and funding to move from a protective, defensive posture
    to a more aggressive preventive approach to security. We encourage the
    Subcommittee to join AFSA in engaging the Department in identifying
    practical solutions to the expanded threat to Americans and to American
    personnel abroad.
        A reinvigorated foreign service.--Finally, Mr. Chairman, there is
    one more area that we would like to share with the Subcommittee that is
    not part of the Administration's request, but surely impacts upon the
    success of U.S. diplomacy. As vital as increased funding is for people,
    technology, and security, AFSA believes that funding by itself will not
    guarantee that the Foreign Service possesses the attributes needed to
    best serve the President, the Congress, and the American people in
    meeting the challenges of the 21st Century. AFSA believes that the
    Foreign Service will also need to develop new skills and a new
    organizational culture.
        In the past, AFSA worked with the Congress in supporting
    legislation that mandated the Department to do workforce planning
    (Public Law 106-113). We also supported Congressional provisions
    requiring the Department to report on management training for Foreign
    Service personnel and to report on the assignment of language trained
    personnel to language designated positions. Assuring the continued high
    quality of this nation's Foreign Service has been a continuing concern
    to AFSA as it has been to the Congress.
        Since July 2001, AFSA has been working with the Director General of
    the Foreign Service in developing reforms to the Foreign Service
    personnel system. To date, we have reached agreement on over a dozen
    reforms, including:
        1. Establishing leadership and management training requirements
    that employees must meet by key stages of their career. These
    requirements will be enforced by promotion precepts that will deny
    promotions to those who have not taken the required training.
        2. Enforce rules governing ``worldwide availability'' so that
    Foreign Service members do not extend in Washington or certain posts
    abroad for unusual lengths of time.
        3. Increase the separation of unsatisfactory performers by having
    the Director General meet with members of the Commissioning and Tenure
    Boards at the State Department to reinforce with them their duty to
    identify unsatisfactory performers. AFSA alerted the Department to the
    fact that, while between 3.5 percent and 7.9 percent of career
    candidates were denied tenure during the mid-1990s, less than 1 percent
    were denied tenure in 1998 and 1999.
        4. To change the organizational cultures of the Foreign Service, we
    have come to agreement on several issues such as putting added weight
    on demonstrated leadership, managerial ability, and good interpersonal
    skills when selecting personnel to be assigned to Deputy Chief of
    Mission (DCM) and other senior positions.
        5. The Director General accepted AFSA's proposal to modernize the
    core precepts for promotion in the Foreign Service to provide
    additional incentives for employees to perform in accordance with the
    management principles enunciated by Secretary Powell and his management
    team. The changes promote the career advancement of those employees who
    exhibit the skills, outlooks, and abilities needed in our new century.
    For example, the revised precepts put new emphasis on operational
    effectiveness, intellectual integrity, customer service, teamwork, and
    leadership and management skills. In so doing, they signal disapproval
    of the risk-averse, form-over-substance modes of behavior that are ill
    suited for actively advancing American interests in the 21st Century.
        Conclusion.--Mr. Chairman, AFSA agrees with Secretary Powell when
    he said that events on and since the tragic day of September 11 have
    made it clear ``that American leadership in international affairs is
    critical'' and that ``out on the front lines of diplomacy, we want a
    first-class offense for America.'' We agree with him that ``quality
    people with high morale, combined with superb training and adequate
    resources, are the key to a first-class offense.''
        Operating accounts do count. The funds requested for fiscal year
    2003 and the Supplemental Request that has recently been forwarded,
    help provide the minimum necessary resources that will allow the
    Department and the Foreign Service to continue its rebuilding of the
    Foreign Affairs infrastructure to meet the challenges of this new
    century. It has been less than three years since the Overseas Presence
    Advisory Panel (OPAP), chaired by Louis Kaden of Wall Street, and
    composed of diplomats, representatives of labor and business, and
    educators reported that:

        ``Insecure and decrepit facilities, obsolete information
    technology, outdated human resources practices, and out-molded
    management and fiscal tools threaten to cripple America's overseas
    presence. We recognize that except for the security threats, none of
    these individual problems is a pressing emergency. Still, as with any
    complex system, if many of the parts of America's overseas presence are
    not working properly, the system may fail. The Panel fears that our
    overseas presence is perilously close to the point of system failure.''

        Mr. Chairman, under the leadership of Secretary of State Powell
    working with Congress, we are pulling back from that ``point of system
    failure.'' We need to stay the course and so we urge that, at a
    minimum, the full $7.5 billion Administration request for the
    Department of State as well as the funding requested in the
    Supplemental be provided. In the end, those funds address the needs of
    diplomacy as it stand on America's front lines serving her and
    protecting our national interests.
                                     ______

                                RELATED AGENCIES
                     Prepared Statement of Steven A. Ludsin
        I have dealt with the U.S. Small Business Administration for almost
    10 years and I was a contractor with the agency for a year and a half
    with negotiations stemming from those contracts covering at least 3
    years. I have concluded that the agency is an anachronism that should
    be reorganized or abolished and funding should be drastically cut.
        The U.S. Small Business Administration, the federal agency mandated
    by Congress to aid, counsel, assist and protect the interests of small
    business has become obsolete. Aside from the government guarantees for
    loan programs and advocating small business procurement protection, the
    agency is out of touch with our times. I had the simple idea of selling
    the SBA's real estate collateral for defaulted small business loans on
    the Bloomberg. The resistance was overwhelming and the staff is so
    committed to the status quo, they cannot adapt to the changed economic
    environment since the 1950's. It is as if they are in a time warp,
    forever stuck in a post World War II mentality.
        After law school, I began my investment banking career in 1976 and
    Michael R. Bloomberg was one of the partners in charge of my
    department. In 1985 I purchased a home from foreclosure in East
    Hampton, NY. I began to pursue the concept of selling foreclosures on
    computers soon after I purchased the home. I tried to get a Small
    Business Investment Research grant from the Department of Commerce in
    1987 but I was turned down. When the S&L bailout began in 1989, I
    brought the idea of electronic marketing on the Bloomberg to the RTC,
    the agency in charge of the bailout, but I could not get a contract.
        Undaunted I persisted and received a good audience with Erskine B.
    Bowles, former SBA Administrator and Chief of Staff of the White House.
    In 1993 he was the Administrator of the U.S. Small Business
    Administration.
        I convinced the SBA to give me a pilot program in 1994 to sell the
    real estate collateral on the Bloomberg. After enduring the frustration
    of the contract renewal process, I managed to get the contract renewed
    in June 1995. Battling the SBA was a full time job; they sapped my
    financial resources and the results led to an endless litigation
    process.
        I had to use the Freedom of Information Act to get the appraisals
    of the properties the SBA hired me to sell because they insisted on
    charging $10,250 for the processing fee which was discretionary. The
    SBA decided I was a commercial requester so I had to pay the fees. I
    challenged the decision in the Federal Courts in New York and actually
    presented my own oral argument before the Second Circuit Court of
    Appeals. The 3-judge panel told me I was at the top of the list of
    attorneys who have appeared on their own behalf, but the Appeals Court
    held that the SBA could charge me the fee because my contract goals
    were not in the public interest. So even though I was selling federal
    assets and disseminating the information world wide on the Bloomberg, I
    had to pay the SBA the FOIA fee.
        I was able to get the appraisals without charge and present them to
    investors by displaying the photos and descriptions and scanning the
    full appraisals using my own scanner. I finally received bids from 2
    major investment banks but after 2 years into the second contract
    beginning in June 1995, the SBA had forgotten to tell me that they
    would need consent of the lending banks to sell the assets in bulk
    which was my goal under the contract. There was a breach of contract
    claim before the General Services Board of Contract Appeals. The claim
    was for $1.2 to $2.4 million for providing buyers ready, willing and
    able. The lawsuit was settled. I have characterized the experience as
    ``econocide'', the purposeful destruction of an entrepreneur's
    financial security. The experience moved me to write a book, ``Roadkill
    on the Information Highway'' published by iUniverse.com.
        I share this account of my struggle because it is a microcosm of
    the cultural rift of the private sector and our federal government.
    Ironically the SBA is selling $10 billion of assets over the coming
    years. How could they seriously believe the private sector would
    participate if the agency doesn't understand the marketplace and
    thwarts any innovation at every turn?
        Although the experience I had is anecdotal, there is a need to put
    a stop to the obfuscation that the SBA uses to justify its existence.
    They are eager to hide behind the FOIA laws in order to retard
    progress. For example, in May 2001, I requested the information about
    the real estate assets still available from the field offices. The knee
    jerk reaction was to force the field offices to direct the inquiry to
    the headquarters and invoke the FOIA law. This creates delay and
    obstacles to purchasing the assets. Similarly, when I sent emails to
    the staff asking what their responsibilities were, most responded by
    directing me to the SBA website.
        Why do you need to pay staff to direct inquiries to the website?
    Why do we pay over $500 million annually to maintain the illusion that
    the SBA will provide funds for small business, when the real decisions
    are made by the banking and venture capital community? The days of
    window dressing must end. I have always supported private-public
    partnerships, but in the case of the SBA, there is no real capability
    to partner. The agency should be reorganized and the guarantee
    component should be reassigned to the Department of Commerce or the
    Department of the Treasury.
        I am grateful for the opportunity to become part of the public
    testimony advocating severe cuts to an agency that has outlived its
    usefulness. Former SBA Administrator Philip Lader commented that the
    SBA was no longer your father's Oldsmobile. Even General Motors retired
    the Oldsmobile. Its time to let go of the propagandistic illusions that
    the SBA furthers the interests of small business. It should be
    abolished.
                                     ______

                   Prepared Statement of The Asia Foundation
        Thank you for the opportunity to submit testimony, supporting The
    Asia Foundation's fiscal year 2003 budget request.
        Mr. Chairman, I would like to present The Asia Foundation's
    programs and our future plans to address the challenges and
    opportunities facing Asia. We believe that our programs demonstrate how
    a small, independent organization can advance American interests in the
    Asia-Pacific region.
        The Administration has endorsed the work of The Asia Foundation by
    requesting an appropriation of $9.44 million for fiscal year 2003.
    While we appreciate that support, we respectfully hope the Congress
    will add to our funding, given the unparalleled new challenges facing
    the Asia region. As you know, The Asia Foundation implements programs
    that improve governance and legal reform, protect human rights, promote
    economic reform and encourage peaceful, cooperative regional and
    international relations. In the post-September 11 period, it is clear
    that in the war on terrorism, it is more important than ever to address
    its root causes of persistent poverty, lack of opportunity and loss of
    faith in local leaders and institutions. It is critical to strengthen
    institutions of governance, advance the rule of law and promote
    stability. This also means creating economic opportunity, broadening
    and improving education systems and other public services and
    protecting the rights of women and children.
                                    overview
        Let me put the Foundation's work into context. The post-September
    11 period presents challenges to political stability, economic growth,
    and America's relations in the Asia region. Afghanistan requires
    continuing donor attention in response to humanitarian needs, and to
    ensure security and stability for the current interim government, the
    Loya Jirga process, and the new government. Other countries in the
    region, including countries with larger Muslim populations such as
    Pakistan, face significant challenges to democratic development, peace
    and stability.
        Asia continues to face complex regional security challenges: on the
    Korean peninsula and the India-Pakistan border, China-Taiwan cross-
    straits relations, and in Afghanistan. Despite some recovery from the
    1997 crisis, economic stagnation continues in Japan, the world's second
    largest economy, and economic uncertainty exists in South and Southeast
    Asia economies. Political instability in Indonesia, extremism in the
    southern Philippines, and internal conflicts in Sri Lanka and Nepal
    also threaten regional stability and impede economic development. Human
    rights abuses and questions of impunity continue. Even though women in
    Asia have made gains, in many places they are still subject to economic
    and political inequities and, in the worst cases, they are victims of
    trafficking and abuse. We have seen reductions in United States
    presence in Asia over the past few years, due to budgetary and other
    circumstances, particularly signaled by a decline of public diplomacy
    efforts.
        In our view, the new circumstances we face in Asia highlight the
    importance and value of the Foundation's programs. There are few
    American organizations with the operating experience, relationships and
    access enjoyed by The Asia Foundation in the region. For nearly 50
    years, the Foundation has operated programs throughout Asia to support
    reform-minded government and non-governmental institutions and
    individuals.
                         the asia foundation's mission
        The Asia Foundation's core objectives are central to United States
    interests in the Asia-Pacific region.
      --Democracy, human rights and the rule of law: developing and
            strengthening democratic institutions and encouraging an
            active, informed and responsible non-governmental sector;
            advancing the rule of law; and building institutions to uphold
            and protect human rights, including women's rights and
            opportunity;
      --Open Trade and Investment: Supporting open trade, investment and
            economic policy reform at the regional and national levels;
      --Peaceful and Stable Regional Relations: Promoting regional
            discussions on security cooperation, regional economic policy,
            law and human rights.
        In the past, this Committee has encouraged the Foundation's grant
    making role, and we remain faithful to that mission. The Foundation's
    hallmark is to make sequential grants to steadily build and strengthen
    institutions, develop leadership and advance policy reforms in
    countries in the region. Foundation assistance supports training,
    technical assistance, and seed funding for new, local organizations--
    all aimed at promoting reform, building Asian capacity and
    strengthening relations with United States institutions. Foundation
    grantees can be found in every sector in Asia, leaders of government
    and industry and at the grass roots level, in the increasingly diverse
    civil society of Asia. Notably, the current Afghanistan Ministers of
    Higher Education Sharief Fayez and Women's Affairs Sima Simar are
    former grantees who have asked the Foundation for immediate assistance
    in education and training, including re-starting the Books for Asia
    program, the Foundation's long standing program that has distributed
    millions of books to Asia since 1954.
        The urgency of the political and security needs in Asia,
    particularly given the instability in South Asia since September 11,
    have increased the need for experienced American actors in the region.
    The experiences in countries such as Korea, the Philippines, Thailand
    and Taiwan, where democratic and economic transitions are well
    underway, represent, in part, the return on investment the Foundation
    has made, over time, in support of individuals and institutions
    committed to reform.
                                    programs
        The Asia Foundation's programs in Asia strengthen formal
    institutions of governance--including constitutional frameworks, the
    legislative branch and the judiciary--and develop more effective civil
    society organizations, the protection of human rights and the
    development of law and effective legal systems. The Foundation's
    programs also increase economic reform and open trade. Its
    international relations programs reflect a unique capacity to promote
    increased understanding of different foreign policy perspectives to
    complement more formal diplomatic efforts that advance American
    economic and security interests in the region.
        Legislative development.--The Foundation has contributed to the
    development of legislatures in 16 countries in Asia through technical
    assistance, training members and staff, facilitating interaction with
    the nongovernmental sector and developing parliamentary capacity to
    review budgets and other executive functions in Thailand, Taiwan, South
    Korea, Mongolia, the Philippines and Indonesia. The Foundation was the
    only American organization to provide technical assistance to the
    Constituent Assembly in East Timor in the recently completed
    constitutional drafting process, providing international experts and
    support for the East Timorese People's Constitutional Working Group.
        Civil society.--The Foundation is the single largest supporters of
    the non-governmental sector in the Asian countries in which we operate.
    The Foundation builds the capacity of organizations, encourages public
    participation and works to improve the regulatory environment for NGOs.
    In Pakistan, the Foundation supports community based organizations that
    provide education services in areas where none exist, through public-
    private partnerships, particularly in the economically poor Northwest
    Frontier Province (NWFP). Continued education and advocacy efforts in
    Nepal are supported that focus on addressing the dire problem of the
    trafficking of women and children. Many programs focus on western
    Nepal, under the greatest risk from the growing Maoist insurgency in
    that part of the country. The Foundation has been the largest supporter
    of human rights, environmental and research and policy NGOs in
    Cambodia.
        Human rights.--The Foundation's human rights programs promote the
    protection and advancement of human rights as an important priority.
    Through its support of nongovernmental and governmental human rights
    efforts at the local, regional and national levels, the Foundation's
    programs focus on human rights education and the development of
    monitoring groups, forensic training to investigate past abuses, media
    training, guides on international human rights standards, conflict
    reporting for journalists, programs to reduce trafficking and violence
    against women, and alternative dispute resolution programs in conflict
    areas. The Foundation supports moderate Muslim organizations in
    Indonesia, Pakistan and in Mindanao in the Philippines to encourage
    programs that promote moderate views, religious tolerance, peace,
    conflict management and the rights of women under Islam, including the
    use of Islamic scriptures to support messages of peace and non-
    violence. The Foundation gives special attention to the troubled areas
    of Indonesia through support for local human rights efforts in Aceh,
    Papua and most recently, the Maluku Islands. Programs include increased
    media campaigns through radio and television by moderate groups to
    promote pluralism and tolerance in conflict prone areas and the
    utilization of mosque youth networks to educate and strengthen networks
    for democracy and pluralistic Islam.
        Legal reform.--In China, the Foundation has supported
    administrative law reform efforts in China to limit the arbitrary power
    of officials and create greater scope for citizen participation and
    redress. With China's entry into the WTO, the Foundation has embarked
    on a training program for provincial and municipal legal affairs
    offices to promote understanding of the complexities of WTO compliance
    related to uniform treatment, legal transparency and consistency.
    Foundation programs also support legal aid services and popular legal
    education to bring the benefits of legal reform directly to China's
    citizens, including migrant women populations in the new economic zones
    of Southern China. In Nepal, the Foundation has started a legal reform
    program for the courts, through training programs in mediation,
    establishment of legal information systems, and development of programs
    with watchdog citizens' groups to raise awareness of corruption and
    misconduct.
        Economic growth and opportunity.--Small and medium enterprise
    reform is a vital engine of growth, providing employment and
    opportunity for millions throughout the region. The Foundation's
    programs help to improve the environment for small business growth in
    Indonesia, Bangladesh, Thailand and the Philippines by removing policy
    barriers and regulatory red tape, reducing corruption, and providing a
    voice for small entrepreneurs through support for business associations
    and business-government dialogue. The Foundation funds efforts to
    improve corporate governance in Korea, China, Japan and the
    Philippines, and supports open trade and investment in the region
    through assistance to the Pacific Economic Cooperation Council (PECC)
    and the Asia-Pacific Economic Cooperation (APEC) process.
        International relations.--The Foundation continues to invest in the
    development of young leaders, for example through support for
    diplomatic training in United States universities for Chinese foreign
    affairs staff, and fellowships for Vietnamese, Mongolian and for the
    first time, a young Indian diplomat. Programs also include support for
    the Council for Security Cooperation in the Asia Pacific (CSCAP),
    training programs in compliance with trade agreements and WTO for
    Chinese and Vietnamese officials and track II programs on cross-straits
    relations an d Northeast Asian security.
                                   conclusion
        As the preceding examples of our work emphasize, the Foundation is
    a field-based organization that supports projects in Asia that aim at
    building the capacity of Asian institutions and supporting reform
    efforts, while at the same time, maintaining close links with the U.S.
    foreign policy community. Working through 14 offices in the Asia
    region, including in China, Hong Kong and Taiwan, with newly
    established project offices in East Timor and Afghanistan, the
    Foundation provides vital support to local economic and political
    reform efforts.
        The Foundation is first and foremost a grant making organization.
    The Foundation has consistently received national recognition for its
    efficient grant-to-operating expense ratio, reflecting its commitment
    to maximizing the impact of its programs in Asia, while keeping
    expenses low. We are not a research organization or an academic
    institution, nor are we Washington based. We work on the ground in Asia
    as an accepted, trusted partner and supporter of Asian reform efforts
    that simultaneously support and reinforce American political, economic
    and security interests. We also partner in our programs with American
    and international public and private organizations to leverage our
    resources, and make investments pay off. Our partnership with The
    Richard & Rhoda Goldman Fund to support Agency Coordinating Body for
    Afghan Relief (ACBAR), an Afghan donor coordination organization, and
    PARSA, which supports projects for women in Afghanistan, is but one
    example.
        Public funding is essential to our mission for many reasons. While
    the Foundation has made gains in expanding private funding, the
    flexibility and reliability that public funding lends to the
    Foundation's efforts are critical. As an organization committed to
    United States interests in Asia, we can only be successful if potential
    private donors understand that the U.S. government continues to support
    our efforts in the region. Furthermore, private funding is almost
    always tied to specific projects (as are USAID funds for which the
    Foundation competes) and do not replace public funding, either in scale
    or flexibility. Moreover, the flexibility afforded by U.S. government
    appropriated funds enables the Foundation to respond quickly to fast-
    breaking developments and program opportunities, as demonstrated by our
    programs related to the referendum in East Timor in 2001 and most
    recently, needs identified by the Afghan Interim Administration and the
    United Nations in Afghanistan related to the upcoming Loya Jirga
    process.
        As you and your colleagues know, budget constraints resulted in
    significant reductions in the Foundation's annual appropriation in
    fiscal year 1996. The requested $9.44 million for fiscal year 2003 is
    below the $15 million annual appropriation for the Foundation during
    the decade prior to 1996. The $15 million level has been authorized
    consistently by the Congressional authorizers in recent years. We have
    worked hard to manage our budget, reduce staff and expenditures,
    increase our efficiency and diversify our funding sources. We have
    struggled to maintain our regional presence through our offices in
    Asia, although budget cuts did force closure of the Malaysia office in
    1996, and ensured that the maximum possible amount of appropriated
    funds are dedicated to on-the-ground programs. Nevertheless, this
    constrained level of funding has limited the Foundation's ability to
    respond to needs in the region.
        In closing, Mr. Chairman, I believe that at this critical time in
    United States-Asia relations we have the opportunity and the obligation
    to demonstrate America's strong commitment to working with Asian
    leaders to assure the security and well being of the people of Asia.
    Now more than ever, The Asia Foundation's programs represent a positive
    American response to the challenges facing Asia today, contributing to
    the development of stable societies and advancing the interests of the
    United States in the region. At a time of rapid change and uncertainty,
    additional funding would enable the Foundation to expand its role and
    its programs to help meet these challenges.
        Thank you.

           LIST OF WITNESSES, COMMUNICATIONS, AND PREPARED STATEMENTS

                                  ----------
                                                                       Page
    Airports Council International--North America, prepared statement   441
    Alliance for International Educational and Cultural Exchange,
      prepared statement.............................................   467
    American Association of Airport Executives, prepared statement...   441
    American Foreign Service Association, prepared statement.........   469
    American Rivers, prepared statement..............................   450
    Anthony, Sheila F., Commissioner, Federal Trade Commission,
      prepared statement.............................................   425
    Ashcroft, John, Attorney General, Office of the Attorney General,
      Department of Justice..........................................     1
        Opening statement............................................     1
        Prepared statement...........................................     6

    Campbell, Senator Ben Nighthorse, U.S. Senator from Colorado:
        Prepared statement...........................................   259
        Questions submitted by.......................................   303
    Carman, Gregory W., Chief Judge, United States Court of
      International Trade, Federal judiciary, the judiciary, prepared
      statement......................................................   158

    Domenici, Senator Pete V., U.S. Senator from New Mexico,
      questions submitted by........................114, 220, 296, 354, 425
    Donnelly, Tony, Director of Budget and Personnel, Supreme Court
      of the United States, the judiciary............................   131

    Evans, Hon. Donald L., Secretary of Commerce, Office of the
      Secretary, Department of Commerce..............................   307
        Opening remarks..............................................   310
        Prepared statement...........................................   307

    Gregg, Senator Judd, U.S. Senator from New Hampshire, questions
      submitted by............................................290, 341, 385

    Hantman, Alan, Architect of the Capitol..........................   131
        Prepared statement...........................................   136
    Heyburn, Judge John G., II, Chairman, Committee on the Budget of
      the Judicial Conference of the United States, Federal
      judiciary, the judiciary.......................................   143
        Prepared statement...........................................   145
    Hollings, Senator Ernest F., U.S. Senator from South Carolina:
        Opening remarks..............................................     1
        Questions submitted by............................54, 206, 332, 391
    Hutchison, Senator Kay Bailey, U.S. Senator from Texas, questions
      submitted by...................................................   221

    Inouye, Senator Daniel K., U.S. Senator from Hawaii, questions
      submitted by.............................................57, 211, 276
    International Research Institute for Climate Prediction, prepared
      statement......................................................   453

    Kennedy, Hon. Anthony M., Associate Justice, Supreme Court of the
      United States, the judiciary...................................   131
        Prepared statement...........................................   134
    Kohl, Senator Herb, U.S. Senator from Wisconsin, questions
      submitted by............................................110, 216, 340

    Lautenbacher, Conrad C., Jr., Vice Admiral, U.S. Navy (Ret.),
      Under Secretary of Commerce for Oceans and Atmosphere, National
      Oceanic and Atmospheric Administration, Department of Commerce.   365
        Opening statement............................................   376
        Prepared statement...........................................   365
    Leahy, Senator Patrick J., U.S. Senator from Vermont:
        Prepared statementsI6046, 318................................
        Questions submitted byI6062, 179, 288........................
    Ludsin, Steven A., prepared statement............................   472

    Mayer, Haldane Robert, Chief Judge, U.S. Court of Appeals for the
      Federal Circuit, Federal judiciary, the judiciary, prepared
      statement......................................................   171
    Mecham, Leonidas Ralph, Director, Administrative Office of the
      United States Courts, and member, Executive Committee of the
      Judicial Conference of the United States, Federal judiciary,
      the judiciary..................................................   143
        Prepared statement...........................................   153
    Michael, Judge M. Blane, member, Committee on the Budget of the
      Judicial Conference of the United States, Federal judiciary,
      the judiciary..................................................   143
    Middle Atlantic-Great Lakes Organized Crime Law Enforcement
      Network, prepared statement....................................   458
    Mikulski, Senator Barbara A., U.S. Senator from Maryland,
      questions submitted byI60214, 278..............................
    Muris, Timothy J., Chairman, Federal Trade Commission............   405
        Prepared statement...........................................   407
    Murphy, Diana E., Chair, United States Sentencing Commission,
      prepared statement.............................................   163
    Murray, Senator Patty, U.S. Senator from Washington, questions
      submitted byI60113, 219........................................

    National Audubon Society, prepared statement.....................   446
    National Congress of American Indians, prepared statement........   455
    National Public Radio, prepared statement........................   444
    National Recreation and Park Association, prepared statement.....   451
    National, Coordinated Law-Related Education Program, prepared
      statement......................................................   461
    Northwest Indian Fisheries Commission, prepared statement........   438

    Pitt, Harvey L., Chairman, Securities and Exchange Commission....   225
        Prepared statement...........................................   225
    Powell, Hon. Colin L., Secretary of State, Office of the
      Secretary, Department of State.................................   237
        Opening statement............................................   240
        Prepared statement...........................................   237
    Powell, Michael K., Chairman, Federal Communications Commission..   183
        Prepared statement...........................................   183

    Rider, Sally, Administrative Assistant to the Chief Justice,
      Supreme Court of the United States, the judiciary..............   131

    Smith, Hon. Fern M., Director, Federal Judicial Center, Federal
      judiciary, the judiciary, prepared statement...................   159
    Suter, William, Clerk of the Court, Supreme Court of the United
      States, the judiciary..........................................   131

    Talkin, Pamela, Marshal, Supreme Court of the United States, the
      judiciary......................................................   131
    The Asia Foundation, prepared statement..........................   473
    The Humane Society of the United States, prepared statement......   453
    The National Consortium for Justice Information and Statistics,
      prepared statement.............................................   464
    The Nature Conservancy, prepared statement.......................   433
    The Ocean Conservancy, prepared statement........................   429
    Thomas, Hon. Clarence, Associate Justice, Supreme Court of the
      United States, the judiciary...................................   131
    Thompson, Mozelle W., Commissioner, Federal Trade Commission,
      prepared statement.............................................   423

    Yukon River Drainage Fisheries Association, prepared statement...   436

                                 SUBJECT INDEX

                                  ----------

                             DEPARTMENT OF COMMERCE

                National Oceanic and Atmospheric Administration

                                                                       Page

    Additional committee questions...................................   385
    Climate services.................................................   369
    Conservation Law Foundation, status of negotiations with.........   380
    Energy...........................................................   372
        Initiative...................................................   402
    Financial management in NOAA.....................................   374
    Fishing restrictions in Northeast................................   380
    Global climate change:
        Addressing...................................................   381
        Initiative...................................................   394
    Groundfishing in Northeast.......................................   383
    Homeland security................................................   373
    International issues.............................................   403
    National Estuarine Research Reserve Program......................   395
    National sea grant college programI60375, 379, 383, 390, 391.....
        Transfer of..................................................   378
    New England groundfish lawsuit...................................   388
    NMFS:
        Annual stock assessments.....................................   384
        Lawsuits.....................................................   391
        Litigation case backlog......................................   379
    NOAA:
        Energy initiative............................................   388
        Fisheries, modernization of..................................   370
        Organization and administration..............................   385
        Sole sourcing................................................   382
    Northern right whales............................................   394
    Ocean and coastal programs.......................................   374
    Other key NOAA programs..........................................   372
    People and infrastructure: $129.0 million adjustment-to-base.....   366
    Saltonstall/Kennedy funds........................................   400
    Science, role of.................................................   390
    Weather warnings and forecasts, improving extreme................   366

                            Office of the Secretary

    Additional committee questions...................................   331
    Advanced Technology ProgramI60311, 316, 332......................
    Bureau of Economic AnalysisI60321, 354...........................
    Bureau of Export Administration..................................   317
    Bureau of the Census.............................................   331
        Financial accounting systems.................................   334
        Fundamental change at........................................   351
        Internal operating system....................................   352
    Commerce administrative management system (CAMS).................   341
    Critical infrastructure protection...............................   344
    Economic information and framework...............................   308
    EDA:
        Investment criteria..........................................   336
        Program reduction............................................   326
    Election reform standards........................................   333
    Homeland securityI60308, 342, 346................................
    Information infrastructure grantsI60321, 323.....................
    International Trade Administration...............................   327
        Textile and manufacturing jobs...............................   337
    MAF/TIGER, cost of...............................................   336
    Manufacturing Extension Partnership ProgramI60313, 319, 332, 340,
      356............................................................
    Manufacturing jobs...............................................   338
    Marine research..................................................   329
    National Institute for Standards and Technology (NIST)I60316, 346
        Activities since September 11th..............................   317
    National Telecommunications and Information Administration.......   315
        Technology Opportunities Program.............................   339
    NOAA:
        Sea Grant Program............................................   337
            Transfer of National.....................................   354
    Northeast economic development representative....................   325
    Oceanic and atmospheric environment, observing and managing the
      Nation's.......................................................   309
    Patent and Trademark Office (PTO)I60338, 349.....................
    Public Telecommunications Facilities Program.....................   356
    Sea grant........................................................   316
    Softwood lumber..................................................   354
    Stellar sea lion.................................................   330
    Technological innovation, providing infrastructure for...........   309
    Trade adjustment assistance......................................   326
    2010 decennial census:
        Cost effectiveness of........................................   351
        Cost of......................................................   333
        Cost savings.................................................   335
    Vessel monitoring system.........................................   329
    World Trade Center:
        Investigation................................................   333
        Towers.......................................................   348

                             DEPARTMENT OF JUSTICE

                         Office of the Attorney General

    Additional committee questions...................................    54
    Agreement with DOD, limitations on...............................    34
    Anti-terrorism task forces.......................................    66
    Antitrust Division...............................................    54
    Antitrust:
        Enforcement clearance agreement..............................    15
        Responsibilities, DOJ's and FTC's plan to divide.............   110
    Attorney General recusals........................................    18
    Background checks................................................    57
    Black tar heroin and methamphetamine trafficking Federal Bureau
      of Investigation (FBI) and Drug Enforcement and Administration
      (DEA)..........................................................   120
    Border security..................................................    47
    Civil rights:
        Advancing....................................................    11
        And hate crimes..............................................    70
        Of Arab Americans............................................    44
        Protecting...................................................    49
    Civil Rights Division............................................    76
    Coordination between agencies....................................    57
    COPS program, reduction ofI6022, 35, 37..........................
    Counterterrorism:
        Budget request...............................................     2
        Responsibilities.............................................    28
    Crime:
        Against Arab Americans.......................................    71
        Supporting victims of........................................    10
    Crisis management, roles in......................................    22
    Cybercrime, combating............................................    50
    Detention and incarceration capacity, managing increased Federal.    10
    Drug trafficking and abuse, curbing..............................    50
    Drugs budget request.............................................     3
    Enron case:
        Need for special counsel in..................................    13
        Recusal......................................................    51
    Federal Bureau of Investigation..................................    47
        Shift in responsibilities....................................    64
    FEMA transfers...................................................    52
        Decision on..................................................    20
    First responder training.........................................   117
    First responders funding.........................................    21
    Foreign terrorist tracking task force............................    66
    Forensic science services and reducing the DNA backlog, improving    50
    Hate crimes:
        Legislation..................................................    45
        Since 9/11...................................................    45
    Illegal drugs, reducing the availability of and supporting proven
      programs aimed at reducing drug use............................    11
    Immigration services and enforcement, improving management of....    10
    INS restructuring................................................   123
    Internet-based regional information sharing system and Internet-
      based Law Enforcement Online Program...........................    67
    Joint terrorism task forces and anti-terrorism task forces.......    65
    Justice Department requests, other...............................     4
    Law enforcement:
        Improving State and localI6048, 69...........................
        In Indian country............................................   113
    Legal activities, enhancing the Department's.....................    12
    Liberian deferred enforced departure.............................    24
    Mental health courtsI6029, 119...................................
    Methamphetamine..................................................    57
    Mississippi redistricting plan...................................    74
    National Guard:
        Arming the...................................................    35
        Deployment...................................................    33
    NDPO and ODP to FEMA, transfer of................................    18
    New Mexico.......................................................   126
    NICS:
        Checklist....................................................    27
        Gun show loopholes...........................................    25
    Northern border:
        Inspector earmark............................................    62
        Recruiting and retention.....................................    63
        Security.....................................................    40
            DOD participation in.....................................    32
    Office of Victims of Crime.......................................   112
    Other important activities.......................................    13
    Postconviction DNA...............................................    38
        Review.......................................................    64
    Preventing and combating terrorism, including securing the
      Nation's border................................................     6
    Professional Security Officer Career Program.....................    67
    Project Child Safe...............................................    36
    Radiation exposure compensation programI6030, 114................
    Safe Explosives Act..............................................    36
    Santa Teresa Port of Entry.......................................    31
        Staffing at..................................................   122
    SCAAP elimination................................................   127
    September 11th Victim Compensation Fund..........................    62
    State and local:
        Assistance grants............................................    41
        Funding......................................................    43
        Law enforcement, streamlining assistance available to........    12
    State court funding..............................................   111
    Tax Division and Environmental and Natural Resources Division....    77
    Title V--Juvenile Justice Local Delinquency Prevention...........   111
    Tobacco litigation...............................................    43
        Resources....................................................    69
    TrilogyI6042, 64.................................................
        Status report on.............................................    42
    USA PATRIOT Act, technology funding request under the............    62
    VAWA--New Mexico.................................................    29
    Violence against women New Mexico funding........................   124
    Voting and civil rights enforcement..............................     4

                              DEPARTMENT OF STATE

                            Office of the Secretary

    Additional committee questions...................................   275
    Afghan women.....................................................   278
    Afghanistan:
        Funding for..................................................   298
        Future of....................................................   271
        Micro lending program in.....................................   269
        Peacekeeping and security in.................................   280
        Terrorist training camps in..................................   251
    AIDS, funding for the fight against global.......................   284
    Arabic Voice of America..........................................   283
    Arms control.....................................................   263
    Berlin Embassy site..............................................   248
    Biennial budgeting...............................................   298
    Biometric identification.........................................   252
    Border security/consular affairs.................................   292
    Budget issues....................................................   255
    Capitalism.......................................................   272
        And the developing world.....................................   299
    Center for Antiterrorism and Security Training (CAST) at Aberdeen
      Proving Ground (APG)I60288, 296................................
    Colombia:
        Human rights certification...................................   288
        Situation inI60258, 268......................................
    Congo, peacekeeping in the.......................................   252
    Congress, consultation with......................................   266
    Convention on the Elimination of All Forms of Discrimination
      Against Women (CEDAW)..........................................   277
    Corruption/international crime...................................   303
    Current events...................................................   256
    Cyprus...........................................................   286
    Department's long-range IT plan..................................   293
    Diplomatic hiring initiative.....................................   291
    Embassy:
        ConstructionI60248, 255, 291.................................
        Five-year construction plan..................................   254
        Security.....................................................   287
    Foreign aid......................................................   298
        Funding......................................................   256
    General State issues.............................................   290
    Global hunger....................................................   285
    Globalization and competition....................................   274
    Hawaiian-based fishing fleets....................................   276
    Human rights in Central Asia.....................................   304
    International law enforcement....................................   296
    International Law Enforcement Academy [ILEA].....................   270
    International Monetary Fund (IMF)................................   297
    Liberian immigrants in the United States.........................   262
    Madagascar, facility in..........................................   247
    Management challenges............................................   297
    Mexico...........................................................   273
    Middle East......................................................   289
    Missile defense and Russia.......................................   265
    Muslim Center in Vienna..........................................   249
    NATO enlargement.................................................   286
    Net fragments....................................................   276
    Nuclear Posture Review (NPR).....................................   281
    OSCE:
        And human rights.............................................   260
        Countries, police training in................................   262
        Role of the..................................................   259
    Overseas buildings program.......................................   253
    Peacekeeping:
        Funding......................................................   283
        General......................................................   294
    Personnel........................................................   245
    Policing.........................................................   305
    Public diplomacy.................................................   277
    Russia: OSCE.....................................................   304
    Serbia...........................................................   289
    Southeast European Cooperative Initiative........................   303
    State and INS coordination.......................................   251
    Terrorism:
        Compensation to victims of international.....................   287
        Expansion of the war on......................................   268
        Victims of compensation......................................   246
        Winning the war on...........................................   250
    Trafficking in human beings......................................   305
    United Nations:
        Capital master plan..........................................   295
        Dues, resynchronization of...................................   283
        Peacekeeping mission in the Congo............................   294
        Population Fund (UNFPA)......................................   283
        Reforms......................................................   302
    United States:
        Long-term commitment to developing countries.................   257
        Policy on Iraq...............................................   266
        Russia relations.............................................   261
    Visa:
        And passport activities......................................   271
        And passport fraud...........................................   300
        Procedures...................................................   300
    Youth in developing countries....................................   302

                       FEDERAL COMMUNICATIONS COMMISSION

    Additional committee questions...................................   206
    Digital conversion...............................................   203
    Emergency broadcast platforms....................................   203
    FCC, view on abolishing the......................................   204
    Fiscal year:
        2002: maximizing available resources.........................   184
        2003: continuing a year of progress..........................   188
    NextWave case....................................................   195
    1934 Communications Act..........................................   195
    Spectrum, ownership of the.......................................   199
    Summary statement................................................   192
    Tauzin-Dingell bill..............................................   197
    Universal service fund...........................................   200

                            FEDERAL TRADE COMMISSION

    Additional committee questions...................................   425
    Competition mission, maintaining.................................   413
    Consumer protection mission......................................   409
    Generic drug industry............................................   422
    Needed resources--fiscal year 2003...............................   418
    Summary statement................................................   405
    Telemarketing....................................................   423

                       SECURITIES AND EXCHANGE COMMISSION

    Accounting industry, review and reform of........................   234
    CEOs, greater responsibilities on................................   233
    Disclosure and accounting........................................   227
    Disclosure system, improving the.................................   234
    Funding:
        Level........................................................   225
        Structure....................................................   229
    Information technology...........................................   229
    Investor education...............................................   229
    New legislative needs............................................   234
    Opening remarks..................................................   230
    Pay parity.......................................................   226
        Justification for funding....................................   231
    President's proposed approach to address issues..................   233
    Real-time enforcement............................................   227
    Regulatory protection, effectiveness of..........................   235
    Staffing:
        Additional needs.............................................   227
        Increased request............................................   231
        SEC levels and Commission workload...........................   232

                                 THE JUDICIARY

                               Federal Judiciary

    Additional committee questions...................................   179
    Administrative Office:
        Budget request...............................................   155
        Contributions of the.........................................   150
        Relocation of the............................................   175
        Role of the..................................................   153
    Anthrax attacks, impact of the...................................   146
    Assistant U.S. Attorneys (AUSAs) impact of additional............   147
    Budget overview..................................................   145
    Civil cases, tracking............................................   181
    Clerks' office staff.............................................   149
    Cost containment and the judiciary's budget process..............   150
    Court support staff..............................................   147
    Defender services................................................   149
    Federal Judicial Center, contributions of the....................   151
    Judicial compensation............................................   151
    Junkets/efforts to lobby the judiciary through seminars..........   179
    Las Cruces Federal courthouse, status of.........................   178
    Long-term implications...........................................   146
    Mentally ill:
        Medications for the..........................................   177
        Services for the within the judicial system..................   176
    New Federal defender office......................................   179
    New Mexico, additional judgeship for.............................   178
    Off-site court operations support center.........................   174
    Panel attorney rate increase.....................................   172
    Probation and pretrial services..................................   148
    Program increases, request for...................................   172
    Rate increase as an adjustment to base...........................   173
    Resources requested..............................................   165
    Responsibilities and accomplishments.............................   156
    Security, heightened.............................................   147
    September 11th attacks, impact of the............................   146
    Terrorism trials, cost of........................................   173
    2001 terrorism incidents, response to............................   153
    2003 request.....................................................   159

                       Supreme Court of the United States

    Building modernization...........................................   133
    Building renovation and improvements.............................   137
    Court automation.................................................   138
    Judges' pay......................................................   139
    Operations and maintenance.......................................   138
    Program changes..................................................   138
    Supreme Court budget.............................................   132

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