[Senate Hearing 108-]
[From the U.S. Government Publishing Office]



 
DEPARTMENTS OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT, AND 
        INDEPENDENT AGENCIES APPROPRIATIONS FOR FISCAL YEAR 2004

                              ----------                              

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

    MATERIAL SUBMITTED BY AGENCIES NOT APPEARING FOR FORMAL HEARINGS

    [Clerk's Note.--The following agencies of the Subcommittee 
on VA, HUD and Independent Agencies did not appear before the 
subcommittee this year. Chairman Bond requested these agencies 
to submit testimony in support of their fiscal year 2004 budget 
request. Those statements submitted by the chairman follow:]

                  NATIONAL CREDIT UNION ADMINISTRATION

      PREPARED STATEMENT OF THE HONORABLE DENNIS DOLLAR, CHAIRMAN

    Mr. Chairman, Ranking Member Mikulski, and Members of the 
Subcommittee. As Chairman of the National Credit Union Administration 
(NCUA), I am pleased to submit testimony that presents NCUA's request 
for fiscal year 2004 funding of the Community Development Revolving 
Loan Fund and to request $1.5 billion in fiscal year 2004 borrowing 
authority for our Central Liquidity Facility (CLF), and slightly 
increased CLF operational expenses for the year.
    I will begin by discussing the Central Liquidity Facility.

    NATIONAL CREDIT UNION ADMINISTRATION CENTRAL LIQUIDITY FACILITY

Introduction
    The National Credit Union Administration Central Liquidity Facility 
(CLF) was created by the National Credit Union Administration Central 
Liquidity Facility Act (Public Law 95-630, Title XVIII, 12 U.S.C. 1795, 
et seq.). The CLF is a mixed ownership Government corporation managed 
by the National Credit Union Administration Board. It is owned by its 
member credit unions who contribute all of the capital by the purchase 
of stock. The CLF became operational on October 1, 1979.
    The purpose of the CLF is to improve general financial stability by 
meeting the liquidity needs of credit unions and thereby encourage 
savings, support consumer and mortgage lending, and provide basic 
financial resources to all segments of the economy. To accomplish this 
purpose, member credit unions invest in the CLF through the purchase of 
stock, which is used for investment purposes and the funding of some 
lending activity. The proceeds of borrowed funds from the Federal 
Financing Bank are used to match fund significant loan requests from 
member credit unions.
    In addition to serving its direct members, the CLF complements the 
organizational structure of the U.S. credit union financial system by 
working with its agent members that are corporate credit unions acting 
as agents of the CLF on behalf of their natural person credit union 
membership. This agent framework consists of a private financial 
network of 33 state and federally chartered corporate credit unions 
with approximately $67.1 billion in assets. The corporate credit union 
network provides operational and correspondent services, investment 
products and advice, and short-term loans to approximately 9,782 
natural person credit unions members. The CLF provides this network 
with assurance that if temporary liquidity shortages or public 
confidence issues arise due to external events or internal problems, 
funds are available to meet abnormal savings outflow. By being a 
specialized lender housed within the NCUA, the CLF has the ability to 
draw upon the supervisory and insurance resources of the Agency. 
However, CLF assistance is generally a secondary source of funds after 
the corporate system or other sources of credit have been utilized. 
Often the CLF is used when other credit sources have been unable to 
provide the appropriate terms and conditions required in a specific 
situation.
    The borrowings of the CLF have the ``full faith and credit'' of the 
United States government. The Federal Financing Bank of the U.S. 
Treasury is available as a source for the CLF to fund its lending 
programs. The CLF is financially self-supporting and does not use 
government funds to support any of its administrative and operational 
expenses.

Lending Activities
    Loans are available to credit unions directly from the CLF or 
through its agent (corporate credit union) members. Credit unions rely 
on market sources to meet their demands for funds. The CLF normally is 
not an active participant in the on-going daily operations of this 
system. Rather its role is to be available when unexpected, unusual, or 
extreme events cause temporary shortages of funds. If not handled 
immediately, these shortages could lead to a larger confidence crisis 
in individual credit unions or even the system as a whole. Because of 
its knowledge of credit unions and its immediate access to the 
supervisory information of NCUA, the CLF exercises a vital role in 
maintaining member and public confidence in the health of the U.S. 
credit union financial system.

Factors Influencing Credit Union Borrowing Demand
    Under the Federal Credit Union Act, the Central Liquidity Facility 
is intended to address unusual or unpredictable events that may impact 
the liquidity needs of credit unions. Since these events are not 
generally foreseen, it is extremely difficult to forecast potential 
loan demand. Throughout the history of the Central Liquidity Facility, 
loan demand has widely fluctuated in both volume and dollar amount.
    The CLF is authorized by statute to borrow from any source up to 
twelve times its subscribed capital stock and surplus. Prior to fiscal 
year 2001, with the exception of the Y2K-transition period, Congress 
restricted the CLF's borrowing limit to $600 million through the annual 
appropriations process. For fiscal year 2001, the traditional $600 
million cap was increased to $1.5 billion. The $1.5 billion borrowing 
limit was again approved for fiscal years 2002 and 2003. The 
continuation of the $1.5 cap for fiscal year 2004 will further assure 
that the CLF continues as a reliable, efficient backup liquidity source 
in times of need.
    It is important to note that Central Liquidity Facility loans are 
not used to increase loan or investment volumes, because by statute, 
the proceeds from Central Liquidity Facility loans cannot be used to 
expand credit union portfolios. Rather, the funds are advanced strictly 
to support the purpose stated in the Federal Credit Union Act--credit 
union liquidity needs--and in response to circumstances dictated by 
market events.

Administrative Expenses
    Total operating expenses for fiscal year 2002 were $208,000, below 
the budget limitation of $309,000. Expenses were under budget in 2002 
due to two factors; (1) a brief vacancy in the NCUA Board in the first 
quarter (2) travel expenses were not incurred as anticipated.
    Total operating expenses for fiscal year 2003 are projected to be 
within our budget limitation of $309,000. In fiscal year 2003, pay and 
related benefits are higher than 2002 due to pay comparability and 
unknown contingencies.
    For fiscal year 2004, the Central Liquidity Facility is requesting 
an administrative expense limitation of $310,000. This figure is 
slightly higher than the previous year due to a change in pay and 
benefits and unknown contingencies. Expenses for fiscal year 2003 are 
not formulated or approved by the NCUA Board until November 2003. 
Accordingly, fiscal year 2004 expenses are estimated with inflationary 
pressures, known pay adjustments, and unknown contingencies.

Additional Background
    Credit unions manage liquidity through a dynamic asset and 
liability management process. When on-hand liquidity is low, credit 
unions must increasingly utilize borrowed funds from third-party 
providers to maintain an appropriate balance between liquidity and 
sound asset/liability positions. The CLF provides a measure of 
stability in times of limited liquidity by ensuring a back-up source of 
funds for institutions that experience a sudden or unexpected shortage 
that cannot adequately be met by advances from primary funding sources. 
Two ratios that provide information about relative liquidity are the 
loan to share ratio and the liquid asset ratio. Liquid assets are 
defined as all investments less than one year plus all cash on hand. 
Managing liquidity risk is a major priority for credit unions and has 
become an increasingly important risk issue in the past decade as the 
charts below indicate.



    Chart 1 shows the ratio of loans to shares in all federally insured 
credit unions. As the ratio of loans to shares increases, the amount of 
funds maintained in short-term liquid investments declines. Liquidity 
risk has increased on average in the past decade as on-hand liquidity 
in federally insured credit unions gradually declined due to increased 
lending. A substantial inflow of shares during 2002 reduced the ratio 
from the Yearend 2001 high of 73.8 percent down to a Yearend 2002 level 
of 70.8 percent. Liquidity risk management remains a significant 
obligation for credit unions.



    Chart 2 shows the ratio of liquid assets to total assets in all 
federally insured credit unions. As this ratio decreases, liquidity 
risk and the potential need for borrowed funds conversely increases. 
Credit unions utilize various market sources for funding needs 
including the repurchase market, correspondent relationships with 
corporate credit unions and other financial institutions, and, to a 
growing extent, membership in the Federal Home Loan Bank system. CLF 
serves as a back-up source of liquidity when an unexpected need for 
funds arises and primary sources are not available.

Explanation of Obligations by Object Class
  --Personnel Compensation represents the estimated salary cost of 1.5 
        permanent full-time employees on duty during fiscal year 2004.
  --Employees Benefits includes health benefits, government life 
        insurance, miscellaneous cash awards, and change of station 
        real estate differential.
  --Travel and Transportation represents travel expenses for CLF staff.
  --Communications, Utilities, and Other Rent represents estimated rent 
        paid to the agency for office space, as well as telephone and 
        postage expenses.
  --Printing and Reproduction represents costs primarily associated 
        with the Annual Report. This expense category will also include 
        minor costs associated with basic forms, statements, and 
        notices sent to members.
  --Other Services represents payroll processing fees, training, and 
        reimbursement to the agency for Board and staff payroll.
  --Supplies and Materials represents computer paper, visual aids, 
        educational supplies, and miscellaneous supplies for the CLF, 
        its Agents, and sponsors of training seminars.
  --Investments are purchases of new investments during the fiscal 
        year.
  --Dividends are the cost of dividends paid to members of the 
        Facility.
    The CLF continues to experience infrequent demand for liquidity 
loans from its member credit unions. This is due, in no small part, to 
the strong financial position of credit unions and the ample levels of 
on-hand liquidity maintained during the 1990s. This is not to say, 
however, that credit unions are not in need of a special purpose 
liquidity lender. The CLF is a very important resource for credit 
unions that experience an unexpected need for liquidity, especially 
when primary funding sources are inadequate or unavailable.
    We cannot foresee the exact circumstances that might necessitate a 
broad-based need for CLF lending but we are dedicated to the principle 
that we must be ready and able to fulfill that purpose; a purpose 
established by Congress when it created the Facility. Liquidity remains 
an important priority. Like all depository institutions, credit unions 
are forced to borrow if their on-hand supply of liquidity is depleted 
beyond the level of current funding obligations. Credit unions do plan 
for such borrowing but there are times when contingency funding 
arrangements are potentially inadequate. Such times call for a 
responsive CLF.
    Whether it lends on an isolated basis or whether it is called upon 
to address a more widespread or even systemic demand for loans, the CLF 
is an efficient, effective, and low cost facility that is well adapted 
to meet the unique needs of its member credit unions.

 NATIONAL CREDIT UNION ADMINISTRATION COMMUNITY DEVELOPMENT REVOLVING 
                               LOAN FUND

    Turning to another subject, I would like to thank the Subcommittee 
for continuing its support of NCUA's Community Development Revolving 
Loan Fund (CDRLF).
    Congress established the CDRLF in 1979, through an initial $6 
million appropriation to assist officially designated ``low-income'' 
credit unions in their efforts to provide basic financial service and 
products to underserved communities. The credit unions participating in 
the CDRLF programs provide underserved communities with access to a 
variety of financial services and products which include basic savings 
and share draft accounts, home and car loans, and start-up 
entrepreneurial capital for small businesses.
    Over the years, Congress has increased the number of dollars 
available for CDRLF loans to $13 million. For more than 13 years, NCUA 
has successfully administered the revolving loan program, providing 
more than 217 loans totaling $32.8 million. And, in 1992, the NCUA 
Board began funding technical assistance grants by using the interest 
generated from the CDRLF loans. In fiscal year 2001, Congress 
recognized the success of the grants by reserving certain funds 
specifically for this part of the CDRLF program. To date, the CDRLF 
technical assistance grant program has provided more than 1,000 grants 
totaling $2.4 million.
    NCUA remains committed in our efforts to promote and facilitate the 
extension of affordable financial services to individuals and 
communities throughout America as demonstrated by the implementation of 
the agency's successful Access Across America initiative. The CDRLF 
plays a vital role in the success of Access Across America, which is 
designed to reach out to underserved communities and create economic 
empowerment for people from all walks of life. Low-income designated 
credit unions use the loans to further community development by 
providing funding for member loan demand, additional member services, 
and increased credit union capacity to serve members that has resulted 
in the overall improvement of the financial condition of low-income 
credit union members. The grants are used for verifiable and need-based 
technical assistance purposes by low-income designated credit unions.
    In 2002, Access Across America proved to be a very successful 
initiative with over 23.5 million Americans living in CDFI designated 
underserved areas becoming eligible for credit union service. In many 
instances, residents of these underserved areas often find themselves 
at the mercy of higher-cost outlets such as pawnshops, check-cashing 
stores, and rent-to-own companies in the absence of an affordable 
financial alternative.
    In 2002, NCUA received requests for loans in the amount of 
$7,007,000 and were able to approve $2,329,000. In addition, NCUA 
distributed $664,314 in technical assistance grants after receiving 
requests for $1,618,843. Unfortunately, due to limited resources, NCUA 
was forced to decline requests for more than $950,000 in technical 
assistance grants that could have been used to further the availability 
of much needed services and products through enhanced technology by 
these low-income designated credit unions, the overwhelming majority of 
which are smaller and challenged by the costs of advancing technology 
in the delivery of financial services.
    As stated earlier, the technical assistance grant program had been 
funded primarily through its history by the earnings generated from the 
interest charged for the CDRLF loans. Because CDRLF loans are low 
interest--the current interest rate is 1 percent--the earnings 
generated are insufficient to meet all the technical assistance 
requests. NCUA accepts applications for loans and grants continuously 
through the year, and we expect a steady pace for requests for the 
remainder of 2003.
    The NCUA Board constantly struggles with the need to keep loan 
interest rates low and the need to generate interest income in order to 
be able to provide additional technical assistance. The funds allocated 
specifically for technical assistance grants over the past two years 
have greatly enhanced our efforts to provide technical assistance to 
low-income credit unions. A survey completed in May 2001 found that 
low-income designated credit unions that receive CDRLF assistance 
demonstrated the following results:
  --Used the program to make additional funds available to meet 
        community loan demands and improve financial services to 
        members,
  --Experienced significant growth,
  --Stimulated economic activities in their communities, and
  --Increased funding for these institutions from other sources.
    NCUA firmly believes that, based upon the amount of loan and 
technical assistance grant applications where the needs were unable to 
be met last year, an increase of an additional $1 million over last 
year's funding level could provide the CDRLF program even greater 
ability to further the growth and long-term viability of credit unions 
in low-income and underserved areas. Access to affordable financial 
services and products can provide these communities with a much needed 
and viable alternative to check cashers, pawn shops, and title loan 
companies which often charge exorbitant rates and fees for credit in 
many low-income areas. By providing an alternative to higher-cost 
lenders, credit unions play a significant and meaningful role in 
helping residents keep more of their money in their communities and 
households. The CDRLF program furthers this worthwhile public policy 
goal, and NCUA values the strong support this Subcommittee has provided 
to this program over the years. We look forward to working with you 
again this year to continue the CDRLF program and further enhance its 
effectiveness.
    Finally, I would like to briefly summarize the current condition of 
credit unions and the National Credit Union Share Insurance Fund 
(NCUSIF). The U.S. credit union system continues to be in excellent 
health. Credit union share growth in 2002 was a significant 15.1 
percent and assets increased 11.1 percent to $557 billion. Net-worth in 
federally insured credit unions at the end of 2002 stood at 10.7 
percent and the number of problem credit unions remains at historical 
lows. These figures demonstrate the continued overall safety and 
soundness of the credit union system.
    In summary, the credit union industry remains in excellent 
condition. NCUA greatly appreciates the Subcommittee's continued 
support of our efforts to keep credit unions safe and sound, enhance 
credit union liquidity, and provide needed assistance through loans and 
grants to low-income credit unions with verifiable needs.
                                 ______
                                 

          U.S. CHEMICAL SAFETY AND HAZARD INVESTIGATION BOARD

PREPARED STATEMENT OF CAROLYN W. MERRITT, CHAIRMAN AND CHIEF EXECUTIVE 
                                OFFICER

    Mr. Chairman, Senator Mikulski, and members of the Subcommittee, 
thank you for the opportunity to present the U.S. Chemical Safety 
Board's budget proposal for 2004.
    In the last six months, the Board has completed four major 
investigations and we plan to finish five more by the end of the fiscal 
year. We have more staff deployed than ever before and now have ten 
investigations underway, from Houston to New York City, from North 
Carolina to St. Louis.
    Next year, with your continued support, we plan to complete 12 
investigations--that's three to four times what the agency could do 
only a couple of years ago.
    The CSB is a small agency just 37 people, mostly scientists, 
engineers, and other investigators. But we do what no other 
organization does: when a major chemical accident occurs, we 
immediately send a team of experts to conduct an independent, 
scientific investigation of the root causes of that accident. We don't 
just determine what happened, we determine why.
    Our purpose is to prevent future accidents, not to issue fines or 
citations. Once we have established the root causes of accidents, we 
report our findings directly to the communities affected and the 
nation, and we issue recommendations to industry and government to 
improve safety. We then press for full implementation of these 
recommended safety actions.
    No other organization has our unique mission to inform the public 
and industry about chemical accident hazards. Tragically, at no time in 
recent years has there been a greater need for an agency like ours. 
This winter has seen a rash of serious chemical accidents. Among our 
ten active cases, the Board is investigating major plant explosions in 
Kinston, North Carolina; Corbin, Kentucky; and Rosharon, Texas. These 
explosions have inflicted many deaths and injuries, imperiled hundreds 
of American jobs, and disrupted regional economies.
    By bringing to light all the causes of chemical accidents--
including hazards that are unknown, forgotten, or underestimated--CSB 
is in the forefront of building a safer industry. Let me add that 
chemical accidents are not just a problem of the chemical industry--
many companies that simply use or handle chemicals experience these 
accidents as well. For example, we are currently investigating 
accidents at a medical device company, an acoustic insulation 
manufacturer, and an architectural sign company--just to name a few.
    We are here asking for a modest increase of $1 million over our 
2003 base budget. The Committee gave us adequate resources last year to 
hire seven new accident investigators, and I thank you for it. We now 
need additional funds to fully utilize our staff and maintain our 
increased productivity into next year.

             UNPRECEDENTED LEVEL OF MISSION ACCOMPLISHMENT

    Since last year, the Board has completed five major accident 
investigations. We have ten more investigations currently underway. A 
summary of the recently completed investigations follows.

                        COMPLETED INVESTIGATIONS

BP Amoco (Augusta, GA)
    On March 13, 2001, three workers were killed as they opened a 
process vessel containing hot plastic at the BP Amoco (now Solvay 
Advanced Polymers LLC) plant in Augusta, Georgia. The workers were 
killed when the partially unbolted cover blew off the vessel, expelling 
molten plastic. The Board report, issued in May 2002, found that the 
accident could have been avoided if the firm had instituted a program 
to better understand the chemical reaction that caused pressure 
accumulation within the process vessel. The Board issued eight specific 
recommendations to the company to prevent a similar incident in the 
future.

Motiva Enterprises (Delaware City, DE)
    On July 17, 2001, one worker was killed and eight others were 
injured when a sulfuric acid storage tank exploded and collapsed at the 
Motiva Enterprises LLC Delaware City Refinery. The explosion caused a 
massive release of sulfuric acid to the environment. The Board found 
that a spark from welding equipment had ignited flammable vapors from 
the storage tank, which was inadequately maintained and had holes 
rusted through its roof.
    The Board identified significant deficiencies in Motiva's 
mechanical integrity program--the program responsible for monitoring 
and preventing corrosion of the storage tank. Among the recommendations 
from this accident, the Board urged OSHA to regulate the safety of 
atmospheric storage tanks when they are connected to hazardous 
manufacturing processes.
    The Board got strong support for its investigation and its 
recommendations from the entire Delaware Congressional delegation. Rep. 
Michael Castle and Sen. Joseph Biden both spoke forcefully at our 
public meeting in Wilmington on August 28, 2002, and they joined with 
Sen. Tom Carper in requesting action ``as swiftly as possible'' from 
OSHA Assistant Secretary John Henshaw. ``Expanding coverage to include 
aboveground storage tanks will go a long way in reaching our common 
goal of reducing catastrophic events,'' they wrote in a letter to 
Secretary Henshaw dated February 25, 2003.

Reactive Hazards (NJ, TX, and nationwide)
    Following the final CSB report in August 2000 on an incident at the 
Morton International plant in Paterson, New Jersey, the Board began an 
intensive study of 167 serious reactive chemical incidents from 1980 to 
2001. On May 30, 2002, the Board held a hearing in Paterson to review 
the findings of the nationwide study. The Board found serious gaps in 
both industry practice and government regulations to control reactive 
hazards. Senator Corzine and Senator Lautenberg both spoke at the 
meeting and supported our investigative findings on this subject.
    On September 17, 2002, in Houston, Texas, the Board issued its 
final report from the reactive hazards investigation. The Board 
recommended that OSHA amend its Process Safety Management standard to 
achieve more comprehensive control of reactive hazards. The Board also 
called on EPA to revise its chemical accident prevention program for 
the same purpose. A further recommendation requested the National 
Institute of Standards and Technology to develop a publicly available 
database of reactive hazard test information. There were also 
recommendations directed to several trade associations, unions, and 
other organizations.
    Meanwhile, serious reactive incidents continue to occur around the 
country. CSB is conducting full investigations of two such incidents, 
in Pascagoula, MS, and Cranston, RI, and preparing a case study of a 
third recent incident in Ohio. All three processes where these 
accidents occurred were exempt from coverage under the OSHA and EPA 
process safety rules.

Georgia Pacific (Pennington, AL)
    On January 11, 2002, a hydrogen sulfide gas leak at the Georgia 
Pacific Naheola paper mill killed two workers and injured a dozen 
others. On November 20, 2002, the Board held a public meeting and 
issued its final report. The Board completed this investigation and 
issued its recommendations in less than a year.
    The Board concluded that plant management had not followed good 
engineering and process safety practices when they earlier connected a 
drain from a truck unloading area into an acidic process sewer. On the 
day of the incident, sodium hydrosulfide, a process chemical that had 
spilled in the unloading area, reacted to release deadly hydrogen 
sulfide gas when it contacted acidic material in the sewer. The toxic 
gas vented from the sewer through a nearby fiberglass manhole cover and 
engulfed the workers. The Board recommended that Georgia-Pacific 
Corporation review sewer system safety to prevent the inadvertent 
mixing of potentially reactive chemicals and also identify plant areas 
that may be at risk for hydrogen sulfide release.

Third Coast Industries (Pearland, TX)
    A massive fire, which broke out in the early morning hours of May 
1, 2002, destroyed the Third Coast Industries blending facility south 
of Houston, in a blaze that consumed 1.2 million gallons of combustible 
and flammable liquids and lasted for more than 24 hours. Approximately 
100 nearby residents were evacuated from their homes while the fire was 
allowed to burn itself out. The plant had no supply of fire water to 
aid emergency responders. On March 6, 2003, the Board issued its final 
report on the accident at a public meeting in Houston. The Board found 
that better fire control systems could have spared the plant from total 
destruction and minimized the impact on nearby residents and 
businesses. Most widely used fire codes have provisions that could have 
greatly mitigated the spread of the fire at Third Coast, but where the 
plant is located in unincorporated Brazoria County there is no 
mandatory fire code. The Board recommended that the County adopt such a 
fire code, and the County did so a week after of the Board's 
recommendation.

                         CURRENT INVESTIGATIONS

Kaltech Industries (New York, NY)
    The CSB is investigating a building explosion that injured dozens 
on April 26, 2002, in the Chelsea neighborhood of downtown New York. 
The explosion occurred at a company, Kaltech Industries, that 
manufactures architectural signs. A number of members of the public 
were among the injured. Preliminary findings indicate that the 
explosion occurred as a result of an uncontrolled chemical reaction 
during waste mixing operations. A public hearing on the issue was held 
April 16, 2003, in New York City, and a final report is expected in 
June 2003.

DPC Enterprises (Festus, MO)
    On August 14, 2002, approximately 48,000 pounds of toxic chlorine 
gas were released from a stationary rail car being unloaded at the DPC 
Enterprises plant in Festus, south of St. Louis. The leak resulted from 
the rupture of an improperly constructed transfer hose and subsequent 
failure of several emergency shutdown devices. On December 4, the Board 
issued a safety advisory to chlorine users nationwide to verify the 
materials of construction of chlorine transfer hoses to prevent future 
gas leaks. The Board's final report on the DPC incident is expected in 
May 2003.

First Chemical (Pascagoula, MS)
    A violent explosion blew apart a large distillation tower at the 
chemical producer on the morning of October 13, 2002. CSB staff noted 
that the incident was a ``close call'' in that falling metal from the 
explosion could have caused the release of deadly gases had it struck 
certain nearby storage tanks. Shrapnel did penetrate one nitrotoluene 
storage tank at the site, igniting a fire that burned for several 
hours. The CSB conducted a well-attended community meeting on the 
significance of this case at Pascagoula City Hall on January 15. A 
final report is expected later this year.

Catalyst Systems (Gnadenhutten, OH)
    On January 2, 2003, a violent explosion destroyed part of Catalyst 
Systems, a manufacturer of curing agents for automotive body fillers, 
located south of Cleveland. The explosion originated in a dryer used to 
concentrate benzoyl peroxide, a reactive chemical of the organic 
peroxide family. The blast caused one injury but could have been far 
worse had not most workers been at lunch when it occurred. CSB 
investigators are preparing a case study on this serious reactive 
chemical incident.

BLSR Operating (Rosharon, TX)
    This facility, located south of Houston, processes oil and gas 
field wastes, recovering petroleum and disposing of waste water. On 
January 13, 2003, two trucks were unloading gas field wastes into an 
open trench, when suddenly their diesel engines began to race (a sign 
of a flammable atmosphere). Moments later a flash fire occurred, 
engulfing the trucks, fatally burning three workers, and injuring 
several others. The Board is investigating this incident, looking at 
how potentially flammable gas field wastes are managed for safety. A 
final report will be issued this summer.

West Pharmaceuticals (Kinston, NC)
    On January 29, 2003, a massive explosion destroyed much of the West 
Pharmaceuticals plant that produced molded rubber medical products. A 
total of six people have died as the result of the blast, including 
several who initially survived only to die later from critical burn 
injuries. Others remain hospitalized. The shockwave from the explosion 
shattered windows hundreds of feet away and hurled debris up to two 
miles from the blast site. Damage to the plant was estimated at $150 
million, and hundreds of jobs were put in jeopardy. A large team of CSB 
investigators deployed immediately to the site, arriving the evening of 
the explosion. CSB investigators rapidly identified the likelihood of a 
chemical dust explosion and began a comprehensive investigation of the 
root causes. The Board is planning to hold a community briefing in 
Kinston this spring.

Technic Inc. (Cranston, RI)
    A February 7 explosion at Technic Inc., a manufacturer of metal 
plating chemicals, sent a number of workers to the hospital. 
Fortunately, only one worker was seriously injured, but his injuries 
were life-threatening. A CSB investigative team was dispatched and 
identified the possibility of an uncontrolled chemical reaction within 
the waste vent piping system attached to several chemical reactors. The 
team continues to investigate the root causes of this accident, which 
is another example of a serious reactive chemical accident that 
originated within a waste disposal system.

CTA Acoustics (Corbin, KY)
    During a brief process shutdown on the morning of February 20, a 
powerful explosion ripped through the CTA Acoustics plant in 
southeastern Kentucky. Seven people have died from burns received 
during the explosion, which CSB investigators believe likely involved 
combustible chemical dust from the process used to make fiberglass 
automotive insulation. Two workers remain in critical condition. The 
blast badly damaged the plant, halting production at several North 
American Ford manufacturing sites, idling more than 10,000 workers. CSB 
staff are continuing to investigate at the CTA plant, conducting 
interviews, gathering samples, and mapping blast damage. The CSB will 
hold a community meeting in the Corbin area within the next several 
months.

Hazard Study--Toxic Gas Emissions (Cincinnati, OH, and nationwide)
    Following its investigation of the fatal Georgia Pacific hydrogen 
sulfide incident, the CSB initiated a follow-up study to look more 
broadly at the problem of toxic gases evolving from waste disposal 
systems. On December 11, 2002, a few weeks after this study was 
announced, a serious incident occurred at Environmental Enterprises in 
Cincinnati, OH, where a worker was overcome by the same gas, hydrogen 
sulfide, from a waste water treatment system. CSB staff are now 
reviewing records from around the country to determine how prevalent 
these incidents are, and their report is expected later in 2003.

Hazard Study--Sodium Hydrosulfide Handling (nationwide)
    As another outgrowth of its Georgia Pacific investigation, CSB 
staff are conducting a review of other incidents involving sodium 
hydrosulfide, the chemical which reacted in the Georgia Pacific sewer 
to produce the toxic hydrogen sulfide. Evidence indicates that other 
fatalities have occurred from the interaction of sodium hydrosulfide 
with acid; this study is examining the sufficiency of current safe 
handling practices for this substance.

                    RECOMMENDATIONS PROGRAM LAUNCHED

    Recommendations are CSB's principal tool for promoting chemical 
safety. Each recommendation has one or more specific recipients, who 
are the parties best able to carry out the recommended action to 
improve safety. Once CSB has issued a recommendation, the CSB 
recommendations staff encourages implementation and tracks compliance. 
In fiscal year 2002, the CSB issued a total of 67 recommendations and 
successfully closed 38 recommendations from prior year investigations. 
The CSB also began posting status information on all recommendations on 
our website.
    The Board aims for 80 percent acceptance of our recommendations 
over a period of time. In the fifth year of our existence, we are well 
on the way to achieving that goal. We have received excellent 
cooperation in virtually every case, and have received only two 
negative responses to the 141 recommendations that have been issued. On 
the other hand, we have received numerous responses indicating positive 
actions underway or planned.
    Here are some recent examples of safety accomplishments made as a 
specific result of CSB recommendations:
  --OSHA issued a Technical Information Bulletin on the hazards 
        associated with temporary work enclosures (CSB Union Carbide 
        investigation);
  --The Institute of Makers of Explosives (IME) developed guidelines 
        for the safe reclamation of explosive materials and the proper 
        training of explosives workers (CSB Sierra Chemical 
        investigation);
  --The American Petroleum Institute developed its first recommended 
        practices for the safe operation of onshore oil and gas 
        production facilities, including worker training, process 
        design, and work practices (CSB Sonat investigation);
  --The Morton International Chemical Company has taken actions to 
        improve reactive chemical safety at its plants, including re-
        evaluating hazards, adding safety alarms, revising operating 
        procedures, and investigating near-miss events (CSB Morton 
        investigation);
  --The National Propane Gas Association and the Fire Service Institute 
        of Iowa revised their fire fighting training materials to 
        include appropriate precautionary measures for flammable gas 
        explosions (CSB Herrig investigation);
  --Brazoria County, Texas, adopted a county-wide fire code for the 
        first time following the Board's Third Coast Packaging 
        investigation.

                  OUTREACH AND DATA EFFORTS REFOCUSED

    Responding to recommendations from the Committee and the Inspector 
General, the Board restructured the agency's outreach efforts to ensure 
they are cost-effective and help to advance the agency's statutory 
mission to prevent accidents. Plans for a freestanding outreach office 
with up to five FTEs were cancelled, with most positions reassigned to 
investigations. Instead the agency has focused on making sure that key 
safety information from its own investigations becomes widely known. In 
lieu of a freestanding outreach office, the agency has established a 
small coordinating committee of existing staff who ensure that outreach 
activities are directly related to getting CSB safety recommendations 
adopted.
    The Board also withdrew a strategic goal to develop its own 
accident data system and instead convened a data roundtable discussion 
in November 2002, jointly with EPA and OSHA. The roundtable resulted in 
broad agreement on measures to improve EPA's data collection program--
measures that will benefit CSB and other government agencies that need 
to look at accident rates. In addition, CSB continues to work with 
other agencies, such as the Agency for Toxic Substances and Disease 
Registry, to better utilize other federal incident data systems.
    The agency has also begun a highly successful program of public and 
community meetings in connection with our accident investigations. We 
have held public meetings in Paterson, NJ; Wilmington, DE; Festus, MO; 
Houston, TX (twice); and Pascagoula, MS. These meetings are held in 
communities where accidents have occurred, and most are also broadcast 
over the Internet. The meetings have been well attended and have drawn 
sizeable audiences of Internet viewers, including safety professionals 
who work in similar industries. We use these public meetings to discuss 
and release our investigative findings and recommendations and also to 
hear specific community concerns about chemical accident hazards.

                        MANAGEMENT IMPROVEMENTS

    We made a number of management improvements during the past year, 
in part as an outgrowth of work by the CSB Inspector General (IG). Ten 
recommendations from a March 2002 IG report were all successfully 
implemented by the agency by the end of the September. Among the 
changes, CSB developed new legal procedures for handling vacancies in 
the Chair; expanded delegation to the COO and the career staff; 
improved tracking of staff time and resources; and streamlined its 
strategic goals and office structure. CSB also successfully petitioned 
OPM for special hiring authority to fill numerous vacancies in its 
investigations and recommendations programs. Armed with this temporary 
authority we hired seven new investigators and specialists by the end 
of the fiscal year.
    In June 2002, the agency recruited its first full-time COO in more 
than two years. This action relieved the General Counsel of collateral 
responsibilities and provided a single, full-time manager for day-to-
day operations. CSB also accepted six additional IG recommendations 
related to personnel management and has recently hired a full-time 
human resources manager to oversee this important function.
    With the swearing in of a new Chairman, a fifth Board member, and a 
full-time Chief Operating Officer, the agency's management has reached 
full operating strength for the first time in its history. As one 
senior industry safety official wrote the Board recently, ``I think the 
CSB has made truly exceptional progress . . . to a group publishing 
excellent investigation reports, facilitating discussions on issues 
facing the chemical industry, etc. . . . You have arrived . . . 
[emphasis in original]''

                    FISCAL YEAR 2004 BUDGET REQUEST

    This Committee has urged the Board to undertake more investigations 
and hazard studies, and we want to produce more work. We are requesting 
a budget increase of $1 million to provide adequate resources for our 
expanded investigative staff to do the work that Congress wants.
    With almost 40 personnel--mostly engineers, scientists, and 
technical specialists--the CSB is poised to achieve its statutory 
mission of protecting lives and property by investigating and 
preventing chemical accidents, and we are already producing significant 
results. The agency has pledged to produce up to 12 investigation 
reports in fiscal year 2004, up from a rate of just three a year in 
fiscal year 2002.
    The expansion of the investigations program and the hiring of 
additional investigators have had a significant budgetary impact. In 
addition, we now have major investigations underway in North Carolina 
and Kentucky, on a scale that is unprecedented for our agency. The 
public expects CSB to conduct prompt, thorough, authoritative 
investigations of both accidents. We have significant, unavoidable 
expenses for contracting with outside experts to assist those 
investigations--such as dust explosion experts--expenses that could not 
possibly have been anticipated in our fiscal year 2003 budget.
    During both fiscal year 2001 and 2002, CSB spent less than its full 
annual appropriation, resulting in unspent ``carryover'' balances at 
the end of each fiscal year. For example, at the end of fiscal year 
2002, CSB had $1.4 million in unspent two-year funds, out of an 
appropriation of $7.85 million.
    However, our expenses for fiscal year 2003 will total an estimated 
$8.6 million, including current year appropriations, carryover funds, 
and prepaid contract items. By comparison, the agency's fiscal year 
2003 appropriation is only $7.85 million, of which $1.4 million must be 
drawn from previous carryover funds. Because we pre-funded certain 
fiscal year 2003 expenses during last year, we can currently function 
despite the apparent imbalance between our current expenses and our 
fiscal year 2003 appropriation.
    Because of the agency's financial condition in fiscal year 2003, 
however, the CSB will have no available carryover moneys entering 
fiscal year 2004. In addition, we lack the financial means to prefund 
fiscal year 2004 expenses to any significant extent. Thus at the 
beginning of fiscal year 2004, CSB will need to be funded entirely from 
new appropriations.
    The Board plans to increase output to 12 investigations and studies 
per year, which will impose additional travel and contract costs next 
year. Likewise we also intend to continue our highly successful program 
of briefings and Board meetings conducted outside of Washington, in the 
field. Information included with the agency's budget request shows that 
if the CSB is funded at the $8 million level in fiscal year 2004, we 
will face an immediate shortfall on October 1, 2003, of almost $1 
million per annum, which will have a serious adverse effect on our 
operations and our ability to retain needed staff.
    In fiscal year 2004 the Board will have a full complement of Board 
members and an adequate staff to meet our objectives. We ask the 
Committee's support to let us continue to accomplish the mission 
Congress gave us--to protect workers, the public, and the environment 
from chemical accidents.
                                 ______
                                 
               U.S. COURT OF APPEALS FOR VETERANS CLAIMS

     PREPARED STATEMENT OF HONORABLE KENNETH B. KRAMER, CHIEF JUDGE

    Mr. Chairman and Distinguished Members of the Committee: On behalf 
of the Court, I appreciate the opportunity to present for your 
consideration the fiscal year 2004 budget request of $16,220,000 for 
the United States Court of Appeals for Veterans Claims. With our nation 
at war, the Court is even more committed to ensuring that our veterans 
and dependents have a justice system that affords effective and timely 
review of the denial by the Department of Veterans Affairs (VA) of 
their claims for benefits based on and provided by a grateful nation 
because of their service and sacrifices.
    The Court's fiscal year 2004 budget request includes $1,175,000 
requested by the Veterans Consortium Pro Bono Program (Representation 
Program). In accordance with practice since fiscal year 1997, the 
Representation Program has provided its own budget request, which the 
Court has forwarded (without comment) along with the Court's budget 
request.
    The appropriation to the Court for fiscal year 2003 was $14,326,000 
(before the .65 percent rescission reduced it to $14,232,881), of which 
$1,045,000 was the amount requested by the Representation Program. Our 
fiscal year 2004 budget request reflects an increase over the budget 
authority for Court operations for fiscal year 2003. Three factors 
account for virtually the entire increase in addition to the $130,000 
increase sought by the Representation Program. The first reflects a 
budgeted pay raise for all nonjudicial Court personnel consistent with 
that generally anticipated for all Washington, D.C., area government 
employees. The second factor is the statutory authorization for a 
temporary increase in the number of judges. The third is a request for 
earmarked funding for security measures, which the Court is now 
withdrawing. I will discuss each of these matters further.
    The first significant increase in the Court's budget request for 
fiscal year 2004 is in personnel compensation and benefits. As in the 
past, in conformance with OMB economic assumptions, we have requested 
funding for a pay adjustment for staff (2.0 percent), with no 
differentiation between the Economic Cost Indicator and locality pay, 
including necessary funding for benefits.
    The second important factor is the result of the enactment of 
Public Law No. 107-103 (Dec. 27, 2001), calling for the temporary 
addition of two judges. Since its inception, the Court has been 
composed of seven judges, one of whom serves as chief judge; however, 
Public Law No. 107-103, temporarily increased the number of judicial 
positions from seven to nine. This law was designed to smooth the 
transition period when the then five, now four, remaining original 
judges would be eligible to retire in a very short span of time; at the 
end of that period, in August 2005, the size of the Court will return 
to seven judges. We have attempted to budget as prudently as possible 
for this temporary judicial increase. Given the uncertainty of the 
timing associated with the nominations process, in our fiscal year 2003 
budget request we requested funding for one additional chambers; we 
have included, as part of the fiscal year 2004 budget request, funding 
for a second additional chambers, that is, for $590,000 to provide for 
personnel and benefits, office buildout, furnishings, equipment, and 
supplies, as well as continuing costs for the operation of the first 
additional chambers. Nominations for the two additional judicial 
positions are now pending before the Senate Committee on Veterans' 
Affairs, along with two nominations to fill the vacancies created by 
former Chief Judge Nebeker's retirement in October 2000 and Judge 
Holdaway's retirement in November 2002. If both additional judgeships 
are filled during fiscal year 2003, we would request reprogramming of 
fiscal year 2003 funds to provide immediately for establishing the 
second additional chambers, and if necessary seek supplemental funding. 
We would then withdraw from our fiscal year 2004 budget request our 
funding request for comparable costs associated with establishing an 
additional chambers. In addition, the benefits portion continues to 
include a Court contribution to the Judicial Retirement System (JRS) 
Trust Fund that reflects all participating judges' opting into the JRS 
survivor annuity program and the statutory provision anticipating that 
all judges--including any appointed as part of the temporary judicial 
increase--will ultimately join the Court's JRS.
    Not taking into account the new judgeships, the Court's request 
proposes no increase in staffing. The Court, as always, will monitor 
staffing to ensure that it is kept at the minimum level necessary to 
review in a timely fashion the cases brought before the Court. To 
provide further background on the workload before the Court, the 
Court's caseload history over the past twelve years is summarized in 
the following table, which also appears on page 4 of the Court's fiscal 
year 2004 Budget Request:

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                               Fiscal   Fiscal   Fiscal   Fiscal   Fiscal   Fiscal   Fiscal   Fiscal   Fiscal   Fiscal   Fiscal   Fiscal
                                                Year     Year     Year     Year     Year     Year     Year     Year     Year     Year     Year     Year
                                                1991     1992     1993     1994     1995     1996     1997     1998     1999     2000     2001     2002
--------------------------------------------------------------------------------------------------------------------------------------------------------
BVA Total Denials...........................   25,082   10,946    9,734    6,194    6,407   10,444   15,865   15,360   14,881   14,080    8,514    8,606
New Cases to USCAVC.........................    2,223    1,742    1,265    1,142    1,279    1,620    2,229    2,371    2,397    2,442    2,296    2,150
New Cases as a Percent of BVA Denials.......      8.9     15.9     13.0     18.4     20.0     15.0     14.0     15.4     16.1     17.3     27.0     25.0
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Appeals to the Court come from the pool of cases in which the Board 
of Veterans' Appeals (BVA or Board) has denied some or all benefits 
sought by claimants. The Court is also empowered to entertain petitions 
for extraordinary relief where the Court action sought would be in aid 
of its jurisdiction. As this table shows, the number of appeals and 
petitions filed with the Court has held relatively steady, even though 
the number of total denials by the Board (the BVA does not publish 
statistics on cases with partial denials) has dropped significantly 
since passage in November 2000 of the Veterans Claims Assistance Act of 
2000 (Public Law No. 106-475) requiring VA to provide more 
comprehensive notice and development assistance to VA benefits 
claimants. There has been a substantial increase in new case filings 
over the last six months. Since September 2002, new case filings have 
averaged 242 per month. If this trend continues throughout fiscal year 
2003, the Court will have the highest number of new cases in its 
history for a 12-month period.
    Furthermore, since Congress extended the Equal Access to Justice 
Act (EAJA) to the Court in 1992, there has been a substantial number of 
EAJA applications. The case-filing figures provided in the table, 
above, however, do not reflect the number of EAJA applications filed 
and EAJA cases pending, even though these applications initiate a 
separate proceeding requiring Court action. In fiscal year 2002, the 
Court acted on 1,104 applications, up from 801 applications in 2001 and 
776 applications in 2000. The potential availability of EAJA fees has 
encouraged a greater number of attorneys to develop expertise in 
veterans benefits law, and the professional assistance of the growing 
appellants' (benefits claimants) bar has proven very valuable in 
litigation before the Court. However, there is a tradeoff: Some EAJA 
applications can demand considerable time because they present very 
complex issues, and resolving these issues continues to require 
substantial judicial and staff resources. Consequently, processing and 
disposing of EAJA applications has become an important workload factor.
    In addition to the factors addressed above, a third matter has 
contributed to the Court's fiscal year 2004 budget request. Included in 
the ``communications, utilities, and miscellaneous charges'' object 
category is $281,700 that the Court requested be earmarked for security 
enhancement. The Court is mindful, however, of the disfavor expressed, 
in H.R. Report No. 107-40 and the Statement of the Managers in the 
Conference Report accompanying H.J. Res. 2 (subsequently enacted as 
Public Law No. 108-7, hereinafter ``the fiscal year 2003 Appropriations 
Act''), for our fiscal year 2003 request for earmarked funds for 
security enhancements. Accordingly, we withdraw the request for 
earmarked funds for use for security enhancement in fiscal year 2004. 
As instructed by the Committee, the Court is working through the 
General Services Administration (GSA) in an effort to make arrangements 
with the building's owner, from which GSA leases the Court's offices, 
for enhanced security to the building. Guards under contract to the 
Federal Protective Service (now part of the Department of Homeland 
Security) have, since March 5, 2003, been conducting magnetometer and 
x-ray screening at the lobby and loading dock and screening vehicles 
entering the public parking garage during regular business hours (with 
limited guard service in the lobby for extended hours). GSA and the 
Court continue to work toward additional security enhancements for the 
building. The Court is mindful of the Committee's view that costs for 
the garage be shared by those who use the facility.
    The Court asks, however, that the Committee consider appropriating 
and earmarking $100,000 of these funds for use during fiscal year 2004 
for the costs of working through GSA to locate a suitable site and 
examine design requirements and other specifications needed for a 
veterans justice center (feasibility study). VA, the veterans service 
organizations (VSOs), the Representation Program, and a number of other 
agencies and organizations involved in legal representation before the 
Court have expressed interest in relocating their appellate 
practitioners to a veterans justice center. The bar association 
continues to support an initiative to house the Court in a veterans 
justice center, rather than a commercial office building with 
nonfederal tenants and without adequate federal control over security. 
The costs of establishing such a center could be comparable to current 
annual rental payments by the Court and other federal entities housed 
in it. In H.R. Report No. 107-740, incorporated by reference into the 
legislative history of the fiscal year 2003 Appropriations Act, the 
Committee ``strongly urge[d] the Court'' to continue to work through 
GSA to ``come to an agreeable solution'' concerning the security issues 
affecting the building where the Court is located. In the event that 
there could not be agreement among the GSA, the Court, the building's 
owners, and the other tenants, the Committee recommended that ``the 
Court look for alternative Federal office space to meet its needs.'' 
The GSA Public Building Services has expressed a willingness to work 
with the Court on this matter, and the earmarked $100,000 would be used 
to pay GSA for expenses incurred and passed through to the Court. 
According to GSA, that is the estimated cost for a feasibility study 
that would include seven major components: (1) Client-requirements 
assessment; (2) asset-needs assessment; (3) conceptual development of 
alternatives; (4) technical and financial analysis of alternatives; (5) 
selection and justification of the preferred alternative; (6) 
construction cost estimates of the preferred alternative, separated 
into shell and tenant improvement components per the GSA pricing guide; 
and (7) delivery schedule and procurement strategy. The GSA feasibility 
study would provide the narratives, charts, plans, sketches, diagrams, 
and other information needed for an informed decision.
    Although not a major factor, a $39,000 increase is reflected in the 
request for funding for other services. These services include cross-
servicing for payroll and finance and accounting support from the 
Bureau of Public Debt (BPD) and the Department of Agriculture's 
National Finance Center, and for court security officers provided 
through a contract with the U.S. Marshals Service. In addition, a 
$10,000 increase for travel reflects an increase in the cost of travel, 
additional judges, and programmed travel by judges to law schools to 
conduct oral argument and thereby promote education in veterans' law 
(as discussed further in the next paragraph), and for training 
associated with the new judicial appointments. Finally, there is an 
increase of $12,000 reflecting increased subscription costs and 
supplies associated with the anticipated new judges and their staff.
    Last year, in my statement in support of the Court's budget request 
for fiscal year 2003, I updated you on two new Court initiatives: To 
promote study of veterans benefits law in the nation's law schools and 
to support practitioners in their effort to organize a voluntary bar 
association. The Court has now held oral argument at two area law 
schools (Catholic University and Georgetown University), and one of the 
schools offered an evening course in veterans benefits law during the 
Fall 2002 semester. Later this Spring, the Court will hold oral 
argument at another local law school (the University of Baltimore). The 
voluntary bar association continues to operate successfully and now has 
almost 250 dues-paying members drawn from the appellants' bar, VA, 
veterans service organizations, and the Court. As one of its 
activities, the bar association has established a law school education 
committee, with members from among the Court's practitioners, including 
members outside the Washington, D.C., geographic area. These 
practitioners are working with law professors and law schools 
throughout the country in exploring various means to expose future 
attorneys to veterans benefits law.
    In conclusion, I appreciate this opportunity to submit this 
testimony on the Court's budget request for fiscal year 2004. On behalf 
of the judges and staff, I thank you for your past support and 
continued assistance. I will be happy to answer any questions that you 
might have.
                                 ______
                                 

                DEPARTMENT OF HEALTH AND HUMAN SERVICES

            AGENCY FOR TOXIC SUBSTANCES AND DISEASE REGISTRY

PREPARED STATEMENT OF HENRY FALK, M.D., M.P.H., ASSISTANT ADMINISTRATOR

    It is a special pleasure to discuss ATSDR's accomplishments and 
plans, as this month marks the 20th anniversary of ATSDR's creation. I 
am very proud of ATSDR's progress over the past 20 years in advancing 
our understanding of the public health impacts of exposure to hazardous 
substances and in undertaking activities to prevent and mitigate 
disease and other harmful impacts of toxic exposure.
    Among the profound changes that have occurred in our country during 
those 20 years, I would like to note two in particular that have played 
a significant role in shaping ATSDR's development and activities.
    First, it has been widely recognized that the problems posed by 
hazardous waste sites are more extensive than was understood in the 
early years of the Superfund program. The number of hazardous waste 
sites in this country is much larger than was once thought. Sites that 
present major public health consequences continue to be identified, 
most notably asbestos contamination from W.R. Grace's vermiculite mine 
in Libby, Montana, a site that was first addressed under Superfund in 
1999.
    Second, terrorist events and the threat of future terrorist events 
have resulted in growing demand for ATSDR's unique experience and 
expertise developed over the past 20 years in carrying out mandated 
Superfund programs.
    Our experience and expertise in chemical toxicology, in emergency 
response, and in fostering coordination among public health, 
environmental, and emergency response agencies, as well as 
organizations at the local, state, and federal levels, is extensive. In 
addition, ATSDR has an important role in disseminating critical 
information to agencies and organizations with a role in terrorism 
preparedness and response.
    The President's fiscal year 2004 Budget includes $73 million for 
ATSDR. This funding will support the agency's ongoing activities.
    Through ever-expanding partnerships with other federal, state, 
tribal and local agencies and with private and public interest 
organizations, we continue to provide the highest quality services to 
the public in both our traditional Superfund programs and in terrorism-
related activities. Innovative partnerships with organizations whose 
programs complement those of ATSDR have enabled us to achieve our 
public health mission more efficiently and effectively, both through 
disseminating critical information and through drawing on the expertise 
of others.
    During the past year, in addition to ongoing work with the 
Environmental Protection Agency (EPA), we have collaborated with a 
broad range of agencies and organizations, including the Centers for 
Disease Control and Prevention (CDC), the National Institute of 
Environmental Health Sciences (NIEHS), the Federal Bureau of 
Investigation, the Federal Emergency Management Agency (FEMA), the 
Chemical Safety and Hazard Investigation Board, the American Chemistry 
Council, colleges and universities, and dozens of state and local 
public health organizations.
    We have cooperative agreements with 31 state health departments, 
under which they conduct health assessments and undertake other 
environmental health activities. In addition, we continue to benefit 
from ATSDR's longstanding partnerships and programs, such as with the 
Minority Health Professions Foundation and its research program, as 
well as with a number of universities and state health departments 
through ATSDR's Great Lakes Human Health Effects Research Program. 
These programs help ATSDR fill the gaps in knowledge about the effects 
of hazardous substances on human health.
    We continue to leverage technology, including the use of 
sophisticated toxicologic, epidemiologic, and environmental data sets 
and analytic approaches, to enable us to carry out our mission most 
effectively. Geographic information system technology allows us to 
layer health, demographic, environmental, and other traditional data 
sources to be analyzed. Improved scientific capacity enables us to 
track the spread of environmental contamination throughout a community, 
to identify geographic areas and facilities of particular concern, and 
to identify susceptible populations and potential health effects.
    In addition to meeting our mandated Superfund-related obligations, 
we also help communities address emergency preparedness and response to 
acts of terrorism, while at the same time strengthening preparedness 
within ATSDR. Finally, we are pursuing a closer and more collaborative 
relationship with CDC as a mechanism for achieving the kind of synergy 
that will make us even more responsive and capable as a public health 
agency.
    This testimony addresses some of the activities that will be 
supported under the fiscal year 2004 budget. These activities are 
critical to fulfilling our mandates under Superfund and to enhancing 
terrorism preparedness.

                 TRADITIONAL ATSDR SUPERFUND ACTIVITIES

    The critical core function of our Agency is to assess the public 
health implications of hazardous waste sites and events involving the 
emergency release of chemicals. Our public health assessments and 
health consultations, as well as many of our health studies and 
surveillance programs, are directed to determining whether a site poses 
a threat to the public's health and to taking needed actions to protect 
public health, working with EPA and states.
    A good example of the wide range of site-specific activities 
undertaken by ATSDR is our ongoing work in addressing tremolite 
asbestos contamination in Libby, Montana.
    ATSDR has been working with EPA and with other federal, state, and 
local public health agencies to address the health threats posed by 
asbestos contamination in Libby. We conducted a medical screening 
program that involved testing of over 7,300 residents who were exposed 
to asbestos in that community. That program revealed that 18 percent of 
those tested have asbestos-related lung abnormalities as shown on chest 
x-rays--a much greater rate than exists in the United States as a 
whole.
    ATSDR is now providing funding and technical assistance to help the 
State of Montana implement a follow-up testing program for former 
workers, residents, household contacts, and other eligible persons. We 
expect the facility for this testing to be operational by the first of 
June of this year. A study to determine the rate of abnormalities by 
use of computed tomography (CT) scans is ongoing. We worked with the 
Health Resources and Services Administration and the Substance Abuse 
and Mental Health Services Administration, both agencies of the 
Department of Health and Human Services, to establish a community 
health clinic in Libby and to provide mental health services to the 
Libby community. Such a clinic is especially critical for addressing 
the health care needs of the medically uninsured, the underinsured, and 
other persons who lack the resources for primary medical care.
    We are creating a registry of former workers and their families, 
approximately 10,000-15,000 people, to help track health conditions of 
these exposed persons and to enable us to provide them any new 
information that becomes available as part of an effort to assist in 
obtaining optimum medical care and taking preventive actions.
    Our work to assess and address the health problems associated with 
exposure to asbestos from Libby has expanded to include 244 sites in 
the United States that received vermiculite ore from the W.R. Grace 
mine in Libby. A map included with this testimony indicates the 
distribution of these sites within the United States. We are 
coordinating with EPA and other federal, state, and local environmental 
and public health agencies to evaluate potential public health impacts 
at these sites. At this point, we have focused our efforts on 
developing health consultations at 28 priority sites and on working 
with 11 state health agencies that are assisting in this effort. We 
will begin releasing the reports of these health consultations in the 
next couple of months. These 28 sites, which are indicated on a second 
map provided with this testimony, were chosen because the exposure of 
former workers, their household contacts, and other individuals was 
deemed significant enough to warrant further evaluation. The priority 
sites include facilities in Beltsville, Maryland; St. Louis, Missouri; 
Marysville, Ohio; and Dallas, Texas. As reports on these sites become 
available, we will address the need for further ATSDR health 
evaluations of former workers or other potentially exposed individuals 
at these sites. Additional health work at these sites may well be 
required in the future.
    ATSDR has also provided funding to nine states to conduct health 
statistics reviews, which offer a way of identifying any heightened 
incidence of disease associated with asbestos exposure at vermiculite 
sites around the country, and we continue to recruit states to join 
this effort. ATSDR expects to release an interim report of results of 
the health statistics reviews by June 30, 2003.
    Our Superfund-related work encompasses environmental problems and 
health threats that extend well beyond those posed by asbestos 
contamination. We have a mandate to produce toxicological profiles on 
the 275 substances thought to pose the greatest hazards and to ensure 
that needed research is done on those chemicals to fill key gaps in 
information.
    Two key programs that contribute to that effort are the Great Lakes 
Human Health Effects Research Program and the Minority Health 
Professions Foundation programs.
  --We support the Great Lakes Human Health Effects Research Program in 
        its efforts to build on and amplify the results of past and 
        ongoing fish-consumption research in the Great Lakes basin. One 
        of the significant findings under this program is that serum 
        polychlorinated biphenyl (PCB) levels and consumption of Great 
        Lakes fish are significantly associated with lower levels of 
        thyroxine, a hormone secreted by the thyroid, in both women and 
        men. Researchers also found that consumption of fish meals was 
        highest among African Americans, but awareness of the fish 
        advisories was lowest in that group.
  --Our cooperative agreement with the Minority Health Professions 
        Foundation and its Environmental Health and Toxicology Research 
        Program continues to help us close the information gap in 
        available scientific data on the health impacts of exposure to 
        hazardous wastes, particularly on the health of poor and 
        minority populations. The agreement, which includes as 
        participants such historically black educational institutions 
        as the Morehouse School of Medicine, Charles R. Drew 
        University, Texas Southern University, Florida A & M 
        University, Meharry Medical College, Tuskegee University, and 
        Xavier University of Louisiana, helps underwrite the training 
        of students who will make a major contribution to public health 
        practice. Moreover, the agreement results in filling some of 
        ATSDR's major research areas.
    To further assist communities and apply the benefits from 
increasing knowledge about the relationship between exposure to toxic 
substances and resulting disease, in the past year ATSDR has begun 
implementing an applied public health environmental research agenda. In 
developing this program ATSDR has been working closely with other 
federal agencies, including the National Institute of Environmental 
Health Sciences, to best leverage resources and develop collaborative 
approaches to address common research needs. As part of this extramural 
research initiative ATSDR will pursue new partnerships with state-based 
and academic institutions. This research agenda will enable us to 
answer with greater certainty the questions and concerns raised by 
communities exposed to toxic substances and hazardous wastes, and to 
improve our ability to provide the best service to communities in the 
vicinity of Superfund sites.
    Site specific health studies are another important tool in 
advancing our knowledge about the relationship between exposure to 
hazardous substances and any resulting disease. Recent examples of some 
of our ongoing work in this area include:
  --In Anniston, Alabama, ATSDR has been working in collaboration with 
        local, state, and federal agencies, as well as with community 
        representatives, to address community concerns regarding the 
        potential for exposure to PCBs. We have been working with the 
        Alabama Department of Public Health to gather, analyze, and 
        interpret vital statistics and existing data describing the 
        incidence of cancer for residents of Anniston, and we will be 
        funding multi-year epidemiologic investigations to study the 
        health effects of exposure to PCBs in this community. We will 
        work closely with the institution(s) selected to do that study, 
        providing both technical and administrative support to the 
        researchers. We will also work closely with EPA in further 
        evaluating exposures.
  --In Herculaneum, Missouri, we have invited a panel of experts to 
        assist us in developing an appropriate health study design to 
        address the lead exposures experienced in this community. We 
        are particularly interested in studying the effects of exposure 
        to lead among children, adolescents, and young adults. In a 
        blood lead screening effort conducted in 2001, 30 of 67 
        children six years old or younger living closest to the Doe Run 
        lead smelter had blood lead levels at or above the CDC action 
        level for lead of 10 ug/dL. A preliminary review of available 
        blood lead data from testing in 2002 of 58 children under 6 
        years old indicate elevated blood lead levels in 17 percent of 
        those children. Further study is warranted in view of the fact 
        that these levels are more than double the national prevalence 
        rate of 7.6 percent and the Missouri rate of 8 percent. Factors 
        contributing to the reduction may include community education 
        regarding possible pathways of exposure, health effects of 
        exposure and measures to reduce exposure.
  --In Fallon, Nevada, ATSDR worked closely with CDC's National Center 
        for Environmental Health (NCEH), the Nevada State Health 
        Division (NSHD), and other agencies to investigate a broad 
        range of possible environmental causes of an unusually high 
        number of childhood leukemia cases there. ATSDR conducted a 
        comprehensive public health assessment process, consulting with 
        community members to identify their health and environmental 
        concerns and then examining a variety of possible environmental 
        pathways through which people might have been exposed to 
        hazardous substances. Earlier this year, ATSDR, CDC/NCEH and 
        NSHD issued reports on the findings of this investigation and 
        held a number of public meetings with the Fallon community. 
        Despite extensive investigation, the agencies have not found a 
        relationship between environmental exposures to contaminants 
        and the leukemia cases.
  --In San Antonio, Texas, we evaluated potential releases of hazardous 
        substances from Kelly Air Force Base, on-base drinking water, 
        and current and past air emissions for associations with health 
        concerns of communities surrounding the base. We are now 
        assisting the Air Force in evaluating a case series of 
        amyotrophic lateral sclerosis, a motor neuron disease, in this 
        community.
  --In Dakota City, Nebraska, we examined the association between 
        hydrogen sulfide, total reduced sulfur levels, and neuro-
        behavioral activity, on the one hand, and the incidence of 
        hospital visits by children for treatment of asthma and other 
        respiratory illnesses, on the other. We are now involved in a 
        follow-up study in Dakota City and South Sioux City.
  --In Warren Township, Ohio, we have been involved in investigating 
        hydrogen sulfide exposure in the surrounding air, creating a 
        multi-agency committee to form and carry out a Public Health 
        Action Plan to address recommendations made in a rapid response 
        health consultation.
  --In Elmore, Ohio, we investigated whether beryllium air emissions 
        and possible worker take-home contamination from the Brush 
        Wellman Elmore plant present a health hazard to the community. 
        Working with the Ohio Environmental Protection Agency, Ohio 
        Citizen Action, and Brush Wellman, we issued a health 
        consultation and conducted several public meetings to address 
        community concerns.
  --In El Paso, Texas, we worked with the Texas Department of Health to 
        address that city's concerns about heavy metal contamination 
        near Sun Bowl stadium. The health department, which receives 
        funding from ATSDR, conducted a series of health consultations 
        looking at lead and arsenic levels in soil. Several residential 
        yards and a daycare facility were found to have amounts of lead 
        and arsenic that exceeded health based screening values. 
        Exposure to lead and arsenic at some of these areas could pose 
        an unacceptable public health hazard to children.
  --In Tarpon Springs, Florida, we recently issued for public comment a 
        public health assessment for the Stauffer Chemical Company 
        site, where contaminants are present in the groundwater and the 
        air. We have entered into an agreement with the University of 
        South Florida to identify and locate former employees as well 
        as students who attended the school nearby, and we are working 
        with the Florida Department of Health to review information 
        from the Florida cancer registry.
  --In northeast Denver, Colorado, we have been working with the 
        Colorado Department of Public Health & Environment and the 
        University of Colorado to conduct a study of children 
        potentially exposed to arsenic, also focusing specifically on 
        soil pica behavior, a habit of ingesting soil, in children six 
        months to six years of age. We have also provided comments to 
        EPA on its proposed plan for cleaning up the so-called VB I-70 
        site.
    Another key function of ATSDR's Superfund program is to educate 
both the health community and the general public about the hazards of 
specific chemicals and waste sites. Recent work in this area includes:
  --In Marion, Illinois, we have worked with the Illinois Department of 
        Health to educate teachers about and improve storage and 
        handling of potentially dangerous chemicals, including mercury, 
        in schools. Many of these stored chemicals were removed as a 
        result of the project.
  --In Jasper County, Missouri, we funded a study by the Missouri 
        Department of Health to assess whether public health 
        intervention efforts had been effective in reducing blood lead 
        levels of the community's children. The intervention efforts 
        were found to have reduced blood lead levels significantly.
    Targeted efforts to improve the diagnosis and treatment of children 
exposed to toxic substances have been another priority for ATSDR. We 
have recently succeeded in helping establish Pediatric Environmental 
Health Specialty Units (PEHSUs) in all ten of the federal regions. In 
fiscal year 2002, pediatricians at these clinics who are especially 
cross-trained in environmental medicine evaluated more than 1,500 
children and provided an additional 1,500 phone consultations to other 
pediatricians in their regions.
    In July of 2002, the PEHSU clinic in Chicago was contacted by the 
Chicago Housing Authority, which was concerned about arsenic 
contamination in the soil of a local playground. The PEHSU, working 
with the Chicago Department of Public Health, helped screen local 
children and identified 14 with elevated levels of arsenic in their 
urine. The PEHSU provided follow-up medical care for affected children, 
and the Chicago Housing Authority began immediate clean-up of the 
playground. This is an excellent example of how a new-and much needed-
resource can help us partner to protect children from the effects of 
toxic exposure.

 POST 9/11 CHALLENGES IN PREPARING TO ADDRESS TERRORISM AND EMERGENCY 
                              PREPAREDNESS

    During the past year, ATSDR has continued to help communities 
improve emergency preparedness and develop a capacity for rapid 
response to acts of terrorism. ATSDR's role in countering health 
impacts of terrorism, particularly in the areas of chemicals and the 
environment, is essential to national safety. We continue to 
participate actively with CDC, EPA, the Department of Homeland Security 
(DHS), and state and local health agencies in undertaking planning and 
preparedness in areas that focus on the unique capabilities of ATSDR.
    For example, we have used partnerships to address emergency 
response capacity in our work with the FEMA/DHS Comprehensive HAZMAT 
Emergency Response-Capability Assessment Program, or CHER-CAP. ATSDR 
has worked with FEMA/DHS on two local emergency planning exercises (the 
so-called ``Tri-town'' exercise in Connecticut, and one in Boston, 
Massachusetts) to assist those communities in improving their response 
to a release of hazardous materials. ATSDR's contributions included 
bringing the medical community into the local planning process and 
assessing hospital emergency preparedness and response through:
  --on-site evaluation, walk-through, and disaster plan review;
  --applying lessons learned from the scientific literature to enhance 
        emergency response;
  --encouraging communication and collaboration among public health and 
        medical officials and community-wide disaster planners 
        regarding preparation for mass-casualty events;
  --providing assistance and training to community responders as well 
        as supporting preparation for use of technology such as 
        geographic information systems and toxicologic data bases; and
  --conducting exercises to assess the state of readiness to respond to 
        mass-casualty events.
    In addition, in June of this year ATSDR will participate in a 
large-scale regional emergency preparedness exercise in Louisville, 
Kentucky with EPA, FEMA/DHS, CDC, and state and local public health 
agencies as well as hospitals, physicians, and fire departments. In 
this simulation, we will provide answers to toxicological and medical 
questions and help maintain a ``victim's registry''.
    We also partner with the private sector to expand the utilization 
of our products. In conjunction with the American Chemistry Council, we 
distributed the document Managing Hazardous Materials Incidents 
(including the medical management guidelines) on CD-ROMs to states and 
communities to educate first-responders to the adverse health effects 
of specific chemicals.
    We provide communities with access to geographic information 
systems to map localities and to model the dispersion of chemicals in 
the event of an uncontrolled release.
    Our Hazardous Substances Emergency Events Surveillance system 
(HSEES) is a major resource in our efforts to reduce and even prevent 
the injury and death that result from hazardous substances events. The 
system captures incident and facility data as well as data on health 
outcomes from hazardous material (HazMat) accidents and other 
uncontrolled releases. To date, fifteen states have cooperative 
agreements with ATSDR to participate in HSEES. State health departments 
enter data into a Web-based application to enable ATSDR to access data 
instantly for analysis. We are working to use HSEES as a key source of 
health information to enable us to respond to emergency events, 
including incidents of terrorism. The recent fire at a plastics factory 
in Kinston, North Carolina, for example, provided us with an 
opportunity to evaluate the use of HSEES as a means of assessing past 
experience and trends in fires in similar types of facilities. Data 
from HSEES has also provided us with information that has been used to 
help ensure that first responders know the appropriate personal 
protective gear to use in dealing with the clean-up of clandestine 
methamphetamine labs.
    Since the events of 9/11/2001, ATSDR has initiated several 
activities designed to apply existing tools to aid preparedness in the 
event of a chemical attack. For example, ATSDR distributed a CD-ROM 
version of our toxicological profiles and medical management guidelines 
to state and local agencies and to first-responders. In addition, ATSDR 
toxicologists, in conjunction with scientists at CDC, have evaluated 
chemicals that are the most likely to be used in a terrorist attack. 
Although we have information on how to diagnose and treat people 
exposed to some of these chemicals, we are working to fill the gaps in 
information that still exist so that we can be even better prepared. At 
the same time, we are sharing the information that we do currently have 
with all relevant parties, including first-responders, hospital 
emergency rooms, poison control centers, clinicians, and the general 
public.
    Other activities that demonstrate ATSDR's commitment to improving 
community emergency preparedness and to developing a rapid response 
capacity to terrorism include the following:
  --Staff members worked with the Federal Bureau of Investigation to 
        collect anthrax spore samples as evidence in the American Media 
        Inc. office building in Boca Raton, Florida, where the index 
        case of inhalation anthrax occurred in an employee. ATSDR 
        scientists and FBI investigators worked together as members of 
        building entry and medical monitoring teams throughout the 
        field investigation. The field investigation team successfully 
        applied a new combination of scientific techniques to locate, 
        quantify, and collect concentrations of anthrax spores within 
        the building.
  --Working with funding from FEMA/DHS, we are helping the New York 
        City Department of Health and Mental Hygiene develop a registry 
        of 150,000-200,000 workers and residents to track the health of 
        people exposed to contaminants from the World Trade Center 
        site.
  --ATSDR rapidly assembled toxicologic guidance for NASA, EPA, and 
        local first responders on the potential for exposures to toxic 
        substances in connection with the Columbia shuttle disaster.
  --ATSDR has linked our emergency response staff with the new CDC 
        Emergency Operations Center so that we have a rapid and 
        seamless public health response to emergency events involving 
        chemicals, including any terrorist attack.
    ATSDR will continue to work closely with:
  --EPA, to develop data and distribute information on chemicals and 
        other hazards;
  --our sister agency CDC, other agencies within the Department of 
        Health and Human Services, and state and local agencies to help 
        train health responders, to deal with chemical, radiologic, and 
        environmental terrorist threats; and
  --DHS, to assure that public health responders are integrated into 
        local emergency planning.
    Mr. Chairman and members of the Subcommittee, our 20th year of 
service to the American public has been the most productive of all, and 
I expect that productivity to continue. We have been good stewards of 
the public funds that Congress has entrusted to us. We continue to look 
for ways to maximize our contribution to the public's health through 
leveraging partnerships and technology. And, ATSDR has undertaken a 
major internal initiative in strategic planning for the next five 
years. We are tying our budget and staffing levels to specific 
performance planning goals and objectives, and striving to improve our 
program performance measures with more outcome and impact data, in an 
effort to provide Congress and the public a full accounting of our 
programs in terms of the difference we have made and the unique 
expertise and services we offer.
    Thank you for the opportunity to provide this testimony.

    
    
    
    
                                 ______
                                 

                     DEPARTMENT OF THE ARMY--CIVIL

 PREPARED STATEMENT OF HONORABLE LES BROWNLEE, UNDER SECRETARY OF THE 
     ARMY AND ACTING ASSISTANT SECRETARY OF THE ARMY (CIVIL WORKS)

                              INTRODUCTION

    Thank you for the opportunity to provide this statement in support 
of the President's budget for the Department of the Army's Cemeterial 
Expenses program for fiscal year 2004.
    I am providing this statement on behalf of the Secretary of the 
Army, who is responsible for operating and maintaining Arlington and 
Soldiers' and Airmen's Home National Cemeteries, as well as making 
necessary capital improvements to ensure their long-term viability.
    Arlington National Cemetery is the Nation's premier military 
cemetery. It is an honor to represent this cemetery and the Soldiers' 
and Airmen's Home National Cemetery. On behalf of these two cemeteries 
and the Department of the Army, I would like to express our 
appreciation for the support this subcommittee has provided over the 
years.

                    FISCAL YEAR 2004 BUDGET OVERVIEW

    The fiscal year 2004 budget is $25,961,000, which is $6,484,000 
less than the fiscal year 2003 appropriation of $32,445,000. The fiscal 
year 2004 budget will support Arlington National Cemetery's efforts to 
improve its infrastructure and continue working toward implementation 
of its Ten-year Capital Investment Plan. The funds requested are 
sufficient to support the work force, assure adequate maintenance of 
buildings and grounds, acquire necessary supplies and equipment, and 
provide the high standards of service expected at Arlington and 
Soldiers' and Airmen's Home National Cemeteries.
    The budget also includes funds to pursue expansion efforts needed 
to ensure that Arlington National Cemetery remains an active burial 
place for service men and women well into the twenty-first century. The 
following table displays how long gravesites will remain available in 
both developed and undeveloped areas that are currently part of the 
Cemetery. It is presented to illustrate the importance of proceeding 
with expansion projects in a timely manner so that there will be no 
disruption in services for deceased veterans and to relieve significant 
crowding of funeral services.
    Note that the gravesite capacity shown in the table for the 
undeveloped area is for currently owned land (i.e., Project 90 and 
utility relocations), but does not include the Millennium Project, 
which requires both land within the Cemetery's boundaries (i.e., the 
old warehouse area and Section 29 land) and land to be transferred to 
the Cemetery (i.e., Fort Myer picnic area). Nor does the table reflect 
future land expansion projects programmed in the Ten-year Capital 
Investment Plan beyond the Millennium Project, such as the Navy Annex 
and Fort Myer parking lot, all of which are currently authorized and 
are addressed in the Concept Land Utilization Plan.

                       ARLINGTON NATIONAL CEMETERY
              [Gravesite Capacity as of September 30, 2002]
------------------------------------------------------------------------

------------------------------------------------------------------------
Gravesite capacity--developed areas.....................         242,850
Total gravesites used...................................         212,281
Gravesites currently available..........................          30,569
Year available capacity exhausted.......................            2012
Gravesite capacity--undeveloped area....................          36,000
Total gravesite capacity................................         278,850
Year total capacity exhausted...........................            2025
------------------------------------------------------------------------

    I will elaborate further on the significance of the declining 
gravesite capacity later on in this statement.

                             BUDGET DETAILS

    The budget is made up of three programs--Operation and Maintenance, 
Administration, and Construction. The principal items contained in each 
program are described below.

Operation and Maintenance Program
    The budget for the Operation and Maintenance program is 
$15,793,000. It provides for the cost of operations necessary to 
conduct an average of 25 funeral services per day, accommodate four 
million visitors each year, and maintain 652 acres of land and 
associated infrastructure. This program supports 95 of the cemeteries' 
total of 101 full time equivalent (FTE) work-years. Contractual 
services comprise just over one-half of the Operation and Maintenance 
program at $8,560,000, as follows:
  --$3,000,000 for tree and shrub maintenance.
  --$2,300,000 for grounds maintenance.
  --$1,400,000 for information guard services.
  --$530,000 to develop an automated system for burial records, 
        gravesite locations, financial management, supplies and 
        equipment.
  --$325,000 for custodial services.
  --$1,005,000 for recurring maintenance of equipment, buildings, 
        headstones, and other facility maintenance contracts.
    The remaining funds in the Operation and Maintenance program 
support the Government workforce, which is primarily responsible for 
all activities associated with preparing gravesites and conducting 
burial services, as well as the cost of utilities, supplies and 
equipment.

Administration Program
    The budget includes $1,299,000 for the Administration program, 
which provides for essential management and administrative functions, 
including staff supervision of Arlington and Soldiers' and Airmen's 
Home National Cemeteries. Budgeted funds will provide for personnel 
compensation, benefits, and reimbursable administrative support 
services provided by other government agencies. This program supports 
the balance of the cemeteries' workforce of six FTE work-years.

Construction Program
    The Construction program's budget is $8,869,000, consisting of the 
following projects:
  --$3,300,000 to design development of 36 acres of land known as the 
        Millennium Project.
  --$53,000 to update and refine the Ten-year Capital Investment Plan.
  --$200,000 to continue developing property in and adjacent to 
        Arlington National Cemetery, in accordance with the Concept 
        Land Utilization Plan.
  --$1,850,000 to repair roads and walkways.
  --$400,000 to continue the grave liner program.
  --$350,000 to demolish the remaining old warehouse buildings.
  --$720,000 to repair storm and sanitary sewer lines.
  --$520,000 to study, design and repair stone boundary walls.
  --$535,000 to study and design Facility Maintenance Complex storage 
        facilities.
  --$205,000 to conduct utility surveys.
  --$185,000 to install an irrigation system at the Kennedy gravesites.
  --$140,000 to repair the fountain at Columbarium Court 2.
  --$125,000 to study appearance standards for cemetery operations.
  --$286,000 to perform a variety of minor projects such as painting 
        and cleaning facilities.
    Three of the above projects are particularly important to increase 
the capacity of Arlington National Cemetery, so that space is available 
for burials into the next century. They are described further in the 
following paragraphs.
    Millennium Project.--As the table displayed earlier in this 
statement illustrates, capacity in the currently developed area of 
Arlington National Cemetery will be exhausted by 2025. In order to 
extend the Cemetery's useful life, the budget includes $3.3 million to 
design the Millennium Project, so that development can begin in fiscal 
year 2007. The Millennium Project involves the development of 36 acres 
of land into gravesite areas, roads, utilities, columbarium walls, and 
a boundary wall with niches for the placement of cremated remains. 
Approximately 26,000 additional gravesites and 15,000 niches will be 
provided when the development is complete. Actual yields could change 
significantly, depending upon final design. The Millennium Project 
would extend the useful life of the Cemetery beyond 2025 to somewhere 
between 2038 and 2047, depending upon final implementation.
    The Millennium Project consists of three parcels of land. The first 
parcel (7 acres) is land already within the boundaries of Arlington 
National Cemetery made available by demolition of the old warehouse 
buildings. The second parcel (12 acres) was transferred to the Cemetery 
from the National Park Service on January 28, 2002, pursuant to the 
authority contained in Section 2863 of Public Law 107-107, the National 
Defense Authorization Act for Fiscal Year 2002. The final piece of the 
Millennium Project is a 17-acre parcel of adjacent land currently owned 
by Fort Myer (picnic area), which is to be transferred to the Cemetery 
in accordance with Section 2882 of the fiscal year 2000 Defense 
Authorization Act (Public Law 106-65). We are working with Fort Myer to 
implement this land transfer in the near future.
    Ten-year Capital Investment Plan.--By our letter of February 5, 
2002, we provided this subcommittee with a ten-year plan that 
identifies the Cemetery's new construction, major rehabilitation, major 
maintenance and study proposals for the next ten years. It addresses 
projects identified in the 1998 Master Plan and other projects needed 
to ensure that the cemetery remains open for burials into the twenty-
second century. It also serves as a guide for annually recurring 
maintenance needs of the Cemetery.
    The fiscal year 2004 budget includes $53,000 to continue developing 
and refining this multi-year plan for funding projects in a technically 
sound and financially efficient manner. This is a living document that 
will be periodically updated to reflect the latest information, 
identify new requirements and improve the quality of cost estimates. It 
is an essential tool in developing a credible long-term investment 
strategy and the budget recommendations that emanate from it.
    Concept Land Utilization Plan.--By our letter of October 27, 2000, 
we provided this subcommittee with a plan that identifies the 
requirements for developing adjacent land for future expansion. The 
first site to be developed is the Millennium Project, as described 
above. The Concept Land Utilization Plan also includes the Navy Annex 
and Fort Myer parking lot, which would extend the Cemetery's life to 
somewhere between 2054 and 2068, again depending upon how these sites 
are ultimately developed. Increasing capacity beyond this time frame 
will require additional land expansion for gravesites or more 
columbarium niches.
    The other items listed in the Construction program are needed to 
address aging and deteriorating infrastructure. These are primarily 
repairs and replacements that should be accomplished to avoid further 
cost increases and potentially disruptive emergency repairs.

                                FUNERALS

    In fiscal year 2002, there were 4,022 interments and 2,283 
inurnments. In fiscal year 2003, we estimate there will be 3,925 
interments and 2,700 inurnments. Looking ahead to fiscal year 2004, we 
estimate there will be 3,925 interments and 2,775 inurnments.

                       CEREMONIES AND VISITATION

    Millions of visitors, both foreign and American, come to Arlington 
to view the Cemetery and participate in ceremonial events. During 
fiscal year 2002, about 3,100 ceremonies were conducted, with the 
President of the United States attending the ceremonies on Veterans Day 
and Memorial Day.
    During fiscal year 2002, Arlington National Cemetery accommodated 
approximately 4 million visitors, making it one of the most visited 
historic sites in the National Capital Region. A recent study confirmed 
this estimate. A customer survey system will be designed and 
implemented in conjunction with the Cemetery's overall automation plan 
and will be used to collect, enter and analyze the survey data.

                     FISCAL YEAR 2003 APPROPRIATION

    The additional $8,000,000 provided in the fiscal year 2003 
appropriation will be used to repair the Memorial Amphitheater 
($6,000,000), accelerate Phase II of Project 90 land development 
($1,200,000), and replace the visitor center roof ($800,000). The roof 
replacement will be accomplished with reprogrammed funds as explained 
in my letter to this subcommittee dated October 30, 2002. The 0.65 
percent rescission included in the fiscal year 2003 appropriation act 
(Public Law 108-7), amounts to $210,893 for Arlington National 
Cemetery, which has been applied to Project 90.

                               CONCLUSION

    The funds included in the fiscal year 2004 budget are necessary to 
maintain the existing infrastructure at Arlington National Cemetery, 
provide quality services for its many visitors, make the capital 
investments needed to accommodate burials, and preserve the dignity, 
serenity and traditions of the cemetery. I respectfully ask the 
Subcommittee's favorable consideration of our budget.
                                 ______
                                 

                 FEDERAL DEPOSIT INSURANCE CORPORATION

PREPARED STATEMENT OF GASTON L. GIANNI, JR., INSPECTOR GENERAL, OFFICE 
                          OF INSPECTOR GENERAL

               FISCAL YEAR 2004 BUDGET SUMMARY STATEMENT

    The Office of Inspector General (OIG) at the Federal Deposit 
Insurance Corporation (FDIC) requests $30.1 million for fiscal year 
2004 to fund 168 staff who conduct independent audits, investigations, 
and other reviews to assist and augment the FDIC's mission. OIG efforts 
promote the economy, efficiency, and effectiveness of the FDIC's 
programs and operations and protect against fraud, waste, and abuse.
    The OIG's fiscal year 2002 achievements are impressive and include:
  --$1.360 billion in actual and potential monetary benefits--a 
        potential return of $42 for each $1 invested in the OIG.
  --141 non-monetary recommendations to FDIC management
  --29 referrals to the Department of Justice
  --35 indictments
  --28 convictions
  --2 employee/disciplinary actions
    The OIG recently assessed the most significant management and 
performance challenges facing the FDIC. The OIG's annual and strategic 
plans for fiscal years 2003 and 2004 are and will be focused on issues 
within these challenges:
  --Adequacy of Corporate Governance in Insured Depository Institutions
  --Protection of Consumer Interests
  --Security of Critical Infrastructure
  --Management and Analysis of Risks to the Insurance Funds
  --Effectiveness of Resolution and Receivership Activities
  --Management and Security of Information Technology Resources
  --Assessment of Corporate Performance
  --Transition to a New Financial Environment
  --Organizational Leadership and Management of Human Capital
  --Cost Containment and Procurement Integrity
    The OIG's budget is about $1.3 million less than the fiscal year 
2003 appropriation. After adjusting for inflation, fiscal year 2004 
will be the eighth consecutive year that the OIG's budget decreased. 
The OIG has significantly downsized its staff from an authorized level 
of 215 for fiscal year 2002 to 168 for fiscal year 2004. The budget and 
staffing reductions have been possible due to the shrinking size of the 
FDIC, completion of work related to the banking and thrift crises of 
the 1990s, prospects for continuing health of the banking industry, and 
buyout and early retirement initiatives of the FDIC.
    Most of the OIG's budget would pay for salaries, benefits, travel, 
and training for its staff. The OIG is also budgeting for certain 
potential litigation expenses which, under Public Law 107-174, must now 
be paid with appropriated funds. Also, the OIG is budgeting to replace 
computers and continue efforts to establish an electronic crimes unit. 
The OIG's appropriation would be derived from the Bank Insurance Fund, 
the Savings Association Insurance Fund, and the FSLIC Resolution Fund. 
These funds are the ones used to pay for other FDIC operating expenses.
    Mr. Chairman and Members of the Subcommittee, I am pleased to 
present the fiscal year 2004 budget request totaling $30.1 million for 
the Office of Inspector General (OIG) at the Federal Deposit Insurance 
Corporation (FDIC). As Inspector General, I am proud of the OIG's 
fiscal year 2002 performance and results and look forward to current 
and future challenges to support the Congress, the FDIC Chairman, and 
corporate management.
    The FDIC was created by the Congress in 1933 to maintain stability 
and public confidence in the nation's banking system. The federal 
deposit insurance offered by the FDIC is designed to protect depositors 
from losses due to failures of insured commercial banks and thrifts. 
Individual deposits of up to $100,000 are covered for 9,354 
institutions totaling $3.386 trillion in deposits as of December 31, 
2002. The FDIC also promotes the safety and soundness of these 
institutions by identifying, monitoring, and addressing risks to which 
they are exposed.
    The FDIC OIG was established in 1989 when the Congress amended the 
Inspector General Act to include the FDIC under the Act's provisions. 
The OIG's program of independent audits, investigations, and other 
reviews assists and augments the FDIC's mission. OIG efforts promote 
the economy, efficiency, and effectiveness of FDIC programs and 
operations and protect against fraud, waste, and abuse.
    The past year has experienced great change in the composition of 
the OIG workforce through a major downsizing and reshaping initiative. 
Along with others in the Corporation, the OIG has worked to complete a 
downsizing effort that has been on-going for several years following 
the FDIC staff buildup to handle the bank and thrift crisis in the 
early 1990s. For the OIG, the recent downsizing has meant decreasing 
from an authorized level of 215 staff for fiscal 2002 to 168 for fiscal 
2004--about a 22 percent reduction. Since I became the FDIC Inspector 
General in 1996, our staff has decreased from 370 to the current level, 
or a total decrease of about 56 percent. This decrease is comparable to 
overall staff decreases throughout the FDIC.
    Even with our downsizing, the OIG has continued to provide 
significant value to the management of the FDIC. In addition, we have 
carried out initiatives to work more strategically in areas of greatest 
challenge to the FDIC, improve our efficiency, enhance our 
communications with both the Corporation and the Congress, add to our 
staff expertise, and align our human capital with our strategic 
planning.
    The funds we are requesting are essential to helping us remain 
prepared to meet the complex and multidimensional issues and challenges 
confronting the FDIC now and in the future. These funds will permit us 
to continue employing the highly capable staff who can meet our future 
challenges, invest in the technology needed to advance our 
capabilities, and cover other mandates. After adjusting for inflation, 
fiscal year 2004 will be the eighth consecutive year that the OIG's 
budget has decreased.
    Before detailing our budget needs for fiscal year 2004, I would 
like to highlight some of the OIG's accomplishments in fiscal year 2002 
and the major challenges confronting the FDIC and OIG.

      A REVIEW OF THE FDIC OIG'S FISCAL YEAR 2002 ACCOMPLISHMENTS

    The OIG's fiscal year 2002 achievements are impressive, and the 
results include:
  --$1.360 billion in actual and potential monetary benefits--a 
        potential return of $42 for each $1 invested in the OIG.
  --141 non-monetary recommendations to FDIC management
  --29 referrals to the Department of Justice
  --35 indictments
  --28 convictions
  --2 employee/disciplinary actions
    More specifically, our accomplishments included 48 completed 
investigations that led to the above indictments and convictions as 
well as fines, court-ordered restitution, and recoveries that 
constitute the bulk of the monetary benefits from our work. Also, we 
issued 36 audit reports, 5 evaluations, and 1 memorandum, which 
included about $607,000 in questioned costs and $3.1 million in 
recommendations that funds be put to better use. The recommendations in 
these reports aim to improve the internal controls and operational 
effectiveness in diverse aspects of the Corporation's operations, 
including automated systems, contracting, bank supervision, financial 
management, and asset disposition.
    Further, the OIG accomplished many of its organizational goals 
during the fiscal year as outlined in our annual performance plan. Our 
2002 Performance Report shows that we met or substantially met 23 of 
our 26 goals, or 88 percent. In a measurable way, these achieved goals 
show the progress we continue to make to add value to the Corporation 
with our audits, investigations, and evaluations in terms of impact, 
quality, productivity, timeliness, and client satisfaction. We also met 
or substantially met goals for providing professional advice to the 
Corporation and for communicating with clients and the public.

Audits, Investigations, and Evaluations
    Examples of the OIG's audits, investigations, and evaluations work 
that contributed to these accomplishments follow.
    Audits of Superior Bank Failure.--The OIG issued the results of 
four reviews, several based on a congressional request, related to the 
failure of Superior Bank, FSB, Hinsdale, Illinois. Loss estimates 
resulting from the failure total about $440 million, making this one of 
the costliest of all recent failures of FDIC-insured institutions. I 
testified about our work before the Committee on Banking, Housing, and 
Urban Affairs, U.S. Senate, commenting on areas where regulatory 
oversight could be strengthened; the regulatory capital treatment of 
residual assets; and the FDIC Board of Directors' authorization of an 
expanded delegation of authority for examiners to conduct examinations, 
visitations, or other activities of insured depository institutions.
    Review of FDIC Special Examination Authority.--The OIG issued the 
results of its review of the FDIC's special examination authority and 
the Division of Supervision's effectiveness in monitoring risks posed 
by the nation's largest banks. Additionally, the OIG commented in 
advance on the draft interagency agreement signed on January 29, 2002 
authorizing an expanded delegation of authority to grant the FDIC more 
autonomy in examining banks that pose a heightened risk to the 
insurance funds.
    Investigation of Former Chairman of Bank of Honolulu.--In March 
2002, the former chairman and owner of 76 percent of shares of the now-
defunct Bank of Honolulu (Hawaii) was sentenced in the U.S. District 
Court in Honolulu to 36 months' incarceration to be followed by 5 
years' supervised release. However, he will be subject to immediate 
deportation upon release from confinement. As a part of the sentencing, 
he was also ordered to pay restitution totaling $3,115,523. The 
defendant had previously pled guilty in October 2001 to violating the 
federal wire fraud statute as a part of a scheme whereby he and his 
brother fraudulently obtained the proceeds of two loans totaling $3 
million made by the Bank of Honolulu. He also pled guilty to knowingly 
and fraudulently concealing property as a part of the bankruptcy 
proceeding he filed in 1998. The bankruptcy fraud violations involve 
two tax refund checks from the State of Hawaii totaling $757,249, which 
he received and failed to turn over to the Bankruptcy Trustee.
    The defendant was initially indicted in August 2000 and was charged 
with additional violations in superseding indictments in October 2000 
and May 2001. The latter superseding indictment also included charges 
against five other individuals who were alleged to have helped him hide 
money from the bankruptcy court and creditors. The additional 
defendants included two of his brothers, two of his business 
associates, and his girlfriend.
    This case was jointly investigated by the FDIC OIG and the FBI and 
was prosecuted by the United States Attorney's Office for the District 
of Hawaii.
    Investigation of the First National Bank of Keystone (West 
Virginia).--During the past year the investigations and prosecutions of 
the principal subjects in the case involving the failure of the First 
National Bank of Keystone (West Virginia) were completed. The 
investigation and prosecutions involving Keystone were conducted by a 
multi-agency task force comprised of special agents of the FDIC OIG, 
FBI, and IRS and prosecutors from the United States Attorney's Office 
for the Southern District of West Virginia and the U.S. Department of 
Justice. The FDIC Division of Resolutions and Receiverships also 
provided valuable assistance in support of the task force 
investigations. The investigation began after the Office of the 
Comptroller of the Currency conducted an examination in 1999 that 
uncovered information that ultimately resulted in the closure of the 
First National Bank of Keystone (Keystone) on September 1, 1999. Based 
on the estimated losses to the insurance fund attributable to the 
Keystone failure, it is one of the ten costliest bank failures since 
1933.
    Since inception, this investigation and corresponding prosecutions 
have resulted in the conviction and sentencings of four of the former 
officers of the bank on charges of obstructing the examination of the 
bank. Two of those same officers along with three other officers were 
convicted on various other charges relating to illegal activity at the 
bank including bank fraud, money laundering, embezzlement, mail fraud, 
insider trading, and filing false income tax returns. Sentencings have 
totaled over 88 years' confinement, over 32 years' probation, fines of 
$124,500, and over $1.3 billion in restitution.
    I am especially proud of the recognition given to four OIG Special 
Agents who received the Attorney General's Award for Distinguished 
Service on July 17, 2002 for their exemplary work in the investigation 
and prosecutions related to this case.
    Review of Information Security Issues.--The OIG issued its mandated 
report on the FDIC's compliance with the Government Information 
Security Reform Act, concluding that the Corporation had established 
and implemented management controls that provided limited assurance of 
adequate assurance over its information resources. While progress had 
been made in addressing previously identified weaknesses, in 3 of 10 
key management control areas evaluated (Contractor and Outside Agency 
Security, Capital Planning and Investment Control, and Performance 
Measurement), the FDIC had no assurance that adequate security had been 
achieved. Our report also highlighted opportunities for the Corporation 
to strengthen the accountability and authority for information security 
by (a) appointing a permanent Chief Information Officer (CIO), (b) 
ensuring that the individual serving as the CIO reports directly and 
solely to the Chairman, and (c) filling key vacancies within the 
Division of Information Resources Management that support information 
security initiatives and operations.
    Investigations of Outstanding Restitution Orders and Other Debt.--
Working with the Corporation's Division of Resolutions and 
Receiverships, the U.S. Attorneys' offices, and other federal agencies, 
the OIG continued to identify and pursue investigations of FDIC debtors 
who have concealed assets or committed other fraud in attempting to 
avoid repayment of their obligations to the FDIC. Our caseload includes 
a total of over $1 billion of estimated fraud related to court-ordered 
restitution and other types of debt.
    Evaluation of Physical Security for FDIC Facilities.--Following the 
tragic events of September 11, 2001, the OIG focused its attention on 
the security of FDIC facilities. We reported that the FDIC generally 
addresses Department of Justice minimum security standards, but we saw 
a need to assign a risk level to each FDIC facility and develop 
appropriate plans based upon the risks. The Corporation has been 
responsive to our concerns.
    Our semiannual reports to the Congress provide many other examples 
of OIG accomplishments. These reports can be found on our Web page at 
www.fdic.gov/oig/semi.html or by contacting our office.

Assistance to FDIC Management
    In addition to 2002 audits, investigations, and evaluations, the 
OIG made valuable contributions to the FDIC in several other ways. We 
strive to work in partnership with Corporation management to share our 
expertise and perspective in certain areas where they are seeking to 
make improvements. Among these contributions were the following 
activities:
  --Reviewed 40 proposed corporate policies and 2 draft regulations and 
        offered comments and suggestions when appropriate.
  --Commented on the FDIC's annual performance report.
  --Provided advisory comments on the FDIC's 2002 Annual Performance 
        Plan.
  --Provided the Corporation with a risk analysis that identified an 
        emerging risk, the quality of bank financial reporting and 
        auditing.
  --Participated in several division level conferences to communicate 
        about our audit and investigation work and processes.
  --Provided comments to the Chief Operating Officer on the 
        Corporation's draft Emergency Response Plan.
  --Provided technical assistance and advice to several FDIC groups 
        working on information technology issues, business process 
        redesign, information security reviews, and contracting 
        policies.
  --Conducted an annual review of the Corporation's internal control 
        and risk management program.

OIG Management and Operational Initiatives
    An important part of our stewardship over the funding we receive 
includes our continuous efforts to improve OIG operations. During the 
past year, we took several initiatives that have great significance on 
our work and operations.
    As I mentioned in the beginning of our statement, the OIG 
participated in a significant downsizing and restructuring initiative 
with the Corporation. FDIC Chairman Donald Powell envisions a smaller 
FDIC and developed a program of voluntary employee separation 
incentives, including an employee buyout program and early retirements. 
I thoroughly reviewed all OIG functions and determined that we needed 
to downsize our staff significantly and, in some cases, hire staff with 
more relevant skills. Over 50 OIG staff accepted buyouts and/or early 
retirements. We closed our San Francisco office and are in the process 
of completing a small reduction-in-force involving remaining surplus 
staff.
    The new organization, though smaller, is now more closely aligned 
with key FDIC mission areas. For example, our Office of Audits 
underwent a major reorganization around five operational directorates: 
Resolution, Receivership, and Legal Affairs; Insurance, Supervision, 
and Consumer Affairs; Information Assurance; and Resources Management. 
A fifth directorate, Corporate Evaluations, performs corporate-wide and 
other evaluations. Our audit function underwent a peer review by the 
U.S. Agency for International Development. The review concluded that 
the OIG's quality control system was designed in accordance with the 
standards of the President's Council on Integrity and Efficiency (PCIE) 
and provided reasonable assurance of conformance to professional 
standards in the conduct of audits.
    Our Office of Investigations has also realigned its staff and field 
operations in response to the OIG's downsizing effort. In addition, I 
established the Office of Management and Congressional Relations by 
merging two offices.
    While restructuring to a smaller workforce, the OIG continues to 
look to increasing the value of our people and the performance capacity 
of the OIG. During fiscal year 2002, we issued a Human Capital 
Strategic Plan, which will align and integrate our human resource 
policies and procedures with the OIG mission. The alignment of our 
human resources with our mission is a new strategic goal in revisions 
we have made to our Strategic Plan. The Human Capital Strategic Plan 
outlines four objectives to maximize the return on our human capital 
investments. The objectives relate to workforce analysis; competency 
investments; leadership development; and a result-oriented, high 
performance culture. We are in the process of implementing several key 
efforts in this multi-year plan, including identification of key staff 
competencies needed to perform our work and development of a business 
knowledge inventory system.
    Our revised strategic goals are interrelated, as follows:
    Value and Impact.--OIG products will add value by achieving 
significant impact related to addressing issues of importance to the 
Chairman, the Congress, and the public.
    Communication and Outreach.--Communication between the OIG and the 
Chairman, the Congress, employees, and other stakeholders will be 
effective.
    Human Capital.--The OIG will align its human resources to support 
the OIG mission.
    Productivity.--The OIG will effectively manage its resources.
    Other internal initiatives include our joint sponsorship of a 2-day 
Symposium on Emerging Issues with Offices of Inspector General of the 
Department of the Treasury and the Board of Governors of the Federal 
Reserve System, which provided approximately 95 auditors from bank 
regulatory agencies and other government organizations insight into 
emerging issues as identified by agency and congressional leadership. 
We also conducted our fourth external customer survey regarding 
satisfaction with OIG operations and processes. We also continued to 
incorporate new technology into our office with the use of an automated 
working paper software package designed to enhance the efficiency and 
effectiveness of our audits and evaluations. In addition, we 
implemented a software application that our office developed to approve 
training requests and keep accurate records on our staff's compliance 
with continuing professional education requirements in Government 
Auditing Standards. We also established an internal Information 
Technology Security Program.

Other Activities
    I continued my role as Vice Chair of the President's Council on 
Integrity and Efficiency (PCIE) and have held this position since April 
1999. The Council maintains six standing committees to initiate and 
manage audit, investigation, evaluation, legislation, professional 
development, and integrity issues and projects in the Inspector General 
community. The PCIE has been very active in helping the government 
achieve better results and has concentrated many of its activities on 
areas that would facilitate agency efforts related to the President's 
Management Agenda. To enhance the community's ability to continue 
fulfilling its mission, the PCIE co-hosted its annual conference to 
highlight challenges and explore ways to address them. Further, the 
PCIE issued several documents during the fiscal year that contributed 
to good government. These documents addressed our nation's critical 
infrastructure protection, critical security, and government-wide 
management challenges. Several of these documents were requested by 
congressional oversight committees to augment their oversight 
abilities.
    In addition to my leadership role with the PCIE, the FDIC OIG 
continued its participation in a Results Act interest group sponsored 
by the PCIE and the U.S. Office of Personnel Management to share ideas 
and best practices on the Results Act implementation. We also 
participated in a PCIE working group looking into the use of Social 
Security Numbers in the federal government and concerns related to 
identity theft. I also led a PCIE committee to update Quality Standards 
for Federal Offices of Inspector General (Brown Book).

         MANAGEMENT AND PERFORMANCE CHALLENGES FACING THE FDIC

    The OIG recently assessed the most significant management and 
performance challenges facing the FDIC. We provided a description of 
these challenges to the Chief Financial Officer of the FDIC in the 
spirit of the Reports Consolidation Act of 2000. For our part, we will 
continue to pursue audits, evaluations, investigations, and other 
reviews that address the challenges, and we look forward to continuing 
to work with the Congress and corporate officials to address the 
challenges successfully. Our annual and strategic plans for fiscal 
years 2003 and 2004 are and will be focused on issues within these 
challenges. I will discuss each of the challenges listed below in 
detail.
  --Adequacy of Corporate Governance in Insured Depository Institutions
  --Protection of Consumer Interests
  --Security of Critical Infrastructure
  --Management and Analysis of Risks to the Insurance Funds
  --Effectiveness of Resolution and Receivership Activities
  --Management and Security of Information Technology Resources
  --Assessment of Corporate Performance
  --Transition to a New Financial Environment
  --Organizational Leadership and Management of Human Capital
  --Cost Containment and Procurement Integrity

Adequacy of Corporate Governance in Insured Depository Institutions
    A number of well-publicized announcements of business failures, 
including financial institution failures, have raised questions about 
the credibility of accounting practices and oversight in the United 
States. These recent events have increased public concern regarding the 
adequacy of corporate governance and, in part, prompted passage of the 
Sarbanes-Oxley Act of 2002. The public's confidence in the nation's 
financial system can be shaken by deficiencies in the adequacy of 
corporate governance in insured depository institutions. For instance, 
the failure of senior management, boards of directors, and auditors to 
effectively conduct their duties has contributed to some recent 
financial institution failures. In certain instances, Board members and 
senior management engaged in high-risk activities without proper risk 
management processes, did not maintain adequate loan policies and 
procedures, and circumvented or disregarded various laws and banking 
regulations. In other instances, independent public accounting firms 
rendered unqualified opinions on the institutions' financial statements 
when, in fact, the statements were materially misstated. To the extent 
that financial reporting is not reliable, the regulatory processes and 
FDIC mission achievement, that is ensuring the safety and soundness of 
the nation's financial system, can be adversely affected. For example, 
essential research and analysis used to achieve the supervision and 
insurance missions of the Corporation can be complicated and 
potentially compromised by poor quality financial reports and audits. 
Potentially the insurance funds can be affected by financial 
institution and other business failures involving financial reporting 
problems. In the worst case, illegal and otherwise improper activity by 
management of financial institutions or their boards of directors can 
be concealed, resulting in significant potential losses to the FDIC 
insurance funds.
    The Corporation has initiated various measures designed to mitigate 
the risk posed by these concerns, such as reviewing the bank's board 
activities and ethics policies and practices and reviewing auditor 
independence requirements. In addition, the FDIC reviews the financial 
disclosure and reporting obligations of publicly traded state nonmember 
institutions as well as their compliance with other Securities and 
Exchange Commission regulations and the Federal Financial Institutions 
Examination Council-approved and recommended policies to help ensure 
accurate and reliable financial reporting through an effective external 
auditing program. Nevertheless, the adequacy of corporate governance 
will continue to require the FDIC's vigilant attention.

Protection of Consumer Interests
    The FDIC is legislatively mandated to enforce various statutes and 
regulations regarding consumer protection and civil rights with respect 
to state-chartered, non-member banks and to encourage community 
investment initiatives by these institutions. Some of the more 
prominent laws and regulations in this area include the Truth in 
Lending Act, Fair Credit Reporting Act, Real Estate Settlement 
Procedures Act, Fair Housing Act, Home Mortgage Disclosure Act, Equal 
Credit Opportunity Act, Community Reinvestment Act of 1977, and Gramm-
Leach-Bliley Act.
    The Corporation accomplishes its mission related to fair lending 
and other consumer protection laws and regulations by conducting 
compliance examinations, taking enforcement actions to address unsafe 
or unsound banking practices and compliance violations, encouraging 
public involvement in the compliance process, assisting financial 
institutions with fair lending and consumer compliance through 
education and guidance, and providing assistance to various parties 
within and outside of the FDIC.
    The FDIC's examination and evaluation programs must assess how well 
the institutions under its supervision manage compliance with consumer 
protection laws and regulations and meet the credit needs of their 
communities, including low- and moderate-income neighborhoods. The FDIC 
must also work to issue regulations that implement federal consumer 
protection statutes--both on its own initiative and together with the 
other federal financial institution regulatory agencies. One important 
focus will be the Gramm-Leach-Bliley Act, as the Corporation must 
ensure it has a quality program to examine institution compliance with 
the privacy and other provisions of the Act.
    The Corporation's community affairs program provides technical 
assistance to help banks meet their responsibilities under the 
Community Reinvestment Act. The current emphasis is on financial 
literacy, aimed specifically at low- and moderate-income people who may 
not have had banking relationships. The Corporation's ``Money Smart'' 
initiative is a key outreach effort. The FDIC must also continue 
efforts to maintain a Consumer Affairs program by investigating 
consumer complaints about FDIC-supervised institutions and answering 
consumer inquiries regarding consumer protection laws and banking 
practices.

Security of Critical Infrastructure
    The adequate security of our nation's critical infrastructures has 
been at the forefront of the Federal government's agenda for many 
years. Specifically, the President's Commission on Critical 
Infrastructure Protection (established in July 1996) was tasked to 
formulate a comprehensive national strategy for protecting the nation's 
critical infrastructure from physical and ``cyber'' threats. Included 
among the limited number of systems whose incapacity or destruction 
were deemed to have a debilitating impact on the defense or economic 
security of the nation was the banking and finance system. With the 
increased consolidation and connectivity of the banking industry in the 
years since 1996, and with the new awareness of the nation's 
vulnerabilities to terrorist attacks since September 11, 2001, the 
security of the critical infrastructure in the banking industry is even 
more important.
    On May 22, 1998, the Presidential Decision Directive (PDD) 63 was 
signed, calling for a national effort to ensure the security of the 
nation's critical infrastructures. PDD 63 defined the critical 
infrastructure as the ``physical and cyber-based systems essential to 
the minimum operations of the economy and government.'' President Bush 
declared that securing our critical infrastructure is essential to our 
economic and national security and issued two Executive Orders (EO 
13228, The Office of Homeland Security and the Homeland Security 
Council and EO 23231, Critical Infrastructure Protection in the 
Information Age) to improve the federal government's critical 
infrastructure protection program in the context of PDD 63.
    The intent of PDD 63 is to ensure that the federal government 
maintains the capability to deliver services essential to the nation's 
security, economy, and the health and safety of its citizens, in the 
event of a cyber or physical-based disruption. Much of the nation's 
critical infrastructure historically has been physically and logically 
separate systems that had little interdependence. However, as a result 
of technology, the infrastructure has increasingly become automated and 
interconnected. These same advances have created new vulnerabilities to 
equipment failures, human error, and natural disasters as well as 
terrorism and cyber attacks.
    To effectively protect critical infrastructure, the FDIC's 
challenge in this area is to implement measures to mitigate risks, plan 
for and manage emergencies through effective contingency and continuity 
planning, coordinate protective measures with other agencies, determine 
resource and organization requirements, and engage in education and 
awareness activities. The FDIC will need to continue to work with the 
Department of Homeland Security and the Finance and Banking Information 
Infrastructure Committee created by Executive Order 23231 and chaired 
by the Department of the Treasury, on efforts to improve the security 
critical infrastructure of the nation's financial system.

Management and Analysis of Risks to the Insurance Funds
    A primary goal of the FDIC under its insurance program is to ensure 
that its deposit insurance funds do not require resuscitation by the 
U.S. Treasury. Achieving this goal is a considerable challenge, given 
that the FDIC supervises only a portion of the insured depository 
institutions. The identification of risks to non-FDIC supervised 
institutions requires effective communication and coordination with the 
other federal banking agencies. The FDIC engages in an ongoing process 
of proactively identifying risks to the deposit insurance funds and 
adjusting the risk-based deposit insurance premiums charged to the 
institutions.
    Recent trends and events continue to pose risks to the funds. Over 
the past year, 11 banks have failed and the potential exists for 
additional failures. While some failures may be attributable primarily 
or in part to economic factors, bank mismanagement and fraud have also 
been factors in most recent failures. The environment in which 
financial institutions operate is evolving rapidly, particularly with 
the acceleration of interstate banking; new banking products and 
complex asset structures; and electronic banking. The industry's 
growing reliance on technologies, particularly the Internet, has 
changed the risk profile of banking. The consolidations that may occur 
among banks and securities firms, insurance companies, and other 
financial services providers resulting from the Gramm-Leach-Bliley Act 
pose additional risks to the FDIC's insurance funds. The Corporation's 
risk-focused examination process must operate to identify and mitigate 
these risks and their real or potential impact on financial 
institutions to preclude adverse consequences to the insurance funds.
    Another risk to the insurance funds results from bank mergers that 
have created ``megabanks,'' or ``large banks'' (defined as institutions 
with assets of over $25 billion). For many of these institutions, the 
FDIC is the insurer but is not the primary federal regulator. Megabanks 
offering new or expanded services also present challenges to the FDIC. 
The failure of a megabank, for example, along with the potential 
closing of closely affiliated smaller institutions, could result in 
such losses to the deposit insurance funds as to require significant 
increases in premium assessments from an institution.
    Further, because of bank mergers and acquisitions, many 
institutions hold both Bank Insurance Fund (BIF) and Savings 
Association Insurance Fund (SAIF) insured deposits, obscuring the 
difference between the funds. There is ongoing consideration of merging 
the two insurance funds, with the thought being that the merged fund 
would not only be stronger and better diversified but would also 
eliminate the concern about a premium disparity between the BIF and the 
SAIF. Assessments in the merged fund would be based on the risk that 
institutions pose to the single fund. The prospect of different prices 
for identical deposit insurance coverage would be eliminated. Also, 
insured institutions would no longer have to track their BIF and SAIF 
deposits separately, resulting in cost savings for the industry. The 
Corporation has worked hard to bring about deposit insurance reform and 
needs to continue to work with the banking community and the Congress 
in the interest of eventual passage of reform legislation.
    Another risk to the insurance funds relates to the designated 
reserve ratio. As of March 31, 2002, the Bank Insurance Fund (BIF) 
reserve ratio was at 1.23 percent, the first time it had fallen below 
1.25 percent since 1995. By December 31, 2002, the BIF reserve ratio 
was at 1.27, two basis points above the statutorily mandated designed 
reserve ratio for the deposit insurance funds. If the BIF ratio is 
below 1.25 percent, in accordance with the Federal Deposit Insurance 
Act, the FDIC Board of Directors must charge premiums to banks that are 
sufficient to restore the ratio to the designated reserve ratio within 
1 year. The Corporation's challenge is to maintain or exceed the 
designated reserve ratio, as required by statute.
    The process for setting deposit insurance premiums, which is 
closely related to the above discussion of the designated reserve 
ratio, represents yet another significant risk to the insurance funds. 
Insurance premiums are not generally assessed based on risk but rather 
the funding requirements of the insurance funds. This approach has the 
impact of assessing premiums during economic downturns when banks are 
failing and likely not in the best position to afford the premiums. 
Also, numerous ``free rider'' institutions have benefited from being 
able to sharply increase insured deposits without contributions to the 
insurance funds commensurate with this increased risk. This can occur 
because the designated reserve ratio has not been breached thereby 
triggering across-the-board premiums. Current deposit insurance reform 
proposals include provisions for risk-based premiums to be assessed on 
a more regularly scheduled basis than would occur using the existing 
approach. Risk-based premiums can provide the ability to better match 
premiums charged to institutions with related risk to the insurance 
funds.

Effectiveness of Resolution and Receivership Activities
    One of the FDIC's most important corporate responsibilities is 
planning and efficiently handling the franchise marketing of failing 
FDIC-insured institutions and providing prompt, responsive, and 
efficient resolution of failed financial institutions. These activities 
maintain confidence and stability in our financial system. The Division 
of Resolutions and Receiverships (DRR) has outlined primary goals for 
the following four business lines and each is accompanied by 
significant challenges.
    (1) Deposit Insurance.--DRR must provide customers of failed 
financial institutions with timely access to their insured funds and 
financial services. A significant challenge in this area is to ensure 
that FDIC deposit insurance claims and payment processes are prepared 
to handle large institution failures.
    (2) Resolutions.--As DRR seeks to resolve failed institutions in 
the least costly manner, its challenges include improving the 
efficiency of contingency planning for institution failures and 
improving internal FDIC communication and coordination as well as 
communication with the other primary federal regulators to ensure 
timely access to records and optimal resolution strategies.
    (3) Receivership Management, Accounting, Internal Review, and 
Customer Service.--DRR's goal is to manage receiverships to maximize 
net return towards an orderly and timely termination and provide 
customers of failed institutions and the public with timely and 
responsive information. Related challenges include improving the 
efficiency of the receivership termination process, improving claims 
processing, continual assessment of recovery strategies, improving 
investigative activities, and charging receiverships for services 
performed under the Receivership Management Program (i.e., service 
costing).
    (4) Employees.--DRR employees need to possess the resources, 
skills, and tools to perform the mission of the Division. One related 
challenge is to ensure that Division personnel have sufficient legal 
support for decision-making.

Management and Security of Information Technology Resources
    Information technology (IT) continues to play an increasingly 
greater role in every aspect of the FDIC mission. As corporate 
employees carry out the FDIC's principal business lines of insuring 
deposits, examining and supervising financial institutions, and 
managing receiverships, they rely on information and corresponding 
technology as an essential resource. Information and analysis on 
banking, financial services, and the economy form the basis for the 
development of public policies and promote public understanding and 
confidence in the nation's financial system. IT is a critical resource 
that must be safeguarded.
    Accomplishing IT goals efficiently and effectively requires sound 
IT planning and investment control processes. The Corporation's 2003 
information management budget is approximately $171.9 million. The 
Corporation must constantly evaluate technological advances to ensure 
that its operations continue to be efficient and cost-effective and 
that it is properly positioned to carry out its mission. While doing 
so, the Corporation must continue to respond to the impact of laws and 
regulations on its operations. Management of IT resources and IT 
security have been the focus of several laws, such as the Paperwork 
Reduction Act, the Government Information Security Reform Act (GISRA), 
and most recently, the Federal Information Security Management Act of 
2002 (FISMA). Similar to the requirements of GISRA, under FISMA, each 
agency is required to report on the adequacy and effectiveness of 
information security policies, procedures, and practices and compliance 
with information security requirements of FISMA.
    The Corporation has worked to implement many sound information 
system security controls, but has not yet fully integrated these into 
an entity-wide program. Additionally, efforts to identify sensitive 
data, plan for and fund essential security measures, incorporate 
security requirements in FDIC contracts, enhance software configuration 
management, and measure the overall performance of the information 
security program need continued attention. Frequently, security 
improvements at the FDIC were the result of a reaction to specific 
audit and review findings, rather than the result of a comprehensive 
program that provided continuous and proactive identification, 
correction, and prevention of security problems. There is also a need 
to appoint a permanent CIO (vacant since September 2001) to strengthen 
accountability and authority in the FDIC's information security 
program.
    The FDIC's progress in addressing the security weaknesses 
identified in our 2001 Security Act evaluation report were offset by 
the emergence of new information security weaknesses identified during 
our 2002 evaluation, as well as the FDIC's internal evaluation 
completed on January 10, 2003. Thus, management and security of 
information technology resources continues to warrant management 
attention.

Assessment of Corporate Performance
    The Government Performance and Results Act (Results Act) of 1993 
was enacted to improve the efficiency, effectiveness, and 
accountability of federal programs by establishing a system for setting 
goals, measuring performance, and reporting on accomplishments. The 
Results Act requires most federal agencies, including the FDIC, to 
prepare a strategic plan that broadly defines each agency's mission, 
vision, and strategic goals and objectives; an annual performance plan 
that translates the vision and goals of the strategic plan into 
measurable annual goals; and an annual performance report that compares 
actual results against planned goals.
    The Corporation's strategic plan and annual performance plan lay 
out the agency's mission and vision and articulate goals and objectives 
for the FDIC's three major program areas of Insurance, Supervision, and 
Receivership Management. The plans focus on four strategic goals that 
define desired outcomes identified for each program area: (1) Insured 
Depositors Are Protected from Loss Without Recourse to Taxpayer 
Funding, (2) FDIC-Supervised Institutions Are Safe and Sound, (3) 
Consumers' Rights Are Protected and FDIC-Supervised Institutions Invest 
in Their Communities, and (4) Recovery to Creditors of Receiverships Is 
Achieved. Through its annual performance report, the FDIC is 
accountable for reporting actual performance and achieving these 
strategic goals.
    The Corporation has made significant progress in implementing the 
Results Act and needs to continue to address the challenges of 
developing more outcome-oriented performance measures, linking 
performance goals and budgetary resources, implementing processes to 
verify and validate reported performance data, and addressing 
crosscutting issues and programs that affect other federal financial 
institution regulatory agencies.

Transition to a New Financial Environment
    On September 30, 2002, the FDIC executed a multi-year contract to 
replace its core financial systems and applications with a commercial-
off-the-shelf software package. The FDIC Board had previously approved 
contract expenditure authority for the New Financial Environment (NFE) 
project totaling approximately $28.8 million. At the time the Board 
case was approved, the FDIC estimated the total life cycle cost of NFE, 
including FDIC staff time, to be approximately $62.5 million over 8 
years. NFE is a major corporate initiative to enhance the FDIC's 
ability to meet current and future financial management and information 
needs.
    Although NFE offers the FDIC significant benefits, it also presents 
significant challenges. These challenges will test the Corporation's 
ability to (1) maintain unqualified opinions on the FDIC's annual 
financial statements through the system implementation and associated 
business process reengineering; (2) manage contractor resources, 
schedules, and costs; and (3) coordinate with planned and ongoing 
system development projects related to NFE. Preliminary results of an 
ongoing audit found that the FDIC had established key management 
controls for the NFE project, but that opportunities for improvement 
existed in the areas of project integration, communications, and risk 
response planning.
    Overall, the FDIC needs to ensure that the NFE Project team 
successfully implements modern and reliable systems to improve 
financial business processes and support current and future financial 
management and information needs, while controlling costs for the new 
environment to the maximum extent possible.

Organizational Leadership and Management of Human Capital
    The FDIC has been in a downsizing mode for the past 10 years as the 
workload from the banking and thrift crises of the late l980s and 1990s 
has been accomplished. Over the past months, a number of division 
mergers and reorganizations took place and the Corporation concluded 
its 2002 buyout/retirement incentive programs. These most recent 
incentive programs achieved a reduction of 699 staff and $80 million 
projected savings in future operating costs. In total, over the past 
10+ years, the workforce (combined from the FDIC and the Resolution 
Trust Corporation) has fallen from approximately 23,000 in 1992 to 
5,500 as of September 30, 2002.
    By June 2003, the Corporation hopes to substantially complete 
required downsizing, identify an appropriate skills mix, and correct 
any existing skills imbalances. To do so, the Corporation continues to 
carry out other features of its comprehensive program such as 
solicitations of interest, reassignments, retraining, outplacement 
assistance, and possible reductions-in-force. The Corporation has also 
predicted that almost 20 percent of FDIC employees will be eligible to 
retire within the next 5 years. As the Corporation adjusts to a smaller 
workforce, it must continue to ensure the readiness of its staff to 
carry out the corporate mission.
    The Corporation must also work to fill key vacancies in a timely 
manner, engage in careful succession planning, and continue to conserve 
and replenish the institutional knowledge and expertise that has guided 
the organization over the past years. A need for additional outsourcing 
may arise and hiring and retaining new talent will be important. Hiring 
and retention policies that are fair and inclusive must remain a 
significant component of the corporate diversity plan. Designing, 
implementing, and maintaining effective human capital strategies are 
critical priorities and must be the focus of centralized, sustained 
corporate attention.
    A significant element of this performance and management challenge 
relates to organizational leadership at the FDIC Board of Directors 
level, specifically with respect to the current make-up of the Board. 
The Board is a body whose strong leadership is vital to the success of 
the agency and to the banking and financial services industry. The 
Board is comprised of five directors, including the FDIC Chairman, two 
other FDIC directors, the Comptroller of the Currency, and the Director 
of the Office of Thrift Supervision. In order to ensure that the 
balance between various interests implicit in the Board's structure is 
preserved, the Board should operate at full strength. However, the 
Board has been operating with an FDIC Director vacancy since September 
1998. Accordingly, we have urged that vacancies on the Board be filled 
as promptly as practicable in order to afford the FDIC the balanced 
governance and sustained leadership essential to the agency's continued 
success.

Cost Containment and Procurement Integrity
    As steward for the Bank Insurance Fund and Savings Association 
Insurance Fund, the FDIC seeks ways to limit the use of those funds. As 
such, the Corporation must continue to identify and implement measures 
to contain and reduce costs, either through more careful spending or 
assessing and making changes in business processes to increase 
efficiency. Many of the efforts described above as part of other 
management and performance challenges (e.g., New Financial Environment, 
Service Costing, corporate downsizing) attest to the Corporation's 
ongoing efforts to do so.
    A key challenge to containing costs relates to the contracting 
area. To assist the Corporation in accomplishing its mission, 
contractors provide services in such areas as information technology, 
legal matters, loan servicing, and asset management. To achieve success 
in this area, the FDIC must ensure that its acquisition framework--that 
is, its policies, procedures, and internal controls--is marked by sound 
planning; consistent use of competition; fairness; well-structured 
contracts designed to produce cost-effective, quality performance from 
contractors; and vigilant contract management and oversight.
    The Corporation has taken a number of steps to strengthen internal 
control and effective oversight. However, our work in this area 
continues to show that further improvements are necessary to reduce 
risks such as the consideration of contractor security in acquisition 
planning, incorporation of information security requirements in FDIC 
contracts, and oversight of contractor security practices. Other risks 
include corporate receipt of billings for such items as unauthorized 
subcontractors, unallowable subcontractor markups, incorrect 
timesheets, unreasonable project management hours billed, conflicts of 
interest, and unauthorized labor categories. The combination of 
increased reliance on contractor support and continuing reductions in 
the FDIC workforce presents a considerable risk to the effectiveness of 
contractor oversight activities. Additionally, large-scale 
procurements, such as Virginia Square II (a $111 million construction 
project to house FDIC staff for the most part now working in leased 
space in the District of Columbia) and the New Financial Environment, 
necessitate continued emphasis on contractor oversight activities.

               THE OIG'S FISCAL YEAR 2004 BUDGET REQUEST

    The OIG is requesting a fiscal year 2004 appropriation of 
$30,125,000 and will fund 168 full-time equivalent staff. The OIG's 
operating budget for fiscal year 2004 totals about $27.8 million, 
exclusive of new capital expenditures for computers and a new 
government-wide funding mandate. This operating budget, which includes 
the salaries, benefit costs, travel, and training expenses for our 
employees, is 9 percent less than the fiscal year 2003 operating 
budget. We are budgeting for capital expenditures of about $1.3 million 
for replacing OIG docking station computers in accordance with the 
FDIC's computer replacement schedule and for our electronic crimes unit 
requirements. In addition, we are budgeting for certain potential 
litigation expenses which, under Public Law 107-174, must now be paid 
for with appropriated funds.
    Our electronic crimes unit enables the OIG to conduct computer 
forensic examinations where possible illegal activities have occurred 
involving information technology. We have already employed the 
capability in several investigations of suspected fraud that may have 
occurred in banks prior to their closings due to insolvency. Additional 
hardware and software will enhance this capability and keep it current 
with changing technology.
    The chart below shows the distribution of the OIG's budget by major 
object classification. Mostly, the OIG budget is comprised of salaries, 
benefits, and the necessary funding for travel and training expenses.



    The FDIC OIG has been operating under an appropriated budget since 
fiscal year 1998 in accordance with Section 1105(a) of Title 31, United 
States Code, which provides for ``a separate appropriation account for 
appropriations for each Office of Inspector General of an establishment 
defined under Section 11(2) of the Inspector General Act of 1978.'' 
This funding approach is part of the statutory protection of the OIG's 
independence. The FDIC OIG is the only appropriated entity in the FDIC. 
The OIG's appropriation would be derived from the Bank Insurance Fund, 
the Savings Association Insurance Fund, and the FSLIC Resolution Fund. 
These funds are the ones used to pay for other FDIC operating expenses.
    The fiscal year 2004 budget is about $1.3 million less than the 
fiscal year 2003 appropriation. After adjusting for inflation, fiscal 
year 2004 will be the eighth consecutive year that the OIG's budget 
decreased. \1\ The graph below shows the OIG's budget history since I 
became the Inspector General in 1996.
---------------------------------------------------------------------------
    \1\ Prior to fiscal year 1998, the OIG budget was part of the FDIC 
annual operating budget approved by the Board of Directors from deposit 
insurance funds and other funds under the Board's stewardship.



    As I discussed earlier, the OIG has significantly downsized not 
only in the past year, but also since 1996. By statute, the FDIC and 
the Resolution Trust Corporation (RTC) and their Offices of Inspector 
General merged on January 1, 1996 and at that time, the combined OIG 
employed 370. The proposed staffing for fiscal year 2004 will be less 
than half of the 1996 staffing level. The OIG's budget and staffing 
reductions have been possible due to the shrinking size of the FDIC, 
completion of the carryover work from the RTC, prospects for continuing 
health of the banking industry, and the Corporation's own staff 
downsizing initiatives. Total FDIC employment has declined from a 
combined FDIC-RTC peak of about 23,000 staff in early 1992 to 5,457 as 
of December 31, 2002. The graph below shows the OIG authorized staffing 
since the merger of RTC in 1996.



                           CONCLUDING REMARKS

    Mr. Chairman and Members of the Subcommittee, I appreciate the 
support and resources we have received from this subcommittee, the 
Congress, and the FDIC over the past several years. As a result, the 
OIG has been able to make a real difference in FDIC operations in terms 
of financial benefits and improvements, and in strengthening our own 
operations and efficiency. Our budget request for fiscal year 2004 is 
modest in view of the value we add. We seek your continued support so 
that we will be able to effectively and efficiently conduct our work on 
behalf of the FDIC Chairman, the Congress, and the American public.
    In this 25th year since passage of the Inspector General Act, I 
take pride in my organization and the entire federal Inspector General 
community and its collective achievements. Building on this legacy, we 
inthe FDIC OIG look forward to new challenges and assisting the 
Congress and corporate officials in meeting them.
                                 ______
                                 

                  AMERICAN BATTLE MONUMENTS COMMISSION

   PREPARED STATEMENT OF MAJOR GENERAL JOHN P. HERRLING, USA (RET), 
                               SECRETARY

    Mr. Chairman and Members of the Committee: Thank you for the 
opportunity to testify on the American Battle Monuments Commission's 
fiscal year 2004 Appropriation Request. The special nature of the 
American Battle Monuments Commission places it in a unique and highly 
responsible position with the American people. The manner in which we 
care for our country's Honored War Dead is, and should remain, a 
reflection of the high regard in which we, as a nation, respect their 
service and sacrifice.
    The American Battle Monuments Commission is responsible for 
commemorating the services of American Armed Forces where they have 
served since April 6, 1917 (the date of U.S. entry into World War I) 
through the establishment of suitable memorial shrines; and for 
designing, constructing, operating, and maintaining permanent American 
burial grounds in foreign countries. In performing these functions, we 
administer, operate, and maintain twenty-four permanent memorial 
cemeteries and twenty-five monuments, memorials, and markers in the 
United States and fifteen countries around the world.
    We have eight World War I and 14 World War II cemeteries located in 
Europe, the Mediterranean, North Africa and the Philippines. All of 
these cemeteries are closed to burials except for the remains of the 
War Dead who may occasionally be discovered in World War I or World War 
II battlefield areas. In addition, we are responsible for the American 
cemeteries in Mexico City, established after the Mexican War, and in 
Panama.
    Presently, 124,917 U.S. War Dead are interred in these cemeteries--
30,922 of World War I, 93,245 of World War II and 750 of the Mexican 
War. Additionally, 6,010 American veterans and others are interred in 
the Mexico City and Corozal (Panama) American Cemeteries. Commemorated 
individually by name on stone tablets at the World War I and II 
cemeteries and three memorials on U.S. soil are the 94,132 U.S. 
servicemen and women who were Missing in Action, or lost or buried at 
sea during the World Wars and the Korean and Vietnam Wars.
    We provide services and information to the public, friends, and 
relatives who visit our cemeteries and memorials. This includes 
information about grave and memorialization sites as well as location, 
suggested routes and modes of travel to the cemeteries or memorials. 
Immediate family members are provided letters authorizing fee-free 
passports for overseas travel to specifically visit a loved one's grave 
or memorial site. During fiscal year 2002, over 8 million people 
visited our cemeteries and monuments worldwide, half of whom were 
American. Photographs of individual headstones and sections of the 
Tablets of the Missing on which the service person's name is engraved 
are also available. These photographs are mounted on large color 
lithographs of the cemeteries or memorials. In addition, we assist 
those who wish to purchase floral decorations for placement at a grave 
or memorial site in our cemeteries. A photograph of the in-place floral 
arrangement is provided to the donor.
    The care of these shrines to our War Dead requires a sizeable 
annual program of maintenance and repair of facilities, equipment, and 
grounds. This care includes upkeep of 131,000 graves and headstones; 73 
memorial structures; 41 quarters, utilities, and maintenance 
facilities; 67 miles of roadways and walkways; 911 acres of flowering 
plants, fine lawns and meadows; nearly 69 acres of shrubs and hedges 
and over 11,000 ornamental trees. Care and maintenance of these 
resources are exceptionally labor intensive, therefore, personnel costs 
account for over 53 percent of our budget for fiscal year 2004. Some of 
this maintenance is performed by casual labor, in peak seasons, since 
permanent cemetery staffs are not sized to provide all the required 
maintenance during the peak-growing season. The remaining 47 percent of 
our budget funds our engineering, maintenance, utilities, equipment, 
and administrative costs.
    As an organization responsible for permanent burial facilities, we 
do not have the option of closing or consolidating cemeteries. Within 
the context of the President's Management Agenda, we have continued our 
efforts to achieve greater efficiency and effectiveness in the areas 
where we do have alternatives.

                 STRATEGIC MANAGEMENT OF HUMAN CAPITAL

    Such efforts demand the strategic management of human capital. We 
analyze our work force to maximize the efforts of employees who deliver 
our services.
    In fiscal year 2000, ABMC and OMB conducted a joint productivity 
study to determine if equipment modernization, leasing, outsourcing, 
and automation improvements could increase the efficiency of our 
cemetery workers. Industry experts from two major turf and grounds-
keeping equipment manufacturers participated in the study. They 
concluded that opportunities existed to reduce work-hours associated 
with labor-intensive operations, potentially offsetting the requirement 
for additional personnel. During fiscal year 2001, we continued our 
study and began procurement of modern, labor-efficient and safety-
related equipment identified in fiscal year 2000. During fiscal year 
2002 and 2003, we continue to replace outdated equipment, enhance our 
automation systems, and make improvements in our operations. In order 
to continue productivity program enhancements, we are requesting $3.0 
million for fiscal year 2004.
    Managing our human capital demands that we have the right person 
with the right skills in every position. In fiscal years 1998 and 1999, 
we undertook the first comprehensive survey of our overseas personnel, 
their position descriptions, and workloads since the early 1980's. This 
survey identified a variety of discrepancies in how we staffed our 
cemeteries. We took corrective action, and with the concurrence of OMB, 
ensured consistency in staffing. In fiscal year 2002, we began a 
worldwide manpower study which will further identify and 
comprehensively outline our manpower requirements, position 
descriptions, workloads and manpower distribution to ensure our work 
force is properly deployed.
    A key element of recruiting and retaining a talented work force is 
fair compensation. To ensure equal pay for equal work we converted the 
European Region from our legacy Cemetery System for classifying and 
paying most of our foreign employees to the standard Foreign Service 
National (FSN) pay system. This FSN system is used by State Department 
and other federal departments employing foreign nationals overseas. 
This will ensure that we have a pool of well qualified personnel to 
fill our critical positions. Making this change resulted in an 
additional requirement of $900 thousand a year in personnel 
compensation. The investment will ensure our ability to recruit and 
retain a quality work force.
    I would like to thank the Congress for their support of our 
personnel program by the inclusion of 20 FTE to compensate for the 
reduction of the French workweek to 35 hours. This increase will allow 
us to continue to maintain the finest Memorial Cemeteries in the world.

                          COMPETITIVE SOURCING

    We have continued efforts to avoid using our work force to perform 
tasks that are not inherently governmental and are readily available in 
the commercial market place. In this area we are well advanced. When 
Congress directed us to establish a World War II Memorial, we 
outsourced the fund raising, design, construction, data management, 
fulfillment processing, customer servicing, and public relations.
    The success of this effort has been astonishing. It will soon 
result in the first national memorial dedicated to the 16 million who 
served in uniform during the war, the more than 400,000 who gave their 
lives, and the millions who supported the war effort from the home 
front.
    Our competitive sourcing initiatives did not stop there. 
Contributing to our efforts to improve financial management, in April 
2000, we contracted with a software implementation consultant to assist 
in the selection and development of an automated, integrated accounting 
system that conforms to regulatory requirements. Our new commercial-
off-the-shelf system became operational in October 2001. The use of a 
competitive source contractor allowed our government employees to focus 
on our daily mission while the contractor ironed out the normal 
wrinkles associated with implementing a new system. We are pleased with 
the overall results and will continue to upgrade our capabilities so 
that we will be among the leaders in financial management in the 
Federal Government.
    In addition, our Infrastructure Modernization Program (IMP) has 
made extensive use of outsourcing to ensure that highly qualified firms 
and individuals were contracted to perform engineering analysis and 
reviews. Most construction and engineering projects at ABMC facilities 
are contracted out, since these projects are usually unique and beyond 
the capability of our limited staff.
    Our cemeteries and their infrastructure range from 45 to 80 years 
old. We began IMP in fiscal year 2001 in order to examine in detail the 
infrastructure of our facilities and bring them up to today's 
standards. With this we can avoid future uncertainty, work in a 
programmed and efficient manner, and protect our investments in 
facilities. The first phase of the IMP consisted of studies to identify 
deficiencies in the various aspects of our infrastructure. In the 
second phase, corrective actions are performed. So far studies of 
electrical systems, the structural integrity (safety) aspect of our 
facilities, and our water systems were completed by an Architectural & 
Engineering firm. Corrective actions on electrical systems and 
structural integrity began during late fiscal year 2001 and are 
continued in fiscal year 2002 and fiscal year 2003. Considerable 
electrical work was identified; fortunately, requirements for 
structural work were of a limited nature. With the study on water 
systems completed in fiscal year 2002, we are moving forward on 
corrective actions. During fiscal year 2003, we are dedicating $2 
million to IMP, and are requesting $2 million for fiscal year 2004 to 
continue these essential projects in addition to the $2.1 million to 
continue normal engineering and maintenance operations.

                     IMPROVED FINANCIAL PERFORMANCE

    Since 1998, ABMC has been required to produce full financial 
statements. In addition, these CFO Act financial statements are 
independently audited by the Comptroller General. Each year, ABMC has 
earned an unqualified opinion from GAO on our annual financial audits.
    We recognize that improved financial performance is more than 
achieving an unqualified audit opinion. It is about putting useful and 
timely information in the hands of leaders with which they can make 
decisions. Our new accounting system moves us toward that goal. Looking 
to the future, we have included $552 thousand dollars in our fiscal 
year 2004 budget to move to a web-based system that will enhance our 
ability to make such information more readily available to our 
decision-makers.
    Closely related to efforts to expand e-government, in partnership 
with the Department of the Treasury, we converted to full electronic 
funds transfer banking for all foreign currency disbursements. Prior to 
this, we maintained U.S. funds in separate overseas foreign currency 
bank accounts under delegated disbursing authority from the Treasury. 
Now disbursements flow electronically from our accounting system 
through the Treasury's Kansas City Financial Center to the overseas 
bank account of our vendors and employees. The initial conversion to 
this electronic capability was not as seamless as expected. However, 
the process is now stabilized and is allowing quicker payments for 
customers, elimination of funds held outside the Treasury in foreign 
bank accounts, and real automation of worldwide funds transfers.
    Our new integrated accounting system and our successes on 
international electronic funds payment and full financial audits are 
moving ABMC toward new levels of financial excellence. We look forward 
to the challenges of fiscal year 2004.

                         EXPANDED E-GOVERNMENT

    Our efforts in expanding e-government go beyond the use of 
electronic funds transfers overseas. They include how we deliver our 
services to our citizens--the very heart of what we do.
    Over the last several years, ABMC has expanded access to valuable 
information through the use of on-line tools. We have a Web site which 
allows visitors to gather information on our organization, cemeteries, 
memorials, and their locations. Our European Region has an intranet web 
site which provides details on their operations. In addition, we have 
placed an interactive video system at the Korean War Veteran's Memorial 
which allows visitors to view or print biographies of those lost in 
that conflict.
    We are also supporting the Administration's efforts to reduce the 
number of payroll providers within the federal government. We are 
working with OPM and GSA to transfer our internal, manual payroll 
operations to a web-based system provided by a service provider, in our 
case GSA. We fully support this effort as a way of saving money 
throughout the government. However, that conversion may bring 
additional conversion costs to us in fiscal year 2004. We are in the 
process of solidifying our cost estimates.

                   BUDGET AND PERFORMANCE INTEGRATION

    We are pressing forward in the budget process to ensure that our 
funding requests support the objectives of the agency and the 
President's Management Agenda. Our budget clearly ties to our Strategic 
and Annual Performance Plans. In addition, these plans directly link to 
the Commission's Management Discussion and Analysis (MD&A) statements 
which are required as an integral part of the annual audit conducted by 
the Comptroller General.

                        OTHER IMPORTANT PROJECTS

Normandy Interpretive Center
    Congress, through Public Law 107-73, provided $5.0 million to ABMC 
for fiscal year 2002, specifically for the partial cost of design and 
construction of a new interpretive and visitor center at the Normandy 
American Cemetery in France. In fiscal year 2003, Congress provided an 
additional $4.0 million to continue this project. We have developed a 
contract proposal and have begun the initial pre-design phase. Our 
intent is to achieve an appropriate and comprehensive design, determine 
and obtain total project funding, and begin construction during fiscal 
year 2004.

Vietnam Veterans Plaque
    Public Law 106-214 directed ABMC to oversee the placement of a 
plaque ``within the Vietnam Veterans Memorial containing an inscription 
intended to honor those Vietnam veterans who died after their service 
in the Vietnam War, but as a direct result of that service, and whose 
names are not otherwise eligible for placement on the Memorial Wall.'' 
The law clearly stated that federal funds may not be used to design, 
procure, or install the plaque. We are in the process of working this 
important project through the requirements of the Commemorative Works 
Act and anticipate completion within the next year.

WWII Memorial
    Beyond our primary mission of operating and maintaining and 
improving the management of twenty-four memorial cemeteries and twenty-
five monuments, memorials, and markers, our attention has also been 
focused on the design and construction of the World War II Memorial.
    Congress provided legislative authority for siting the memorial in 
the prime area of the capital, which includes the National Mall. The 
total estimated cost of the memorial project is $170.5 million, which 
includes site selection and design, construction, a National Park 
Service maintenance fee required by the Commemorative Works Act, 
groundbreaking and dedication ceremonies, fund raising and 
administration of the project from its inception in 1993 through 
projected completion in 2004.
    The Commission of Fine Arts (CFA), the National Capital Planning 
Commission (NCPC) and the Department of Interior approved selection of 
the Rainbow Poolsite, a 7.4-acre area at the east end of the Reflecting 
Pool between the Lincoln Memorial and the Washington Monument.
    The public fund raising began in earnest in March 1997 when the 
ABMC announced that former Senator Bob Dole would serve as the National 
Chairman of the World War II Memorial Campaign. He was joined in this 
endeavor by National Co-Chairman Frederick W. Smith, founder and CEO of 
FedEx Corporation. The fund-raising efforts continued to be positive 
during fiscal year 2002, building on the groundwork and success of 
previous fiscal years. The campaign received $11.6 million in 
contributions during the fiscal year 2002, bringing the total funds 
received from all sources, including the federal government, to $186 
million. This total increased to about $189 million as of January 2003.
    Congress also approved several legislative items that continue to 
support the memorial project. Public Law 106-117, signed November 30, 
1999, granted ABMC permanent authority to solicit and receive funds and 
preserves any such funds in ABMC controlled interest bearing Treasury 
Accounts, including any funds remaining after completion of the 
memorial and increased ABMC's authority to accept volunteer services 
and to use intellectual property interests. In addition, Public Law 
106-398, signed October 30, 2000, designated $6 million of the proceeds 
from the sale of titanium from the National Defense Stockpile for 
completion of the design, groundbreaking, construction, maintenance, 
and dedication of the memorial.
    Our greatest challenge has been to ensure that construction is 
completed so that as many of the World War II generation as possible 
will live to see and be honored by the memorial. A construction permit 
was issued by the National Park Service in January 2001, but a small 
coalition of groups opposed to the site and design had filed a federal 
lawsuit to block the project. Construction, which could have begun in 
March 2001, was delayed by this legal action. Public Law 107-11, signed 
by President Bush on Memorial Day 2001, directed that the memorial be 
constructed expeditiously at the dedicated Rainbow Pool site. On the 
basis of this legislation, the federal lawsuit was dismissed, clearing 
the way for award of a construction contract in June 2001. Actual 
construction began in September 2001 and the memorial is expected to be 
completed in the spring of 2004 and will be dedicated on May 29, 2004.
    Since 1923 the American Battle Monuments Commission's memorials and 
cemeteries have been held to a high standard in order to reflect 
America's continuing commitment to its Honored War Dead, their 
families, and the U.S. national image. The Commission intends to 
continue to fulfill this sacred trust while ensuring the prudent 
expenditure of appropriated funds.
    The American Battle Monuments Commission appropriation request for 
fiscal year 2004 is $32,400,000.
                                 ______
                                 

                 NEIGHBORHOOD REINVESTMENT CORPORATION

         PREPARED STATEMENT OF ELLEN LAZAR, EXECUTIVE DIRECTOR

    Neighborhood Reinvestment Corporation is pleased to submit its 
testimony for the record. This testimony is based on the experience and 
considerable successes of 226 community development organizations 
serving more than 2,300 urban, suburban, and rural communities. These 
nonprofit partnerships are collectively known as the 
NeighborWorks network and operate in 49 states, the District 
of Columbia, and Puerto Rico.
    The Neighborhood Reinvestment Corporation was created by Congress 
in 1978. Since that time, Neighborhood Reinvestment and its affiliated 
NeighborWorks network have responded to communities in need, 
championed homeownership for Americans of modest means, and created a 
network of excellence in the housing and community development field. 
This could not have been accomplished without this Subcommittee's 
commitment of federal funds. In fiscal year 2002, the 
NeighborWorks system generated nearly $1.7 billion in direct 
investment, helping nearly 70,000 families obtain and maintain safe and 
affordable rental and homeownership housing.
    We thank the Subcommittee for supporting Neighborhood Reinvestment 
through the fiscal year 2003 budget appropriation of $105 million, and 
we look forward to briefing you on our outcomes next year. Neighborhood 
Reinvestment's fiscal year 2004 budget justification outlines proposed 
activities at a $115 million budget level, an increase of $10 million 
over the fiscal year 2003 budget justification. With this additional 
$10 million, the NeighborWorks system will continue to 
increase our homeownership efforts, and meet rising personnel costs and 
health care expenditures to maintain the Corporation's committed 
professional staff.
    This year Neighborhood Reinvestment celebrates its 25th 
anniversary. As the environment in which we work has changed 
dramatically, our mission has become even more relevant and our 
services are in high demand. Neighborhood Reinvestment is well 
respected in the housing and community development field, and the 
NeighborWorks brand is seen as a sign of the highest quality. 
Since our founding, Congress and a long succession of administrations 
have consistently remained supportive of our activities. As we 
celebrate our past with immense pride, we want to look to the future 
and position the NeighborWorks system to respond to the 
critical needs that our nation's communities face.

             OVERVIEW OF THE NEIGHBORWORKS SYSTEM

    Created by an act of Congress in 1978 (Public Law 95-557), 
Neighborhood Reinvestment Corporation works with 226 local community 
development nonprofits, and Neighborhood Housing Services of America 
(NHSA) to accomplish its mission, as outlined by its authorizing 
statute. This coordinated effort is known as the 
NeighborWorks system.

               THE NEIGHBORHOOD REINVESTMENT CORPORATION

    Neighborhood Reinvestment's partnership with local housing and 
community development organizations supports residents, businesses and 
local governments in their efforts to revitalize their communities. 
Neighborhood Reinvestment has five core activities:
  --We assist existing NeighborWorks organizations to expand 
        their geographic and programmatic scope and help other 
        organizations to become chartered members of the 
        NeighborWorks network. Currently, we work with 226 
        NeighborWorks organizations nationwide in over 2,300 
        communities, and we expect to invite 12 additional 
        organizations to join the network in fiscal year 2003.
  --We fund NeighborWorks organizations by supporting their 
        capital projects and operations to enable them to create and 
        develop their own community-revitalization initiatives from a 
        solid asset base. In fiscal year 2002, this resulted in $1.7 
        billion of direct investment in America's communities, creating 
        a powerful engine for revitalization.
  --We provide sophisticated and specialized technical assistance to 
        NeighborWorks members to more effectively and 
        efficiently reach underserved communities. In 2002, more than 
        35,000 lower income families and individuals were able to 
        purchase, maintain or rehabilitate their home, over 72,000 
        families received pre- or post-purchase homebuyer education 
        services, and more than 34,000 rental units for lower income 
        households were owned or managed as a result of the work of the 
        NeighborWorks network.
  --We conduct extensive review and oversight of 
        NeighborWorks organizations and NHSA, providing them 
        with an objective appraisal of their strengths and weaknesses, 
        which allows them to successfully manage their resources and 
        programmatic risks. Using a rigorous and formalized 
        organizational assessment process, each community development 
        organization in our network is evaluated annually and given a 
        report card covering performance in such areas as financial 
        management, board governance, contract compliance, 
        productivity, and resource development.
  --We operate national Training Institutes open to anyone involved in 
        affordable housing and community revitalization, particularly 
        private- and public-sector practitioners and community leaders. 
        In 2002, more than 11,000 housing and community development 
        practitioners from every state received substantive training in 
        key aspects of community and economic development activity, 
        including real estate development, portfolio management, 
        leadership development and financial management.
    These activities individually and collectively build the 
productivity and strength of the NeighborWorks network and 
the broader community development field.

                  THE NEIGHBORWORKS NETWORK

    Neighborhood Reinvestment is the founder of the 
NeighborWorks network, a collaborative group of community-
based nonprofits that has evolved to include 226 members active in more 
than 2,300 communities across the country today. Regardless of their 
target communities, NeighborWorks organizations function as 
partnerships of local residents, lenders and other business leaders, 
and representatives from local government. To achieve the locally-
identified goals, members of the NeighborWorks network 
utilize the laboratory environment Congress intended to achieve 
creative strategies, collaborate on best practices, and develop 
flexible financing mechanisms.
    Each organization is responsible for setting its own strategies, 
raising funds, and delivering services. Most NeighborWorks 
organizations provide homebuyer counseling, rehabilitation monitoring, 
and targeted lending services that complement conventional lending 
activity. Most NeighborWorks organizations also operate a 
revolving loan fund to meet community credit needs such as gap 
financing for home purchase loans, second mortgages for rehabilitation, 
small-business loans, and acquisition and development of residential 
and commercial real estate. The NeighborWorks network is the 
only national community development nonprofit network with extensive 
expertise in designing, originating, and servicing small non-
conventional loans to lower-income families. Clients often require 
individual counseling and personalized assistance; however, this 
concentrated effort pays off by creating new opportunities for first-
time homebuyers and by permitting existing homeowners to make 
affordable improvements, all of which works to revitalize communities.

                NEIGHBORHOOD HOUSING SERVICES OF AMERICA

    NHSA works in partnership with the Neighborhood Reinvestment 
Corporation to meet special secondary market needs of 
NeighborWorks organizations and their clients. The primary 
mission of NHSA is to operate a specialized secondary market created to 
replenish the revolving loan funds and capital pools of local 
NeighborWorks organizations.
    With administrative and capital support provided by Neighborhood 
Reinvestment, NHSA purchases community development loans at face value, 
thereby allowing NeighborWorks organizations to originate 
loans with interest rates and terms based on the borrowers' ability to 
repay. NHSA's loan purchases provide a stream of capital into 
NeighborWorks organizations' revolving loan funds, to meet 
additional needs within their target neighborhoods.

                      OUTCOMES OF FISCAL YEAR 2002

    With your backing and confidence, fiscal year 2002 proved to be a 
groundbreaking year on many fronts. Congress provided Neighborhood 
Reinvestment with an appropriation of $105 million; of which, $10 
million was set-aside to encourage partnerships and training in 
furtherance of the U.S. Department of Housing and Urban Development's 
Section 8 homeownership option, and $5 million was set-aside to promote 
the development of mixed-income rental properties that included 
families with incomes below 30 percent of area median income.
    In fiscal year 2002, the NeighborWorks network achieved 
new levels of production, including:
  --Generated nearly $1.7 billion in direct investment to targeted 
        communities;
  --Made available affordable housing opportunities for nearly 70,000 
        families;
  --Provided pre- and post-purchase homebuyer education and counseling 
        services to over 68,000 families; and
  --Leveraged $15.80 in other investments for each dollar Congress 
        appropriated to Neighborhood Reinvestment.
    Furthermore, the two set-asides allowed Neighborhood Reinvestment 
and the NeighborWorks network to continue its role as 
laboratory for the community development field.
  --Neighborhood Reinvestment partnered with 53 NeighborWorks 
        organizations and 70 Public Housing Authorities in implementing 
        the Section 8 homeownership option. Over the past four years, 
        the NeighborWorks system has provided homebuyer 
        education to 2,000 families, produced over 200 new homeowners, 
        and educated 1,200 professionals on this new programmatic 
        opportunity.
  --The NeighborWorks network developed 121 rental units 
        affordable to families with incomes below 30 percent of area 
        median income. These units were in 14 developments totaling 
        over 1,300 units. Remarkably, many of these extremely low-
        income units will be affordable to families with incomes less 
        than 30 percent of area median income without the need for a 
        Section 8 voucher or certificate. Were it not for this special 
        set-aside, these units would not have been developed.
    Lastly, we continued to provide high quality services to 
NeighborWorks organizations, aiding their continuing work of 
providing needed services in their communities. In fiscal year 2002, 
Neighborhood Reinvestment and NHSA:
  --Conducted organizational assessments of each 
        NeighborWorks organization;
  --Provided over 11,000 individuals with training, amounting to over 
        188,000 contact hours;
  --Purchased over $60 million in loans from NeighborWorks 
        organizations; and
  --Distributed 69 percent of Neighborhood Reinvestment's appropriation 
        in the form of grants.

                     OUTCOMES FOR FISCAL YEAR 2004

    For fiscal year 2004, we are requesting an appropriation of $115 
million. At this funding level, Neighborhood Reinvestment will be able 
to expand its services in support of the White House's initiative on 
increasing minority homeownership and other homeownership activities, 
as well as continue to recruit and retain staff that will increase its 
service to the NeighborWorks network.
    A $115 million appropriation will assist the 
NeighborWorks network to:
  --Leverage nearly $2.2 billion in direct total investment in 
        distressed communities;
  --Use each dollar Congress appropriates to leverage $18 from other 
        sources;
  --Assist nearly 79,000 families obtain and maintain safe and 
        affordable rental and homeownership housing; and
  --Provide pre- and post-purchase homeownership counseling and 
        financial literacy training to nearly 84,000 families.
    To support and expand these significant accomplishments, the 
Neighborhood Reinvestment Corporation and NHSA will:
  --Conduct 240 organizational assessments of member organizations;
  --Provide 220,000 training contact hours to community development 
        leaders and practitioners through the Neighborhood Reinvestment 
        Training Institute and regional training venues;
  --Disburse 69 percent of Neighborhood Reinvestment's congressional 
        funding in the form of grants; and
  --Purchase $65 million in loans from NeighborWorks 
        organizations.
    The main purpose of the $10 million increase over the President's 
fiscal year 2003 budget will be used to help meet the aggressive goals 
Neighborhood Reinvestment has set in support of the White House's 
initiative to increase minority homeownership rates.
    The added funding in fiscal year 2004 will also help Neighborhood 
Reinvestment address rising personnel and benefits costs. While 
Neighborhood Reinvestment staff has actually decreased since 1999, 
benefits costs for our staff have risen. The increase in personnel and 
operating costs is attributed to higher gross salaries and costs of 
health care and other benefits. The increase in salaries includes a 
five percent merit pool and small bonuses; the Corporation does not 
provide a cost-of-living increase.

                    PRIORITIES FOR FISCAL YEAR 2004

    In developing our fiscal year 2004 budget, we sought to continue 
our excellent work from prior years, while defining more aggressive 
expectations for the NeighborWorks system. We have always 
worked to be good stewards of the funds that Congress has entrusted to 
us, and we continue to diligently work to maximize our efficiency and 
effectiveness. In order to meet these expectations, Neighborhood 
Reinvestment and the NeighborWorks system will continue to 
respond to communities in need, champion homeownership for families of 
modest means, and create and sustain a network of excellence.

                         NETWORK OF EXCELLENCE

    Regardless of their target communities, NeighborWorks 
organizations function as partnerships of local residents, lenders and 
other business leaders, and local government representatives. They 
produce creative strategies, share best practices, and develop flexible 
financing mechanisms. In order to facilitate, encourage and promote 
this network of excellence, the Neighborhood Reinvestment Corporation 
provides guidance, assistance and oversight in the following areas:

Financial Support
    Equity capital grants are a critically important financing vehicle 
that Neighborhood Reinvestment provides to NeighborWorks 
organizations for capital and revolving loan funds. 
NeighborWorks organizations use these grants to provide 
equity and gap financing necessary to make loans for home purchases, 
rehabilitation and small businesses, and provide financing for real 
estate development.
    Neighborhood Reinvestment also provides expendable grants to 
NeighborWorks organizations to strengthen and increase their 
organizational ability to develop and administer responsive products 
and services. Particular emphasis is placed on activities crucial to 
increasing production and efficiency, thereby generating sustained 
community impact and ensuring the long-term success of the 
organization.

Technical Assistance
    In tandem with financial assistance, Neighborhood Reinvestment 
provides a wide range of technical assistance. NeighborWorks 
organizations request practical, systems-based assistance in 
programmatic, organizational, administrative, financial or management 
areas of strategic importance to their organization. Neighborhood 
Reinvestment responds with a team of professionals familiar with each 
organization's local market, environmental challenges, structure and 
mission, and provides technical assistance in six key programmatic 
areas: organizational development; resource development and marketing; 
community revitalization, economic development and business planning; 
technology and financial management systems; single-family housing and 
lending; and real-estate development and management.

Organizational Assessment
    As part of our responsibility to act as a good steward of federal 
funding, and to protect the investment of other partners as well as the 
high standards and the reputation of the NeighborWorks 
network as a whole, Neighborhood Reinvestment Corporation is committed 
to promoting and maintaining a network of high-performing, well-
managed, nonprofit housing and community development corporations that 
deliver high quality services responsive to local needs and have a 
measurable impact on their communities. One of the tools employed in 
doing this is a uniform program review and assessment system.
    Through a system of continuous monitoring, each 
NeighborWorks organization is subject to an annual risk 
assessment through either off-site or on-site program reviews. Off-site 
reviews involve the collection and analysis of data about the 
organization. These data are analyzed in eight risk areas on a 
quarterly basis. If a risk alert is identified, the degree to which the 
organization has the capacity to manage the risk is determined.

Training
    A comprehensive, systematic program of training and informing 
powerfully augments on-site technical assistance. The Neighborhood 
Reinvestment Corporation is nationally recognized as the premier 
provider of training in the housing and community development field, 
having founded its Training Institute 15 years ago. Today, the 
Neighborhood Reinvestment Training Institute offers more than 150 
courses and reaches more than 5,000 people a year from more than 4,000 
communities across America.
    Neighborhood Reinvestment's Training Institutes are typically 
scheduled five times each year at various locations around the country. 
Approximately half of the attendees of the Institutes come from 
organizations within the NeighborWorks network; the rest come 
from other communities and organizations around the country. This is 
one of the many ways that the support Congress provides Neighborhood 
Reinvestment Corporation reaches not only the 2,300 
NeighborWorks-assisted communities, but also the broader 
community development field.
    Beginning in 2002, Neighborhood Reinvestment introduced a unique 
program for seasoned practitioners. The Advanced Practitioner Platform 
requires participants to shape and focus their efforts on challenges 
that can make a tangible difference for their organizations, and for 
the housing and community development field. Participants establish 
ambitious goals and hold themselves and each other accountable for 
achieving them. This self-motivated and disciplined approach is fully 
focused on ensuring the success of participants as they advance their 
own work in building strong community-based organizations.

Expansions, Organizational Mergers and New Affiliates
    In today's community development industry, effective and efficient 
growth strategies do not necessarily mean creating or adding new 
organizations. In many underserved areas, the most sensible and cost-
effective approach is to expand the reach or programmatic services of 
an existing network member, or to facilitate a merger of two 
organizations to create a more powerful organization with greater 
impact and efficiency. Neither of these approaches results in the 
addition of new organizations, yet both can result in productive 
outcomes, more efficient use of resources, and expanded coverage. 
Mergers are becoming an increasingly common practice. The combined 
efforts resulting from mergers can result in achieving greater impact 
at equal or less cost.
    Neighborhood Reinvestment receives a far greater number of requests 
for new affiliations than it can hope to satisfy responsibly. To 
prioritize requests from new applicants, the Corporation seeks those 
environments where its resources and assistance are likely to add the 
greatest value to local efforts and produce the most pronounced impact. 
Through a careful affiliation process, Neighborhood Reinvestment works 
with interested existing community-based organizations to ensure that 
before any organization is chartered as a NeighborWorks 
entity, it is: sound and productive; led by a responsible board of 
directors reflective of the community it serves; and, committed to a 
mission compatible with the focus and priorities of the 
NeighborWorks network.

                   RESPONDING TO COMMUNITIES IN NEED

    Twenty-five years ago, the Neighborhood Reinvestment Corporation 
was created because there was a noticeable void in the nation's lending 
system; namely, there were few opportunities for families of modest 
means to obtain mortgages and rehabilitation loans from the private 
lenders. Although the larger environment in which the 
NeighborWorks system operates has changed dramatically over 
the years, the Corporation's role as a bridge between mainstream 
financial institutions and lower-income communities remains relevant 
and critical. Neighborhood Reinvestment and the NeighborWorks 
network continue to operate in underserved communities that are home to 
people who lack access to decent affordable housing, financial 
products, services, and the kind of investments that sustain 
communities.

Revolving Loan Funds
    Because of their flexibility and local control, revolving loan 
funds are central to the impact of the NeighborWorks system. 
These loans are local pools of money administered by 
NeighborWorks organizations to meet the lending needs of 
borrowers who do not qualify under conventional loan underwriting 
criteria and to serve as equity capital in support of major capital 
projects. Funding comes from private- and public-sector investors as 
well as from Neighborhood Reinvestment's equity capital grants. Most 
revolving loan fund capital comes from local sources--loans and grants 
made by banks, insurance companies, foundations, local governments and 
other local investors. In fiscal year 2002, nearly $95 million from 
NeighborWorks revolving loan funds were invested in 
communities.
    Loans are made at flexible rates and terms that fit the lower-
income borrower's ability to repay, and are typically secured by a lien 
on the property, often a second or third lien to allow for investment 
by other public and private sector entities. Seventy-one percent of 
loans made through NeighborWorks revolving loan funds are 
made to very low- or low-income households, 53 percent to minority-
headed households, and 45 percent to female-headed households. The 
liquidity of local revolving loan funds is maintained by selling loans 
to NHSA.

Supporting Rural Efforts
    In 2002, 60 NeighborWorks organizations identified their 
primary service areas as rural communities, which is 27 percent of the 
NeighborWorks network and comprises the fastest growing 
segment of the network. Moreover, as our existing 
NeighborWorks organizations expand their target areas, they 
begin to capture rural areas with their services. The network has 
proven its ability to address housing needs in rural communities, 
particularly through our partnership with Rural NeighborWorks 
Alliance. With seed funding from Neighborhood Reinvestment and the 
Northwest Area Foundation, rural NeighborWorks organizations 
have grown a shared revolving loan fund that provides bridge financing 
for local housing or economic development projects at below-market 
rates. With current loan assets of over $2.1 million, the Rural 
NeighborWorks Alliance has made 40 loans totaling more than 
$4.5 million to 14 rural NeighborWorks organizations. These 
loans have supported the production of 413 units of housing and 26 
economic development projects, and leveraged $33 million in total 
project financing.

Using Multifamily Rental as an Asset
    Understanding the importance of multifamily rental housing in a 
comprehensive neighborhood revitalization strategy, a group of 
NeighborWorks organizations formed the 
NeighborWorks Multifamily Initiative in 1999. Together, these 
organizations own more than 34,000 units of affordable and well-
maintained rental housing. The members of the NeighborWorks 
Multifamily Initiative make it their mission to provide sustainable 
multifamily homes, which are characterized over the long-term by:
  --Affordability, as defined by local market conditions;
  --Ongoing economic viability;
  --High quality maintenance and management; and
  --Access to on-site learning centers designed to advance the personal 
        assets of residents--academic success of youth, employability 
        of adults, financial savings, and homeownership.
    With $5 million provided by Congress in fiscal year 2002, the 
Corporation embarked on an ambitious effort to create mixed-income 
multifamily properties serving families and individuals below 30 
percent of area median income. With that funding, Neighborhood 
Reinvestment provided 14 grants, which funded the development of those 
units affordable to families with extremely low-incomes. The 
congressional funding produced 121 units affordable to extremely low-
income families. These units accounted for nine percent of the total 
units in the properties in which they were located, while 79 percent of 
the units were affordable to families with incomes between 30 and 60 
percent of area median income. The remaining 12 percent of the units 
were affordable to families with incomes greater than 60 percent of the 
area median. The $5 million congressional set-aside helped invest over 
$141 million in targeted communities. Further, these units were 
developed in a myriad of settings--urban, suburban, rural, large and 
small developments as well as scattered site. Most importantly, many of 
these units will be affordable to extremely low-income families without 
need for a Section 8 voucher or certificate or other form of on-going 
subsidy. The report summarizing preliminary findings of this effort can 
be found in the Corporations fiscal year 2004 Budget Justification.

        CHAMPIONING HOMEOWNERSHIP FOR AMERICANS OF MODEST MEANS

    Neighborhood Reinvestment and the NeighborWorks network 
have been particularly active promoting homeownership. Over the past 10 
years, the NeighborWorks Campaign for Home Ownership has made 
significant headway. The combined efforts of the Campaign created more 
than 60,000 new homeowners and provided counseling to over 350,000 
individuals. As a result, $5 billion was invested in many of America's 
distressed communities.

Supporting the President's Homeownership Goals
    For years, the NeighborWorks system has been a leader in 
bringing homeownership opportunities to all Americans. Among the 
families assisted by the NeighborWorks Campaign for Home 
Ownership from 1998 through 2002, 54 percent are racial and/or ethnic 
minorities--compared to 19 percent minorities served by the 
conventional market (based on 2000 HMDA data).
    In June 2002, President Bush announced a national goal of 
increasing the number of minority homeowners by at least 5.5 million by 
the end of this decade. The NeighborWorks system has been 
active partners in the development and unveiling of the White House's 
initiative on increasing minority homeownership. Rather than making 
changes in its basic strategies, the Corporation will expand the tools 
and efforts that have proven to be the most effective in addressing 
critical areas affecting homeownership opportunities, particularly for 
minorities and other underserved populations such as Spanish-speaking 
families who are not bilingual.
    In support of the White House's initiative, over the next ten years 
the NeighborWorks system will:
  --Make available housing counseling assistance to more than 650,000 
        families, of which 59 percent will be minority households;
  --Provide direct home-ownership assistance to more than 130,000 
        families, of which more than 59 percent are estimated to be 
        minority families;
  --Provide training, outreach, translation and other supports with an 
        eye to increasing the minority homeownership rate; and
  --Raise $750 million in private sector social investments for NHSA's 
        secondary market activities.

NeighborWorks Campaign for Home Ownership
    The NeighborWorks Campaign for Home Ownership is the 
largest initiative of its kind to bring families of modest means into 
the economic mainstream by helping them achieve homeownership. 
Neighborhood Reinvestment has coordinated this joint effort of banks, 
insurance companies, secondary markets, government, the real estate 
community and others, involving more than 140 local community-based 
NeighborWorks organizations since the initial launch of the 
NeighborWorks Campaign for Home Ownership in 1993.
    Over the past 10 years, Neighborhood Reinvestment and the 
NeighborWorks network have met challenging goals and 
accomplished significant outcomes through the NeighborWorks 
Campaign for Home Ownership, including:
  --Assisted more than 60,000 families to become homeowners, of which 
        54 percent are minority and 67 percent have incomes below 80 
        percent of area median income;
  --Provided more than 350,000 individuals with pre-purchase homebuyer 
        education and counseling services; and
  --Invested more than $5 billion in America's distressed neighborhoods 
        and communities.
    The Campaign for Home Ownership, a partnership among Neighborhood 
Reinvestment and NeighborWorks members, has focused on 
supporting NeighborWorks organizations to help establish 
clear, aggressive goals, and define and abide by high quality 
standards. Innovative tools and ideas, such as Full Cycle Lending, 
SM NeighborWorks HomeOwnership Centers, SM 
Financial Fitness, and Section 8 homeownership, have also been 
developed and supported. More recently, Neighborhood Reinvestment and 
members of the NeighborWorks network have begun to work with 
families even earlier in the process, through a financial education 
program called Financial Fitness. The Corporation has developed 
standards, adapted and created training materials, trained trainers 
through the Neighborhood Reinvestment Training Institute, and initiated 
a pilot Financial Fitness program at 39 NeighborWorks sites 
nationwide. This program intends to give participants an understanding 
of basic finances and healthy financial relationships that benefit both 
the individual and the community.
    By the end of calendar year 2002, NeighborWorks 
organizations enrolled over 8,700 people in the training, and graduated 
more than 5,500 individuals. Of these, nearly 59 percent are 
minorities, 93 percent are renters, 65 percent are women, and 75 
percent have incomes below 80 percent of the area median income.
    The Campaign for Home Ownership has set new goals for the next five 
years, including
  --Creating 50,000 new homeowners, including 30,000 minority 
        homebuyers.
  --Assisting 50,000 families to preserve homeownership and improve 
        their homes through housing rehabilitation, maintenance, 
        repairs, delinquency and foreclosure prevention, loss 
        mitigation, and refinancing.
  --Establishing a coordinated outreach, public information and 
        counseling effort to reach 500,000 families through educational 
        programs, such as Financial Fitness classes, anti-predatory 
        lending efforts, pre- and post-purchase counseling, and 
        expansion of NeighborWorks HomeOwnership Centers. 
        SM
  --Working with up to 10 pilot NeighborWorks organizations 
        to establish geographically-targeted revitalization efforts, 
        which will include homeownership promotion as well as single- 
        and multi-family real estate development, resident leadership, 
        and commercial and economic development.
  --Promoting the growth of the homebuyer education industry through 
        the development of up to 10 national alliances, establishing 
        national standards for training and certifying homebuyer 
        educators and counselors, and providing tools and best 
        practices that can help the industry become more effective, 
        efficient and sustainable.

Helping Section 8 Families Move to Homeownership
    The NeighborWorks system is dedicated to expanding 
homeownership opportunities across the country, particularly for 
families and individuals with low and moderate incomes. One of the most 
innovative programs used in this effort is the Section 8 homeownership 
option. Strong technical and financial support from the Neighborhood 
Reinvestment Corporation has enabled NeighborWorks 
organizations to serve as a bridge between private lenders and public 
housing authorities to make homeownership a reality for qualified 
Section 8 voucher holders. Congress has propelled the 
NeighborWorks network's efforts by providing funding 
specifically targeted to NeighborWorks organizations 
partnering with Public Housing Authorities (PHAs).
    In recognition of the early success of this effort, the 
Corporation's fiscal years 2001 and 2002 appropriation included a total 
of $15 million set-aside to develop capacity and effective 
partnerships. Most of the funds were used to capitalize 
NeighborWorks organizations' revolving loan funds serving as 
a source for second mortgages, with a smaller portion being used for 
capacity-building grants. These grants helped some 
NeighborWorks organizations tailor their pre- and post-
purchase services to the specific needs of their Section 8 population, 
develop unique systems to work with a Section 8 voucher and the PHA, or 
defray a portion of the costs associated with hiring additional staff 
to implement the program. The appropriation set-asides also support a 
performance-monitoring component with assistance from a third-party 
consulting and research firm.
    The set-asides helped fund 53 NeighborWorks organizations 
develop partnerships with 70 PHAs, provide 2,000 families with pre-
purchase homebuyer education, and resulted in over 200 new homeowners. 
The median income of these families was slightly over $24,000, compared 
to the median family income of the typical U.S. buyer of $48,991. These 
partnerships are built upon the NeighborWorks network's solid 
experience in pre- and post-purchase counseling, innovative mortgage 
financing and in leveraging public resources and private investment.
    Both the multifamily and Section 8 homeownership efforts of the 
NeighborWorks network exemplify Neighborhood Reinvestment's charter: to 
operate as a laboratory for the community development field in order to 
identify models and practices that keep America's communities strong 
and vital.

                               CONCLUSION

    Let me close by thanking the Subcommittee for the wonderful 
opportunity you have given the NeighborWorks system to serve 
America's communities, and to ask for your continued support. After 25 
years, Neighborhood Reinvestment Corporation continues to strive for 
the maximum efficiency in the delivery of its services to America's 
communities. We are proud of the work that the NeighborWorks 
system has accomplished over the last quarter century; we also know 
that more work is left to be done.
    Our proposed priorities for fiscal year 2004 allow us to continue 
the balance between efficiency and creativity, between responsible 
stewardship and locally-controlled programmatic flexibility. This 
Subcommittee has been our most vocal supporter in productively 
maintaining this balance since 1978.
    Neighborhood Reinvestment Corporation is committed to building 
healthy, strong and safe communities all across America. Your continued 
support is vital to us in accomplishing this goal.
                                 ______
                                 

                        SELECTIVE SERVICE SYSTEM

        PREPARED STATEMENT OF LEWIS C. BRODSKY, ACTING DIRECTOR

                                PREFACE

    For many years, I had the privilege of accompanying past Directors 
of the Selective Service System in their appearances before this 
Committee while serving in the capacity of the Agency's Director of 
Public and Congressional Affairs. Time and circumstances caused me to 
change roles early this year and today I am pleased to represent the 
Selective Service System as its Acting Director. Director Rascon 
resigned his position on January 2, 2003, because of health reasons; 
and I do not know how long it will take for the President to nominate 
and the Senate to confirm a new Director. But I can assure you that the 
Selective Service System continues to drive forward. We are improving 
registration compliance, shifting our focus in consonance with the most 
likely needs of the Department of Defense (DOD), and undergoing 
restructuring in line with the President's Management Agenda.
    I welcome this opportunity to support the President's fiscal year 
2004 appropriations request of $28,290,000 for the Selective Service 
System. This is a 6.8 percent increase over the current fiscal year. 
The proposed budget will cover the cost of current services, provide a 
small program increase for unavoidable information technology changes, 
and accommodate a 3.6 percent annual salary increase. By adjusting its 
operational priorities, reducing full-time military staffing, and 
employing state-of-the-art information technologies over time, the 
Agency has been able to accomplish its statutory responsibilities 
without interruption.

                              CAPABILITIES

    The SSS stands ready to perform its mission. It can conduct a draft 
that is efficient, fair, equitable, and accepted by the public, should 
the President and the Congress authorize a return to a draft. It is 
also ready to administer a program of alternative community service for 
men who are classified as conscientiously opposed to military service. 
With its routine communication with all men in the U.S., 18 through 25 
years old, and its ability to mobilize national manpower on a large 
scale, the Agency is also capable of performing additional human 
resource support missions related to national security or service, if 
so directed.
    I am pleased to report that the men and women of Selective Service 
are making a good Agency even better. For example, the Agency continues 
its close partnership with the DOD by providing direct support to Armed 
Forces recruiting and accessions processing. Specifically, Selective 
Service provides the names of its registrants to the Secretary of 
Defense for recruiting purposes, in accordance with a provision in 
Military Selective Service Act. Additionally, we have taken this 
cooperation a step further since January 2000, by continuing an 
effective joint mailing program. As we reported previously to this 
Committee, information about Armed Forces opportunities and a business 
reply card are now enclosed with the registration acknowledgment that 
the SSS sends to each new registrant. Thus, the Defense Department 
benefits by ``piggy-backing'' on our routine mailings and it reimburses 
us for the additional costs.
    Beyond these tangible services, Selective Service also promotes an 
intangible national benefit. For present and future generations of 
America's young men, it represents a very critical link between 
society-at-large and today's volunteer military. It is a reminder that, 
as Americans, every young man is personally responsible for ``providing 
for the common defense'' in the time-honored tradition of preceding 
generations.

                             PRIORITY AREAS

    Since becoming Acting Director less than four months ago, I have 
focused Agency activities on complying with President Bush's Management 
Agenda. We are reexamining our processes and restructuring the SSS to 
meet the most likely manpower needs of the Department of Defense while 
finding improved ways of serving the public. Three initiatives are 
especially noteworthy because they are providing the largest return on 
investment while producing more effective and responsive customer 
service. Each satisfies the Administration and Congressional charges to 
Federal agencies to evolve into performance-based organizations.
    1. Organizational Realignment.--Expanding upon our fiscal year 2002 
Agency's Workforce Restructuring Plan, a complete ``bottom-up review'' 
is underway with contractor assistance. After several recent 
consultations with senior Defense manpower officials, it is apparent to 
me that the Agency's current organizational structure is not as 
responsive or relevant to the contemporary needs of the DOD as it might 
be. Consequently, we are shifting our programmatic emphasis from 
readiness to conscript of large numbers of untrained men within 193 
days of activation to a draft of smaller numbers of critical skills 
personnel in shorter time frames. This necessary realignment can be 
accomplished within current resources and will probably result in less 
management overhead, merging of offices and programs, and increased 
potential for outsourcing some Agency functions. The benefits accrued 
from strategic management of human capital, competitive sourcing, 
improved financial performance, expanded e-Government, and better 
integration between budget and performance should substantially 
increase Agency efficiency. In this ongoing review, there are no 
``sacred cows.'' All functions and programs are on the table, and each 
structural change and staffing decision will be driven by practical, 
cost-conscious considerations.
    2. Registration Compliance.--The SSS registration compliance rate 
for men 18 through 25 years old declined steadily from a high of over 
98 percent in 1991 to a low point of 88 percent in 1999. This decrease 
was cause for serious concern because of our self-imposed ``fairness'' 
criteria. We believe a compliance rate of less than 90 percent would 
contribute to a lack of public confidence because the resulting draft 
would not be considered fair or equitable. The public would believe, 
rightly so, that not everyone who should be in the manpower pool is 
accounted for; and therefore those who are registered have an increased 
chance of being called for involuntary service. This is why SSS 
Directors since 1992 have placed a consistent priority on raising the 
registration rate. Our concentrated efforts to halt and reverse the 
downward spiral are achieving success. We held the line at 88 percent 
overall registration compliance in 2000 and, at the end of 2001, we had 
turned the corner and started an upward trend, achieving 89.1 percent 
compliance by 18- to 25-year old men. For 2002, Selective Service 
achieved 91 percent compliance. The other good news is that the 
statistics for fiscal year 2002 are indicating a 74 percent compliance 
rate for ``on-time'' registration of men turning 18. This is the 
highest compliance rate achieved for this year group since 1994. We 
will continue to use a combination of approaches and the attendant 
resources will be traded off among other programs, if necessary. To 
reinforce success, we:
  --Are continuing to develop and distribute public service broadcast 
        messages to low compliance markets, together with new printed 
        materials. To support this effort, additional radio public 
        service announcements (at no cost for air time) in English and 
        Spanish are being distributed. These high-quality products have 
        received laudatory comments from viewers around the country and 
        are receiving no cost annual air play commercially valued at 
        $7.2 million.
  --Have just revamped the interactive Selective Service pages on the 
        World Wide Web (http://www.sss.gov) where online registration, 
        database verification, the ability to file changes of 
        information, and a wealth of other Agency information are now 
        available to anyone with access to the Internet. For fiscal 
        year 2002, 69 percent of registrations reach the SSS through 
        electronic means, or about 135,000 registrations per month, and 
        we continue to expand our Website's capabilities. We are also 
        placing links to our site with other Federal, state and local 
        agencies and schools to enhance public education and facilitate 
        customer responsiveness.
  --Are benefitting from an increasing number of states which link 
        obtaining a driver's license or state I.D. card to the 
        Selective Service registration requirement. These state laws 
        are currently providing the SSS with an average of 27,500 
        registrations per month. As of this month, 30 states, two 
        territories, and the District of Columbia have legislation in 
        place. They represent over 56 percent of the national 18-year-
        old male registrant population and we are working closely with 
        additional states where such legislation is pending.
    3. Information Technology (IT).--In concert with the President's 
Management Agenda, we are convinced that in an era of constrained 
resources, expanding workload, and performance-based organizations, one 
major strategy must be to continue to invest in IT. It has been the 
SSS' major approach to improving customer service and organizational 
productivity while conserving limited human and fiscal resources. We 
began modernization of the Agency's technology infrastructure fiscal 
year 1997 and plan to continue through fiscal year 2004 and beyond. Our 
Information Technology Architecture Plan focuses on adding new 
information technologies to the Agency's infrastructure. In fiscal year 
2004 we must make additional refinements in hardware and software which 
are driven primarily by changing customer needs and revised government 
requirements. The goal of upgrading the Agency's IT platforms is based 
on re-engineering critical mainframe computer systems. Integrating the 
SSS mainframe computer systems into more user-friendly Web-based 
applications is our strategy over the next several years. By embracing 
change and applying technology, Agency activities are leading toward a 
paperless work environment and a more efficient means of doing 
business. These revamped systems are paying important dividends in end-
user convenience and better service to our customers, as well as 
increasing the productivity of the Agency's workforce.

                          ADAPTABLE TO CHANGE

    We are also ready to aid the Administration and the Congress with 
any future initiatives that could capitalize upon Selective Service's 
unique capabilities. There has been much dialogue among the public, 
private groups, academia, and the Administration concerning a draft, 
volunteerism, and national service. Selective Service has a wealth of 
experience in managing volunteers (Board Members), and administering 
programs of alternative community-based service (for men classified as 
Conscientious Objectors) throughout its 63-years of existence. The 
Agency also has experience in conducting a fair and equitable 
classification procedure to determine who should serve when not all can 
serve. To ensure fairness and equity, each SSS Board is a melting pot 
of civic-minded men and women reflecting the racial, cultural and 
ethnic diversity of the young men within the communities it serves. 
Through these volunteers, a unique bond has been formed at the grass 
roots with young American men, society-at-large, and the U.S. Armed 
Forces. Through the Selective Service structure, every American 
community plays a positive role in providing for the common defense. In 
short, this Agency has extensive practical experience in identifying, 
contacting and classifying people to participate in a national security 
or service program. If called upon to support any new ``service'' 
initiatives of the Administration, Selective Service can lend its 
expertise and ample experience to the task.

                                CLOSING

    Today, Mr. Chairman, thanks in very large measure to your personal 
interest in this Agency and the continuing support of the Subcommittee 
and its staff members, the Selective Service System stands prepared to 
perform its time-tested responsibilities, if so directed. The fiscal 
year 2004 appropriation request of $28,290,000 will be invested 
prudently in one of the Nation's important security assets. Its 
rationale for existence and its credentials are the same: to provide a 
compact, cost efficient structure capable of rapid expansion in a 
crisis; to provide manpower to our Armed Forces as required; and to do 
it fairly, equitably, and within the necessary time frames. The 
Selective Service System remains resolute in its organizational 
realignment and operational streamlining. It has improved service to 
its customers, reinforced its commitment to America, and stands ready 
to play a key role in our Nation's future.
    Thank you, Mr. Chairman.


DEPARTMENTS OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT, AND 
        INDEPENDENT AGENCIES APPROPRIATIONS FOR FISCAL YEAR 2004

                              ----------                              

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

                       NONDEPARTMENTAL WITNESSES

    [Clerk's Note.--The following testimonies were recieved by 
the Subcommittee on VA, HUD and Independent Agencies for 
inclusion in the record. The submitted materials relate to the 
fiscal year 2004 budget request.
    The subcommittee requested that public witnesses provide 
written testimony because, given the Senate schedule and the 
number of subcommittee hearings with Department witnesses, 
there was not enough time to schedule hearings for non-
departmental witnesses.]

    PREPARED STATEMENT OF THE LAC DU FLAMBEAU BAND OF LAKE SUPERIOR 
                            CHIPPEWA INDIANS

    The Lac du Flambeau Reservation is in the ``North Woods Area'' of 
Wisconsin and our homeland is called Waswagoning. The Lac du Flambeau 
tribal members always want to remind Congress about the special and 
unique relationship the Federal government has with Indian tribes. The 
Federal government is obligated by Treaty and Executive Order to 
provide for critically needed social, education, health and 
governmental services to the Band and its members in exchange for the 
land, water, natural resources and peace our forefathers provided. As 
Congress and the President work on the fiscal year 2004 Budget, the 
obligations and commitments to provide for these services must not be 
forgotten and should be given the highest priority. The Lac du Flambeau 
Band submits the following issues and concerns to the Subcommittee 
concerning veteran's affairs, housing and the environment.

                        VETERANS' ADMINISTRATION

    The Lac du Flambeau Band would like to address how the system is 
failing our American Indian veterans with regard to accessing veterans' 
benefits. American Indians across the country have the highest record 
of military service per capita when compared with other ethnic groups. 
These men and women have put their lives at risk to ensure the survival 
of future generations and the freedom of all Americans, yet they 
consistently have problems accessing basic benefits and services. It is 
difficult and frustrating for our veterans to get to the County 
Veterans Service Office (``CVSO'') located almost 50 miles away. 
According to a resolution prepared by the Great Lakes Inter Tribal 
Council in Lac du Flambeau, there are approximately 40,000 American 
Indian veterans in Wisconsin. It is estimated that only 5 percent of 
these veterans are aware of the benefits programs for veterans.
    We urge the Committee to establish Tribal Veterans Service Office 
(``TVSO'') on Indian Reservation to render services locally to American 
Indian veterans and their families. Currently, the Band is not a 
recipient for Federal or State grants in regards to securing tribal 
veterans' benefits. By Congress appropriating $150,000 as a proposed 
budget, we can finance and secure office space for a TVSO at Lac du 
Flambeau. We ask that this TVSO have autonomy and the same benefits and 
opportunities as the CVSO. We respectfully request that Congress honor 
our warriors and ensure that these American Indian veterans can access 
veterans' benefits with fewer barriers by placing a TVSO on the Lac du 
Flambeau Reservation.

                                HOUSING

    There is a shortage of housing on the Lac du Flambeau Reservation. 
Additionally, the housing that is in place is substandard and lending 
to an ever-increasing black mold problem. Four hundred and twenty five 
(425) homes were tested for mold with 85 percent testing positive for 
mold. In March 2000, the Bureau of Indian Affairs released a Labor 
Force Survey that shows the Lac du Flambeau enrolled membership 
population is 3,056 with a projected population growth of 4 percent by 
the year 2005. The Tribal Housing Authority's NAHASDA Block Grant is 
$1,639,625.00. The Band's housing stock is 191 rental units and 68 
Mutual Help units--a total of 249 units and over half the units are 
considered to have overcrowded living conditions. The rental units are 
17 to 38 years old and are in substandard condition, most of which 
require major rehabilitation and modernization. There are currently 300 
Lac du Flambeau members on the waiting list for housing. Band members 
continue to move back to the reservation only to find overcrowded 
living conditions and no housing.
    Lac du Flambeau's Chippewa Housing Authority continues to face the 
housing shortage and inadequate funds to renovate existing units. Toxic 
mold has been found in 85 percent of our housing units. Because of the 
shortfalls in funding, it becomes a balancing act to determine if you 
use the funding for housing development, rehabilitation of older units 
or toxic mold re-mediation. Housing development, renovation and 
modernization needs must be addressed simultaneously. Unfortunately, 
lack of funding is an obstacle in providing safe, healthy and 
affordable housing for the tribal membership.
    President Bush's budget proposal for fiscal year 2004 is $641 
million for the Indian Housing Block Grant (IHBG), the major Native 
American housing program authorized by the Native American Housing 
Assistance and Self-Determination Act of 1996 (NAHASDA). This amount is 
identical to funding requested and enacted for the past three years. 
According to data from the National Association of Home Builders, the 
median cost of a new home has risen 34 percent over the past ten years 
and has increased almost 5 percent annually over the past four years. 
In order for the Committee to understand the funding shortfall, it is 
estimated that Lac du Flambeau's Housing Authority would require $2.5 
million per year for maintenance and rehabilitation for existing 
NAHASDA units, $1.2 million annually for new housing development and 
$1.5 million for administrative costs. The Band urges Congress to 
increase the NAHASDA appropriations to a level that is responsive to 
the growing housing needs on the reservation.
    It must be noted that the toxic mold is a very serious problem in 
Lac du Flambeau and we also urge Congress to hold hearing on this 
specific problem in Indian Country. The purpose of the hearing would be 
to determine the causes, extent of and cost to fix the problem. Toxic 
mold has been associated with numerous health related issues.

                              ENVIRONMENT

    The Lac du Flambeau Reservation is rich with water bodies and 
forests with nearly 50 percent of the reservation is saturated with 
water. The total resource areas are as follows: Wetlands--24,000 acres 
(27.7 percent), Lakes & Rivers--17,897 (20.7 percent), Forested 
Uplands--41,733 (48.2 percent), and Other--3,000 (3.5 percent). 
Approximately 25 percent of the reservation area is owned by non-Band 
members and is considered fee land. The Band was blessed with a very 
diverse ecosystem and a huge responsibility to protect, enhance, and 
conserve the natural resources for present and future generations.
    Based on the above the Lac du Flambeau Band is very concerned with 
the decrease in Section 106 funding in fiscal year 2004. It is estimate 
that Band, along with other Region V Tribes, will have their 106 
funding reduced by $30,000-$32,000 in fiscal year 2004. The reasons for 
the funding shortfall are two-fold.
    Starting this year EPA is using Census 2000 data. Through fiscal 
year 2002 EPA had used 1990 census data. Use of the Census 2000 data 
redistributes funds among the Regions. The updated numbers of eligible 
Tribes and the new census data caused Region 5's allocation of 106 
funds to drop from approximately $4.14 million in fiscal year 2002 to 
$3.87 million in fiscal year 2003.
    EPA is currently reworking their funding formula to address 
Oklahoma Tribes. The criteria being used to allocate 106 funds to date 
have not given credit to Region 6 for all of the land areas of these 
Tribes. When land areas and population data for the Oklahoma Tribes are 
built into the allocation formula, this has the effect of reducing the 
allocation to Region 5 (and other Regions, particularly Region 8). 
Although the numbers are still evolving, Region 5's allocation could go 
down to approximately $3.29 million in fiscal year 2004.
    To off set the decrease in funding due to the combine factors 
mentioned above, the Band urges Congress to make additional funds 
available in EPA's 2004 budget for Section 106 grants to Tribes.
    EPA has also helped the Band in developing underground storage 
tank, radon, and solid waste programs on the reservation. These 
programs have succeeded largely due to the General Assistance Program 
(``GAP''). The monies received since 1992 have allowed the Band to make 
significant progress, however $110,000 is not adequate to support the 
implementation of these federally mandated programs. Indian Tribes are 
required to comply with many environmental mandates. We need an 
increase to at least $135,000 for fiscal year 2004 to support 
additional staff, which is needed to assist the Band in protecting and 
conserving our natural resource.
    In addition, the recently enacted Tribal Cooperative Agreement 
Authority, which allows the EPA to award cooperative agreements to 
Tribes to assist in implementing Federal environmental programs, should 
be renewed permanently or at least for an additional year. A specific 
tribal set aside for this new program would also be helpful to the Band 
in achieving necessary environmental goals. Currently this Cooperative 
Agreement Authority does not carry any additional funding allocation 
for Tribes. Tribes are precluded from obtaining any State dollars 
allocated for similar EPA/State Cooperative Agreement Authority.

                      WATERS OF THE UNITED STATES

    The scope of federal jurisdiction under the Clean Water Act was 
severely limited by the U.S. Supreme Court decision in the case of the 
Solid Waste Association of North Cook County (SWANCC). Today many 
waters are treated as ``jurisdictionally isolated waters'' that are no 
longer subject to CWA regulation. Congress should redefine waters of 
the United States to cover these ``jurisdictionally isolated waters'' 
back within the scope of CWA jurisdiction. Many States are taking steps 
to close this loophole, which is resulting in a jurisdictional 
patchwork of water regulations, where there used to be uniformity. 
Wetlands are essential for clean water, flood control and fish and 
wildlife habitat.
                                 ______
                                 
    PREPARED STATEMENT OF THE GREAT LAKES INDIAN FISH AND WILDLIFE 
                          COMMISSION (GLIFWC)

             ENVIRONMENTAL PROTECTION AGENCY APPROPRIATIONS

    GLIFWC seeks $311,000 from various EPA programs for its ceded 
territory treaty rights environmental protection program:
    Lake Superior Bi-National Program and Lake Superior LaMP.--$80,000 
for continued GLIFWC participation in the Bi-National Program, in the 
on-going work regarding the Lake Superior LaMP, and in IJC, SOLEC and 
other Great Lakes forums.
    Ceded Territory Fish Consumption Mercury Advisory Program.--
$141,000 to continue GLIFWC's long-standing program to collect and test 
fish for mercury content and to communicate up-to-date information to 
tribal communities and the public through health care providers and 
Geographic Information System (GIS) maps.
    Lake Superior Habitat and Human Health Research.--$90,000 for 
research projects on contaminant levels in Lake Superior whitefish and 
on potentially contaminated whitefish and lake trout spawning grounds 
in Lake Superior.

            GLIFWC'S GOALS FOR EPA'S FISCAL YEAR 2004 BUDGET

    GLIFWC asks Congress to provide adequate appropriations for EPA's 
programs that fund GLIFWC's work in these areas, and to instruct EPA to 
provide the funds to meet GLIFWC's needs. Over the past 8 years, 
Congress and EPA have funded GLIFWC's treaty rights environmental 
protection program under a variety of budget categories, including: 
wetlands (Section 104(b)(3) funds), coastal environmental management 
(CEM), the Great Lakes National Program Office (GLNPO), the Office of 
Pollution Prevention and Toxics, and environmental justice grants. \1\ 
The Clean Water Act (33 U.S.C. Sec.  1268) requires the EPA and GLNPO 
to integrate tribal agencies in the development and implementation of 
action plans to carry out the United States' responsibilities under the 
Great Lakes Water Quality Agreement. In addition, GLIFWC and its member 
tribes are among the partners implementing the Great Lakes Strategy for 
2002--A Plan for the New Millennium.
---------------------------------------------------------------------------
    \1\ The Administration casts its proposed fiscal year 2004 budget 
in terms of the EPA strategic plan's goals. For GLIFWC's ceded 
territory purposes, the relevant goals and related funding categories 
appear to be: Goal 2: Clean and Safe Water; Goal 4: Preventing 
Pollution and Reducing Risk in Communities, Homes, Workplaces and 
Ecosystems; Goal 6: Reduction of Global and Cross-Border Environmental 
Risks; Goal 7: Quality Environmental Information; and Goal 8: Sound 
Science, Improved Understanding of Environmental Risk and Greater 
Innovation to Address Environmental Problems.
---------------------------------------------------------------------------
            CEDED TERRITORY TREATY RIGHTS AND GLIFWC'S ROLE

    Tribal members rely upon fish, wildlife, and plants for religious, 
cultural, medicinal, subsistence, and economic purposes. Their treaty 
rights mean little if contamination of these resources threatens the 
health, safety, and economy of tribal members, or if the habitats 
supporting these resources are degraded.



    GLIFWC was established in 1984 as a ``tribal organization'' within 
the meaning of the Indian Self-Determination Act (Public Law 93-638). 
It exercises authority delegated by its member tribes to implement 
federal court orders and various interjurisdictional agreements related 
to their treaty rights. GLIFWC assists its member tribes in:
  --securing and implementing treaty guaranteed rights to hunt, fish, 
        and gather in Chippewa treaty ceded territories; and
  --cooperatively managing and protecting ceded territory natural 
        resources and their habitats.
    The requested EPA funds would assist GLIFWC in achieving its 
broader conservation/habitat protection mission by maintaining 
partnerships with other resource managers and scientific/conservation 
organizations and by funding specific environmental research projects.
    For the past 17 years, Congress and Administrations have funded 
GLIFWC through the BIA, EPA and other agencies to meet specific federal 
obligations under: a) a number of U.S./Chippewa treaties; b) the 
federal trust responsibility; c) the Indian Self-Determination Act, the 
Clean Water Act, and other legislation; and d) various court decisions, 
including a 1999 U.S. Supreme Court case, affirming the treaty rights 
of GLIFWC's member Tribes. GLIFWC serves as a cost efficient agency to 
conserve natural resources, to effectively regulate harvests of natural 
resources shared among treaty signatory tribes, to develop cooperative 
partnerships with other government agencies, educational institutions, 
and non-governmental organizations, and to work with its member tribes 
to protect and conserve ceded territory natural resources.
    Under the direction of its member tribes, GLIFWC operates a ceded 
territory hunting, fishing, and gathering rights protection/
implementation program through its staff of biologists, scientists, 
technicians, conservation enforcement officers, and public information 
specialists. Its activities include: natural resource population 
assessments and studies; harvest monitoring and reporting; enforcement 
of tribal conservation codes into tribal courts; funding for tribal 
courts and tribal registration/permit stations; development of natural 
resource management plans and tribal regulations; negotiation and 
implementation of agreements with state, federal and local agencies; 
invasive species eradication and control projects; biological and 
scientific research; and development and dissemination of public 
information materials.

                GLIFWC PROGRAMS CURRENTLY FUNDED BY EPA

    GLIFWC currently administers EPA funding for a variety of ceded 
territory environmental protection programs and studies.
    1. Participation in the Lake Superior Bi-National Program.--Since 
fiscal year 1996, EPA has provided CEM funds for a 1 FTE equivalent to 
facilitate GLIFWC's participation in the Bi-National Program to Restore 
and Protect Lake Superior, including preparation of the Lake Superior 
LaMP and participation in various International Joint Commission (IJC) 
and State of the Lake Ecosystem Conference (SOLEC) forums. In fiscal 
year 2003, GLIFWC administered $77,000 in EPA CEM funds to facilitate 
participation in these forums as well as in the implementation of the 
Great Lakes Strategy for 2002--A Plan for the New Millennium.
    2. Study of Proposed Crandon Mine in Wisconsin.--GLIFWC's work 
related to the proposed mine includes hydrological modeling, 
contaminant transport analysis, and baseline biomonitoring studies. In 
fiscal year 2002, GLIFWC administered $68,700 in EPA wetlands (Section 
104(b)(3)) funds to continue its technical studies and assessments. In 
fiscal year 2003, Congress provided $144,000 for GLIFWC's review, 
analysis and GIS mapping related to the mine, particularly as to 
completion of an ongoing baseline biomonitoring project, participation 
as a ``cooperating agency'' in the preparation of the federal EIS, and 
maintenance of hydrological and contaminant transport expertise.
    3. Research and Special Projects.--Since fiscal year 1997, EPA has 
provided a combination of CEM, GLNPO, and Environmental Justice funds 
for GLIFWC to conduct scientific research to produce data relevant to 
the Bi-National Program/Lake Superior LaMP and to human health. In 
fiscal year 2003, GLIFWC will continue to administer $82,000 from EPA's 
Pollution Prevention and Toxics program and Environmental Justice 
program to test several Lake Superior fish species for dioxin and 
persistent organic pollutants.

                FISCAL YEAR 2004 FUNDING NEEDS/RATIONALE

    GLIFWC would use fiscal year 2004 funds for:
    1. Participation in the Lake Superior Bi-National Program.--$80,000 
for continued funding of GLIFWC staff (1 FTE equivalent, and related 
travel and other expenses) who will participate in the Bi-National 
Program, in the on-going implementation of the Lake Superior LaMP, in 
IJC and SOLEC forums, and in the implementation of the Great Lakes 
Strategy for 2002--A Plan for the New Millennium.
    Rationale.--GLIFWC has been actively involved in the Bi-National 
Program since 1993. However, it was not able to adequately participate 
until EPA first provided CEM funds for this purpose in fiscal year 
1996. As a result, GLIFWC currently serves on the Bi-National Program's 
Task Force and Workgroup, and on the Workgroup's chemical, terrestrial 
and habitat committees. Its staff Co-Chairs the Workgroup's habitat 
committee and terrestrial committee. GLIFWC is participating in the on-
going review and implementation of the Lake Superior LaMP. It also 
helps to liaison with other relevant Great Lakes institutions, such as 
the Great Lakes Fishery Commission, on issues of mutual concern between 
environmental and natural resource managers.
    As for IJC forums, GLIFWC staff regularly attend the biennial IJC 
meetings and provide periodic comments when issues arise in the 
interim, such as on the matter of Great Lakes water diversions. As for 
SOLEC, GLIFWC staff has addressed plenary sessions on the topic of wild 
rice and has organized breakout sessions on wild rice.
    This funding is necessary for GLIFWC to live up to its partnership 
responsibilities under the Great Lakes Strategy for 2002--A Plan for 
the New Millennium.
    2. Ceded Territory Fish Consumption Mercury Advisory Program.--
$141,000 to continue GLIFWC's long-standing program to collect and test 
fish for mercury content and to communicate testing results to tribal 
communities and the public through health care providers and Geographic 
Information System (GIS) maps.
    Rationale.--Over the past seven years, GLIFWC has instituted an 
unprecedented lake-specific mercury advisory program to help tribal 
members and the general public consume fish as part of a healthy diet. 
The health benefits of eating fish are well known, but can be 
undermined if the fish are contaminated. GLIFWC has developed a system 
for sampling and testing walleye and muskellunge fillets, and then 
disseminating consumption advisories for specific lakes based upon the 
mercury contaminant data for that lake. This allows harvesters to make 
informed decisions about where they should fish and how much fish they 
should eat from a particular lake.
    GLIFWC has sampled and analyzed 1,919 walleye fillets harvested 
from 137 previously un- or undersampled Wisconsin lakes. It has 
combined its data with that previously collected by the State, with a 
resulting mercury database of 4,951 walleye fillets. In addition, 
GLIFWC has collected 94 walleye samples from 7 Minnesota lakes and 181 
walleye samples from 14 Michigan lakes.



    Over the years, as of 1999, GLIFWC's mercury testing surpassed the 
State's in the Wisconsin ceded territories. Current state budget 
crunches will only exacerbate this trend. Moreover, GLIFWC's recent 
federal funding for its mercury testing program has subsided, most 
notably with the completion of the ATSDR-funded Ojibwe Health Study.
    GLIFWC seeks EPA funding to continue this program for three more 
years, specifically for:
  --Collecting and testing walleye and musky for mercury content.--
        GLIFWC will continue to test 22 long term study lakes on an 
        alternating year basis. The goal is to provide a 10-year data 
        set for researchers to assess mercury trends in northern 
        Wisconsin waters. GLIFWC also will test an additional 42 lakes 
        over a three year period. All samples will be tested at the 
        University of Wisconsin-Superior's Environmental Health 
        Laboratory, which was established cooperatively by the Tribes 
        and University in 1990.
  --Communication of testing results through Geographic Information 
        System (GIS) maps.--GLIFWC will continue to produce lake-
        specific color-coded mercury advisory maps. Since 1995, these 
        maps have been used by tribal members and the general public to 
        identify lakes and sizes of ogaa (walleye) low in hazardous 
        methyl mercury. They are distributed to tribal communities at 
        registration stations, through GLIFWC's newspaper and other 
        publications, and through GLIFWC's Website (www.glifwc.org).
  --Linkages with Health Care Networks.--GLIFWC also will continue to 
        provide this information to health care providers (Indian 
        Health Service and others). Since 1999, GLIFWC has provided its 
        maps and data to clinics, to tribal health care providers 
        serving the WIC program, and at local and regional nursing 
        conferences.
  --Support the Memorandum of Understanding with the Wisconsin 
        Department of Natural Resources.--GLIFWC will continue to meet 
        its obligations under a 1996 agreement with the Wisconsin DNR 
        to share fish contaminant testing results. The DNR integrates 
        GLIFWC and state data to publish the State's annual fish 
        advisory document.
    3. Continuing Research and Special Projects.--$90,000 for Lake 
Superior habitat and human health research projects related to the Bi-
National Program and the Great Lakes Strategy for 2002--A Plan for the 
New Millennium.
    Rationale.--GLIFWC has undertaken a number of studies over the 
years related to the Lake Superior ecosystem. For example, with GLNPO 
and CEM funds, GLIFWC is preparing a report on the threat of wetland 
and terrestrial exotic plants to Lake Superior, has studied sturgeon in 
the Lake Superior basin, and has prepared GIS maps of fish spawning and 
nursery locations for both native and exotic species. In addition, as 
part of its ongoing natural resource contaminant/human health research, 
GLIFWC used Environmental Justice grants to update its fish consumption 
advisory database and to undertake wild rice contaminant research for 
heavy metals.
    For fiscal year 2004, GLIFWC would explore EPA funding for two 
projects:
  --Keweenaw Peninsula Mining Waste Assessment.--Assess impacts from 
        mining waste (stamp sands) dumped into Lake Superior near 
        Michigan's Keweenaw Peninsula during the late 1800s, map an 
        important whitefish and lake trout spawning reef in Keweenaw 
        Bay, and determine the distribution of stamp sands in relation 
        to the spawning reef.
  --Lake Superior Whitefish Contaminant Assessment.--Assess mercury, 
        PCB and organochlorine levels in whitefish harvested by tribes 
        in western Lake Superior waters, and evaluate the new data in 
        relation to current fish consumption advisories.
                                 ______
                                 
        PREPARED STATEMENT OF THE CITY OF ST. HELENA, CALIFORNIA

                           CITY OF ST. HELENA

    The City of St. Helena is located in the center of the wine growing 
Napa Valley, 65 miles north of San Francisco. The area was settled in 
1834 as part of General Vallejo's land grant. The City of St. Helena 
was incorporated as a City on March 24, 1876 and reincorporated on May 
14, 1889.
    The City from its inception has served as a rural agricultural 
center. Over the years, with the growth and development of the wine 
industry, the City has become an important business and banking center 
for the wine industry. The City also receives many tourists as a result 
of the wine industry. While, the main goal of the City is to maintain a 
small-town atmosphere and to provide quality services to its citizens, 
this is becoming increasingly difficult. Regulatory, administrative and 
resource requirements placed on the City through the listing of 
threatened and endangered species under the Endangered Species Act on 
the Napa River, as well as significant Clean Water Act requirements 
require the City with a small population base to face significant 
financial costs.
    The City of St. Helena is a General Law City and operates under the 
Council-City Manager form of government. The City Council is the 
governing body and has the power to make and enforce all laws and set 
policy related to municipal affairs. The official population of the 
City of St. Helena as of January 1, 2002 is 6,019. St. Helena is a full 
service City and encompasses an area of 4 square miles. Because of its 
size and its rural nature, St. Helena has serious infrastructure, as 
well as, flood protection and environmental needs that far exceed its 
financial capabilities.
    The Napa River flows along the north boundary of the City of St. 
Helena in northern Napa County. The overall Napa River Watershed 
historically supported a dense riparian forest and significant wetland 
habitat. Over the last 200 years, approximately 6,500 acres of valley 
floor wetlands have been filled in and 45,700 acres of overall 
watershed have been converted to urban and agricultural uses. This 
degradation of natural habitats has had a significant effect on water 
quality, vegetation and wildlife, and aquatic resources within the Napa 
River Watershed.
    Surface water quality of the Napa River is dependent upon the time 
of year, runoff from York and Sulphur Creeks, and urban area 
discharges. During the winter months when streamflow is high, 
pollutants are diluted; however, sedimentation and turbidity is high as 
well. During the summer months when streamflow is low, pollutants are 
concentrated and oxygen levels are low, thereby decreasing water 
quality. Agricultural runoff adds pesticides, fertilizer residue, and 
sometimes sediment. Discharges from urban areas can include 
contaminated stormwater runoff and treated city wastewater. The Napa 
River has been placed on the Clean Water Act 303(d) List and TMDL 
Priority Schedule due to unacceptable levels of bacteria, 
sedimentation, and nutrients. It is against this backdrop that the City 
of St. Helena faces its biggest challenges.

                              PROJECT NEED

    While much of the City's character is tied to its location along 
the Napa River, since 1853, it has been a continual battle defending 
St. Helena and its residents from the flooding Napa River. The City of 
Napa has suffered from 27 floods between 1862 and 1997, with the 
largest flood occurring on February 18, 1986. Between 1961 and 1997, 
Napa County residents suffered $542 million in property damage. In 1995 
and 1997, the Napa River overflowed its banks, turning most towns along 
the Napa River into churning tributaries, and forcing people to abandon 
their homes and businesses (FEMA, 2001). In an effort to address not 
only its significant flood management issues, but to improve the land, 
habitat and water quality in the Napa River, the City has developed an 
integrated plan.
    The St. Helena flood protection and corridor restoration project is 
a multi-objective project which will provide flood damage reduction 
through restoration and re-establishment of the natural floodplain 
along the project reach, setting back of levees and the re-creation and 
restoration of a natural floodway corridor providing over 22-acres of 
high value riparian forest. This forested area will improve both 
terrestrial and fish habitat on the Napa River, which is listed by the 
EPA as an impaired waterway. Steelhead and salmon recovery will be 
improved by the project and passive recreation will provide Napa River 
viewing and interpretive opportunities for local residents who now have 
no access to this reach of the Napa River. The project will also 
provide all-weather cross-Napa Valley access for the residents of the 
City to its nearest hospital, which is presently inaccessible during 
flood events greater than the 50-year probability storm.
    The St. Helena Habitat Terraces, a portion of the overall St. 
Helena plan, are critically needed to address water quality, habitat 
and flood management issues. Given the Napa River's status by EPA as an 
impaired waterway, immediate measures are necessary to improve water 
quality. Storm water discharge from the City's urban area is a 
significant water quality problem. The filtering of non-point source 
storm water runoff provided by the habitat terraces is critical to meet 
the City's TMDL and NPDES needs. This is an innovative non-structural 
water pollution control approach which will have positive implications 
for other communities across the country.
    In addition, the Napa River and its riparian corridor are 
considered Critical Habitat for Steelhead and Salmon Recovery, as well 
as a significant migratory corridor for a number of birds that use the 
Pacific Flyway. Without an integrated program to address the water 
quality and the Endangered Species Act (ESA) habitat issues, both water 
quality and key habitat issues will undermine the Napa River condition. 
Therefore, the St. Helena Habitat Terraces are necessary to address the 
key environmental issues for the Napa River.

                            PROJECT BENEFIT

    The St. Helena Habitat Terraces would be developed to serve as low 
velocity run-out zone in which sediments may be trapped during 
intermediate and lower river flows. Any contaminants found in the 
City's storm water system which will be discharged through the newly 
vegetated terraced area to the west of the Napa River, may be retained 
in the area during the first flush of the system each winter. The 
Adaptive Management Plan being formulated by the City will address the 
accumulation of these deposits and their impact on flood protection and 
enhancement benefits.
    The Habitat Terraces are part of a multi-purpose plan St. Helena is 
developing to manage the flood and environmental issues along the Napa 
River by re-creating and restoring the natural floodplain corridor 
through the one mile project reach and re-connecting the Napa River to 
its historic floodplain. Creation of flood and habitat terraces on the 
east bank of the Napa River and flood terraces set at geomorphically 
appropriate discharge elevations will be excavated and planted with 
native habitat allowing for restoration of the natural floodplain 
terraces.
    Over 20 acres of rich floodplain riparian habitat will be re-
established and restored through re-vegetation of native communities of 
willow/alder, vine/ash, Oak/Snowberry and Buckeye/Walnut in the newly 
created overflow channels. Aquatic habitat will be improved through the 
project reach through these plantings providing new Shaded Riverine 
Habitat as well as through installation of large logs and woody debris 
providing improved fish passage habitat. There is presently little 
varied down wood in the existing river corridor due to demands for 
regular river clearing to maximize floodwater conveyance. The St. 
Helena project will rectify this situation providing a resting placed 
for migrating salmonids.
    Because of the critical storm water management and water quality 
issues within the Napa River and its riparian corridor, which are 
considered a critical habitat for the threatened steelhead, innovative 
efforts like the St. Helena Habitat Terraces are important to address 
the complexity of environmental issues facing St. Helena and are an 
innovative approach to addressing local issues stemming from federal 
statutes. This effort could be used as a model for other waterway and 
riparian corridors across the country.
    The City of St. Helena, therefore, respectively requests the 
Committee's support of $2,000,000 in appropriations in fiscal year 2004 
within the Environmental Protection Agency's Environmental Programs and 
Management account, so that St. Helena may proceed with this unique 
water quality and environmental restoration effort, the St. Helena 
Habitat Terraces.
                                 ______
                                 
  PREPARED STATEMENT OF THE UPPER MISSISSIPPI RIVER BASIN ASSOCIATION

    The Upper Mississippi River Basin Association (UMRBA) is the 
organization created in 1981 by the Governors of Illinois, Iowa, 
Minnesota, Missouri, and Wisconsin to serve as a forum for coordinating 
the five states' river-related programs and policies and for 
collaborating with federal agencies on regional water resource issues. 
As such, the UMRBA has an interest in the budget for the water programs 
of the U.S. Environmental Protection Agency (EPA).

              STATE POLLUTION CONTROL GRANTS (SECTION 106)

    UMRBA supports the Administration's proposed 4 percent increase in 
funding for Section 106 State Pollution Control Grants. Federal Section 
106 funds, in combination with the states' matching dollars, support 
the core state water quality programs, including water quality 
assessment and monitoring, water quality planning and standard setting, 
total maximum daily load (TMDL) development, point source permitting, 
and training and public information. Adequate funds are particularly 
critical to supporting the states' development and implementation of 
total maximum daily loads. The tasks associated with developing TMDLs 
for impaired waters include watershed characterization, computer 
modeling and related analyses, allocation of permissible loads, 
development of TMDL reports and plans, and public outreach and 
stakeholder development. These responsibilities have the potential to 
overwhelm state agency resources that are in many cases already 
strained. Under the fiscal year 2004 budget proposal of $200 million, 
the five states in the Upper Mississippi River Basin would be allocated 
a total of $20 million in Section 106 funding. This funding is 
fundamentally important to the states' ability to carry out their 
responsibilities under the Clean Water Act.

TMDLS, WATER QUALITY CRITERIA & STANDARDS, AND WATER QUALITY MONITORING 
                              & ASSESSMENT

    EPA's fiscal year 2004 proposed budget for Environmental Programs 
and Management (EPM) includes $25 million for TMDLs, $24 million for 
Water Quality Criteria and Standards, and $14 million for Water Quality 
Monitoring and Assessment. All of these amounts reflect modest, but 
important, increases over the Agency's fiscal year 2003 request. The 
TMDL funding will help support EPA's TMDL-related responsibilities, 
such as developing guidance and technical support for states and 
approving/disapproving TMDLs in a timely fashion. Funding for water 
quality criteria and standards will support EPA's standards-related 
efforts, such as development of criteria and helping states link 
standards to TMDLs. The funding for water quality monitoring and 
assessment will enable EPA to help states and local watershed groups 
enhance their monitoring programs, including increased use of a 
probabilistic approach to support water quality decision-making. UMRBA 
supports funding for these three key EPM programs which, coupled with 
the Section 106 grants, will help states fulfill their basic Clean 
Water Act responsibilities.

                   CLEAN WATER STATE REVOLVING FUNDS

    The UMRBA is deeply concerned about the lack of support in the 
Administration's fiscal year 2004 budget proposal for the Clean Water 
State Revolving Fund (CWSRF), which helps address wastewater 
infrastructure needs. The CWSRF has made tremendous contributions to 
improving the nation's water quality. In fiscal year 2002, the five 
Upper Mississippi River Basin states received a total of $177 million 
in CWSRF funding. However, the CWSRF is proposed to be cut by 63 
percent in fiscal year 2004. This would mean $850 million for the 
CWSRF, rather than its authorized and historical level of $1.35 
billion. Given the flexibility to redirect wastewater funds to the 
Drinking Water State Revolving Fund (DWSRF), even less than $850 
million might well be available for the wastewater SRFs. While the 
flexibility to shift between these two programs can help the states 
address their most pressing needs, it is no substitute for adequate 
funding. Estimates of the nation's wastewater infrastructure needs 
certainly vary, as evidenced in the Congressional deliberations on new 
water infrastructure financing legislation. However, there is 
absolutely no doubt there are substantial unmet needs. The high demand 
for these funds underscores the need to reauthorize CWSRF funding and 
increase annual federal appropriations to $2 billion.

               STATE NONPOINT SOURCE GRANTS (SECTION 319)

    The Administration has requested $238.5 million for the Section 319 
state nonpoint source grant program, slightly less than the $240 
million provided in fiscal year 2003. Nonpoint sources are one of the 
major causes of water pollution in the Upper Mississippi River Basin, 
which drains the nation's agricultural heartland. For each of the past 
three years, the five states in the Upper Mississippi River Basin have 
been allocated a total of $34 million in nonpoint source grants. 
Adequate funding for Section 319 and complementary efforts, including 
the USDA's conservation programs, is essential to meeting the region's 
major water quality challenges. With the expansion of USDA conservation 
programs, it is especially important to fund the Section 319 program as 
well, given that it supports a variety of efforts unrelated to 
agriculture, such as Phase II stormwater work. Thus, at a minimum, 
UMRBA urges Congress to maintain funding for state nonpoint source 
grants at the fiscal year 2003 level of $240 million, recognizing that 
continued progress in addressing nonpoint pollution will require 
significantly increased resources.

                ENVIRONMENTAL MONITORING AND ASSESSMENT

    EPA's fiscal year 2004 budget includes $38.87 million for its 
Environmental Monitoring and Assessment Program (EMAP). EMAP is of 
particular interest to the UMRBA because it includes the Central Basin 
Integrated Assessment, as well as research related to environmental 
indicators. The Central Basin assessment focuses on large rivers in the 
Mississippi Basin, which are challenged by long term loadings of 
nutrients, sediments, and toxic chemicals, as well as extensive habitat 
alternatives. This Central Basin EMAP initiative is intended to fill 
the scientific gaps (e.g., indicators, sampling design, and sampling 
methodology) that currently limit our ability to assess baseline 
conditions and measure the performance of environmental protection 
activities. The resulting advancements in monitoring technology and 
approaches could be potentially useful in guiding the development of 
TMDLs on major rivers such as the Missouri and Mississippi Rivers. In 
addition, the states bordering the Upper Mississippi River are hopeful 
that EMAP will help in the development of ``indicators of impairment.'' 
Such indicators are critically needed for large border rivers to 
improve the states' ability to meet their Clean Water Act 
responsibilities on these rivers. Fiscal year 2003 marked the beginning 
of the Central Basin EMAP. In fiscal year 2004, EPA will begin the 
first full year of monitoring to measure the conditions of these large 
rivers. UMRBA thus supports proposed funding for the Central Basin 
EMAP.

                HYPOXIA ACTION PLAN AND WATERSHED GRANTS

    The UMRBA is disappointed that the Administration's fiscal year 
2004 budget proposal does not include additional new resources to 
address the recommendations in the Hypoxia Action Plan, submitted by 
the Mississippi River/Gulf of Mexico Watershed Nutrient Task Force in 
January 2001. The states in the Upper Mississippi River Basin have 
consistently said that reductions in nutrient inputs to the Gulf of 
Mexico and monitoring to evaluate the effectiveness of these efforts 
will only be possible if significant new budgetary resources are 
provided by the federal government. While the states continue to 
support the goals and strategies set forth in the Action Plan, little 
progress will be made to reduce the Gulf hypoxic zone and improve water 
quality conditions throughout the basin without a major federal 
financial commitment.
    EPA's fiscal year 2004 budget documentation indicates that the 
agency intends to focus a portion of the Targeted Watershed Grants to 
support implementation of the Hypoxia Action Plan. Although UMRBA is 
pleased that the unique needs of the Mississippi River Basin are being 
recognized, the watershed grant program established just last year, 
does not, in fact, represent additional new funding. The $20 million 
recommended by the Administration for Targeted Watershed Grants in 
fiscal year 2004 comes at the expense of water quality cooperative 
agreements (Section 104(b)(3) grants), which are recommended to be 
reduced by $20 million in fiscal year 2004. Although UMRBA supports 
funding for watershed planning and management, it should not come at 
the expense of other well-established programs.
                                 ______
                                 
PREPARED STATEMENT OF THE SANTA CLARA VALLEY WATER DISTRICT, SAN JOSE, 
                               CALIFORNIA

  PERCHLORATE CLEANUP PROJECT, SANTA CLARA COUNTY, CALIFORNIA--SUMMARY

    This statement urges the Committee's support for an appropriation 
add-on of $1 million, for technical and logistical assistance to the 
San Martin Community and local and state agencies regarding the cleanup 
of a 7\1/2\ mile groundwater plume of perchlorate that has affected 
several hundred water supply wells.

                          STATEMENT OF SUPPORT

    Background.--The Central Coast Regional Water Quality Control Board 
(Regional Board) is providing regulatory oversight of the Olin 
Corporation led investigation and cleanup for perchlorate contamination 
in the San Martin Area associated with their former highway flare 
manufacturing plant. The Regional Board currently does not have 
adequate resources to address the magnitude of the perchlorate 
contamination which has affected several hundred drinking water supply 
wells. Groundwater is currently the only source of drinking water in 
this area and over 1,500 families have been provided with bottled 
water. Significant concerns remain regarding this community's exposure 
to perchlorate in their drinking water and perchlorate accumulation in 
agricultural crops and livestock. To address these concerns and ensure 
that the groundwater basin in this area is aggressively restored and 
cleaned up the Santa Clara Valley Water District (District) is 
requesting Federal assistance. We respectfully request funding to 
facilitate a prompt and complete cleanup of groundwater resources in 
the San Martin area of Santa Clara County.
    Demographics.--
  --Established residential community to Silicon Valley.
  --Important agricultural resource area.
  --Community provides housing to Silicon Valley workers.
    Perchlorate Investigation and Cleanup Status.--The source of the 
perchlorate is attributed to a former safety flare manufacturing plant 
owned by Olin Corporation that opened in 1955. Potassium perchlorate is 
a component of these flares. Perchlorate contamination in groundwater 
was initially detected at low concentrations in shallow groundwater 
samples collected at the site of the facility in August 2000, as part 
of due diligence investigation by a prospective purchaser of the site. 
The Regional Board directed an investigation of the site that led to 
sampling of nearby domestic wells in the fall of 2002. After the 
detection of perchlorate in domestic wells immediately downgradient of 
the site, the District became concerned that significant contamination 
could exist over a larger area. Additional sampling of domestic wells 
performed in December 2002 by the District confirmed that suspicion. 
San Martin does not have a municipal water system and the water supply 
comes from over 2,000 domestic and small water system wells in the 
area. Groundwater is the sole source of their water. Working with the 
Regional Board, the District acted swiftly to notify private well 
owners of the potential problem in the affected area and assured that 
their wells would be sampled. The District has also offered to provide 
free bottled water to those in the affected area while investigation of 
the contamination continues. To date the District has sampled over 1000 
domestic wells in the San Martin Area. Results to date for 700 wells 
show 450 wells with no detectable concentrations (<4 ppb) and over 250 
wells with detectable perchlorate above 4 ppb. In addition Olin 
Corporation is also sampling over 300 domestic wells. Bottled water is 
being delivered to over 1,865 families and businesses in the area. The 
District is currently funding bottled water at 1,100 locations while 
Olin Corporation is providing bottled water to an estimated 765 
locations.
    The full extent of perchlorate contamination is not expected to be 
known until the end of 2003 at which time an interim cleanup plans may 
have been developed. There are currently no firm estimates to how long 
it will take to develop a long-term solution for cleanup of 
groundwater.
    Fiscal Year 2004 Funding Recommendation.--It is requested that the 
Congressional Committee support an appropriation add-on of $1 million, 
to determine the best long-term solution and to initiate clean up 
efforts.
                                 ______
                                 
 PREPARED STATEMENT OF THE METROPOLITAN WATER RECLAMATION DISTRICT OF 
                            GREATER CHICAGO

                      TUNNEL AND RESERVOIR PROJECT

    I am Terrence J. O'Brien, President of the Metropolitan Water 
Reclamation District of Greater Chicago, and on behalf of the Water 
Reclamation District, I want to thank the Subcommittee for this 
opportunity to present our priority for fiscal year 2004, and express 
our appreciation for your support of our requests over the years. The 
Metropolitan Water Reclamation District (District) is the sponsor for 
the federally approved combined sewer overflow (CSO) project, the 
Tunnel and Reservoir Plan (TARP), in Chicago, Illinois. Specifically, 
we are asking that $5 million be included to continue construction of 
this project in the Subcommittee's VA, HUD and Independent Agencies 
Appropriations Bill for fiscal year 2004. The following outlines the 
project and the need for the requested funding.

                              INTRODUCTION

    The District was established in 1889 and has the responsibility for 
sewage treatment, and is also the lead agency in providing sponsorship 
for flood control and stormwater management in Cook County, Illinois. 
In fact, the District was established in response to an epidemic of 
waterborne diseases caused by drinking polluted Lake Michigan water, 
which killed 90,000 people in 1885. By 1900, the District had reversed 
the flows of the Chicago and Calumet Rivers to carry combined sewage 
away from Lake Michigan, the area's main water supply. The District has 
been involved with major engineering feats since its inception.
    In an effort to meet the water quality goals of the Clean Water 
Act, to prevent backflows into Lake Michigan, and to provide an outlet 
for floodwaters, the District designed the innovative TARP. The TARP 
tunnels, which were judged by the Environmental Protection Agency (EPA) 
on two occasions as the most cost-effective plan available to meet the 
enforceable provisions of the Clean Water Act, are a combined sewer 
overflow elimination system. The TARP reservoirs, also under 
construction, will provide flood control relief to hundreds of 
thousands of residents and businesses in the Chicagoland area.

                       TUNNEL AND RESERVOIR PLAN

    The TARP is an intricate system of drop shafts, tunnels and pumping 
stations which will capture combined sewer overflows from a service 
area of 375 square miles. Chicago will remove three times the amount of 
CSO pollution as Boston's projected removal--for approximately the same 
cost. The remaining Calumet tunnel system will provide 4.1 million 
pounds of biological oxygen demand (BOD) removal versus Boston's one 
million pounds of BOD removal per year. In fact, Chicago's CSO 
pollution problems are worse than the combination of Boston, New York, 
and San Francisco's pollution problems. The Chicago Metropolitan Area's 
annual BOD loading from CSO pollution is 43 million pounds per year. 
This contrasts with the combination of Boston, New York and San 
Francisco's combined annual BOD loading of 35 million pounds.
    A good portion of the remainder of the TARP system is to be built 
in the southeast side of Chicago and the southern suburbs (Calumet 
system), a low-income, highly neglected and highly polluted area. This 
community suffers from tremendous land, air and water pollution--
literally a dumping ground for multi-media pollution ranging from 
chemical waste to serious water pollution.
    Due to the enormous risk to the community, the District as the 
local sponsor cannot afford to leave the citizens vulnerable. 
Therefore, it is imperative that this work must continue. Because we 
have awarded construction contracts in the area, the climate is 
favorable for continuing with this work at this time, producing 
significant cost savings. What we are seeking, then, is funding to 
advance federal work.
    We have a proven and cost-effective program. In fact, we have 
estimated that TARP's cost is about a quarter of the cost of separating 
the area's existing combined sewer systems into separate sewage and 
stormwater systems. Upon reanalysis, the EPA has consistently found the 
TARP program to be the most cost-effective solution that will reduce 
the impacts by the greatest degree to meet the enforceable requirements 
of the Clean Water Act, with the least amount of dollars. The project, 
while relating most specifically to the 52 tributary municipalities in 
northeastern Illinois, is also beneficial to our downstream communities 
such as Joliet and Peoria. These benefits occur because of the capture 
of wastewater in the tunnels during the storm periods and by treatment 
of the discharge before being released into the waterways.
    Since its inception, TARP has not only abated flooding and 
pollution in the Chicagoland area, but has helped to preserve the 
integrity of Lake Michigan. In the years prior to TARP, a major storm 
in the area would cause local sewers and interceptors to surcharge 
resulting in CSO spills into the Chicagoland waterways and during major 
storms into Lake Michigan, the source of drinking water for the region. 
Since these waterways have a limited capacity, major storms have caused 
them to reach dangerously high levels resulting in massive sewer 
backups into basements and causing multi-million dollar damage to 
property.
    Since implementation of TARP, 734 billion gallons of CSOs have been 
captured by TARP, that otherwise would have reached waterways. Area 
waterways are once again abundant with many species of aquatic life and 
the riverfront has been reclaimed as a natural resource for recreation 
and development. Closure of Lake Michigan beaches due to pollution has 
become a rarity. After the completion of both phases of TARP, 99 
percent of the CSO pollution will be eliminated. The elimination of 
CSOs will reduce the quantity of discretionary dilution water needed 
for flushing of Chicago's waterway system, making it available as 
drinking water to communities in Cook, DuPage, Lake, and Will counties, 
which have been on a waiting list. Specifically, since 1977, these 
counties received an additional 162 million gallons of Lake Michigan 
water per day, partially as a result of the reduction in the District's 
discretionary diversion in 1980. Additional allotments of Lake Michigan 
water will be made to these communities, as more water becomes 
available from sources like discretionary diversion.
    With new allocations of lake water, more than 20 communities that 
previously did not get to share lake water are in the process of 
building, or have already built, water mains to accommodate their new 
source of drinking water. The new source of drinking water will be a 
substitute for the poorer quality well water previously used by these 
communities. Partly due to TARP, it is estimated by IDOT that between 
1981 and 2020, 283 million gallons per day of Lake Michigan water would 
be added to domestic consumption. This translates into approximately 2 
million additional people that would be able to enjoy Lake Michigan 
water. This new source of water supply will not only benefit its 
immediate receivers but will also result in an economic stimulus to the 
entire Chicagoland area, by providing a reliable source of good quality 
water supply.
    TARP was designed to give the Chicago metropolitan area the optimal 
environmental protection that could possibly be provided. More 
importantly, no other project was found to be as cost-effective. In 
addition, the beneficial use of the project is being enhanced by the 
addition of the flood control reservoirs now being designed and 
constructed by the Corps of Engineers, which will be connected to the 
tunnels for additional capture and storage of combined sewage during 
flood events. We believe TARP stands as a tribute to our nation's Clean 
Water goals and one that is being accomplished within the most 
economical constraints.

                            REQUESTED ACTION

    The $5 million we are seeking in fiscal year 2004 funding in the 
Subcommittee's bill will help keep the local sponsor whole for the 
advance construction it plans to accomplish on the Little Calumet Leg 
for the Calumet System of the congressionally-authorized TARP project. 
While the TARP project was originally authorized at 75 percent federal 
funding, the District as local sponsor has been contributing at least 
50 percent of the total project cost. We greatly appreciate the 
Subcommittee's endorsement of our request over the years to advance the 
construction of this work. This fiscal year 2004 work will go a long 
way to address serious water quality, stormwater and safety problems. 
It will have a tremendously beneficial impact on a community which 
suffers from water pollution and significant flooding problems. The EPA 
has approved the facilities plan for the overall TARP project and 
design has been completed. The EPA has identified this particular 
segment of work as the next critical section of the plan to be 
constructed based on significant water quality benefits.
    Once on-line, the Little Calumet Leg of the Calumet System will 
capture 1.5 billion gallons of CSOs per year and will protect 14.9 
square miles of the City of Chicago from raw sewage backup and 
flooding.
    We urgently request that this funding be included in the 
Subcommittee's bill for the construction of the Calumet System of the 
TARP project. We thank you in advance for your consideration of our 
request.
                                 ______
                                 
       PREPARED STATEMENT OF THE CALAVERAS COUNTY WATER DISTRICT

    Calaveras County is located on the eastside of the Central Valley 
of California and encompasses approximately 1,028 square miles of land, 
stretching across more than 50 miles of valleys, foothills, and 
mountain peaks. The topography ranges from approximately 200 feet above 
mean sea level (ft-msl) in the northwestern region of the County, to a 
peak height of 8,170 ft-msl near Alpine County.
    The communities of West Point, Wilseyville and Bummerville are 
located in the northeastern portion of the county in the sparsely 
populated higher foothills. The topography ranges from approximately 
2,500 feet in Wilseyville to 3,200 feet in Bummerville. Mild summers 
and cold winters characterize the region, with temperatures ranging 
from the low 20's to the middle 80's. Snow accounts for a large 
percentage of the precipitation in the watersheds supplying the study 
area.
    In the fall of 1946, the Calaveras County Water District (CCWD) was 
organized under the laws of the State of California as a public agency 
for the purpose of developing and administering the water resources in 
Calaveras County. Therefore, CCWD is a political subdivision of the 
State of California and is governed by the California Constitution and 
the California Government and Water Codes. CCWD is not a part of or 
under the control of the County of Calaveras. CCWD was formed to 
preserve and develop water resources and to provide water and sewer 
service to the citizens of Calaveras County.
    Under state law, CCWD, through its Board of Directors, has general 
powers over the use of water within its boundaries. These powers 
include but are not limited to: the right of eminent domain, authority 
to acquire, control, distribute, store, spread, sink, treat, purify, 
reclaim, process and salvage any water for beneficial use, to provide 
sewer service, to sell treated or untreated water, to acquire or 
construct hydroelectric facilities and sell the power and energy 
produced to public agencies or public utilities engaged in the 
distribution of power, to contract with the United States, other 
political subdivisions, public utilities, or other persons, and subject 
to the California State Constitution, levy taxes and improvements.
    CCWD provides water service to over 10,000 connections throughout 
Calaveras County. CCWD operates five independent treatment facilities 
with a combined treatment capacity of over 13 million gallons per day. 
The water facilities include approximately 290 total miles of 
transmission and distribution pipelines ranging from 4 to 20 inches in 
diameter and 31 storage tanks with capacity of over 14.5 million 
gallons. CCWD provides water and/or sewer service to 65 percent of the 
residents of Calaveras County.

         WEST POINT, WILSEYVILLE AND BUMMERVILLE SYSTEM HISTORY

    CCVD owns and operates the domestic water system in the rural 
communities of West Point, Wilseyville, Bummerville and part of Sandy 
Gulch. This water system is located in the District's West Point 
Service area, located in the Mokelumne River Watershed, Calaveras 
County, Central California, in the foothills of the Sierra Nevada 
Mountains. Population growth in the service area has generally averaged 
less than one percent annually over the last 15 years. This low growth 
rate may be attributed in part to the reduction in industry within the 
service area. Presently, the economic base of the community is 
principally related to retirement living with some of the population 
commuting to larger nearby communities for employment opportunities.
    The communities of West Point and Wilseyville developed over the 
last 150 years, initially as mining companies and later as logging 
communities. Originally, these areas were served water through a series 
of mining ditches associated with these activities. The decline of 
these industries, which were critical to the area economy, brought 
about CCWD's purchase of the water and conveyance systems.
    The West Point water system was purchased in 1954 by CCWD from the 
West Point Ditch Company. The predecessor to Sierra Pacific Logging 
Company owned and built the Wilseyville system and sold it to CCWD in 
1964. The Bummerville system was connected to the West Point system in 
1959. Between 1964 and 1974 the system was brought into compliance with 
state and federal regulations for operation by CCWD.
    The existing water system serves 520 connections, a total 
population of 1,298, including a local Native American Reservation. The 
current facilities include two raw water reservoirs (Wilson Lake and 
the Regulating Reservoir); two raw water diversion facilities (Bear 
Creek gravity and Middle Fork Mokelumne pumped); one water treatment 
plant (West Point); two treated water pump stations (Bummerville and 
Upper Wilseyville); and the associated distribution and storage 
systems.
    The two main sources for water supply for the West Point water 
treatment plant are the Bear Creek diversion, which is a gravity 
source, and the pumped source from the Mokelumne River. Both raw 
sources are generally of good quality and are very easily treated to 
potable standards. Water rights for the West Point/Wilseyville water 
system are derived from existing water rights agreements for diversion 
of flow from Bear Creek and from the Middle Fork of the Mokelumne 
River. These agreements provide for adequate water to serve the present 
water customers, as well as future full buildout of the adjacent areas. 
In the case of drought, the Bear Creek supply can be supplemented with 
water from the Middle Fork of the Mokelumne River. In addition, the 
District maintains the 50 acre-foot Regulating Reservoir (also referred 
to as the West Point Reservoir), which may be called upon to supplement 
and augment supply during dry periods.
    The West Point/Wilseyville water system and related facilities were 
primarily constructed before 1960 and many system components are either 
inadequate or in need of replacement. Several changes have been made to 
the systems in response to more stringent regulations, which allowed 
the abandonment of the Wilseyville plant. In addition, the West Point 
water treatment plant and pump stations have been upgraded and an 
intertie has been installed between West Point and Wilseyville.
    Distribution system deficiencies are evident when evaluated against 
current water industry standards for publicly owned and operated 
systems. The 1996 Master Plan was completed to address these 
deficiencies. Specific recommendations were presented to bring the 
system into compliance with current and anticipated water industry 
standards. In 1998, a Master Plan Supplement provided additional 
analysis for improvements to the West Point Wilseyville, and 
Bummerville systems.
    West Point, Wilseyville and Bummerville have infrastructure 
requirements that far exceed their financial capabilities. However, the 
infrastructure is crucial to the health, safety, and existence of these 
small, rural communities. In addition, rising water and sewer rates 
have been necessary due to new regulatory requirements and these rising 
rates have been difficult for the community to face. The closing of 
lumber mills in Calaveras and neighboring Amador County (over the last 
ten years) has also made a difficult situation worse for those 
dependent on that industry for employment, especially in this current 
climate of high unemployment rates. In an effort to begin addressing 
these needs at the state and local level, a $500,000 feasibility study 
state grant and a $1.9 million Bear Creek state construction grant have 
recently been provided. In order to build on these state and local 
efforts and to meet the critical infrastructure needs and the needs of 
the community, we respectfully request assistance for the following 
project components:

       WATER SUPPLY INFRASTRUCTURE REHABILITATION PROJECT REQUEST

    The small rural communities of West Point, Wilseyville, and 
Bummerville are faced with unaffordable water system replacement costs 
for aging supply and distribution systems. Water pressure and fire flow 
are inadequate in much of the service area. The raw water storage and 
transmission facilities are in need of immediate repairs.
    Seven projects have been identified to provide the West Point water 
system with a safer and more reliable level of service. These projects 
include:
  --West Point Clearwell Replacement.--The upgraded West Point Water 
        Treatment Plant is operational; however, the current clearwell 
        will not provide sufficient contact time for compliance with 
        disinfection regulations. This project will demolish and 
        replace the old 500,000 gallon tank with a new 600,000 gallon 
        steel tank.
  --Bummerville Treated Water Storage Tank Replacement.--Replacement of 
        small redwood tanks with a single 150,000 gallon steel tank.
  --Wilson Lake Embankment.--Assessment and reconstruction of a primary 
        storage reservoir that is no longer functional.
  --West Point-Wilseyville Distribution System.--Replace the aging 
        ``backbone'' transmission and distribution piping and provide a 
        second intertie between West Point and Wilseyville service 
        areas to improve fire flow and system reliability.
  --Bummerville Treated Water Distribution System--Replacement of old, 
        leaking, small-diameter piping to improve flow and fire 
        protection.
  --Mokelumne River Intake and Pump Station.--Relocation of the pump 
        station out of the flood plain, replacement of the raw water 
        line to the treatment plant, and modification of the existing 
        river diversion structure.
  --Regulating Reservoir.--Remediation projects to improve water 
        quality problems at a primary storage reservoir.
    This funding we are requesting here is necessary to assist in the 
upgrade, reconstruction, and repair of water system infrastructure 
critical for basic water pressure and fire flow. The District, 
therefore, respectfully requests the Committee's support for a 
$2,500,000 appropriation in fiscal year 2004 under the Environmental 
Protection Agency's State and Tribal Grant Assistance Program, so that 
efforts to initiate construction in the much-needed West Point Drinking 
Water System can proceed.
                                 ______
                                 
   PREPARED STATEMENT OF THE WASHINGTON SUBURBAN SANITARY COMMISSION

    The Washington Suburban Sanitary Commission (Commission or WSSC), 
established in 1918, is a public, bi-county agency providing water and 
wastewater services to Montgomery and Prince George's Counties in the 
Washington Capital region. WSSC is governed by six Commissioners with 
equal representation from each county and has developed its systems to 
the point where it is a national leader in the water and sewerage 
industry. The Commission is the among the ten largest water and 
wastewater utilities in the country, serving approximately 1.6 million 
people in a 1,000 square mile service area. In addition, the Commission 
provides services to 26 key federal installations and facilities in the 
Washington area, including such important military facilities as 
Andrews Air Force Base; the National Imagery and Mapping Agency; the 
National Naval Medical Center; the Naval Surface Warfare Center; the 
U.S. Army Research Center. Numerous other state and local security-
related installations and offices also receive service from the 
Commission.
    Water treatment and distribution facilities operated by the 
Commission include three water supply reservoirs; two water filtration 
plants; fourteen water pumping stations; 5,100 miles of water mains; 
and 54 treated-water storage facilities. Water production at Commission 
facilities is 166 million gallons per day. In terms of wastewater 
facilities, the Commission operates six wastewater treatment plants; 41 
wastewater pumping stations; and approximately 4,900 miles of sewer 
mains.

                 WASTEWATER DISINFECTION SYSTEM UPGRADE

    Since September 11, 2001, the Commission has worked with security 
consultants to aggressively assess the vulnerability of our key 
facilities to terrorist attack. As a result of that effort, the 
Commission has identified and implemented numerous enhancements to our 
security programs to prevent and/or provide early detection of 
physical, chemical or biological attack on our systems. Aspects of 
these improvements range from monitoring programs to detect chemical or 
biological irregularities to the physical ``hardening'' of several of 
our key facilities.
    These vulnerability assessments revealed a particular concern 
regarding the storage and use of gaseous chlorine at WSSC wastewater 
treatment facilities. The high risk from using and storing chlorine can 
be eliminated by switching to a system using ultraviolet disinfection 
methods. In addition to eliminating the need to use and store a 
hazardous chemical, switching to ultraviolet disinfection also has 
other environmental benefits because it does not form other potentially 
harmful byproducts in effluent.
    Due to the immediate and critical importance of reducing this high 
risk factor, WSSC has budgeted funds in its fiscal year 2004 budget to 
begin this switchover. In order to implement the switch from chlorine 
disinfection to UV disinfection, $2 million in federal EPA STAG funds 
is needed immediately so that this critical regional safety issue can 
be accomplished as quickly as possible. Three wastewater treatment 
plants: the Western Branch; Seneca; and Piscataway must all be switched 
over to UV disinfection systems. The total cost for this switchover is 
$13.5 million. WSSC is working closely with the Montgomery and Prince 
George's County governments and the Maryland Department of the 
Environment in order to carry out these projects.

                PATUXENT WATER TREATMENT PLANT EXPANSION

    The vulnerability assessments also indicated that the Potomac River 
watershed, due to its size, could be vulnerable to tampering and 
contamination. Thus, additional water supply capacity for the region is 
needed in the event that the Potomac River cannot be used as a source 
of water. Thus in order to ensure adequate water supply to the region, 
other sources of water must be secured or expanded. WSSC believes that 
the Patuxent River can be used in emergency situations to help supply 
water to the region.
    The Patuxent River Water Treatment Plant is unique from several 
perspectives. The Plant's watershed is rather small and is easier to 
protect than the Potomac River watershed. Its raw water is also of 
better general quality than the Potomac River. Finally, it is located 
at a higher elevation than the Potomac and needs far less energy to 
provide water to WSSC. As such, this plant is easily and cost-
effectively amenable to reliability enhancements for both quantity and 
quality aspects. The Commission seeks to increase the capacity of the 
Patuxent River plant to nominal 72 million gallons per day (MGD)/120 
MGD emergency capacity. This additional capacity will allow WSSC to 
continue services during any emergency that might adversely affect the 
operation of the Potomac Plant.
    This project was previously identified and has been broken into two 
phases. Phase I will rehabilitate this plant to provide 40 MGD of 
capacity. Phase I will be completed shortly and is being implemented 
with local resources. Phase II would see the plant expanded to 72 MGD. 
Specifically, the updgrade and expansion will consist of the addition 
of a sixth treatment train (flocculators, sedimentation basins, 
disinfectant contact chamber, and filters); a new fourth raw water main 
from the T. Howard Duckett Dam and Rocky Gorge Pumping Station to the 
Plant; and the modification and expansion of the Rocky Gorge Raw Water 
Pumping Station.
    The estimated cost of Phase II of this regional security measure is 
$33 million, and WSSC requests $2 million in fiscal year 2004 to begin 
implementing these needed improvements. In order to carry out this 
project, WSSC is working closely with the Montgomery County government; 
the Prince George's County government; the Maryland National Capital 
Park and Planning Commission, the Maryland Department of the 
Environment, and the Interstate Commission on the Potomac River Basin.
                                 ______
                                 
        PREPARED STATEMENT OF THE AMERICAN ASTRONOMICAL SOCIETY

    The astronomical research enterprise in the United States is 
supported in large part by the National Science Foundation (NSF) and 
the National Aeronautics and Space Administration (NASA). Federal 
support of astronomy research has been the foundation of our success in 
the last five decades, enabling fundamental discoveries about the 
nature of universe and its history, including the existence of dark 
matter and dark energy, and the discoveries of planets around other 
stars. The U.S. research community leads the world in astronomical 
discovery, and federal support of basic research is key to maintaining 
the preeminent role of American astronomical research.
    Beyond the excitement of new discoveries in astronomy, basic 
research in the physical sciences in the United States contributes to 
the national economy and helps to maintain our robust economic 
competitiveness in the world market. Astronomy attracts students to 
careers science and engineering and motivates students to achieve a 
high level of competence in technical fields. Federal funding for 
missions and telescopes provides the infrastructure for astronomical 
research. The importance of federal funding extends beyond support for 
missions and facilities, however; it is federal support for research 
that allows us to produce our basic and most important products: new 
discoveries and scientifically literate and trained personnel.
    Each decade, the astronomical community reaches consensus on the 
most important large, medium, and small research projects for the next 
ten years, ranked in a priority manner based on their scientific 
benefit. This consensus, called the Decadal Survey of Astronomy and 
Astrophysics, is created under the auspices of the National Research 
Council as a National Academy Report. The most recent report, 
``Astronomy and Astrophysics in the New Millennium'' represents the 
fifth such decadal survey. During the subsequent decade, the NRC 
Committee on Astronomy and Astrophysics reviews the progress of the 
ranked projects and suggests any necessary augmentations or changes. 
Decadal Surveys are now also available for two related fields, 
Planetary Science and Solar Physics.
    The value of the Decadal Surveys to policy makers is quite clear. 
Usually, the projects listed require federal support. With a list of 
projects, prioritized by the scientific community itself, appropriators 
may confidently allocate funds, knowing that they are supporting the 
best possible science.
    The American Astronomical Society, which represents nearly 6,500 
professional astronomers, almost all of whom live and work in the 
United States, has endorsed these reports and I have included the text 
of those endorsements below. The complete reports are available in 
print and online (for free) from the National Academy Press 
(www.nap.edu).
    The Society thanks the members of the Senate VA-HUD-IA 
appropriations subcommittee for their support of basic science and 
urges the subcommittee to utilize the Decadal Survey Reports for 
Astronomy and Astrophysics, for Planetary Science, and for Solar 
Physics in making funding decisions this year and throughout the 
decade.

      ENDORSEMENT OF THE DECADAL ASTRONOMY AND ASTROPHYSICS REPORT

Adopted 7 January 2001, San Diego, CA

Astronomy and Astrophysics in the New Millennium
    A report of the Astronomy and Astrophysics Survey Committee, Board 
on Physics and Astronomy, Space Studies Board, Commission on Physical 
Sciences, Mathematics and Applications, and National Research Council
    ``Whereas, the National Research Council has recently completed and 
published the report Astronomy and Astrophysics in the New Millennium 
and,
    Whereas, the report represents a consensus of the astronomy and 
astrophysics community as to the priorities for federal investment in 
astronomy and astrophysics research for the coming decade and,
    Whereas, the process by which the report was produced was carried 
out in a fully open manner and included many opportunities for input 
from the astronomy and astrophysics community as well as open public 
sessions in several locations and at meetings of the American 
Astronomical Society and,
    Whereas, the report will be presented to Congress as an important 
and useful document for establishing federal investment in astronomical 
and astrophysical research in the coming decade,
    The American Astronomical Society hereby endorses the report as 
presenting a valid and balanced set of priorities for the coming decade 
for investment in astronomy and astrophysical research.
    Further, the American Astronomical Society encourages its members, 
other astronomy, astrophysics and related researchers, astronomy and 
astrophysics enthusiasts, the public and especially members of Congress 
and the Administration to fully embrace the report and use it when 
making policy decisions regarding federal investment in astronomical 
and astrophysical research during the coming decade.''

 ENDORSEMENT OF THE NRC REPORT ``NEW FRONTIERS IN THE SOLAR SYSTEM: AN 
                   INTEGRATED EXPLORATION STRATEGY''

Adopted 30 September 2002
    The American Astronomical Society hereby endorses the National 
Research Council Report ``New Frontiers in the Solar System: An 
Integrated Exploration Strategy'' as a balanced set of priorities for 
Federal expenditure in solar system studies for the coming decade.
    This report was completed by the National Research Council after 
substantial input from the planetary sciences community with the 
support of the Division for Planetary Sciences of the American 
Astronomical Society. The report represents a community consensus as to 
the priorities for federal investment in solar system exploration for 
the period 2003-2013.
    The key overall recommendations include maintenance of NASA's 
Discovery program of low-cost missions, a Kuiper-Belt/Pluto medium 
class mission and the large-cost category Europa Geophysical Explorer. 
There are also a separate set of prioritized recommendations for the 
Mars Exploration Program.
    The survey endorses several ground-based facilities recommended by 
the recent Astronomy and Astrophysics decadal survey, including the 
Giant Segmented Mirror Telescope and the Large-Aperture Synoptic Survey 
Telescope with operating modes supportive of solar system studies. It 
also points out the important role planetary astronomy plays in support 
of NASA missions.
    The AAS encourages its members, other astronomy, astrophysics and 
related researchers, astronomy and astrophysics enthusiasts, the public 
and especially members of Congress and the Administration to fully 
embrace the report and use it when making policy decisions regarding 
federal investment in solar system exploration during the coming 
decade.
                                 ______
                                 
 PREPARED STATEMENT OF THE AMERICAN INDIAN HIGHER EDUCATION CONSORTIUM

    This statement focuses on three areas: Department of Housing and 
Urban Development, National Science Foundation, and National 
Aeronautics and Space Administration.
    Mr. Chairman and Members of the Subcommittee, on behalf of this 
nation's 34 American Indian Tribal Colleges and Universities (TCUs), 
which comprise the American Indian Higher Education Consortium (AIHEC), 
thank you for the opportunity to express our views and requests for 
fiscal year 2004.

                          SUMMARY OF REQUESTS

Department of Housing and Urban Development (HUD)
    Since fiscal year 2001, a modest TCU initiative has been funded 
within the Community Development Block Grant program. This competitive 
program supports efforts by the TCUs to assist their communities by 
addressing dire community-based facilities and infrastructure needs. We 
strongly urge the Subcommittee to support this program at a minimum $5 
million, an increase of $2 million over the President's fiscal year 
2004 budget request.

National Science Foundation (NSF) Programs
    Tribal Colleges and Universities Program (TCUP).--Over the past few 
years, this program has provided important assistance to TCUs as they 
build their capacity to provide strong science, technology, 
engineering, and mathematics (STEM) teaching and learning programs for 
American Indians. In three years, 19 of the 32 eligible TCUs have begun 
participating in the program, along with seven Alaska Native and Native 
Hawaiian serving institutions. We request that Congress expand this 
vital program to $15 million, $5 million above the President's budget 
request, to help support funding of Alaska Native and Native Hawaiian 
serving institutions, which NSF includes in the TCU program and funds 
to a significant extent.

Tribal College Linkages with K-12 Schools
    Rural Systemic Initiative (TC-RSI) and the Math Science Partnership 
Program (MSP).--In the mid-1990s, NSF established a program to assist 
TCUs and other rural higher education institutions in promoting 
systemic change in STEM education in rural K-12 schools. This program 
has proven to be remarkably successful, yet NSF plans to terminate the 
program as current grants expire. In fiscal year 2002, the President 
established a similar, but significantly expanded new program, the Math 
Science Partnership program. In the first year, none of the 24 programs 
funded included minority serving institutions (MSIs) or specifically 
targeted American Indian children. We strongly urge the Subcommittee to 
support the ESR division budget and to establish American Indian and 
Rural Schools programs within the MSP program or to include report 
language reaffirming Congressional support for the TC-RSI program 
beyond the current grant period.
    Advanced Networking with Minority Serving Institutions.--In fiscal 
year 1999, NSF funded a project to help MSIs develop the campus 
infrastructure and national connections necessary to participate in the 
Internet-based Information Age. The project involves a historic and 
successful collaboration between three minority communities and 
mainstream institutions, which had little or no prior experience 
working together. AN-MSI has developed a successful model for providing 
support and technical assistance and is working with tribal colleges on 
collaborative education and research projects. AN-MSI's funding expires 
at the end of fiscal year 2003, and if new funding is not secured, the 
project's work will cease. We request that the Subcommittee include 
funding within NSF's CISE directorate to continue and expand the AN-MSI 
program at $3 million in fiscal year 2004.

National Aeronautics and Space Administration (NASA)
    In fiscal year 2001, the tribal colleges established a formal 
cooperative agreement with NASA for a project designed to increase 
access, participation, and success of American Indians in high quality 
K-16 mathematics, science, engineering, and technology programs. The 
agreement includes a TCU liaison between AIHEC and NASA to oversee 
implementation of the project and provides modest program enrichment 
grants to the colleges. However, as NASA implements a major 
reorganization of its education programs, it is unclear whether and how 
it will support partnerships with the tribal colleges and universities. 
We urge Congress to include report language to encourage NASA to extend 
its successful cooperative agreement on behalf of TCUs; ensure that the 
modest existing initiatives for TCUs are not eliminated in the 
reorganization of NASA's education programs; and encourage NASA faculty 
exchange programs and IPA contracts with TCUs to provide needed on-site 
expertise and partnerships. Additionally, we ask for report language to 
encourage the development of new initiatives to address the technology 
infrastructure needs at the TCUs.

                               BACKGROUND

    As a group, Tribal Colleges and Universities are this nation's 
youngest institutions of higher education. The first tribal college--
Navajo Community College (now Dine College) in Tsaile, Arizona--was 
established in 1968. Over the next few years, a succession of tribal 
colleges followed, primarily in the Northern Plains. In 1972, the first 
six tribally controlled colleges established AIHEC to provide a support 
network for member institutions. Today, AIHEC represents 34 TCUs 
located in 12 states. Collectively, these institutions serve 30,000 
full- and part-time American Indian students from more than 250 
federally recognized tribes. Yet in comparison with other institutions, 
TCUs benefit from only a handful of dedicated programs and receive only 
a very small portion of overall Federal higher education funding.
    The vast majority of TCUs is accredited by independent, regional 
accreditation agencies and like all institutions of higher education, 
must undergo stringent performance reviews on a periodic basis. In 
addition to associate, bachelor, and master's degree programs, TCUs 
provide much needed high school completion (GED), basic remediation, 
job training, adult education, and vitally needed community-based 
continuing education programs. Tribal colleges function as community 
centers; libraries; tribal archives; career and business centers; 
economic development centers; public meeting places; and child care 
centers. Each TCU is committed to improving the lives of students 
through higher education and to moving American Indians toward self-
sufficiency.
    TCUs provide access to higher education for American Indians and 
others living in some of this nation's most rural and economically 
depressed areas. These institutions, chartered by their respective 
tribal governments, combine traditional teachings with conventional 
postsecondary courses and curricula. They have developed innovative 
means to address the needs of tribal populations and are successful in 
overcoming long-standing barriers to higher education for American 
Indians. Over the past three decades, these vital institutions have 
come to represent the most significant development in the history of 
American Indian education, providing access to under-represented 
students and promoting achievement among students who may otherwise 
never have known postsecondary education success.
    Despite their remarkable accomplishments, TCUs are the most poorly 
funded institutions of higher education in the country. Chronically 
inadequate operations funding remains the most significant barrier to 
their success. Funding for basic institutional operations of 24 
reservation-based TCUs is provided through Title I of the Tribally 
Controlled College or University Assistance Act (Public Law 95-471). 
Funding under the Act was first appropriated in 1981 and is still, over 
20 years later, less than two-thirds of its authorized level of $6,000 
per full-time Indian student (ISC). Despite a nearly $2 million 
increase in basic operations funding in fiscal year 2003, Title I 
colleges are receiving $3,908 per full-time equivalent Indian student, 
an $8 decrease per ISC from the fiscal year 2002 funding level, due to 
enrollment increases and an unclear method for allocating operations 
funding. While mainstream institutions have a foundation of stable 
state tax support, TCUs must rely on annual appropriations from the 
Federal government for their basic institutional operating funds. 
Because TCUs are located on Federal trust territories, states have no 
obligation to fund them even for the non-Indian state-resident students 
who account for approximately 20 percent of TCU enrollments. Yet, if 
these same students attended any other public institution in the state, 
the state would provide basic operating funds to the institution.
    As a result of more than 200 years of Federal Indian policy--
including policies of termination, assimilation and relocation--many 
reservation residents live in abject poverty comparable to that found 
in Third World nations. Through the efforts of TCUs, American Indian 
communities receive services they need to reestablish themselves as 
responsible, productive, and self-reliant.

                             JUSTIFICATIONS

Department of Housing and Urban Development
    We are pleased that the President's fiscal year 2004 budget request 
includes $3 million for HUD-TCU program funded under the Community 
Development Block Grant program. This competitive grants program 
enables tribal colleges to expand their roles and effectiveness in 
addressing development and revitalization needs in their respective 
communities. No academic or student support programs are funded through 
this program; rather, funding is available only for community-based 
outreach and service programs at TCUs. Over the past few years, a 
handful of tribal colleges have been able to build or enhance child 
care centers, social service offices; help rehabilitate tribal housing; 
establish and expand small business development; and enhance vitally-
needed library services.
    The number of TCUs is continuing to grow. Two additional colleges 
have joined our ranks, Saginaw Chippewa Tribal College, in Mt. 
Pleasant, Michigan and Tohono O'odham Community College in Sells, 
Arizona. We strongly urge Congress to continue to fund this program at 
a minimum of $3 million, included in the President's budget request, to 
help ensure that much needed community services and programs are 
expanded and continued.

National Science Foundation Programs
    Tribal Colleges and Universities Technology Initiative.--In fiscal 
year 2001, NSF launched a new TCU initiative designed to enhance the 
quality of science, technology, engineering and mathematics (STEM) 
instruction and outreach programs, with an emphasis on the leveraged 
use of information technologies at TCUs. The program enables colleges 
to implement comprehensive institutional approaches to strengthen 
teaching and learning in ways that improve access, retention, and 
completion of STEM programs, particularly those that have a strong 
technological foundation. Through this program, colleges gain support 
their efforts to bridge the ``digital divide'' and prepare students for 
careers in information technology, science, mathematics, and 
engineering fields. The overall goals of the program are to improve 
access, retention, and graduation rates among American Indian students 
and to increase the number of American Indians in the information 
technology, science, mathematics and engineering workforce. In three 
years, 19 of the 32 eligible TCUs are participating in the program, 
along with seven Alaska Native and Native Hawaiian serving 
institutions. We request that Congress expand this vital program to $15 
million, $5 million above the President's budget request. This level 
more accurately reflects the true needs of the eligible pool, which NSF 
significantly expanded when it included Alaska Native and Native 
Hawaiian serving institutions, in the TCU program.
    Tribal College Linkages with K-12 Schools: Rural Systemic 
Initiative (TC-RSI) and the Math Science Partnership Program (MSP).--In 
the mid-1990s, NSF established a program to assist tribal colleges and 
other rural institutions of higher education in promoting systemic, 
standards-based change in STEM education in rural K-12 schools. Since 
1995, this program has proven to be remarkably successful in terms of 
standards-based testing, professional development of teachers, and 
enhanced learning strategies. Fourteen TCUs currently participate in 
the program. Despite its success, NSF has decided to terminate the 
program as current grants expire.
    In fiscal year 2002, the President established a similar, but 
significantly expanded new program, the Math Science Partnership 
program (MSP). MSP seeks to strengthen K-12 science and mathematics 
education through partnerships involving K-12 schools, institutions of 
higher education and community stakeholders. In the first year, NSF 
funded 24 programs. None included minority serving institutions or 
specifically targeted American Indian children. We strongly urge the 
Subcommittee to support the ESR division budget and to establish 
American Indian and Rural Schools programs within the Math Science 
Partnership program or to include report language reaffirming 
Congressional support for the TC-RSI program beyond the current grant 
period.
    Advanced Networking with Minority Serving Institutions (AN-MSI).--
Four years ago, NSF funded a project within its Computer and 
Information Science and Engineering (CISE) Directorate to help 
minority-serving institutions (MSIs) develop the campus infrastructure 
and national connections necessary to participate in the emerging 
Internet-based Information Age. The project involves an historic and 
successful collaboration between three minority communities and 
mainstream institutions, which had little or no prior experience 
working together. AN-MSI has developed a successful model for providing 
TCUs and other MSIs with technical assistance, education, and training 
programs to improve campus-based information and communications systems 
and strengthen IT staff. While much has been accomplished, TCUs are at 
the beginning stages of technology use, particularly for collaborative 
education and research. AN-MSI's funding expires at the end of fiscal 
year 2003, and if new funding is not secured, the project's work will 
cease. We request that the Subcommittee include funding within NSF's 
CISE Directorate to continue and expand the AN-MSI program at $3 
million in fiscal year 2004.

National Aeronautics and Space Administration (NASA)
    In fiscal year 2001, TCUs established a formal cooperative 
agreement with NASA for a project designed to increase access, 
participation, and success of American Indians in high quality K-16 
mathematics, science, engineering, and technology programs. The 
agreement includes a TCU liaison between AIHEC and NASA to oversee 
implementation of the project and provides modest program enrichment 
grants to the colleges. However, as NASA implements a major 
reorganization of its education programs, it is unclear whether and how 
it will support partnerships with tribal colleges. We urge Congress to 
include report language to encourage NASA to extend its successful 
cooperative agreement on behalf of TCUs; ensure that the modest 
existing initiatives for TCUs are not eliminated in the reorganization 
of NASA's education programs; and encourage NASA faculty exchange 
programs and IPA contracts with TCUs to provide needed on-site 
expertise and partnerships. Additionally, we ask for report language to 
encourage the development of new initiatives to address the technology 
infrastructure needs at TCUs.

                               CONCLUSION

    In light of the justifications presented in this statement and the 
overwhelming evidence of inequitable access to technology in rural 
America, we respectfully request Congress increase funding for Tribal 
College and University programs to help bring economic self-sufficiency 
to Indian Country. Fulfillment of AIHEC's fiscal year 2004 request will 
strengthen the missions of TCUs and the enormous, positive impact they 
have on their respective communities. Your support will help ensure 
that they are able to educate and prepare thousands of American Indians 
for the workforce of the 21st Century. TCUs have proven to be very 
responsible with the Federal support they have received over the past 
three decades. It is important that the Federal government now 
capitalize on its investment. We respectfully request your continued 
support of tribal colleges and full consideration of our fiscal year 
2004 appropriations requests.
                                 ______
                                 
      PREPARED STATEMENT OF THE AMERICAN SOCIETY FOR MICROBIOLOGY

    The American Society for Microbiology (ASM), the largest single 
life science organization in the world, comprising more than 40,000 
members, appreciates the opportunity to provide written testimony on 
the fiscal year fiscal year 2004 appropriation for the National Science 
Foundation (NSF).
    The ASM represents scientists who work in academic, industrial, 
medical and governmental institutions worldwide. Microbiologists are 
involved in research to improve human health and the environment. The 
ASM's mission is to enhance the science of microbiology, to gain a 
better understanding of basic life processes, and to promote the 
application of this knowledge for improved health, and for economic and 
environmental well being.
    The following testimony will outline the ASM's funding 
recommendations for the NSF for fiscal year 2004.

                      NATIONAL SCIENCE FOUNDATION

    The ASM endorses the level of funding approved by Congress in the 
NSF Authorization Act of 2002 (Public Law 107-368) to provide $6.39 
billion, a 20 percent increase, for the NSF in fiscal year 2004. This 
would raise the NSF budget by $1.1 billion from its current $5.3 
billion level of funding for fiscal year 2003. The ASM strongly 
supports Congress's bipartisan commitment to strengthen scientific 
research and education. The NSF budget is one of the nation's most 
important investment opportunities because it funds research in new 
frontiers of scientific inquiry and contributes to creating a highly 
skilled, competitive workforce in science and engineering. Although NSF 
accounts for only 4 percent of federal R&D spending, it supports nearly 
50 percent of the non-medical basic research at our colleges and 
universities. A 20 percent increase will fund additional excellent 
rated research projects in pursuit of important discoveries and 
innovations. In addition, increasing NSF's budget beyond the 
Administration's proposed $5.5 billion budget will allow the NSF to 
continue making increases in the size and duration of NSF grants, 
graduate student stipends and investments in priority areas, such as 
Biocomplexity in the Environment and Nanoscale Science and Engineering. 
Increases in these areas will ensure high productivity among 
researchers and will improve the attractiveness and viability of the 
science and engineering fields to future students. Achieving these 
goals requires public investment that reflects the importance of 
science and engineering to the social and economic foundation of the 
nation.
    The NSF's mission is to promote and advance scientific, 
mathematical, and engineering research and education in the United 
States. It is a key agency for supporting research that uses genomic 
information in new and creative ways through interagency partnerships 
that advance all the sciences. The NSF has launched several grants that 
seek to bring multidisciplinary approaches to ecology, human health, 
and genomic sequencing. These efforts are supported by promising 
partnerships with the National Institutes of Health (NIH), the U.S. 
Department of Agriculture (USDA), the U.S. Geological Survey (USGS), 
and the Department of Energy (DOE). Other NSF initiatives will result 
in increased understanding of environmental and human microbial 
interactions, which have particular relevance to global environmental 
change as well as infectious diseases and represent a new frontier in 
scientific research.
    Continued research concerned with the impact of microorganisms on 
the well being of humans, animals, plants and the environment is 
critical. The ASM supports NSF's continued focus on microbial biology 
and the diversity of microorganisms. Microorganisms play key roles in 
processing our wastes, recycling the nutrients that support our 
agriculture, forests and fisheries, yield new pharmaceuticals, provide 
key tools for biotechnology, affect the quality of our food and water, 
control some pests, and cause disease. The NSF recognizes the important 
role microorganisms play in our well-being and funds programs that 
advance our understanding of the microbial world. This effort has led 
to new programs such as the Microbial Observatories program, which 
focuses on the discovery of important but uncultured microorganisms. It 
also provided the foundation for NSF's participation in the interagency 
effort, ``The Microbe Project.''

                    BIOCOMPLEXITY IN THE ENVIRONMENT

    The ASM supports the proposed $100 million budget for fiscal year 
2004 for Biocomplexity in the Environment (BE) research. BE is an 
integrative program that utilizes all of the NSF science directorates 
to address some of the worlds most pressing scientific and societal 
challenges, such as, climate change and the complicated question of 
long-term environmental security. This intradirectorate initiative 
seeks to better understand the complexity of interactions between 
local, regional and global ecosystems that is inextricably linked to 
human well being. Advances in molecular biology, ecology, the 
geosciences, mathematics and the computational sciences have made it 
feasible to begin to understand these complex interactions. 
Microorganisms are key components of the soil, water, plant, and animal 
environments and therefore are dominant factors in understanding these 
interactions. Furthermore, only a small percentage of the microbial 
species on earth are known, leaving their functional role unknown. 
These unknown organisms are the largest untapped source of biodiversity 
and a potential source of new pharmaceuticals, enzymes, biocontrol 
agents, and tools for nanotechnologies.
    The ASM also endorses the program's emphasis on microbial genomic 
sequencing as a major new tool in furthering our understanding of the 
microbial world. In 2004, BE will focus on a number of priorities that 
will enhance our fundamental understanding of microorganisms important 
in nature and to humans (e.g., Microbial Genome Sequencing (MGS) 
activity). The MGS activity will focus on microorganisms chosen for 
their fundamental biological interest through the peer-reviewed process 
and for their importance in agriculture and forestry, relevance to the 
safety and quality of the food and water supply, and as potential 
bioterrorism agents. The ASM is also pleased with the Tree of Life 
Project. The NSF expects this program to capitalize on new and powerful 
computational and genomic technologies, which biologists' will then use 
to construct a universal genealogy for all 1.7 million named species of 
living organisms on Earth. Genome sequencing will provide the basis of 
efforts to better manage these organisms. The ASM is equally pleased to 
see joint efforts with NIH, USDA, NSF, USGS, USDA, and the National 
Aeronautics and Space Administration (NASA) continue in the Ecology of 
Infectious Disease activity. Research will focus on ecological 
determinants of disease transmission, possible health effects from 
environmental change, and improved tracking of outbreaks, which should 
be useful in following the West Nile virus. BE's research (Coupled 
Biogeochemical Cycles activity) in the biological, geochemical, 
geological, and physical processes is promoting new multidisciplinary 
approaches to traditional biological and geochemical science and should 
be continued.
    ASM applauds NSF's continued leadership in expanding 
multidisciplinary research opportunities and urges Congress to fully 
support BE.

                   NANOSCALE SCIENCE AND ENGINEERING

    The NSF is the lead agency in the National Nanotechnology 
Initiative, which allows scientific disciplines an opportunity to focus 
information technology, biology, engineering, physics, chemistry, and 
material and computer sciences into a unified research effort to make 
discoveries in materials and manufacturing, medicine, environment and 
energy and national security. The ASM supports the Administration's 
proposed level of funding of $249 billion for this program. The 
Biological Directorate's (BIO) portion of the fiscal year 2004 
initiative is $5 million, which represents a $2 million increase from 
fiscal year 2003.
    The ASM supports the Biosystems at the Nanoscale program ($21 
million). This program will study biologically based systems that have 
potential applications in biocompatible nanostructured materials, new 
devices for research in genomics, proteomics and cell biology, and 
nanoscale sensory systems. Nanoscale research could be particularly 
beneficial to understanding cellular communication and detection of 
environmentally important signals.
    The NSF is a pioneer among federal agencies involved with 
nanotechnology research and the ASM supports additional interagency 
cooperation between the NSF and the Department of Energy.

                NATIONAL ECOLOGICAL OBSERVATORY NETWORK

    The National Ecological Observatory Network (NEON) is a 
continental-scale initiative composed of 10 distinct geographically 
distributed, networked observatories that will serve as a platform for 
integrated research across the sciences. NEON will allow for the first 
time, teams of scientists to monitor the environment as it changes, 
providing new insights into regional and national ecological health and 
sensitivity. NEON will require new technologies, approaches and 
methodologies and will provide an opportunity for scientists to break 
new ground on innovative equipment and instrumentation that is so 
crucial to move science forward. NEON sites will also provide 
opportunities for other agency scientists to work in partnership with 
NSF grantees on multidisciplinary projects that will enhance all of the 
sciences.
    The Administration has proposed $12 million for the initiative in 
fiscal year 2004. The ASM is encouraged by the Administration's 
support; however, the ASM recommends that the Subcommittee build upon 
the President's request and fund NEON at $20 million for fiscal year 
2004. This level of funding would allow the construction of one 
complete observatory and a more rapid realization of NEON.
    The ASM recommends that Congress give high priority to increasing 
the NSF's funding as it considers its fiscal year 2004 appropriation. 
Many of today's scientific achievements leading to the development of 
biotechnology, antifreeze proteins, improved crops and plant-based 
products, and DNA fingerprinting have their roots in basic research 
supported by the NSF. The many future health and environmental 
challenges the United States will face can only be overcome through the 
potential of basic research to generate crucial new scientific 
knowledge and advancements that lead to new technologies for the 
future.
                                 ______
                                 
    The following testimony will outline the ASM's funding 
recommendations for EPA's research and development programs for fiscal 
year 2004.

                    ENVIRONMENTAL PROTECTION AGENCY

    The EPA's scientific research and development programs are critical 
to researchers in the fields of applied and environmental microbiology. 
Research on environmental microbiology is essential for improving air, 
water, and soil quality; for assuring the safety of potable water 
supplies; for protecting public water systems from biological threats; 
for providing safe means for waste disposal; and for cleanups of 
environmental contaminants. The ASM believes that sound public policy 
for environmental protection depends on adequately funded programs of 
intramural and extramural research based on a system of peer review to 
assure that support is awarded to research programs having both quality 
and relevance. The EPA has begun its own peer review system based upon 
the National Science Foundation model. Critical peer review of both the 
intramural and extramural research programs of the EPA are necessary 
for ensuring the quality and scientific validity of studies that are 
funded.

                     SAFE WATER AND WATER RESEARCH

    The ASM strongly recommends increasing the Administration's request 
of $49.2 million for Safe Drinking Water Research. The ASM also 
believes the total funding level for Clean and Safe Water programs at 
$2.9 billion is very inadequate and should be restored to fiscal year 
2003 levels. The ASM is very concerned that the Administration 
continues to cut the budgets of EPA's water programs that help to 
ensure the quality of the nation's water system. The ASM requests that 
Congress restore critical funding across EPA's water programs that 
ensure the Clean Water Act and the Safe Drinking Water Act are properly 
maintained. Maintaining a strong infrastructure for water quality is 
the foundation of EPA's Area-Wide Optimization Program (AWOP), which is 
designed to reduce consumers' exposure to microbial contaminants by 
improving the performance of filtering technology. This program is 
particularly important in maintaining the viability of drinking water 
systems ability to comply with drinking water regulations, especially 
the arsenic and microbial, disinfectant and disinfection by-products 
rules.
    The ASM applauds the EPA's continuing support of program 
initiatives such as drinking water safety standards (e.g., Contaminant 
Candidate List (CCL)), cost-effective water treatment technologies 
focusing on microbes, improved water safety guidelines and pollution 
indicators, and a federal database of beach advisories and closings 
across the United States. It is essential that EPA's water quality 
programs continue to focus on reducing the uncertainties surrounding 
the exposure to biological and chemical contaminants by improving 
analytical methods and risk assessments. ASM encourage these and other 
efforts to improve drinking water implementation programs that 
strengthen coordination between local, state, and federal authorities.

               SCIENCE TO ACHIEVE RESULTS PROGRAM (STAR)

    The ASM is concerned that the Administration is funding the STAR 
program at the fiscal year 2000 level of $100 million. The flat funding 
of this program over the past four fiscal cycles has lead to a 
reduction in the program's ability to attract new researchers. 
Therefore, the ASM believes the program would be better served if 
funded at $110 million for fiscal year 2004. The STAR program is an 
important mission-driven, extramural research initiative. This program 
funds important environmental research proposals from scientists 
outside the federal government and is a valuable resource for the EPA 
in finding solutions to many complex environmental problems. Grants 
made under the STAR program last from two to three years and provide 
about $150,000 of scientific support per grant year. The STAR program 
funds projects in specific focal areas including global warming, 
drinking water, ecology of harmful algal blooms, water and watersheds, 
ecological indicators, and pollution prevention (e.g., mercury), which 
have significant microbiological components. For instance, in 1999, 
STAR program grantees developed a model to better understand mercury's 
terrestrial and aquatic fate and transformation processes that 
influence environmental exposure and toxicity. This study is 
particularly important in understanding ecosystem responses to changes 
in mercury inputs and its affect on water quality, wildlife, and 
humans.
    The ASM is pleased to see that the EPA continues to expand the 
bounds of STAR research by developing multi-year plans (e.g., for 
Particulate Matter) that will relate STAR and intramural research 
products to the Agency's strategic goals for different program areas. 
These plans will help provide a framework for the Agency to consider, 
and to explain the balance of R&D performers in individual research 
areas. The ASM also recommends that 20 percent of the STAR budget 
remain open for exploring broader issues not covered by targeted RFA's. 
This mechanism captures the creativity of the scientific community to 
foresee EPA relevant needs and solutions.

               GRADUATE ENVIRONMENTAL FELLOWSHIP PROGRAM

    The EPA's Graduate STAR Environmental Fellowship Program has been 
an outstanding success in attracting some of the best young talent to 
environmental research. Examples of research conducted in the STAR 
program include new methods of classifying biologically impaired 
watersheds and the human health effects of particulate matter. This 
type of research is generally unique to the EPA and is integral to its 
role as steward of the environment. Unfortunately, the Administration 
is cutting the program funding in half ($4.9 million) in its fiscal 
year 2004 budget. Therefore, the ASM highly recommends that the 
Subcommittee allocate the necessary funds ($10 million) to keep the 
STAR fellowship program competitive for the nation's best students.
    The ASM believes the Fellowship program is one of the many 
initiatives the federal government must fully support to ensure that 
the nation is prepared to answer the complex scientific questions of 
the future. Both the public and private sectors will benefit from a 
steady stream of well-trained environmental specialists. The proposed 
elimination of the program will hinder further research in such areas 
as bioremediation, global warming, and water safety. The ASM also 
shares the concern raised by the EPA's Science Advisory Board (SAB) 
that without the Fellowship program, the EPA may be unable to replace 
many of the EPA scientists nearing retirement with top-level 
scientists. The ASM is also concerned that the quality and regard for 
EPA science will suffer in the short and long-term if the program is 
abolished. The EPA would not only lose valuable graduate research, but 
the partnerships developed between industry environmental labs and the 
EPA.
    During this year's appropriations process, the ASM urges Congress 
to consider these needs and provide the necessary incremental funding. 
The ASM appreciates the opportunity to comment and would be pleased to 
provide additional information.
                                 ______
                                 
    PREPARED STATEMENT OF THE 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 all the tribes in the State of Washington I would 
like to thank you for the opportunity to provide testimony concerning 
the Environmental Protection Agency's (EPA) fiscal year 2004 
appropriations.
    We are specifically requesting that you identify $700,000 within 
EPA's 104(b)(3) program for the tribes in Washington State, through the 
Northwest Indian Fisheries Commission, for the purpose of maintaining 
the existing and successful Coordinated Tribal Water Quality Program 
(CTWQP). The purpose of our request is to continue implementation of 
this inter-governmental mechanism for twenty-six participating tribes 
and tribal organizations in the State of Washington for fiscal year 
2004. We thank you for your support this past fiscal year when the 
Committee provided us $630,000 for our needs. This program, has 
provided a forum for continuous and meaningful communication between 
tribal, state and federal agencies for more than a decade. Strong 
congressional support for implementation of this tribal initiative 
which began in 1990, and is still present today.
    In recent years Congress has been very responsive to tribal 
environmental protection issues through unprecedented increases in the 
Environmental Protection Agency's General Assistance Program (GAP) for 
tribes. Paradoxically, during this same time, this important tribal/EPA 
water initiative is losing funding. The urgency of this request is a 
result of significant erosion of base level funding for the CTWQP 
potentially jeopardizing the long-term investment of federal and tribal 
government's within this efficient and effective water resources 
protection and management program.
    The intent of this testimony and funding request is to maintain 
this important and successful tribal initiative by:
  --Providing implementation funding to further tribal objectives 
        relative to water resource management and protection of the 
        twenty-six participating tribes; and,
  --Maintaining centralized program coordination at the Northwest 
        Indian Fisheries Commission.
    Support for this model tribal initiative is timely, as it 
complements and supports federal initiatives aimed at maintaining 
healthy waterways. Further, as an existing program that centers around 
watershed-based water quality protection by building partnerships, and 
fostering inter-jurisdictional cooperation, it maximizes and leverages 
the efficiency of available resource dollars. Additionally, it is a 
critical component in the protection and restoration of our northwest 
salmon and shellfish.
    Justification for this funding request is based on:
  --Legal rights and obligations of the federal government to protect 
        the treaty-reserved rights of the tribes;
  --The United States' trust responsibility to protect the health and 
        environment of the tribes on a government-to-government basis;
  --Cost effective use of a cooperative intergovernmental strategy to 
        accomplish national clean water goals; and,
  --The minimization of conflict between multiple jurisdictions who 
        manage water resources.
    To assist the Committee members, I would like to summarize 
background information relevant to our request.

                               BACKGROUND

    The NWIFC request is made on behalf of our nineteen (19) member 
treaty fishing tribes, the Hoh, Chehalis, and Shoalwater Bay tribes in 
western Washington, and the Yakama Indian Nation, Colville 
Confederated, Spokane, and Kalispel Tribes in eastern Washington. The 
funding request is to continue implementing the model Coordinated 
Tribal Water Quality Program that began in 1990.
    The State of Washington has been blessed with bountiful rivers and 
streams. Five species of Pacific salmon and three species of anadromous 
trout use streams in the State of Washington during the fresh water 
stages of their life cycles. Historically, there were ample supplies of 
fish for ceremonial, subsistence, commercial and recreation purposes. 
Old growth conifer removal, riparian zone impacts, farming activities, 
and channelization of the streams has reduced the productive capacity 
of these streams to extremely low levels. Currently, there are Puget 
Sound salmon stocks listed under the Endangered Species Act.
    In 1979, the United States Supreme Court re-affirmed the treaty 
tribes right to catch half of the harvestable number of anadromous fish 
passing through tribal usual and accustomed areas. In 1980, the Federal 
District Court held that the United States and the State of Washington 
must not permit degradation of fish habitat which would diminish the 
treaty harvest right. This decision specifically included degradation 
by point and non-point pollution. The federal courts have recognized 
that protection of water quality and other attributes of fish habitat 
are necessary to secure the Constitutionally-protected rights of the 
tribes to harvest fish.
    The sovereign authorities of the Tribes and the legal principles 
enunciated in United States v. Washington and other federal court 
decisions support tribal involvement with both on and off-reservation 
environmental issues. The federal court decisions recognized the tribes 
as co-managers of the fish resource and water quality in our state. As 
co-managers in Washington, the tribes must have the resources to 
adequately participate in environmental protection programs.
    The EPA Indian policy (1984) of working with federally recognized 
tribes on a government-to-government basis concerns more than 375 
Indian tribes in the lower 48 states which control more than 52 million 
acres of land base. In our state, tribal reservations make up 
approximately six percent (6 percent) of the State of Washington. Our 
tribes have also retained usual and accustomed fishing grounds that 
include most of the State of Washington.
    The combined area of Indian reservations nationally is larger than 
all of New England, yet EPA now devotes only a tiny fraction of its 
personnel and funds to environmental protection for the tribes. This is 
clearly a discriminatory prioritization of federal funds. On a national 
level, tribal reservations represent three percent (3 percent) of the 
land base of this nation. Although the EPA has worked closely with the 
states to implement adequate environmental programs, little has been 
done, until recently, to accomplish the same for the tribal 
governments. Indian tribes are over two decades behind the states both 
in resources received from the EPA and in technical assistance provided 
by the EPA in developing tribal water program offices. A front end 
investment will promote cooperation and increased tribal involvement in 
environmental protection, as has been the case between the EPA and 
state governments for the past 20 years. The Coordinated Tribal Water 
Quality Program enables and fosters cooperative inter-jurisdictional 
partnerships.
    We recognize, support, and appreciate the successful efforts that 
have been made to improve EPA Indian Programs and tribal funding. Our 
request for additional funding is intended to stabilize existing 
program implementation activities. Clearly, a means must be found to 
support the long term funding of tribal programs that seek to protect 
tribal treaty rights, their waters, and their peoples, or, the efforts 
being made by EPA will not continue to be successful.

                           TRIBAL/STATE ROLES

    Beginning in 1990, the State of Washington has supported tribal 
involvement in environmental protection, both off and on-reservation. 
The state is committed to work with the tribes on a government-to-
government basis as co-managers of the water resource in the 
implementation of this program. The federally recognized Indian tribes 
in our region have a long legacy of working cooperatively with the 
State of Washington. The intent to foster that kind of relationship was 
articulated in the Centennial Accord with Governor Gardner in 1989 and 
was re-affirmed with Governor Locke in the 1999 Leavenworh Agreement. 
The water quality protection efforts supported by EPA funding are part 
of sustaining that kind of inter-governmental cooperation.
    The Coordinated Tribal Water Quality Program, an EPA/Tribal 
partnership, has generated successful models of state/tribal inter-
jurisdictional cooperation. Examples of these models are:
  --the Tribal Water Quality Standards Template, which encourages 
        inter-governmental uniformity and coordination of water quality 
        management;
  --the Clean Water Act Sec. 303(d) Cooperative Management Program, 
        which provides a forum for state/tribal government-to-
        government relations throughout the CWA Sec. 303(d) listing and 
        implementation process; and,
  --the Coordinated Tribal Data Management System for Water Quality, 
        design to promote efficiency, accuracy and cooperation in 
        utilizing water quality data.
    The tribes must be part of the solutions to prevent and control 
water pollution in the State of Washington. The tribes must participate 
in these activities to protect their governmental interests and treaty-
protected fishing rights. In this time of existing and pending listings 
of salmon stocks under the Endangered Species Act, neither we, nor the 
resource, can afford to lose programs integral to our inter-
governmental cooperative watershed program. The Coordinated Tribal 
Water Quality Program is part of protecting our nation's environmental 
heritage.

                               CONCLUSION

    For thirteen years, Congress has recognized and supported the 
Coordinated Tribal Water Quality Program by appropriating funding to 
maintain its operation. Even with the increased EPA General Assistance 
Program tribal set aside, tribes in the State of Washington are in 
danger of losing this successful tribal water quality initiative. This 
model program demonstrates how tribes can develop environmental 
programs and work with EPA to realize its long-range objective of 
including tribal governments as partners in decision-making and program 
management of tribal lands and resources.
    We appreciate the difficulty Congress is facing in making decisions 
for this next fiscal year. In the case of the EPA, Congress and the 
Administration will probably direct their resources to address those 
areas of highest risk to human health, public safety, and the 
environment. Therefore, we want to reiterate that tribal reservations 
and protection of their treaty resources have not been adequately 
addressed for the past twenty years and thus represent the highest of 
risks to this nation.
    Sufficient and permanent funding is necessary to continue the 
tribal cooperative program. Certainty of funding is necessary for the 
tribes to hire permanent and professional staff to implement this 
program. Without an ongoing investment by Congress much of the good 
that has been accomplished to date will be lost.
    Please consider our request for $700,000 for the Washington State 
Tribal Water Quality Initiative. Once again, thank you for the 
opportunity to provide testimony. Thank you also for your support in 
developing a national model, which demonstrates the ability of tribal 
governments to address environmental protection priorities through 
cooperative watershed processes with state and local governments.
    Thanks to this Committee, we are making significant progress, and 
this water quality initiative is being supported at all levels. We hope 
you and the Committee will continue to look favorably on our request.
                                 ______
                                 
 PREPARED STATEMENT OF THE QUINAULT HOUSING AUTHORITY, QUINAULT INDIAN 
                              RESERVATION

    Thank you Chairman Walsh and other distinguished Members of this 
Subcommittee for accepting this written testimony. The Quinault Indian 
Nation and Quinault Housing Authority (QHA) Board of Commissioners 
appreciate this opportunity to present our housing priority requests, 
on the fiscal year 2004 Budget for the Department of Housing and Urban 
Development, Indian Housing, Office of Native American Programs, to 
this Subcommittee.
    I would also like to take this opportunity to express my sincere 
appreciation to the military personnel who are away from home and their 
loved ones. On behalf of my People, I pray that they will have a safe 
and expedient return to their families and to their Homeland.

                     NATIONAL INDIAN HOUSING NEEDS

    $1 Billion.--For Native American Housing Assistance and Self-
Determination Act (NAHASDA)
    $150 Million.--For Community Development Block Grants (CDBG)
    $20 Billion.--For Indian Health Service Sanitation Facilities 
Construction
    $26 Million.--For USDA Indian Set-Aside for Utilities
    $35 Million.--For Supplemental Housing Efforts
    $4.8 Million.--For Technical Assistance to Indian Housing 
Authorities by the Native American Indian Housing Council

                       JUSTIFICATION OF REQUESTS

    For 32 years I have worked to improve living conditions on the 
Quinault Indian Reservation, located on the Olympic Peninsula, in 
Coastal Washington State. As an employee and Executive Director for the 
Quinault Housing Authority, I am disappointed, to say the least, with 
the President's budget proposal for Indian Housing for fiscal year 
2004.
    Today, we have the same concerns as other Americans about terrorist 
attacks, chemical warfare, and how Homeland Security will protect our 
Nation during this time of war. But, for American Indians and Alaskan 
Natives (AI/AN), our concerns are heightened during these times because 
of our basic human needs, which are often taken for granted by people 
who do not live in rural remote areas such as reservations. Shelter for 
our tribal members is a high priority for the Quinault Tribal 
Government and the Quinault Housing Authority.
    Many factors complicate and make costly the development and 
maintenance of affordable housing for AI/AN. Noted studies, reports and 
testimony on this subject have documented many of the obstacles and 
challenges Indian Housing Authorities (IHAS) are confronted with in 
just trying to provide housing to Indian people on reservations. While 
the list may be extensive, the challenges identified most frequently 
are (1) the remoteness of the reservations limit infrastructure and the 
availability of human resources; (2) land-use restrictions and the 
unfavorable land conditions on most reservations complicate the 
development and maintenance of low-income housing; and (3) the cost of 
the projects spiral upward because of the aforementioned challenges.
    While there will always be hurdles to scale over and barriers to 
remove, I find my job more benefiting than ever; not only to the people 
I serve, but to myself as well. And, the Native American Housing 
Assistance and Self-Determination Act of 1996 (NAHASDA) is largely 
responsible for this new attitude.
    The reauthorization of NAHASDA last fall opens the regulations up 
to review and revisions. The negotiated rulemaking committee will need 
the support of the Quinault Housing Authority, as well as the other 
IHAS, to improve upon how NAHASDA works for us all. Each area will have 
a representative and an alternate on the committee and it is our 
responsibility to maintain a line of communication with these 
representatives to know what is going on throughout the negotiated 
rulemaking process and to provide an advisory role to our area 
representatives.
    If Congress supports our requests for increased funding, on behalf 
of the Quinault Housing Authority, I would like to offer my support to 
the negotiated rulemaking committee to support the formula they design 
to distribute all new monies. I encourage my colleagues who operate 
Indian Housing Authorities to support this committee in their efforts 
to make NAHASDA an even better mechanism to improve housing on Indian 
land.

Native American Housing Assistance and Self-Determination Act of 1996 
        (NAHASDA)--$1 Billion
    The Indian Housing Block Grant line item has been flat-lined since 
1998 but tribal housing needs have continued to increase with births, 
marriages, extended life cycles of our Tribal Elders and tribal members 
returning to the reservations. Many reports indicate that Indian 
Housing is the worse in the United States, with an immediate need for 
200,000 homes. One may ask how and why, but it is quite simple: we have 
never received enough funding to eliminate the worse case conditions.
    NAHASDA allows Tribes to develop and utilize their grants to fit 
the needs of each Tribe. One thing we know is that we cannot develop 
homes without an infrastructure. The Quinault Housing Authority has 
been successful with NAHASDA. The flexibility of the Block Grant has 
allowed us to assist our Tribal Elders by providing them with a home in 
which they could age without the threat of eviction and homelessness. 
Tribal youth activities have been accessible and have offered our youth 
positive choices as alternatives to illegal drug and alcohol use. We 
have acquired homes that families have out-grown and, in some cases, 
where families have downsized and are no longer in need of the larger 
homes they once occupied, we have also intervened.
    The Quinault Housing Authority has been utilizing a USDA utilities 
grant along with NAHASDA grants to develop the water/sewer, water 
storage tank, power, telephone and streets for an eighty-unit (80) 
development (Phases I and II). We are nearing the completion of the 
USDA grant and we are moving forward and powering up the water/sewer 
treatment facilities. We can now begin the development of homes.

Community Development Block Grant--$150 Million
    This is a valuable grant utilized by Tribes to assist them in the 
development of Community buildings, health clinics, youth facilities, 
economic development, and infrastructure. As we continue to strive to 
build healthy communities for our Tribal members we request an Indian 
Set-Aside at a minimum of $150 Million.

Indian Health Service Sanitation Facilities Construction Funds--$20 
        Million
    Presently, appropriation report language precludes Tribes from 
utilizing IHS Sanitation Facilities Construction funds for HUD-funded 
housing projects. With this restrictive language, Tribes are forced to 
utilize NAHASDA funds to develop infrastructure rather than houses. 
Removing the language will allow for Tribal flexibility for sanitation 
construction, but will place additional stress on limited funding. We 
support Health & Humans Services Secretary Tommy Thompson's request for 
an additional $20 Million to improve sanitation and infrastructure 
needs on Indian Reservations, with the removal of restrictive 
appropriations language.

USDA Indian Set-Aside for Utilities--$26 Million
    This program is vital to Tribal Housing Infrastructure needs. While 
$13 Million is greatly appreciated, because of the cost of developing 
utilities on a remote Indian Reservation, this amount would assist 
little more that 13 Tribes. Increasing this amount to $26 million would 
allow for NAHASDA funds to build houses.
    The Quinault Housing Authority has developed the infrastructure for 
a forty-unit housing development, Phase I, with streets, electricity, 
telephone lines, water wells, water treatment, water storage tanks and 
a sewer treatment facility. We have invested $6 million dollars into 
this development. Engineering and construction estimates have projected 
that housing will cost $3.2 million. We will extend the development to 
include an additional forty (40) homes, Phase II, when funding is 
available.

Bureau of Indian Affairs Housing Improvement Program--$35 Million
    The Quinault Housing Authority administers this program for the 
Quinault Indian Nation. Although the funding is minimal at $70,000 
annually, it is vital to our Elders. Each year we are able to 
rehabilitate two houses or construct one. This program allows for our 
Indian Elders to live their declining years in comfort. We request $35 
Million a year to supplement other housing efforts.

Technical Assistance--$4.8 Million
    While the Quinault Housing Authority has not utilized the National 
American Indian Housing Council's technical assistance, we are aware of 
tribes who have. Most of these tribes are small and either lack 
experience or knowledge in construction, administration, or grant 
application preparation. Keep in mind the remoteness of many of these 
Tribes. In order for grant dollars to get to the people identified and 
most in need, and to get houses built, it is imperative that technical 
assistance be provided. The National American Housing Council has a 
vehicle in place to provide this expertise that is so desperately 
needed by so many tribes. We support NAIHC's request of $4.8 Million 
for fiscal year 2004.

Performance Concerns and Performance Based-Budgeting
    HUD Assistant Secretary Michael Liu recently reported that 40 
percent of NAHASDA funds remain unspent. We request that HUD be 
required to provide an accurate accounting of IHBG funds and 1937 
Housing Act funds alleged to be in the pipeline because we feel this is 
an inaccurate estimation of the performance of NAHASDA.
    We also request that the A-133 Audit supplemental be expanded to 
accurately account for the performance of Indian Housing Block Grants. 
Presently Indian Housing Plans and Annual Performance Reports are NOT 
adequate to provide an accurate accounting of Tribal performance. Both 
of these documents are extremely time consuming and repetitive. HUD 
conducts their Audits, Reviews and Monitoring with the ``GOTCHA'' 
mentality. The Seattle HUD Office of Native American Programs has four 
Certified Public Accountants (CPA's) on staff to conduct the reviews or 
audits. We have the Federal Government conducting Financial Audits in 
addition to the Independent Auditors; this is excessive. In some cases 
we have had the Inspector General's Office also conducting audits.
    Tribal Independent Financial Auditors are required to audit not 
only the financial records, but verify that Current Assisted Stock 
funding from the grant formula is being spent on the 1937 Housing Act 
units as required. They also test the financial expenditures against 
the Indian Housing Plans and verify the Annual Performance Reports' 
accuracy. Again, we feel that this is over zealous auditing and 
oversight.
    Our opinion is that HUD needs to provide some hands-on technical 
assistance to struggling Tribes, rather than having four CPA's come in 
afterwards to criticize what they could have prevented. An Architect or 
Engineer on staff would better serve Tribes. The CPA's would be better 
utilized providing technical assistance in bookkeeping and accounting 
focusing on those auditable areas for reporting.

                               CONCLUSION

    We ask that you inquire into HUD's inaccurate accountability for 
the Indian Housing Block Grant funding and further investigate the 
Infrastructure funding for Tribes.
    Mr. Chairman, and Honorable Committee members, I thank you for this 
opportunity to be heard today. My thoughts and prayers are with you in 
the difficult days ahead.
    We appreciate and thank you for your hard work and attention to 
Indian Housing issues and concerns.
                                 ______
                                 
          PREPARED STATEMENT OF THE FLEET RESERVE ASSOCIATION

    Mr. Chairman, members of the Subcommittee, the membership is again 
pleased that the Fleet Reserve Association (FRA) has been invited by 
the Subcommittee to present our legislative goals for the year 2004. On 
behalf of more than 134,000 shipmates, I extend gratitude for the 
concern, active interest and progress to date generated by the 
Committees in protecting, improving, and enhancing benefits that are 
richly deserved by our Nation's veterans.
    FRA was established in 1924 and its name is derived from the Navy's 
program for personnel transferring to the Fleet Reserve or Fleet Marine 
Reserve for the Marine Corps after 20 or more years of active duty but 
not 30 years to fully retire. During the required period of service in 
the Fleet Reserve, assigned personnel earn retainer pay and are subject 
to recall by the Secretary of the Navy.
    FRA is the oldest and largest professional military enlisted 
association exclusively serving and representing men and women of the 
three Sea Services. It continues to seek protection and equity for 
those who serve in or have retired from the United States Navy, Marine 
Corps, Coast Guard and those veterans requesting assistance. The 
Association has been active over the past 77 years in pursuing 
Congressional and the respective Administration's support for quality 
of life and veterans' programs for enlisted Sea Services personnel.

                       LEGISLATIVE GOALS IN BRIEF

    FRA's membership has an average age of 68 years, all veterans of as 
many as three wars, mostly retired from the Sea Services. Our members 
have tasked us with the following Legislative priorities and to work 
with Congress to obtain appropriate funding for each.
  --Expand Military Retiree Access to the VA Health Care System.
  --Explore possibilities for alternative Managed Health Care Programs 
        in VA.
  --Expand Health Care Options for Retired Military Veterans under Age 
        65.
  --Funding for the construction and leasing of additional nursing and 
        long-term care facilities.
  --Amend Title 38 USC to authorize concurrent receipt of military 
        retired pay and veterans' compensation.
  --Support statute requiring the repayment of separation pay if the 
        service member reenlists in the Reserve component, subsequently 
        is entitled to retired pay, or becomes entitled to VA 
        compensation.
  --Support H.R. 1111 that amends the Uniformed Services Former Spouse 
        Protection Act to deter state courts from dividing VA or DOD 
        disability pay as property in divorce proceedings.
  --Enhance educational programs and provide voluntary open enrollment 
        in the Montgomery GI Bill for all current active duty military 
        personnel, including military personnel who never enrolled in 
        VEAP or MGIB.

         DEPARTMENT OF VETERANS AFFAIRS FISCAL YEAR 2004 BUDGET

Fiscal Year 2004 Budget
    FRA continues its quest for a realistic DVA budget that will 
provide adequate funding to care for all of the Nation's veterans, 
their families and survivors. Although the fiscal year 2004 budget has 
the largest percentage increase for any Government department, we 
believe that in real funds no substantial increase has been noted and 
that the increases are based on optimistic goals of collections and 
other monetary reimbursements that we hope can be met. FRA has listed 
the following veterans' programs it believes should be authorized and 
funded in full. The Association urges your consideration and adoption 
of these programs to assure America's veterans that they will be fully 
compensated for their sacrifices while in the uniform of the Armed 
Forces of the United States, and that their families and survivors will 
be cared for as prescribed in the mission of the Department of Veterans 
Affairs. Currently the Veterans Benefits Administration (VBA) part of 
the DVA budget is funded as mandatory spending. FRA concurs with and 
endorses the House Veterans Affairs Committee recommendation to convert 
the veterans health care account from discretionary to mandatory. This 
will ensure that the Veterans Healthcare Administration (VHA) has 
sufficient funding without the necessity for annual hearings.

                     VETERANS HEALTH ADMINISTRATION

Suspension and Realignment of Veterans Categories
    In January, citing mounting deficits and difficulties of operating 
on funding based on Continuing Resolutions, Secretary Principi 
suspended enrollments in Priority 8 for the remainder of this year. We 
applaud the effort it took to make this decision to concentrate on the 
VA core values of providing care for Service Connected veterans, 
indigent and homeless veterans and those that need specialized services 
such as blind rehabilitation and prosthetic services. The Secretary 
promised that he will monitor the situation and if warranted may 
possibly re-open enrollment sooner. We hope that with adequate funding 
this suspension will be terminated in the near term.
    The VA's proposal of a $250 yearly enrollment fee for non-service 
connected Priority 7 and Priority 8 veterans is totally unacceptable. 
All veterans, regardless of their financial status should be afforded 
an opportunity to enroll in VA health care programs. We understand the 
need for re-imbursement of monies utilized in treatment of veterans, 
but believe it would make more sense for those veterans that are 
Medicare eligible, and choose to have their health care at VA 
facilities, be covered by subvention which is reimbursement of fees 
directly to the VA by the Department of Health and Human Services. This 
proposed new enrollment fee combined with new drug co-pay proposals for 
Priority 7 & 8 veterans would have the effect of driving away many 
veterans who just cannot afford the increased costs.
    A second initiative announced by the Secretary will be the 
establishment of a VA+Choice Medicare plan for Priority 8 veterans aged 
65 or older who are denied enrollment in the VA system. Although this 
is a good idea that will assist in providing medical coverage for 
veterans unable to qualify for VA healthcare, we question the ability 
of VA to provide adequate and accredited services for treatment within 
a 30 day Medicare-mandated period and not somehow shortchange many 
veterans who are waiting many months for appointments. We do not see 
any excess capacity for treatment in most VA facilities especially in 
areas where the majority of veterans live. At the press conference 
announcing the VA's fiscal year 2004 budget, the Assistant Deputy 
Secretary for Finance William H. Campbell was asked what would be done 
if capacity was insufficient or the required Medicare standards could 
not be met. He answered that the obvious response would be to contract 
out the necessary services. It would seem that any outsourcing of 
services would defeat the stated purpose of providing VA healthcare 
services to those veterans unable to join the VA health care system. 
FRA believes contracting out the necessary services would only anger 
and confuse many older veterans who would be torn between remaining in 
the VA system to continue on waiting lists or disenroll from the VA 
Health Care System and then enroll in the VA+Choice in order to gain 
access to health care in a more timely manner. A final consideration 
for this proposal is the state of all Medicare+Choice programs. There 
are problems with these programs and it is becoming more difficult for 
Medicare-eligible people to locate plans and doctors willing to accept 
new Medicare insured patients. FRA believes this could very well happen 
with a VA+Choice plan as well.
    Now that the war with Iraq has started, FRA notes with 
encouragement the letter from Senator Specter and Senator Graham which 
was sent to the Pentagon on February 14, 2003 requesting a formal 
report on the ``military's preparedness to protect forces in southwest 
Asia'' and a second letter from VA Secretary Principi on the same day 
which requested information on the current health of the deploying 
forces. Further this letter requested information on ``record-keeping 
of medical treatment during deployment; information-gathering 
mechanisms; and the Pentagon's preparedness to share data with the 
Department of Veterans Affairs''. We believe the proactive actions by 
the members of these two committees and Secretary Principi's foresight 
should help in resolving any healthcare issues from a possible conflict 
in the area and will hopefully prevent or at least mitigate any 
problems such as what happened with the so called Gulf War Syndrome. We 
trust that continued pressure from Congress will ensure the Pentagon 
maintains its improved record keeping and will share their information 
in a timely manner to aid the DVA in its mission.
    FRA understands the VHA is undergoing major changes and that one of 
its stated goals is to drastically reduce the waiting times for primary 
care. We hope that this goal includes dental care. In December FRA 
received a call from one of its members who lives in the Phoenix area. 
He is 100 percent service connected disabled and entitled to dental 
care which he desperately needs as one of his prescriptions has badly 
deteriorated his teeth. When he called to make an appointment he was 
told the earliest he could be seen was two years and three months. We 
hope this is not wide-spread throughout the VA system, if so, FRA 
believes that expanded recruiting efforts and increased pay levels for 
dentists as briefed to VSO's at the January meeting of the National 
Leadership Board will help ease the long waiting times for dental care.

Nursing Homes, Long Term Care, and Other Health Care Programs
    Public Law 106-117, Section 101, The Veterans Millennium Health 
Care Act made great strides in providing long-term care for our 
veterans. However, this program is only authorized for a four-year 
period, and only for veterans who need care for a service-connected 
disability, and/or those with service-connected disability ratings of 
70 percent or more. This program should be extended, expanded and 
funded to include veterans with service-connected disability ratings of 
50 percent.
    World War II and Korean veterans are in their 60s and older, as are 
some Viet Nam veterans, and many require a greater level of long-term 
care. No one can argue that as veterans grow older, more and more of 
them will become dependent upon the VA to provide the necessary care in 
nursing homes, domiciles, state home facilities, and its underused 
hospital beds. The Nation can ill afford to wait for out-year funds 
before it expands nursing or long-term care.
    FRA disagrees with the methodology used in collecting funds for the 
Millennium Act and transferring that money to the Treasury. VA's 
rationale for this is to allow more discretionary VA spending under the 
current caps set in the Balanced Budget Act. The Association views this 
a slight of hand rather than a reliable business practice and firmly 
believes any money collected from veterans for veterans' health care 
should stay within the VHA.

Tobacco-related Illnesses
    In 1998, Congress changed the law prohibiting service-connection 
for disabilities related to smoking. Many veterans began using tobacco 
during their military service. It was a way of life and information 
detailing the health risks associated with tobacco use and nicotine 
addiction was nonexistent. In earlier years there were many who 
believed the Armed Services facilitated smoking by including cigarettes 
in meal rations, and cigarettes were sold at discounted prices in 
military exchanges. FRA recommends that Congress revisit and repeal its 
1998 decision, and provide the appropriate funds.

Medical and Prosthetic Research
    Dollar for dollar, VA is widely recognized for its effective 
research program. FRA continues to support adequate funding for medical 
research and for the needs of the disabled veteran. The value of both 
programs within the veterans' community cannot be overstated.

                    VETERANS BENEFITS ADMINISTRATION

Separation Pays
    Under current law, service members released from active duty who 
fail to qualify for veterans' disability payments, and are not accepted 
by the National Guard or Reserve, never have to repay any portion of 
separation pay. If, however, qualified for either, it's time for pay-
back. FRA has difficulty understanding why the individual willing to 
further serve the Nation in uniform, or is awarded service-connected 
disability compensation, should have to repay the Federal government 
for that privilege.
    FRA is opposed to the repayment requirement. The Association 
recommends the repeal or the necessary technical language revision to 
amend the applicable provisions in Chapters 51 and 53, 38 USC, to 
terminate the requirement to repay the subject benefits. (Also requires 
an amendment to 1704(h)(2), 10 USC.)

Court-Ordered Division of Veterans Compensation
    The intent of service-connected disability payments is to 
financially assist a veteran whose disability may restrict his or her 
physical or mental capacity to earn a greater income from employment. 
FRA believes this payment is exclusively that of the veteran and should 
not be a concern in the states' Civil Courts. If a Civil Court finds 
the veteran must contribute financially to the support of his or her 
family, let the court set the amount allowing the veteran to choose the 
method of contribution. FRA has no problem with child support payments 
coming from any source. However VA disability should be exempt from 
garnishment for alimony. If the veteran chooses to make payments from 
the VA compensation award, then so be it. The Federal government should 
not be involved in enforcing collections ordered by the states. Let the 
states bear the costs of their own decisions. FRA recommends the 
adoption of stronger language offsetting the provisions in 42 USC, now 
permitting Federal enforcement of state court-ordered divisions of 
veterans' compensation payments.

Montgomery GI Bill (GI Bill)
    The GI Bill is one of the major enticements for enlisting in the 
United States Armed Forces. FRA believes that continued improvements to 
the GI Bill are necessary in order to continuously attract new recruits 
per Congressionally mandated recruitment levels each year.
    The Association is grateful that the 107th Congress passed enhanced 
MGIB benefits. We are also very encouraged and heartily endorse the 
House Veterans Affairs Committee recommendation to increase the MGIB 
payment to $1,200 effective October 1, 2004. FRA believes Congress 
should increase MGIB benefits annually based on a current average cost 
of a four-year state run college education.
    In the past, would be participants in the MGIB were not permitted 
to enroll because they never enrolled in the Veterans Educational 
Assistance Program (VEAP). During the VEAP era, that program was 
considered to be insufficient in providing adequate funding for a 
college education. Therefore, current active duty military members who 
have never enrolled in VEAP or MGIB should be given an opportunity to 
participate. It is somewhat puzzling to know that an individual may 
enlist to enroll in the MGIB, but cannot enroll if he or she reenlists. 
The question is, WHY NOT?
    Meanwhile the Association continues to subscribe to the belief once 
offered by the Treasury Department, that veterans who take advantage of 
their GI bill will eventually return more money to the U.S. Treasury 
than was spent by the Federal government for their education.

Disability Compensation Claims Processing
    FRA believes VA's efforts in decreasing the backlog of initial 
disability claims are commendable and are continuing at a very good 
rate.
    However there appears to be an impediment at the Board of Veterans 
Appeals (BVA) that is growing daily. In February 2002, the BVA started 
a process that allows them to be responsible for gathering all 
available information to assist their efforts in processing veterans' 
claims and appeals. Currently there are over 9,000 cases in various 
stages of development. Since last year they have only cleared a little 
over 600 cases. The 26 employees doing this work are overwhelmed. 
During a recent visit to the BVA, a member of the FRA staff was told 
there are no plans in the immediate future to expand the workforce 
dealing with these claims. It appears that strides made in initial 
claims processing may be negated by this current and growing backlog of 
cases on appeal. FRA urges the VBA to expeditiously expand the 
workforce dealing these cases.

                    NATIONAL CEMETERY ADMINISTRATION

Cemetery Systems
    The National Cemetery Administration (NCA) has undergone many 
changes since its inception in 1862. Currently, the administration 
maintains almost 2.5 million gravesites at 124 national cemeteries in 
39 states, the District of Columbia and Puerto Rico.
    One quarter of the nation's 26 million veterans alive today is over 
the age of 65. Rapidly aging veteran populations coupled with the death 
rate of World War I and World War II veterans create resource 
challenges within the NCA. It was estimated that the number of deaths 
in 2002 were over 680,000 veterans, and by 2006 that number will 
increase to 687,000 annually, or an average of 1,900 funerals a day. 
During this time period, the interment rate will continue to rise 
thereby placing even greater strain on NCA's workforce and equipment.
    FRA is grateful to Congress for its increased funding for new 
cemetery sites in Atlanta, Detroit, Southern Florida, Oklahoma City, 
Pittsburgh and Sacramento. The NCA is doing much to meet resource 
challenges and the demand for burial spaces for aging veterans. With 
additional resources, the NCA will hopefully be able to meet the 
demand. FRA urges increased funding, structured so the NCA has 
exclusive use for the purchase of land, preparation, construction and 
operation of new cemeteries, the maintenance of existing cemeteries, 
and the expansion of grants to States to construct and operate their 
own cemeteries.

                               CONCLUSION

    Mr. Chairman. In closing, allow me to again express the sincere 
appreciation of the Association's membership for all that you, the 
Veterans Affairs Committees, have done for our Nation's veterans over 
these many years.
    FRA is grateful to address its recommendation for funding of the 
Department of Veterans affairs. Granted, not all veterans' issues are 
cited in this statement; however, the Subcommittees do have the 
Association's support for the improvement or enhancement of any 
veterans programs not addressed herein.
                                 ______
                                 
   PREPARED STATEMENT OF THE UNIVERSITY CORPORATION FOR ATMOSPHERIC 
                            RESEARCH (UCAR)

    On behalf of the University Corporation for Atmospheric Research 
(UCAR) and the university community involved in weather and climate 
research and related education, training and support activities, I 
submit this testimony for the record of the U.S. Senate Committee on 
Appropriations, Subcommittee on VA, HUD and Independent Agencies. UCAR 
is a consortium of 66 universities that manages and operates the 
National Center for Atmospheric Research (NCAR) and additional 
research, education, training, and research applications programs. In 
addition to its member universities, UCAR has formal relationships with 
approximately 100 additional undergraduate and graduate schools 
including historically black and minority-serving institutions, and 40 
international universities and laboratories. UCAR is supported by the 
National Science Foundation (NSF) and other federal agencies including 
the National Aeronautics and Space Administration (NASA).

                   NATIONAL SCIENCE FOUNDATION (NSF)

    The science community was encouraged last year when Congress 
passed, and the President signed, the National Science Foundation 
Authorization Act of 2002 authorizing the doubling of NSF's budget over 
the next several years. Doubling the NSF budget would allow for the 
long overdue enhancement of the research directorates, enable funding 
of several critical large facility projects that have already been 
approved by the National Science Board, and strengthen NSF's K-12 
education projects including those targeting populations of students 
who are underrepresented in this nation's scientific endeavors. While 
last year's support from Congress and the White House looked promising, 
the NSF fiscal year 2004 Request recommends $5.48 billion overall, a 
flat budget at best when compared to fiscal year 2003 final funding 
plus inflation. I urge the Committee to appropriate for NSF a budget of 
$6.39 billion (a 19 percent increase over the fiscal year 2003 final 
appropriation), as authorized by Congress, in order to bring this 
country's physical sciences and engineering programs into parity with 
those of the life sciences.

NSF Research and Related Activities (R&RA)
    The peer-reviewed work supported by the directorates and programs 
of NSF's Research and Related Activities represent a major portion of 
this nation's scientific research achievement and technological 
progress. The fiscal year 2004 request for RR&A is $4.1 billion, a 
completely inadequate 0.6 percent increase over the fiscal year 2003 
final budget. I urge the Committee to appropriate for Research and 
Related Activities an amount commensurate with the doubling of the NSF 
budget as authorized by Congress.
    Geosciences (GEO) Directorate.--This NSF Directorate is the 
principal source of federal funding for university-based research in 
the geosciences. The GEO section of the fiscal year 2004 NSF Request 
states that, ``Breakthroughs in observing, modeling, and understanding 
complex Earth systems are coming just at the time when society is in 
critical need of sound scientific advice on how to mitigate or adapt to 
changes in the habitability of the planet. The geosciences stand poised 
to make tremendous contributions to improve the quality of life by 
providing useful information to decision makers about the key planetary 
processes, their complex interactions, and, where possible, their 
future implications.'' This tremendous potential cannot be achieved 
with diminished resources as suggested by the fiscal year 2004 request 
of $687.9 million, a 0.19 percent decrease when compared with the 
fiscal year 2003 final appropriation. I urge the Committee to 
appropriate for the Geosciences Directorate an amount commensurate with 
the doubling of the NSF budget as authorized by Congress.
    Atmospheric Sciences (ATM).--Within the GEO Directorate, the 
Division of Atmospheric Sciences supports research that contributes new 
understanding of the behavior of the Earth's atmosphere and its 
interactions with the sun in addition to supporting the operation and 
maintenance of large, complex facilities required for such research. 
ATM programs are of direct importance to the physical safety of our 
citizens, our economic health, and global issues of national security 
relevance, such as severe weather, climate change, the security of our 
communications infrastructure, and the environmental health of the 
planet. I urge the Committee to appropriate for the Atmospheric 
Sciences within the Geosciences Directorate an amount commensurate with 
the doubling of the NSF budget as authorized by Congress.
    National Center for Atmospheric Research (NCAR).--Funded within 
ATM, the world-class National Center for Atmospheric Research supports 
the country's entire atmospheric and related sciences community through 
observational and computer facilities, instrumented research aircraft, 
and an extensive visiting scientist program. The work of NCAR is 
critical to our understanding of weather phenomena, space weather, 
climate change, the chemical composition and behavior of the Earth's 
atmosphere, and the societal impacts of environmental change. In 
addition, NCAR's research products are applied to create technologies 
that mitigate the impacts of hazardous weather on air and surface 
transportation and that provide support for the prediction and control 
of wildland fire. I urge the Committee to appropriate for the National 
Center for Atmospheric Research an amount commensurate with the 
doubling of the NSF budget as authorized by Congress.

Major Research Equipment and Facilities Construction (MREFC) Programs
    Support for unique national facilities, as provided through NSF's 
MREFC account, is necessary to advance U.S. capabilities required for 
world-class research. While requested fiscal year 2004 funding exceeds 
that of the fiscal year 2003 final by 35 percent, this amount will 
still not allow the tremendous progress that this country is capable of 
making in developing MREFC projects that have already been approved by 
the National Science Board and that could serve this nation well. I 
urge the Committee to appropriate for the Major Research Equipment and 
Facilities Construction (MREFC) Programs, an amount commensurate with 
the doubling of the NSF budget as authorized by Congress.
    HIAPER.--When the Budget Request was prepared, the fiscal year 2003 
final budget for NSF had not been completed. Since HIAPER development 
funding was completed in the fiscal year 2003 Omnibus Bill, HIAPER, 
funded in the fiscal year 2004 Request at $25.5 million, does not need 
to be included in the final budget. This gives the Committee a 
tremendous opportunity to apply this $25.5 million to another project 
in the extensive list of those approved by the National Science Board. 
On behalf of the atmospheric sciences community, I want to thank the 
Committee for the crucial role it played in seeing that funding for 
HIAPER, the nation's newest high-altitude research aircraft, was 
appropriated over the past several years.
    Earthscope.--This multi-purpose geophysical instrument array will 
allow scientists to make major advances in our knowledge and 
understanding of the structure and dynamics of the North American 
continent. The initial Earthscope activity, deployment of high-
capability seismometers throughout the United States, will improve our 
resolution of the subsurface structure, lead to advances in 
understanding fault conditions and the rupture processes of 
earthquakes, and make contributions to the atmospheric sciences. I urge 
the Committee to support the fiscal year 2004 request of $45.0 million 
for Earthscope.

Education and Human Resources (EHR)
    Nothing is more important for the future of our nation than the 
education of the next generation of leaders. I applaud the EHR request 
for increased stipends to $30,000 annually to attract our best 
graduates for research and teaching fellowships and ask the Committee 
to ensure that this is included in the final budget bill.
    National STEM Digital Library (NSDL).--I would like to draw the 
Committee's attention to a bold, new NSF effort to provide the nation 
with a comprehensive digital library for the sciences. NSDL will 
provide innovative infrastructure to support teaching and learning 
across scientific fields. Such a massive effort needs strong backing, 
particularly during the initial development-into-operations phase. I 
urge the Committee to support the NSDL effort, the budget for which 
appears to be eroding (down $5 million in the Request from the fiscal 
year 2003 appropriation of $25 million), even in this early, critical 
stage of its development.

Climate Change Research Initiative (CCRI)
    NSF has played a key role in the U.S. Global Change Research 
Program (USGCRP) and now, as part of the Administration's multi-agency 
Climate Change Research Initiative, the agency will support research to 
reduce uncertainty and provide timely information to facilitate policy 
decisions. The Request states that, ``These investigations will 
complement NSF's ongoing programs in climate change science.'' In my 
opinion, the Administration could take far more advantage of NSF's 
strengths in achieving the nation's climate research goals. Therefore, 
I urge the Committee to support, at the very least, the fiscal year 
2004 request for $25 million for CCRI, ask that you ensure that these 
activities truly complement and not diminish the critical research 
activities that have existed in the past under USGCRP, and ask that you 
investigate expanding NSF's climate change research responsibilities in 
fiscal year 2004 in order to tap NSF's extraordinary potential to 
advance the research agenda.

          NATIONAL AERONAUTICS AND SPACE ADMINISTRATION (NASA)

    Following the space shuttle disaster, we understand that NASA has 
the enormous and unfortunate task of examining and possibly revamping 
the Space Flight account. As this task is performed, I urge the 
Committee to protect NASA's strong and vibrant science accounts and not 
allow them to be harmed by fund transfers. I would like to comment on 
the following NASA Science Aeronautics and Exploration programs that 
contribute to the health and well being of the nation, in part through 
the achievements of the atmospheric and related sciences community:

Space Science Enterprise
    The extraordinary mission of the Space Science Enterprise is to 
chart the evolution of the universe and understand its galaxies, stars, 
planetary bodies, and life; to discover planets around other stars; and 
to understand the behavior of the sun and its interaction with Earth. I 
urge the Committee to support the Administration's fiscal year 2004 
request for the Space Science Enterprise of $4.0 billion.
    Sun Earth Connections (SEC).--The SEC program within the Space 
Science Enterprise formulates missions to investigate the effects of 
solar phenomena on Earth and on the space environment. Its overall goal 
is to understand the changing sun and its effects on the Solar System, 
life, and society. I urge the Committee to support the Administration's 
fiscal year 2004 request for Sun Earth Connections by appropriating the 
request of $769.6 million. SEC contains several missions that promise 
great benefit to society, and are of particular importance to our 
community, including the following:
    Thermosphere, Ionosphere, Mesosphere, Energetics and Dynamics 
(TIMED), the first science mission of Solar Terrestrial Probes within 
SEC, was successfully launched in 2001. The mission provided the first 
ever data on the composition of the Mesosphere and Lower Thermosphere/
Ionosphere (MLTI) region of the Earth's atmosphere, and is 
investigating the influences of the sun and humans on this altitude 
(60-180 km) in order to understand MLTI variability and the potential 
impact of these changes on satellite tracking, spacecraft lifetimes, 
degradation of spacecraft materials, and re-entry of piloted vehicles. 
I urge the Committee to continue to support TIMED operations and data 
analysis at a level at least equal to the fiscal year 2003 
appropriation.
    Solar-B is a U.S./Japan collaboration to investigate the 
interaction between the Sun's magnetic field and its corona. The 
mission will provide space weather data to help understand events such 
as solar mass ejections that can endanger astronauts in orbit and 
impact Earth's atmosphere occasionally causing expensive communications 
disruptions. The Solar-B launch, originally scheduled for 2005, has 
been delayed in Japan until 2006. This unavoidable shift in schedule 
will add to the cost of the program. I urge the Committee to support 
the fiscal year 2004 request for $12.5 million for the continued NASA 
development of the Solar B mission's instrument subsystems, and to 
support, with new funding so as not to adversely affect the mission, 
additional costs that are incurred as a result of launch delay.

Earth Science Enterprise (ESE)
    The purpose of ESE missions is to provide data sets that hold the 
key to answering one of the most important questions for the future of 
this planet: ``How is the Earth changing, and what are the consequences 
for life on Earth?'' Even so, the fiscal year 2004 Request gives ESE 
the only decrease of any NASA Enterprise. In addition to its ongoing 
programs that have important practical applications for watershed 
management, flood remediation, ecosystem management, and wildland fire 
assessment and response, ESE will play an increasingly important role 
in the Administration's Climate Change Research Initiative by providing 
state-of-the-art remote sensing measurements critical to understanding 
climate change processes. While the fiscal year 2004 Request states 
that the ESE decrease reflects the fact the several large programs are 
past their peak development phases, the funding level allows for no 
growth. I urge the Committee to keep the investment in NASA balanced by 
providing an increase for the Earth Science Enterprise that is 
consistent with increases for other NASA Enterprises such as Space 
Science and Biological and Physical Research. Such support would 
provide ESE with an approximate 10 percent increase over the fiscal 
year 2003 appropriated amount.
    Earth System Science.--Within ESE, Earth System Science employs a 
constellation of more than 15 Earth observing satellites collecting 
global data used to analyze, model, and improve our understanding of 
the Earth system. Application of these data will enable improved 
predictions of climate, weather, and natural hazards. I urge the 
Committee to support the fiscal year 2004 budget request of $1.47 
billion for the Earth System Science Theme. This Theme area contains 
several programs that are of great benefit to society, and are of 
particular importance to the atmospheric sciences community, including 
the following:
    Climate Change Research Initiative (CCRI) Acceleration.--New in 
this year's ESE request is the CCRI Acceleration program that advances 
several climate change data collection and evaluation programs that are 
of great importance to society. I urge the Committee to support the 
CCRI Acceleration activities as long as the request of $26.0 million is 
not drawn from and thereby diminishing other critical research 
programs.
    Earth Observing System Data and Information System (EOSDIS) 
Development.--EOS satellites collect data on the major interactions of 
the land, oceans, atmosphere, ice, and life that comprise the Earth 
system in order to answer questions about how the Earth is changing and 
what the consequences of those changes are for life. EOSDIS development 
supports new Earth Science Enterprise missions and the data sets are 
used broadly in a number of scientific fields. I urge the Committee to 
support the fiscal year 2004 request of $98.3 million for EOSDIS.
    AURA.--Scheduled to launch next year, this EOS mission will provide 
data to answer such critical questions as whether the Earth's ozone 
layer is recovering and whether air quality is deteriorating around the 
globe. These are issues that affect environmental policies and 
international agreements. I urge the Committee to support the fiscal 
year 2004 budget request of $52.5 million for AURA development.
    Missions in Formulation.--As the first cycle of EOS missions comes 
to a close, future missions are being planned to continue to meet the 
scientific needs of the NASA Earth System Science projects. I urge the 
Committee to support the Administration's fiscal year 2004 request of 
$274.4 million for EOS Missions in Formulation.
    U.S. Global Change Research Program (USGCRP).--While the 
interagency USGCRP is not called out specifically in the Request, I 
would like to acknowledge the crucial role NASA has played in this 
program in the past and the critical role it plays and will play in the 
Administration's Climate Change Research Initiative. NASA research 
efforts in global change involve space-based, satellite studies of the 
Earth as an integrated system. These activities, concentrated within 
the ESE, represent a critical investment for the future of this 
country, its economy, and the health and safety of its citizens. I urge 
the Committee not to lose sight of critical U.S. Global Change Research 
Program activities as the Climate Change Research Initiative continues 
to provide important new structure to this nation's climate research 
efforts.

Earth Science Applications
    Within NASA's Earth Science Applications Theme, we are pleased to 
note the increased request for Earth Science Education and the 
continuation of the GLOBE Program. I urge the Committee to support the 
fiscal year 2004 request of $20.8 million for Earth Science Education.

Office of Aeronautics Technology
    Within the Office of Aeronautics Technology, The Aviation Safety 
and Security Program encompasses four areas, one of which is Weather 
Safety Technologies. In partnership with the FAA, the Department of 
Defense and the aviation industry, this program develops and supports 
the implementation of technologies to reduce fatal aviation accidents 
and delays caused by weather hazards. I urge the Committee to support 
the fiscal year 2004 request for the Weather Safety Technologies 
program of $42.3 million.
    On behalf of the UCAR community, I want to thank the Committee for 
the important work you do for U.S. scientific research, education, and 
training. We understand and appreciate that the nation is undergoing 
significant budget pressures at this time, but a strong nation in the 
future depends on the investments we make in science and technology 
today. We appreciate your attention to the recommendations of our 
community concerning the fiscal year 2004 budget of NSF and NASA.
                                 ______
                                 
           PREPARED STATEMENT OF THE DORIS DAY ANIMAL LEAGUE

    Mr. Chairman and members of the Subcommittee, thank you for the 
opportunity to present testimony relevant to the fiscal year 2004 
budget request for the U.S. Environmental Protection Agency's (EPA) 
Office of Research and Development (ORD) and Science and Technology 
Account. I hope the Subcommittee will consider the concerns of the 
350,000 members and supporters of the Doris Day Animal League and take 
steps to ensure the EPA recognizes the necessity of sound science 
approaches in its research, development and validation of non-animal, 
alternative toxicological test methods. These methods can significantly 
reduce the numbers of, and ultimately replace, animals in its testing 
programs.

 RESEARCH, DEVELOPMENT AND VALIDATION OF NON-ANIMAL, ALTERNATIVE TEST 
                                METHODS

    In recent fiscal years, the enacted budget for the ORD has hovered 
at approximately $500 million, comprising just 9 percent of EPA's total 
budget. In a report filed by the agency's own Science Advisory Board, 
fiscal year 2002 Presidential Science and Technology Budget Request for 
the Environmental Protection Agency: An SAB Review, the SAB urged 
Congress to increase the proportion to 12 percent by 2004. However, 
within these appropriations, we have found it difficult, if not 
impossible, to track funding by ORD for specific non-animal, 
alternative test methods to meet the EPA's needs in new testing 
programs. It is our contention that many emerging technologies, which 
often prove to be faster to run, less expensive and at least as 
predictive as current animal tests used for hazard and risk assessment, 
would benefit from research and development dollars.
    Thanks to the leadership of Chairman James Walsh, House 
Subcommittee on VA, HUD and Independent Agencies Appropriations, the 
House inserted a $4 million directive for the EPA to research, develop 
and validate non-animal, alternative test methods in the fiscal year 
2002 bill. Ultimately, the conference committee for the VA, HUD and 
Independent Agencies fiscal year 2002 bill agreed to the following 
language:

    ``The conferees have agreed to provide $4,000,000 from within 
available funds throughout the Science and Technology account, for the 
research, development, and validation of non-animal, alternative 
chemical screening and prioritization methods, such as rapid, non-
animal screens and Quantitative Structure Activity Relationships 
(QSAR), for potential inclusion in EPA's current and future relevant 
chemical evaluation programs. Activities funded in this regard should 
be designed in consultation with the Office of Pollution Prevention and 
Toxic Substances.''

    The animal advocacy community is greatly appreciative of this 
first-ever directive to the EPA. However, the House report language for 
fiscal year 2002 also included a directive for a report to Congress on 
the specifics of the EPA's expenditures. It is truly unfortunate that 
this language was deleted from the final conference report as we have 
had significant difficulty in obtaining concrete information from the 
agency on the expenditure of funds to date. And, in fact, 
communications from the EPA which have been shared with Chairman Walsh 
clearly delineate an agency preference for ``basic research'' into long 
range potential methods versus ``applied research'' that may yield 
immediate results with existing promising methods. In addition, to our 
current knowledge, the EPA did not of its own volition direct 
additional resources to these efforts in fiscal year 2003.
    We request that $5 million, from the current budget request, be set 
aside for research, development and validation for regulatory 
acceptance of non-animal, alternative test methods. Activities funded 
by these allocations shall be designed in consultation with the Office 
of Pollution Prevention and Toxic Substances. It is our preference that 
these test methods have direct relevance to new EPA testing programs, 
including the High Production Volume chemical testing program, 
Endocrine Disruptor Screening Program (EDSP) and Children's Health 
initiative. A case in point is the lack of strategy by the agency to 
research, develop, validate and integrate in vitro systems for thyroid 
disruption and metabolism, which would greatly reduce the numbers of 
animals slated for death under the EDSP. Our request for $5 million 
represents just 1 percent of the total ORD budget and would be 
perceived by all stakeholders as a genuine commitment by EPA to new 
non-animal, alternative test methods.
    I also request that the Subcommittee require the EPA report to the 
Subcommittee by April 30, 2004 regarding expenditures and plans for 
additional expenditures for fiscal year 2004 funds.

               CONTINUED RELIANCE ON ANIMAL TEST METHODS

    As you may know, the EPA requires substances such as pesticides, 
industrial chemicals, and others to be tested for their rates of skin 
corrosion, skin absorption, and skin irritation. Traditionally, these 
tests cause grave pain, distress and death to great numbers of 
animals--including literally chemical burns through the skin and organs 
of rabbits.
    Fortunately, there are non-animal test methods that are just as 
predictive, if not more so. Human skin equivalent tests such as 
EpiDermTM and EpiSkinTM have been scientifically 
validated and accepted in Canada, the European Union, and by the 
Organization for Economic Cooperation and Development (OECD), of which 
the United States is a key member, as complete replacements for animal-
based skin corrosion studies. Another non-animal method, 
CorrositexTM, has been assessed as scientifically valid by 
the U.S. Interagency Coordinating Committee on the Validation of 
Alternative Methods and data generated from the non-animal test is 
accepted by the relevant federal agencies. Various tissue-based methods 
have been accepted in Europe as total replacements for skin absorption 
studies in living animals. Government regulators in Canada accept the 
use of a skin-patch test in human volunteers as a replacement for 
animal-based skin irritation studies (for non-corrosive substances free 
of other harmful properties).
    I therefore respectfully urge that you also include language in the 
report accompanying the fiscal year 2004 VA, HUD and Independent 
Agencies Appropriations bill stating that: No funds for the EPA 
(including salaries or expenses of personnel) may be used for the 
purpose of assessing data from an animal-based test method when a non-
animal test for the desired endpoint has been validated and/or accepted 
by the OECD or its member countries.

                               CONCLUSION

    I respectfully request that the Subcommittee direct the EPA provide 
$5 million for the ORD to research, develop and validate non-animal, 
alternative toxicological test April 24, 2003 Page 4 methods for 
regulatory acceptance and that the agency be required to provide a 
timely, detailed report on the expenditure of these funds.
    I also respectfully request that the Subcommittee direct that no 
funds be used to assess data from an animal-based method when a 
scientifically valid non-animal test is widely accepted.
                                 ______
                                 
   PREPARED STATEMENT OF THE MICKEY LELAND NATIONAL URBAN AIR TOXICS 
                            RESEARCH CENTER

    The Mickey Leland National Urban Air Toxics Research Center (NUATRC 
or Leland Center) is requesting a $2.5 million appropriation for fiscal 
year 2004 to continue the air quality public health research on air 
toxics in urban areas as directed by the U.S. Congress. The NUATRC is a 
501(c)(3) institution, which was authorized by Congress in the Clean 
Air Act Amendments of 1990 (Title III, Section 301 (p)).
    The NUATRC has been operational for over ten years as a unique 
public/private research partnership. Active research has been performed 
for eight years. The NUATRC receives EPA Assistance Awards based upon 
Congressional appropriations. We leverage these federal funds with non-
federal funds contributed from a variety of government and non-
government sources. Our 2003 non-federal contributor's commitments 
included major U.S. companies, local government, and a local privately 
funded ambient monitoring network; with industrial firms being the 
major private contributors. To further leverage our funding, NUATRC 
utilizes an administrative services agreement with The University of 
Texas-Houston Health Science Center in the Texas Medical Center 
complex. This arrangement lowers the NUATRC's overall costs and allows 
the NUATRC to take advantage of the world-renowned scientific community 
at The University of Texas and the Texas Medical Center, as directed by 
Congress, while still remaining an independent entity.
    The NUATRC's mission is to sponsor and direct sound, peer-reviewed 
scientific research on the human health effects of air toxics in urban 
populations. The NUATRC's goal is research on these topics driven by 
scientific questions requiring answers by policy and decision makers in 
government, industry and academia to improve the scientific basis of 
regulatory decisions. It is an integral part of the air toxics strategy 
established by Congress to assess the risks posed by air toxics to 
individuals living in areas where air quality concerns have been 
expressed by both medical and scientific experts and urban community 
leaders.
    The NUATRC is governed by a nine-member Board of Directors, 
appointed pro rata by the Speaker of the U.S. House of Representatives, 
the Majority Leader of the U.S. Senate, and the President of the United 
States. The current membership of the Board of Directors is shown in 
Attachment 1. We are grateful for the recent appointments of Wilma 
Delaney, Monica Samuels, and Mary Gade by the President to our Board. 
We are awaiting action on the appointment of two additional Board 
Members. One is a House appointment; one is a Senate appointment. 
Amongst its duties, the NUATRC Board appoints a 13-member Scientific 
Advisory Panel, selected from national research institutions, academic 
centers, government agencies, and the private sector. The current 
membership of the Scientific Advisory Panel is shown in Attachment 2.

                              ACHIEVEMENTS

    We have established the following major scientific achievements 
over the last several years that are in keeping with our Congressional 
charge in the Clean Air Act Amendments of 1990:
  --Establishment of the importance of personal exposure (e.g. what 
        people breathe) to the evaluation of possible public health 
        effects. These findings are stimulating a reevaluation of the 
        national emphasis on outdoor levels and sources.
  --Development of inexpensive and accurate personal monitoring 
        technology to allow measurements of individual exposures to air 
        toxics. This provides a new and, for the first time, direct 
        view of the possible public health risks of personal exposure 
        to air toxics. To our knowledge, this is a unique contribution 
        by the NUATRC. See the supplemental material for photos and 
        further descriptions of this technology (Attachment 3).
  --Results that support a new focus on those air toxics that exist on 
        particles and may be a factor in the claims of increased 
        mortality from these exposures.
  --Initiation of community-based studies that involve participation by 
        those citizens directly exposed to urban levels of air toxics. 
        This includes early data from NUATRC's involvement in the 
        National Health and Nutrition Examination Survey (NHANES).
    We owe these advances in large part to the work of our Scientific 
Advisory Panel, made up of world class scientists from the public 
(EPA), private and academic sectors, who have spent considerable time 
and effort to develop and refine these studies in a collegial and 
efficient manner. We also are fortunate to have had the encouragement 
of this body, which has consistently supported the NUATRC with annual 
appropriations in the EPA budget, without which we would not be able to 
continue.
    We continue to work closely with the EPA, through which we access 
the Congressionally-appropriated funds. We have an excellent working 
relationship with the EPA scientists that serve on our research panels, 
and we are continuing to interact with their administrative 
counterparts to establish a firmer base for our EPA financial support.

                           CURRENT ACTIVITIES

    The NUATRC has been very active on its air toxics research 
initiatives. One of these initiatives addresses the national concerns 
about asthma. The NUATRC's initiative seeks to determine whether air 
toxics play a major role in the exacerbation of asthma, which is a 
multi-faceted, complex, and increasing public health issue especially 
among the minority and underserved populations. The NUATRC has had 
several discussions with the scientific staff at the National 
Institutes of Environmental Health Sciences (NIEHS) to understand how 
we can best leverage our experience in personal exposure assessment 
with the NIEHS' well known expertise in public health effects. We are 
hopeful of developing considerable support in 2003-2004 for joint 
NUATRC-NIEHS programs on urban air toxics and asthma exacerbation.
    To further understand asthma the NUATRC has begun receiving 
preliminary results from the NUATRC sponsored research program on 
children's asthma and the effects, if any, that result from exposures 
to air toxics. The pilot study is entitled ``Oxygenated Urban Air 
Toxics and Asthma Variability in Middle School Children: A Panel 
Study'' or Air Toxics and Asthma in Children (ATAC). We expect that 
this study will be completed in 2004. Aside from generating important 
health data in Houston, it will help define the cost and scope of any 
national study of this kind, similar to what we are discussing with 
NIEHS. Our ability to discern specific personal exposures to those air 
toxics that are thought to play a role in asthma exacerbation will 
allow us to pinpoint and separate those effects from the many urban 
confounders that often mask the important factors in the spread of this 
disease. We have relied on scientific input from our expert Panel and 
submit all proposals to external peer-review. This process has led us 
to select a team of physician/scientists from major medical research 
institutions at the Texas Medical Center. Specifically, NUATRC has 
selected an excellent interdisciplinary research team whose members 
represent Baylor College of Medicine, The University of Texas School of 
Public Health and Texas Children's Hospital to carry out this work with 
asthmatic middle school children in the Houston area. This research is 
supported by EPA funding, funding from local government, and private 
sector contributions. We are hopeful that the success of this program 
will lead to NIEHS involvement in a wider ranging study of asthma and 
air toxics with a national focus, and part of our appropriations 
request is for leveraging the NIEHS support.
    In addition to funding research, publication of research findings 
is a NUATRC goal. Our priority is to support research leading to peer-
reviewed publications. A list of the NUATRC's publications is presented 
in Attachment 4. Another NUATRC goal is the participation in or hosting 
of an annual Workshop or Symposia. In 2004, NUATRC will sponsor a 
workshop or symposium on ``Association Between Microenvironments and 
Levels of Air Toxics from Personal and Biological Monitoring''.

                       RESEARCH FINDINGS TO DATE

    In 2004, NUATRC will continue research efforts to better understand 
the personal exposures of people living in urban areas to a number of 
the 188 air toxics defined in the Clean Air Act. However, NUATRC is 
also beginning to receive data from our new health effects studies, an 
emphasis area on which we will continue to focus in 2004.
    From our earlier exposure studies we have achieved pioneering 
accomplishments in measuring levels of personal exposures to toxic air 
pollutants. These studies in New York, New Jersey, Los Angeles and 
Houston have ended. We anticipate the final report shortly and that the 
information generated will be reported at a number of major scientific 
meetings, and published, during the next 12 months. The investigators 
at Columbia University, EOHSI in New Jersey and The University of Texas 
have obtained massive amount of important data which will be the 
subject of many analyses and publications over the next several years. 
These data point conclusively to the importance of personal exposures 
in terms of assessing the actual public health risk from air toxics.
    In Attachment 5 to this submission, we provide examples of the kind 
of information we are obtaining, which suggests that the nation's 
environmental resources need to be focused on personal situations, as 
opposed to a continuing emphasis on fixed site urban air monitors.
    These fixed site monitors, which play a key role in determining 
overall urban air quality and air quality standard attainment, are not 
numerous enough or precise enough to address public health risks. The 
support we have received from this Subcommittee has been instrumental 
in creating a new scientific emphasis on personal exposure measurement. 
The EPA has now accepted the importance of such approaches and is 
instituting its own program in this area.
    The NUATRC research programs at Harvard and Washington State 
University are focused on the air toxic component of fine particles, 
notably metals, in terms of possible effects on peoples' heart rate and 
pulmonary functions when exposed to fine particles. These 
epidemiological studies also allow us to better define future research, 
which will combine personal exposure measurements, the apportionment of 
source contributions and the health effects end points, as are being 
developed in this work at Harvard and Washington State. Of course, the 
NUATRC's pilot asthma studies will be a major advance in the public 
health science area.
    We have also expanded our involvement in community-based 
environmental health research, which is an important element in our 
charge, as air toxics health effects can be expected to 
disproportionately impact the economically and medically underserved 
people in our urban populations. Through our Small Grants Program we 
have recently completed research underway in Baltimore under a Johns 
Hopkins University research grant to address exposures to air toxics in 
a residential community in close proximity to an industrial complex. 
This research also has met the goal of keeping the community informed 
as to the results of our studies, which is all too often ignored or 
neglected in our haste to complete studies and submit them for 
publication. We have a somewhat similarly-intentioned program in 
progress at the University of Illinois at Chicago, which deals with the 
levels of polycyclic aromatic hydrocarbons (PAH) in indoor 
environments.

                             ADMINISTRATION

    The NUATRC operates with an efficient administrative staff of five 
full-time and one part-time equivalent staff, one consultant, and 
important administrative support from The University of Texas Health 
Science Center at Houston (UTHSC). Our staff is employed by UTHSC, 
which obviates the need for considerable personnel support services and 
allows us the benefit of residence a world class health science center, 
while remaining an independent institution. This provides important 
scientific and administrative benefits, including access to the Medical 
School and School of Public Health faculty. We are extremely conscious 
of and pleased to call attention to our ratio of monies spent directly 
on research compared to administrative costs, and we will continue to 
leverage of our research funds.

                      2004 BUDGET RATIONALIZATION

    For 2004 the NUATRC will support several categories for individual 
research studies. The research category budgets are shown in the budget 
table below. First, the NUATRC will continue to fund asthma and air 
toxics research in 2004. NUATRC's pilot asthma work (ATAC) is planned 
to be expanded to a national study with NIEHS, which we will cost share 
with NIEHS and/or other interested participants. NUATRC has recently 
completed several data rich urban air toxics research studies. For 2004 
NUATRC plans to offer additional data analysis and interpretation RFA's 
to the scientific community to ``mine'' this rich, complex, and deep 
data base. The particle personal cascade impactor and pump development 
has been completed. Funding in this category for 2004 will also be used 
to fund the use of both in research studies. We also would continue our 
involvement with the NHANES program run by the National Center for 
Health Statistics, in which our participation is highly leveraged. The 
evaluation of Perinatal Health Effects of Air Toxics is an emerging and 
important area of research. For 2004, at the direction of NUATRC's SAP, 
NUATRC plans the development and release of an RFA to assess the 
status, scope, and direction of this research area. Current NUATRC 
sponsored Health Effects Research has shown results on the effects of 
air toxic exposures on human respiratory functions and is planned to 
continue with new studies for 2004. The Small Grants Program has been a 
successful, cost effective program for NUATRC in terms of 
identification of emerging research areas and publications in the peer-
reviewed literature. We will continue this program in 2004. The 
emphasis we place on having Workshops and/or Symposia every year has 
proven cost-effective in advancing the understanding of air toxics 
health effects. With 2004 funding we will continue to support an annual 
Workshop or Symposium. The Research Support category is essential to 
provide funds for scientific peer-review, publications, reports, 
additional scientific research, quality assurance and other activities 
recommended by the SAP and approved by the Board. This budget also 
serves an important strategic research function for the entire NUATRC 
program. The total budget shown below is an effort recognizing current 
budget pressures. However; the budget presented below also capitalizes 
on the legacy investment in research already made by providing 
resources to fully analyze and capture the knowledge inherent in the 
study results in time for answers to regulatory and scientific 
questions. We will continue, as noted elsewhere, to seek supplemental 
funding sources for our research program. We are encouraged with the 
interest in our research program by non-federal funding sources. For 
the first time in the NUATRC's history we have received project 
specific funding commitments from Harris County, Texas and the Houston 
Regional Monitoring Corporation. We are also encouraged by the 
contributions of several private companies such as ExxonMobil, Rohm and 
Haas, Inc., and Shell Oil Foundation (and 7 other organizations) as 
contributors the NUATRC's research program.

                         Fiscal Year 2004 Budget
------------------------------------------------------------------------

------------------------------------------------------------------------
Asthma Studies/Air Toxics Research......................        $450,000
Perinatal Health Effects of Air Toxics Research.........         300,000
Data Analysis, Interpretation, and Presentation                  250,000
 (``Mining'')...........................................
Health Effects Research.................................         150,000
Small Grants............................................         300,000
Workshops, Symposia.....................................          50,000
Research Support........................................         100,000
Administration..........................................         900,000
                                                         ---------------
      Total.............................................       2,500,000
------------------------------------------------------------------------

                                 ______
                                 
   PREPARED STATEMENT OF PEOPLE FOR THE ETHICAL TREATMENT OF ANIMALS 
                                 (PETA)

    People for the Ethical Treatment of Animals (PETA) is the world's 
largest animal rights organization, with more than 750,000 members and 
supporters. We greatly appreciate this opportunity to submit testimony 
regarding the fiscal year 2004 appropriations for the Environmental 
Protection Agency (EPA). Our testimony will focus on chemical tests 
allowed or required by the EPA to be conducted on animals.
    As you may know, the EPA requires substances such as pesticides, 
industrial chemicals, and others to be tested for, among many other 
hazards, their rates of skin corrosion, skin absorption, and skin 
irritation. Traditionally, these particular tests have involved 
smearing chemicals on animals' shaved backs, often causing effects 
ranging from swelling and painful lesions to wounds where the skin is 
totally burned through.
    Fortunately, there are non-animal test methods that are just as 
effective, if not more so, for these three endpoints. ``Human skin 
equivalent'' tests such as EpiDermTM and 
EpiSkinTM have been scientifically validated and accepted in 
Canada, the European Union, and by the Organization for Economic 
Cooperation and Development (OECD), of which the United States is a key 
member, as total replacements for animal-based skin corrosion studies. 
Another non-animal method, CorrositexTM, has been approved 
by the U.S. Interagency Coordinating Committee on the Validation of 
Alternative Methods. Various tissue-based methods have been accepted in 
Europe as total replacements for skin absorption studies in living 
animals. In fact, in 1999 the EPA itself published a proposed rule for 
skin absorption testing using a non-animal method that has never been 
finalized. Government regulators in Canada accept the use of a skin-
patch test in human volunteers as a replacement for animal-based skin 
irritation studies (for non-corrosive substances free of other harmful 
properties).
    However, the EPA continues to require the use of animals for all 
three of these endpoints, despite the availability of the non-animal 
tests.\1\
---------------------------------------------------------------------------
    \1\ The EPA may allow the use of EpiDermTM, however it 
will apparently require confirmatory testing on animals of any negative 
non-animal test results. This sets an unjustified precedent of 
requiring confirmatory testing of validated non-animal tests with non-
validated animal tests.
---------------------------------------------------------------------------
    In fiscal year 2002, the subcommittee allocated the first-ever 
appropriation for the EPA to research, develop, and validate non-animal 
methods. The appropriation was in the amount of $4,000,000 and was to 
be used for ``non-animal, alternative chemical screening and 
prioritization methods, such as rapid, non-animal screens and 
Quantitative Structure Activity Relationships.'' However, to date, the 
EPA has refused to provide a detailed accounting of how this 
appropriation was spent and exactly what non-animal testing methods 
received these funds.
    We respectfully request that the subcommittee include report 
language ensuring that no funds for the EPA (including salaries or 
expenses of personnel) may be used for the purpose of assessing data 
from an animal-based test method when a non-animal test for the desired 
endpoint has been validated and/or accepted by the OECD or its member 
countries. We also request that $5 million from the current budget 
request be set aside for the research, development, and validation of 
non-animal test methods, and that the EPA be required to report to 
Congress on how these funds are spent.

                  ANIMAL TESTS CAUSE IMMENSE SUFFERING

    Traditionally, the degree to which corrosive materials are 
hazardous has been measured by the very crude and cruel method of 
shaving rabbits' backs and applying the test substance to the animals' 
abraded skin for a period of hours. As one can imagine, when highly 
corrosive substances are applied to the backs of these animals, the 
pain is excruciating. In skin absorption tests, the rate at which a 
chemical is able to penetrate the skin is measured by shaving the backs 
of rats and smearing the substance on them for an exposure period of up 
to 24 hours. They are eventually killed, and their skin, blood, and 
excrement are analyzed. A similar method is used to test for skin 
irritation, except the unfortunate subjects are again rabbits, who are 
locked in full-body restraints. A test chemical is applied to their 
shaved backs, and the wound site is then covered with a gauze patch for 
normally four hours. A chemical is considered to be an irritant if it 
causes reversible skin lesions or other clinical signs, which heal 
partially or totally by the end of a 14-day period. Animals used in the 
above tests are not given any painkillers.

      THESE TESTS HAVE NEVER BEEN PROVEN TO BE RELEVANT TO HUMANS

    None of the animal tests currently used for skin corrosion, 
absorption, or irritation has ever been scientifically validated for 
its reliability or relevance to human health effects. Animal studies 
yield highly variable data and are often poor predictors of human 
reactions. For example, one study, which compared the results of rabbit 
skin irritation tests with real-world human exposure information for 65 
chemicals, found that the animal test was wrong nearly half (45 
percent) of the time in its prediction of a chemical's skin damaging 
potential (Food & Chemical Toxicology, Vol. 40, pp. 573-92, 2002).

           VALIDATED METHODS EXIST WHICH DO NOT HARM ANIMALS

    Fortunately, test methods have been found to accurately predict 
skin corrosion, absorption, and irritation.
    EpiDermTM and EpiSkinTM are test systems 
comprised of human-derived skin cells, which have been cultured to form 
a multi-layered model of human skin. The CorrositexTM 
testing system consists of a glass vial filled with a chemical 
detection fluid capped by a membrane, which is designed to mimic the 
effect of corrosives on living skin. As soon as the corrosive sample 
destroys this membrane, the fluid below changes color or texture.
    For skin absorption tests, the absorption rate of a chemical 
through the skin can be measured using skin from a variety of sources 
(e.g. human cadavers). The reliability and relevance of these in vitro 
methods have been thoroughly established through a number of 
international expert reviews, and have been codified and accepted as an 
official test guideline of the OECD.
    Instead of animal-based skin irritation studies, government 
regulators in Canada accept the use of a skin-patch test using human 
volunteers. (The chemical is first determined to be non-corrosive and 
free of other harmful properties before being considered for human 
studies.)

  NON-ANIMAL TEST METHODS CAN SAVE TIME, MONEY, AND YIELD MORE USEFUL 
                                RESULTS

    Unlike animal testing that can take two to four weeks, 
CorrositexTM testing can provide a classification 
determination in as little as three minutes and no longer than four 
hours.
    Tissue culture methods to test for skin absorption allow 
researchers to study a broader range of doses, including those at the 
actual level of exposure that occurs in the occupational or ambient 
environment, which is not possible with the animal-based method.
    Many non-animal methods can yield results with greater sensitivity 
and at a lower cost than animal-based methods. Protocols are more 
easily standardized, and the variations among strains and species are 
no longer a factor.

            THE EPA CONTINUES TO REQUIRE THE USE OF ANIMALS

    Despite the ethical, financial, efficiency, and scientific 
advantages of the above non-animal methods, the EPA continues to 
require and accept the unnecessary use of animals in tests for skin 
corrosion, absorption, and irritation.

                                SUMMARY

    Non-animal methods are available now to replace animal-based 
methods to test substances for skin corrosion, absorption, and 
irritation. There simply is no excuse for continuing to cause animals 
to suffer when non-animal tests are available.
    We therefore hereby request, on behalf of all Americans who care 
about the suffering of animals in toxicity tests, that you please 
include language in the report accompanying the fiscal year 2004 VA, 
HUD and Independent Agencies Appropriations bill stating that:
  --no funds for the EPA (including salaries or expenses of personnel) 
        may be used for the purpose of assessing data from an animal-
        based test method when a non-animal test for the desired 
        endpoint has been validated and/or accepted by the OECD or its 
        member countries;
  --an allocation in the amount of $5 million of the EPA's research 
        budget be directed toward the research, development, and 
        validation of non-animal test methods; and
  --the EPA must report to the Subcommittee by April 30, 2004, 
        providing a detailed accounting of how the above allocation is 
        spent.
    Thank you for your consideration of our request.
                                 ______
                                 
            PREPARED STATEMENT OF THE JOSLIN DIABETES CENTER

                              INTRODUCTION

    Mr. Chairman, thank you for this opportunity to provide a status 
report on the Diabetes Project conducted jointly by the Joslin Diabetes 
Center in Boston, MA and the Department of Veterans Affairs (Medical 
Care account), for which you provided $5 million each in the fiscal 
year 2001, fiscal year 2002 and the fiscal year 2003 Appropriations 
Acts.
    Our request for fiscal year 2004 to continue this project with the 
VA is $5 million in the Medical Care account, of which the VA's costs 
represent approximately 50 percent. I am Dr. Sven Bursell, Principal 
Investigator of the project and Associate Professor of Medicine at the 
Harvard Medical School.

                               BACKGROUND

    Joslin Diabetes Center has been involved with the Department of 
Defense and the Department of Veterans Affairs in a pilot demonstration 
project for the advanced detection, prevention, and care of diabetes. 
The Joslin Vision Network (JVN) has been deployed in VA sites in VISN 
21 in Hawaii (Honolulu, Hilo and Maui), VISN 1 in New England (Boston, 
Brockton in Massachusetts, and Togus, Maine) and VISN 19/20 (Seattle 
and Tricities in Washington, Anchorage in Alaska and Billings in 
Montana). The JVN employs telemedicine technology to image the retina, 
through an undilated pupil, of patients with diabetes, and produces a 
digital video image that is readable in multiple formats.
    This project was funded initially through the Department of Defense 
Appropriations Act. The Department of Veterans Affairs medical staff 
was eager to expedite the deployment of this advanced diabetes 
technology beyond the limited resources available through participation 
in the DOD funded project. We petitioned this Subcommittee for 
additional resources to be made available to the VA for discretionary 
diabetes detection and care.
    This Committee provided $2 million in fiscal year 2000 and $5 
million each in fiscal year 2001, fiscal year 2002 and fiscal year 2003 
for expansion of this project within the VA. The VA has indicated a 
desire to continue expansion, citing the JVN as the model of the future 
telemedicine in a recent conference of the Association of Military 
Surgeons-General of the US (AMSUS). We are seeking $5 million to 
continue this expansion, and are supported by the VA medical policy 
staff.
    The leadership shown by this Subcommittee has enabled the VA to 
provide its patient population the best diabetes care, prevention, and 
detection in the world. We extend our sincere appreciation to you for 
your response to that request.

            FISCAL YEAR 2002 AND FISCAL YEAR 2003 ACTIVITIES

    The policy and program officials of the VA have established the 
appropriate contracts and statements of work that resulted in consensus 
with respect to deployment of the Joslin Vision Network (JVN) 
technology to three sites: Anchorage, Alaska, TriCities, Washington, 
and Billings, Montana. A Reading Center will be created and utilized in 
Seattle, Washington. In addition, the refinement of JVN technology, 
both hardware and software, will move toward developing a scalable 
system that is capable of widespread deployment agency-wide. This 
system was completed and it is anticipated that this next generation of 
the system will be completely integrated into the VA's VISTA Medical 
Records System and the VA communications infrastructure.
    Results from our various demonstration installations have shown 
that appropriate clinical resources can be efficiently allocated with 
respect to appropriate ophthalmology referral. For example, the 
installation in Togus, Maine where there is no ophthalmology resources 
on site has shown that the use of the JVN system can effectively 
prioritize patients that need to be seen by the opthalmologist at the 
time when the ophthalmologist plans to visit that clinic. This site is 
imaging approximately 10 patients per day and they find the JVN program 
extremely resource efficient in providing the appropriate eye care to 
their patients.
    The same experience was noted from the VA clinics in Hilo and Maui 
where the Optometrist from the Honolulu VA visits these island clinics 
once a month and was able to effectively focus his time on the patients 
that really needed his expertise for managing their diabetes eye 
complications.
    Results from a recently completed cost efficiency study using the 
VA diabetic patient population showed that the use of the JVN system 
was both less costly and more effective for detecting diabetic 
retinopathy than traditional dilated eye examination performed by a 
retinal specialist. Additionally, data showed that the JVN system was 
both less costly and more effective for preventing severe visual loss 
in VA diabetic patients compared to traditional ophthalmoscopy.
    An equally important concentration of resources in fiscal year 
2001-2003 was focused on refining the technical core using outcomes 
based medical and case management scenarios to develop a diabetes 
healthcare model that is modular, customizable and that can be 
seamlessly integrated into the existing VA telemedicine systems. This 
is the stated goal of the medical leadership in the VA, DOD and HIS 
health care systems. The overarching vision for the VA/JVN project is a 
web-based comprehensive diabetes health care system that can be 
interactively used by both patients and providers, that incorporates 
diagnosis specific education and training modules for patients and 
providers and that incorporates software applications that allow 
outcome measures to be statistically assessed and individual treatment 
programs to be interactively adjusted based on these outcome measures. 
The JVN Eye Health care system exists as a component of a comprehensive 
diabetes management system, incorporating other clinical disciplines 
such as endocrinology, vascular surgery and internal medicine.

                      FISCAL YEAR 2002-2003 GOALS

    The use of the JVN equipment and expansion of screening 
opportunities are a continuing major focus for fiscal year 2003 
activities. The actual number of sites deployed to will be determined 
on the locales with the greatest need for diabetes care in conjunction 
with the telecommunications infrastructure at the identified sites and 
the ease and costs associated with interfacing the JVN technology into 
the existing infrastructure.
    We will also develop clinical pathways and protocols to facilitate 
access and coordination of care for diabetic patients using mobile JVN 
systems. The goal is to access diabetic patients from smaller Community 
Based Outpatient Clinics (CBOC) where specialty eye care is not 
available and where performance with respect to accessing diabetic 
patients for eye care falls below the performance standards set by the 
VA.
    We have expended considerable effort in migrating the JVN 
demonstration technology platform into an application that is totally 
compliant with existing medical informatics infrastructures and the 
existing VISTA infrastructure of the VA system. This will encompass the 
integration of hardware and software in close collaboration with 
available resources from the VA VISTA program that will allow a highly 
scaleable transparent integration of the JVN Diabetes Eye Health Care 
system into the existing health informatics infrastructures of the VA 
system.
    For the fiscal year 2002-2003 project phase, we have established 
the following tasks, targets, and activities:
  --Deployment of fixed site and mobile units of a viable, sustainable, 
        and refined operating JVN Diabetes Eye Health Care model and 
        Comprehensive Diabetes Management program.
  --Develop a modularized medical outcomes based telemedicine diabetes 
        management program in continued collaboration with the VA with 
        outcome measures incorporated into software based on clinical 
        results and research experiences of the fiscal year 2001 
        efforts.
  --Develop curriculum based patient and provider educational modules.
  --Integrate internet based portals that are accessed by patients for 
        reporting of glucose values and receiving feedback with respect 
        to goals for self management of their diabetes and adjustments 
        of their treatment plans based on these goals. These portals 
        will also provide regular education modules for the patients 
        that are customized to their particular needs and clinical 
        diabetes risk assessment.
    The effort for fiscal year 2003 will result in the development of 
modular applications associated with different aspects of total 
diabetes disease management such as clinical risk assessment, outcomes 
assessments, behavior modification in an interactive electronic 
environment, and education programs. These applications will be 
designed in collaboration with participating VA sites to provide an 
ultimate product that appropriately assesses the clinical diabetes risk 
and provides treatment plans and behavior modifications that are 
tailored to any particular patients needs. The programs will also be 
designed so that they can realize a significant cost and resource 
efficiency with respect to support and maintenance of the JVN component 
and the diabetes management programs that will facilitate an 
accelerated deployment in the future.
    Technologically, we will be providing an application that 
automatically detects retinal pathology from the JVN images. Using this 
first step approach it is anticipated that we can reduce the load on 
the reading center by as much as 50 percent. This is achieved through 
the use of a computer application that scans the images and detects any 
abnormalities that may be associated with the development of diabetic 
retinopathy. In those cases where the computer detects pathology a 
reader will be notified to perform the appropriate reading for 
retinopathy assessment. In the case where the computer does not detect 
any pathology the patient can be assigned to a low risk priority where 
the computer findings can be rapidly confirmed by the reader and the 
patient asked to return for repeat JVN imaging in a year.

                        FISCAL YEAR 2004 REQUEST

    For fiscal year 2004, we request that in the VA Medical Account $5 
million be allocated to continue and expand this project. The positive 
response within the VA system indicates that with sufficient resources, 
the JVN technology would be deployed in a number of sites with the 
ultimate goal of incorporating the JVN technology throughout the VA 
Medical Care system. The VA Budget Request by the fiscal year 2005 
cycle will include provisions for full deployment for the JVN 
throughout the VA Medical Care system. As the technology, systems and 
production of equipment are standardized to off the shelf 
specifications, the expense per site will decrease.
    The specific goals for fiscal year 2004 include the following:
  --Establish specific medical codes that will allow the VA to track 
        performance with respect to these JVN examinations and to 
        ensure that it conforms with VA performance criteria in 
        multiple remote VA outpatient settings;
  --Improve adherence to scientifically proven standards of diabetes 
        eye care and diabetes care;
  --Improve/promote access to diabetes eye care;
  --Increase number/percentage of patients with Diabetes Mellitus 
        obtaining eye care;
  --Provide education patients and providers in the clinical setting.

                               CONCLUSION

    We request continuation and maintenance of this Committee's policy 
of support for the improvement of the diabetes care in the VA medical 
system. Through funding of This $5 million request, the benefits by the 
close of fiscal year 2004 will include:
  --Deployment of JVN detection and care at 5 different VA centers 
        where each center will provide services for 6 different remote 
        sites for a total 35 sites.
  --JVN accessibility to increase VA capability to achieve patient 
        compliance to eye examinations to at least 95 percent of the 
        diabetic patient population in any area being serviced. From an 
        estimate of the VA diabetic patient population we would 
        estimate that the JVN would be accessing an estimated patient 
        population of 196,000, or an estimated 11 percent of the total 
        VA Diabetic population after completing anticipated 2002 
        deployments.
  --The model for VA's deployment of the JVN as a diabetes detection 
        and Disease management platform for expansion to availability 
        for the entire VA Patient population.
    Thank you for this opportunity to present this request for $5 
million for fiscal year 2004 and status report for fiscal year 2003 on 
a medical technology breakthrough for the patients and health care 
system within the Department of Veterans Affairs.
                                 ______
                                 
  PREPARED STATEMENT OF THE CONSORTIUM OF SOCIAL SCIENCE ASSOCIATIONS 
                                (COSSA)

    Mr. Chairman and Members of the Subcommittee, the Consortium of 
Social Science Associations (COSSA) represents over 100 professional 
associations, scientific societies, universities and research 
institutes concerned with the promotion of and funding for research in 
the social, behavioral and economic sciences (SBE). COSSA functions as 
a bridge between the research world and the Washington community. A 
list of COSSA's Members, Affiliates, and Contributors is attached. We 
appreciate the opportunity to comment on the spending request for 
fiscal year 2004 for the National Science Foundation.
    COSSA appreciates the Subcommittee's past strong support for NSF, 
particularly last year's substantial budgetary increase. COSSA is well 
aware that each year you confront difficult choices among competing 
agencies under the Subcommittee's jurisdiction. COSSA is delighted that 
the Subcommittee leadership has expressed that NSF will remain a 
significant priority for them.
    COSSA strongly believes that investing in NSF's research and 
education efforts will help determine this country's future economic 
well-being and national security. Therefore, COSSA finds the 
administration's proposal for a $171 million increase for NSF in fiscal 
year 2004 totally inadequate. In agreement with the Coalition for 
National Science Funding, the Subcommittee's leadership, and the NSF 
reauthorization bill, COSSA strongly supports doubling the NSF budget 
over the next five years. The Coalition for National Science Funding 
(CNSF), in congruence with the reauthorization legislation, recommends 
a fiscal year 2004 budget for NSF of $6.391 billion. COSSA endorses 
this recommendation. This budget enhancement will return many-fold its 
value in economic growth, help save lives, promote prosperity, and 
improve society, and provide more excellent science from more excellent 
scientists.
    Over the past half century science has been the engine that has 
driven the nation's economic success and quality of life improvements. 
Fundamental university-based science has delivered the great 
technological advances that have provided for new methods and products 
that have advanced our nation forward. These include: geographic 
information systems, World Wide Web search engines, automatic heart 
defibrillators, product bar codes, computer aided modeling, retinal 
implants, optical fibers, magnetic resonance imaging, and composite 
materials used in aircraft.
    A substantial increase for NSF in fiscal year 2004 will forge great 
advances in the 21st Century. A much larger than proposed budget 
enhancement would allow NSF a much-needed boost for the size and 
duration of its research and education grants. It would also lead to 
improving the scientific literacy of the nation's students and general 
population. As our business leaders understand, without improvements in 
education and training and new innovations and scientific findings, 
growth will stall. NSF needs a significant influx of new funds.

  THE FISCAL YEAR 2004 BUDGET AND THE SOCIAL, BEHAVIORAL AND ECONOMIC 
                             SCIENCES (SBE)

    COSSA also believes the small 1.2 percent increase proposed for the 
Research and Related Activities Account is dismal. The reauthorization 
bill calls for a fiscal year 2004 amount of $4.8 billion for R&RA and 
COSSA strongly endorses that figure.
    For the Social, Behavioral and Economic Sciences Directorate (SBE), 
the administration proposes $211 million for fiscal year 2004. The 
final fiscal year 2003 appropriation for SBE was $191 million. With 
some restored funding for the Science, Resources, and Statistics 
division the SBE current plan is $195.6 million. Although the proposed 
increase from fiscal year 2003 to fiscal year 2004 is 8.2 percent, 
seemingly larger than most of the other directorates, in absolute terms 
this is only $16 million, quite smaller than almost all of the other 
directorates. For the two research divisions the increase is only $12.1 
million. Another thing to keep in mind is that NSF provides almost one-
half of federal support for basic research for these sciences. For some 
fields in the SBE sciences, NSF is the only source of federal support 
for basic research and infrastructure development.
    The Social, Behavioral and Economic (SBE) Sciences are poised and 
ready to make significant discoveries in the future. Improvements in 
computer computation, computer communication, and the rapid increases 
in multidisciplinary scientific endeavors make the old model of these 
sciences as ``cottage industries'' a difficult one to sustain any more. 
Collaborations, collaboratories, merged databases, functional MRIs, and 
virtual centers are the future of SBE research.
    Recognizing this, NSF has proposed a Foundation-wide priority 
called Human and Social Dynamics (HSD) in the fiscal year 2004 budget. 
This priority area has been developed and discussed with the SBE 
community for over three years. Begun with $10 million in seed money in 
fiscal year 2003, HSD has a proposed budget of $24.5 million in fiscal 
year 2004, about two-thirds of which is from the SBE proposed budget.
    The priority area seeks to understand change: its causes and 
ramifications, how to anticipate it, how the human mind and social 
structures create it, and how people and organizations manage it. These 
questions will be investigated using multidisciplinary approaches with 
already existing sophisticated research techniques as well as providing 
support for the development of improved tools for future 
investigations.
    For fiscal year 2004 areas of emphasis include: 1) enhancing human 
performance on the individual and organizational levels; 2) 
understanding decision-making under uncertainty; 3) comprehending 
agents of change, particularly in large scale transformations, such as 
globalization and democratization; 4) analyzing and modeling various 
aspects of HSD, including complex networks such as terrorism; 5) 
improving and using spatial social science techniques to explore HSD 
topics; and 6) developing and supporting instrumentation and data 
resources such as cognitive neuroimaging and longitudinal surveys to 
upgrade the measurement and analysis of information from diverse 
sources. COSSA strongly supports the implementation of the priority and 
its increased funding.
    In addition to the priority area, the NSF budget includes $20 
million for a second year of funding for Science of Leaning Centers. 
The SBE sciences are in the forefront of providing research and 
evidence for improving how our children learn and survive in the 
modern, complex societies in which we live. Fundamental research by 
developmental psychologists, cognitive scientists, sociologists, and 
economists, has revealed a wealth of data about how children think and 
learn and how these processes are mediated by family demographics, 
community politics, and the structure of the schools. COSSA strongly 
supports the continued funding of the Science and Learning Centers.
    Furthermore, increased support will enhance funding for research in 
the learning and developmental sciences to integrate studies of 
cognitive, linguistic, social, cultural, and biological processes 
related to children and adolescent learning. This support will include 
research funded under the Children's Research Initiative (CRI). We 
appreciate the Committee's willingness to ensure that the CRI remains 
an open competition where the merit review process is allowed to work 
unhindered by any attempts at privileging certain institutions.
    COSSA also strongly supports the funding for research on the 
ethical, legal, and social consequences of technological change. Both 
the Information Technology and Research area and the Nanoscale Science 
and Engineering area include funding to answer important questions on 
how the results of this cutting-edge research will impact humans and 
society. From increasing privacy concerns, to the ethics of genetic 
testing, to how we relate in Web based communities, to how our 
political system works, SBE scientists are exploring many aspects of 
this issue.
    It is also clear that the NSF's new emphasis on Environmental 
Research and Education provides exciting opportunities for the SBE 
sciences. The recent report: Complex Environmental Systems: Synthesis 
for Earth, Life, and Society in the 21st Century, outlines a research 
agenda that includes Coupled Human and Natural Systems as a key area. 
This area integrates population, ecosystems and socioeconomic models to 
understand and enable response to issues such as landscape 
fragmentation, spread of pathogens and water resources. SBE will also 
fund centers focusing on Risk Analysis and Decision-making on global 
climate change.
    SBE continues to maintain support for major long-term data bases 
such as the Panel Study on Income Dynamics, the General Social Survey, 
and the American National Election Studies. These three data series 
paint a portrait of American's attitudes and behavior over almost 40 
years. In addition, SBE is providing support for the National 
Historical Geographic Information System, which will provide free 
public access to U.S. Census databases from 1790 to the present. By 
digitizing the data, place-specific information can be utilized by 
geographic information systems.
    Research in the SBE sciences continues to examine the ever more 
complex and important human dimensions of issues and generates new 
knowledge and insights to help us understand human commonalities and 
human differences. Basic research in these disciplines also develops 
information that policymakers can use later to formulate solutions to 
individual and societal problems. The research portfolio is diverse and 
supports science of enormous intellectual excitement and substantial 
societal importance. It deserves enhanced resources.
    The Science, Resources and Statistics (SRS) division is an 
important resource for the whole Foundation and for the entire science 
and engineering community. The high quality data it provides to 
researchers and policymakers about the science and technology 
enterprise merits generous support. The redesign of its survey samples 
to reflect the changes discovered in the 2000 Census explain the large 
jump from fiscal year 2002 to fiscal year 2003. As SRS continues to 
improve its products its support should be increased.

                              OTHER ISSUES

    COSSA supports the increased funding proposed for the Graduate 
Fellowship programs. Raising the stipend to $30,000 will attract more 
excellent students into graduate study in all the sciences. The 
enhanced stipends should not occur with a corresponding reduction in 
the number of these prestigious, portable, student-controlled 
fellowships for graduate training.
    COSSA also strongly supports continuation of the Interagency 
Education Research Initiative (IERI), a collaboration among the NSF, 
Department of Education, and the National Institute of Child Health and 
Human Development. The IERI provides significant support over a period 
of time to conduct meaningful studies of factors affecting student 
achievement and to seek and disseminate answers to how we can improve.

                               CONCLUSION

    COSSA urges the Subcommittee to significantly boost support for the 
National Science Foundation in fiscal year 2004. NSF will then provide 
the fundamental research that will help the world stay healthy, 
prosperous, and secure. In addition, with increased funding the Social, 
Behavioral and Economic Sciences Directorate can support basic research 
in these disciplines to help meet the needs of this country and the 
world for evidence-based policies to work on the complex problems 
affecting us all.
    Thank you for the opportunity to present our views.
                                 ______
                                 
          PREPARED STATEMENT OF THE AMERICAN CHEMICAL SOCIETY

    The American Chemical Society (ACS) would like to thank Chairman 
Christopher Bond and Ranking Member Barbara Mikulski for the 
opportunity to submit testimony for the record on the VA, HUD and 
Independent Agencies Appropriations bill for fiscal year 2004.
    ACS is a non-profit scientific and educational organization, 
chartered by Congress, representing more than 160,000 individual 
chemical scientists and engineers. The world's largest scientific 
society, ACS advances the chemical enterprise, increases public 
understanding of chemistry, and brings its expertise to bear on state 
and national matters.
    The ACS would like to thank the members of the Subcommittee for 
strong and continued support for investment in NSF. We understand the 
difficult choices that must be made in drafting the VA-HUD bill, 
particularly in this time of worsening deficits. We commend the 
Subcommittee for taking the long view and providing a notable increase 
for NSF in fiscal year 2003.
    In developing the fiscal year 2004 NSF budget, we believe the 
subcommittee has an excellent guide. The NSF authorization law that 
President Bush signed in December sets out sound program directions for 
NSF and calls for an investment of $6.4 billion for the Foundation in 
fiscal 2004. We respectfully ask the subcommittee to support this level 
during markup of the bill.
    NSF has earned strong bipartisan support for advancing new 
discoveries, industries, and the work of countless scientists and 
engineers--including most Nobel laureates in science. As the only 
agency devoted to supporting basic research and education across all 
scientific fields, NSF is critical to continued progress in all areas 
of science and engineering. Support for the best ideas and new 
frontiers across core disciplines has been the hallmark of NSF and the 
backbone our research system. We believe renewed support for core 
disciplinary research is essential to address unmet needs and to 
sustain NSF's support for high quality, high-risk research. This 
investment is also essential in promoting the success of 
multidisciplinary initiatives such as information technology and 
nanotechnology--areas ripe for scientific progress to benefit society.
    On April 8th, an article in the New York Times highlighted the 
enormous potential benefits of nanotechnology research to our military 
and other national needs. It emphasized the importance of federal 
funding in this area, which is led by DOD, NSF, and other agencies. The 
article noted ``nearly 25,000 graduates in Asian countries received 
doctoral degrees in engineering fields related to nanotechnology in 
2000, compared with fewer than 5,000 in the U.S.'' A senior Pentagon 
official was quoted as saying that ``nanotechnology will eventually 
alter warfare more than the invention of gunpowder.''
    We also encourage the subcommittee to grow NSF's budget to help 
address the need for renewed federal investment in physical sciences 
and engineering research, which has lagged over the last decade. 
President Bush's top science and technology advisory council, the Hart-
Rudman Commission on National Security, and many other groups have 
called for boosting federal investment in this area given its central 
role in advancing our economic, energy, and homeland security. One need 
only look at the current reliance of our troops on technology to know 
that our long-term national security depends on scientific advances. We 
commend the House and Senate Appropriations Committees for recognizing 
this need in the fiscal year 2003 omnibus appropriations bill. While 
the administration did emphasize physical sciences research at NSF in 
its budget, the request unfortunately would not translate into notable 
increases over the enacted fiscal year 2003 level.
    NSF is very important to transforming scientific knowledge into 
economic value. NSF investments are critical to productivity in many 
sectors, including chemicals, electronics, communications, and 
biotechnology. While the avid support for NSF among our academic 
members may not come as a surprise, it is often our industrial 
members--who make up 60 percent of ACS--who speak most passionately 
about the importance of NSF. They understand the key role of basic NSF 
research in enabling industrial innovation, productivity growth, and 
the training of the next generation of scientists and engineers.
    Sustaining America's global technological and economic leadership 
demands improvements in science and engineering education at all 
levels. It is alarming that the nation's growing workforce demand is 
coming at a time of declining science achievement by high school 
students and while decreasing numbers of students are earning science 
and engineering degrees. NSF's research and education programs are 
essential to improving science education at the precollege, 
undergraduate, and graduate levels and in expanding opportunities for 
students to pursue and remain in science and engineering programs at 
universities. The Foundation's Education and Human Resources (EHR) 
division plays a critical role in this effort.
    Precollege Education.--With an emphasis on curriculum reform, 
assessment, and teacher preparation and professional development, EHR's 
precollege programs improve standards-based, inquiry-centered math and 
science education across the country. ACS encourages continued support 
for NSF's precollege programs to nurture the development of the next 
generation of technologically proficient workers. ACS supports the 
administration's $200 million request for the Math and Science 
Partnership program, which establishes alliances between schools, 
colleges and universities, and other stakeholders to improve teacher 
quality and student achievement in math and science. Strong funding 
will continue to provide effective model programs and strategies to 
improve teacher training and curriculum development across the nation.
    Underrepresented Groups.--ACS strongly supports NSF efforts to help 
cultivate the vast pool of untapped talent among women and 
underrepresented minorities. With an emphasis on two-year colleges, 
NSF's Advanced Technological Education program promotes science, 
technology and mathematics preparation for today's technology-based 
workplace. The two-year college system is especially important for 
economically disadvantaged students who use it as a point of entry into 
higher education. In addition, ACS also supports the Science, 
Technology, Engineering and Mathematics Talent Expansion Program, which 
provides grants to higher education institutions for initiatives that 
increase the number of degrees in these fields. Strategies in this area 
have included summer learning, faculty development, research 
experiences, scholarships, and partnerships.
    Noyce Scholarships.--Since 2002, the Noyce Scholarships have 
provided multi-year awards to institutions of higher education to 
provide future teachers with scholarships, stipends, and training 
toward teacher certification or alternative certification. These 
scholarships are an important step in the process of recruiting high 
quality science and mathematics teachers to increase American students' 
performances in these subjects. The Congress has recognized the value 
of the Noyce scholarships by authorizing $20 million annually through 
fiscal year 2005, and we support the administration's request for 
increased funding in fiscal year 2004.
    NSF programs also provide critical support for graduate and post-
doctoral fellowships, which can shorten the time to Ph.D. degree, 
increase the participation of underrepresented groups in science and 
engineering, and significantly broaden research and training 
opportunities. The Graduate Research Fellowship Program provides 
support for graduate students pursuing research-based master's or 
doctoral degrees in science and engineering. This flagship program 
selects and supports the most promising science and engineering 
students in the US and provides support for stipends and cost of 
education allowances for their graduate education.
    As the Subcommittee knows, it takes years to train scientists and 
engineers and to develop new technologies to advance our economic and 
national security. The fruit of this investment does not ripen 
overnight, nor does it come cheaply. Despite fiscal pressures, we hope 
the subcommittee will continue to take the long view and fund NSF at a 
level more commensurate with the scope and importance of its mission. 
One need only look at NSF's low overhead, its renowned peer review 
system for determining quality science, and its top management ratings 
from OMB to have the utmost confidence that NSF will allocate increases 
wisely. NSF is an investment in every sense of the word. And the return 
on this investment has been extraordinary by any measure.
                                 ______
                                 
     PREPARED STATEMENT OF THE ASSOCIATION OF AMERICAN UNIVERSITIES

    Mr. Chairman and Members of the Subcommittee, I am pleased to have 
this opportunity to present to you the views of the Association of 
American Universities (AAU) concerning the fiscal year 2004 budget 
proposals and matters pertaining the VA, HUD and Independent Agencies 
Appropriations Bill.
    This year, that AAU is asking for two things of this Subcommittee. 
First, AAU strongly urges the Congress to appropriate funding for the 
National Science Foundation (NSF) in fiscal year 2004 at the level 
authorized by Public Law 107-368, the NSF Authorization Act of 2002. 
Second, AAU urges Congress to support $7.7 billion for National 
Aeronautics and Space Administration (NASA) Science, Aeronautics, and 
Exploration (SAE) activities, a total increase of $440 million (6.1 
percent) over the fiscal year 2003 level. Even though AAU recognizes 
that some changes may be made to NASA's fiscal year 2004 request in the 
coming months, strong funding of the agency's science programs is still 
in the best interest of the nation.
    I cannot overstate the importance to our nation's future prosperity 
of investment in basic scientific research and in the people who 
conduct this research. The innovation that flows from basic research 
has fueled the explosion of technological advancements in our lifetimes 
and is key to continuing progress. Research in all the physical 
sciences is increasingly interdependent, and medical technologies such 
as magnetic resonance imagery, ultrasound, and genomic mapping could 
not have occurred without underlying knowledge in biology, physics, 
mathematics, computer sciences, chemistry and engineering. Significant 
future medical advances also require advances in the sciences. 
Industries, state governments, and federal laboratories are entering 
into partnerships with universities at a rate that multiplies daily 
because in a knowledge economy, our economic leadership depends on 
ideas we generate. University research is the primary source for these 
ideas.

                      NATIONAL SCIENCE FOUNDATION

    NSF is the heart of the federal investment in basic scientific 
research. Since its founding in 1950, NSF has had an extraordinary 
impact on American scientific discovery and technological innovation. 
Despite its size, it is the only federal agency with responsibility for 
research and education in all major scientific and engineering fields. 
Approximately 95 percent of the agency's total budget directly supports 
the actual conduct of research and education, while less than five 
percent is spent on administration and management.
    In recent years, the NSF has enjoyed strong support from the VA, 
HUD and Independent Agencies Subcommittee in both the House and Senate. 
In fiscal year 2001, with the Subcommittee's help, Congress provided 
the single largest funding increase, in both percentage and dollar 
terms, in the history of the NSF. The Congress again substantially 
increased funding for the NSF in both fiscal year 2002 and fiscal year 
2003. We thank the Subcommittee, and in particular Chairman Bond and 
Ranking Member Mikulski, for their critical role in securing these 
increases; the university community is enormously grateful for this 
support.
    The tremendous level of support for NSF was also demonstrated last 
year when Congress passed H.R. 4664, The NSF Authorization Act of 2002, 
a bill aimed at putting the NSF on a track to double its budget over 
five years. This Act (Public Law 107-368), signed into law by President 
Bush on December 19, 2002, authorized a maximum funding level for the 
NSF in fiscal year 2004 of $6.4 billion. For fiscal year 2004, AAU 
endorses the authorized funding level and urges the Congress to 
appropriate $6.4 billion in funding for the NSF. This represents a $1.1 
billion increase over the fiscal year 2003 level of $5.3 billion. The 
President has requested $5.5 billion for NSF in fiscal year 2004.
    The AAU would suggest that approximately half of this fiscal year 
2004 funding increase be devoted to advancing NSF's core research 
programs and priority areas. Of the remainder of our recommended 
increase, AAU would urge that approximately two-thirds go to advancing 
the Foundation's education and training efforts, and one-third be used 
to upgrade and enhance the nation's science and engineering 
infrastructure. More specific details concerning how we feel funding 
increases should be used are outlined below.
    Advance core programs for research.--Presently, 15 to 20 percent of 
highly-rated proposals to the NSF are not funded because of inadequate 
resources. In some NSF programs, this percentage is even higher. The 
Congress should strive to see that all highly-rated NSF proposals are 
funded. Had this occurred in fiscal year 2002, 1800 additional 
proposals (proposals which while rated as high as the average NSF award 
by external reviewers, were declined due to lack of available funding) 
would have been awarded requiring an additional $1 billion. Likewise, 
grant size and duration should be increased. Increasing the size and 
time period of grants will enable researchers to concentrate more of 
their time on working with students and on research and discovery 
rather than paperwork.
    Continue support for key initiatives and priorities areas.--New and 
exciting multidisciplinary initiatives at the NSF should be promoted 
and encouraged. Significant growth in NSF budgets over the next several 
years will allow the Foundation to support focused initiatives such as 
those launched in recent years in nanotechnology, biocomplexity, 
information technology research and workforce development, which foster 
new and innovative multidisciplinary efforts on university campuses.
    Increase support for education and training.--Declines in 
enrollment of United States students in science, engineering and 
mathematics programs at all levels are due to our failure to stimulate, 
maintain and adequately support students with interests in these 
fields. We therefore support increasing the NSF graduate student 
stipend to $30,000 and urge additional support of graduate student 
research throughout the NSF. Likewise, additional funding should be 
provided for programs such as the Research Experiences for 
Undergraduates (REU) program and other new and innovative programs 
aimed at stimulating involvement of undergraduates in research. 
Finally, we encourage support for programs, such as Math and Science 
Partnership initiative, which are specifically focused on improving K-
12 math and science education.
    Increase support for research infrastructure.--In its recently 
issued report, the National Science Board (NSB) expresses concerns 
regarding the current state of your scientific and engineering research 
infrastructure. Specifically, they suggest increasing resources to 
ensure that individual investigators and groups of investigators have 
the necessary resources and tools to work at the frontiers of science 
and engineering. The AAU supports the NSB's recommendations with 
regards to increasing support of research infrastructure and would call 
our attention to the need to upgrade mid-level infrastructure and to 
the specific needs we have to upgrade university-based research 
facilities and instrumentation. We also support funding for large-scale 
research proposals, such as those proposed for funding within the NSF's 
Major Research Equipment (MRE) account.

             NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

    NASA has a long history of productive collaboration with 
universities, supporting research that has given the United States the 
undisputed leadership role in the study of space and the earth's 
environment. University-based research, with important technological 
applications, has been supported through research grants, individual 
collaborations between faculty and NASA scientists, and formal 
partnerships between NASA centers and universities.
    Workforce issues continue to be of concern to both NASA and 
research universities. Both the current and former NASA Administrators 
have publicly expressed concern about NASA's ability to attract and 
retain qualified scientists and engineers. Within the next five years, 
one third of NASA's workforce will be eligible for retirement. Many 
university space science teams are facing similar problems. Formerly 
strong teams are weakening as key investigators age and retire. In some 
fields the problem is acute, with the major scientists all in their 
sixties coupled with low enrollments of graduate students to follow 
them. In other areas, there are major new initiatives to be undertaken 
and yet no certainty that the required educated workforce will be 
available. The nation's security depends on an aggressive space program 
for surveillance and active defense, and economic impacts of space 
communications and remote sensing are large. We must not lose our lead 
in space research because we lack educated manpower.
    The Subcommittee recognized the seriousness of this problem last 
year and included report language in the fiscal year 2003 VA-HUD 
Appropriations report asking NASA, OSTP and NSF, in cooperation with 
the nation's leading research universities, to develop a comprehensive 
plan and implementation strategy that will result in the number of 
students pursuing advanced degrees. AAU remains eager to work with the 
agencies on this issue. Moreover, while we are pleased that NASA has 
created the Education Enterprise, we remain concerned that the primary 
emphasis is still on K-12 programs. The Scholarship for Service program 
is a step in the right direction, but there is much more that can be 
done.
    The AAU supports $7.7 billion for NASA's Science, Aeronautics, and 
Exploration (SAE) activities, $34 million above the President's fiscal 
year 2004 request. This would be a total increase of $440 million (6.1 
percent) over the fiscal year 2003 level. The AAU recommendation is 
consistent with the President's fiscal year 2004 budget proposal for 
SAE with the exception of the Earth Science Enterprise. For that 
office, AAU proposes a 2 percent inflationary increase over the fiscal 
year 2003 appropriation of $1.7 billion. This would increase funding 
for the office by $34 million. In particular, AAU supports the $26 
million requested for acceleration of the Climate Change Research 
Initiative. Universities are working with the Earth Science Enterprise 
to develop new instruments and smaller, more capable spacecraft to 
respond to research needs. The increased funding would help achieve 
these goals.
    AAU supports the Administration's fiscal year 2004 request of $4 
billion for the Space Science Enterprise. This would be an increase of 
$506 million (14.4 percent) over fiscal year 2003. The request funds 
all currently planned missions, but also contains $59 million for an 
exciting initiative called Beyond Einstein. This initiative has the 
potential to answer three questions left unanswered by Albert 
Einstein's theories: What powered the Big Bang? What happens to space, 
time, and matter at the edge of a black hole? What is the mysterious 
dark energy expanding the universe? Research in this area has the 
potential to transform our understanding of the universe.
    The Space Science request also includes new initiatives for power 
and propulsion technology and for optical communications. The 
development of these capabilities would address current limitations in 
robotic space flight and have the potential to revolutionize the type 
of planetary missions that can be flown a decade hence. AAU supports 
this revitalization effort.
    For the Biological and Physical Research Enterprise, AAU supports 
the budget request of $973 million, an increase of $110 million (12.7 
percent) over the fiscal year 2003 appropriation. The request includes 
$39 million to begin a Human Research Initiative to further understand 
and address health and logistical challenges encountered in long-
duration space flights. Although NASA emphasizes biomedical research 
associated with crew health maintenance, a large number of 
investigations address cutting-edge scientific problems with direct 
application to Earth-based technological, industrial, and health 
issues. Ground-based research is also essential for developing the 
knowledge and validating experimental approaches for spaceflight 
experiments, and is especially important at a time when the space 
shuttle fleet is grounded. NASA currently funds about five ground-based 
investigations for each flight investigation, and hopes eventually to 
reach a ten-to-one ratio. Increased funding for this office would 
permit more grants to be funded at higher levels for longer periods of 
time.
    The highly-leveraged Space Grant program plays an important and 
successful role in workforce development through university programs 
and K-12 outreach. AAU also urges the Committee to fund the Space Grant 
program at its authorized level of $28 million.
    Competitive Merit Review.--Finally, NASA's scientific achievements 
are due both to the hard work of agency and university scientists and 
to the agency's use of merit review for allocating research funding. We 
believe that NASA should continue to use merit review to allocate 
research funds, since this process has helped produce the discoveries 
and advances from which the nation has benefited.
    Thank you for your attention to these matters, and for the 
opportunity to provide this testimony.
                                 ______
                                 
           PREPARED STATEMENT OF THE SOCIETY FOR NEUROSCIENCE

    Good morning Mr. Chairman and members of the Subcommittee. I am 
pleased to be submit testimony for this Subcommittee's consideration. I 
am Dr. Huda Akil and I serve as the President of the Society for 
Neuroscience. Our organization has a membership of more than 31,000 
basic and clinical researchers. We are the largest scientific 
organization in the world dedicated to the study of the brain, spinal 
cord and nervous system. The Society's primary goal is to promote the 
exchange of information among researchers. We are also devoted to 
education about the latest advances in brain research and the need to 
make neuroscience research a funding priority.
    Aside from my work at the Society, I am the Gardner Quarton 
Distinguished University Professor of Neuroscience in Psychiatry at the 
University of Michigan. I am also the Co-Director of the Mental Health 
Research Institute in Ann Arbor. I study the biology of the emotional 
circuits in the brain along with the impact of the environment on these 
circuits. My work focuses on stress, mood disorders, and substance 
abuse.
    Mr. Chairman, the Society appreciates this opportunity to testify 
and to discuss some of the important VA and NSF sponsored research 
being conducted in the field of neuroscience. We thank the members of 
this Subcommittee for their dedication to biomedical research at the 
National Science Foundation (NSF) and the Veterans Administration (VA).

                      NATIONAL SCIENCE FOUNDATION

    SfN is pleased with the funding levels outlined in the National 
Science Foundation Reauthorization Act of 2002. This legislation 
demonstrates Congress's commitment to a solid foundation for scientific 
endeavors. In order to maintain the technological progress the United 
States has consistently made, including advances in medical research, 
this foundation is critical. For the National Science Foundation (NSF), 
the President's budget request recommends $5.48 billion, an increase of 
$450 million or 9.0 percent. The Society for Neuroscience endorses the 
Coalition for National Science Funding (CNSF) request of $6.39 billion, 
the same as the level included in the reauthorization.
    While psychiatry, neurology, and neurosurgery are the better-known 
medical specialties that have their basis in neuroscience, this 
research has an impact on so many aspects of our lives and our nation's 
health. Even for individuals not specifically diagnosed with brain 
disorders or neurological conditions, neuroscience research facilitates 
scientists' understanding of how the brain functions. This knowledge is 
essential to understanding the impact of other diseases and disorders. 
For example, there is ample evidence that depression increases the 
likelihood of heart disease and that in turn heart disease can trigger 
severe depression. Obesity is a major health issue in our country. 
Feeding behavior and metabolic activity is controlled by the brain. 
Understanding how to help moderate these two factors could save 
billions of dollars in health care costs.
    With the introduction of programs like Project BioShield and the 
creation of the new Department of Homeland Security, the threat of 
imminent danger is now a part of our daily lives. This threat will 
undoubtedly have an impact on our nation's mental health. In addition 
to conducting basic research, NSF research can help researchers 
understand and treat the psychological effects of living with the 
threat of terrorism and now, under conditions of a war. The science of 
the brain can have great impact on the overall mental and physical 
health of this nation.
    As the Committee is aware, nearly all NSF appropriated funds are 
received through competitively awarded grants, with only five percent 
going to salaries and expenses. NSF is unique in its ability to channel 
the majority of its funding to the specific goal of acquiring knowledge 
and conducting research.

                     DEPARTMENT OF VETERANS AFFAIRS

    The Veterans Health Administration (VHA) is the nation's largest 
direct provider of healthcare services and the nation's most clinically 
focused setting for medical and prosthetics research. The research 
component attracts innovative researchers and provides veterans with 
access to innovative therapies.
    For the VA Medical and Prosthetics Research, we support the Friends 
of VA Medical Care and Health Research (FOVA) and the Independent 
Budget for the Veteran's Administration fiscal year 2004 Funding 
Recommendation of $460 million. The VA's Medical and Prosthetic 
Research Program fulfills a critical promise to our nation's veterans, 
but also yields innovative research for the nation as a whole. 
Investments in investigator-initiated research projects at VA have led 
to an explosion of knowledge that promises to advance our understanding 
of disease and unlock strategies for prevention, treatment, and cures. 
Additional funding is needed to improve quality of life for our 
veterans and plan for care of our nation's soldiers currently serving 
in Iraq.

 INCIDENCE AND ECONOMIC BURDEN OF NEUROLOGICAL AND PSYCHIATRIC DISEASES

    Each year, we try to convey the importance of biomedical research 
in terms of longer, healthier lives for those who suffer from 
debilitating neurological and psychiatric disorders. It is in the 
economic costs and burdens that the impact of these diseases is 
measurable. For example:
  --All Depressive Disorders affect 18.8 million Americans and cost $44 
        billion per year;
  --Hearing loss costs the United States $56 billion per year, on the 
        28 million Americans affected;
  --Alzheimer's Disease affects 4 million Americans and costs $100 
        billion a year;
  --4 million people are affected by stroke, which costs the United 
        States $30 billion per year;
  --$32.5 billion per year is spent on the 3 million Americans that 
        have schizophrenia;
  --1.5 million Americans are affected by Parkinson's Disease at a cost 
        of $15 billion per year;
  --Multiple Sclerosis affected 350,000 Americans at a cost of $7 
        billion per year.

                               CONCLUSION

    NSF and the VA medical system attract top researchers and serve a 
critical role by providing the opportunity to learn more about the 
diseases and conditions that affect our quality of life. With NSF 
building a fundamental base for scientific research and VA researchers 
building on this, our country will continue to excel in technological 
and biomedical advancements. Thank you for your efforts to ensure 
adequate resources for this important endeavor. The Society would also 
like to thank you for the opportunity to present testimony to the 
Subcommittee.
                                 ______
                                 
     PREPARED STATEMENT OF THE AMERICAN SOCIETY OF PLANT BIOLOGISTS

    Founded in 1924, the American Society of Plant Biologists (ASPB) 
represents nearly 6,000 plant scientists. The largest segment of ASPB 
members conducts research at universities in each of the 50 states. 
ASPB membership also includes scientists at government and commercial 
laboratories. We appreciate this opportunity given by the Subcommittee 
to submit these comments on behalf of the plant science community.
    The plant biology community joins with other biologists in 
extending our deep appreciation to Chairman Bond, Ranking Member 
Mikulski, and to all members of the Subcommittee for your strong 
support of plant genome research and other fundamental research 
sponsored by the National Science Foundation (NSF) Directorate for 
Biological Sciences and other directorates.
    Tremendous advances in the area of plant genomics have resulted 
from the interdisciplinary research efforts of plant biologists and 
physical scientists supported by NSF. As the broadly based science 
coalition, the Coalition for National Science Funding, noted in its 
brochure on NSF printed last month (the NSF Directorate for Biological 
Sciences section of the brochure is attached):

    ``Accomplishments
    Plant Genomics & Economically Important Crops
    A study that used microarray technology simultaneously explored the 
expression of thousands of genes in soybeans in order to better 
understand this economically vital plant's responses to drought and 
disease. A separate study on the petunia flower revealed changes in 
plant gene function that are inherited but that do not entail a change 
in DNA sequence.''

    Thanks to the support of the Subcommittee, NSF has been able to 
sponsor genomic research on economically important plants and on the 
model plant Arabidopsis thaliana. The entire Arabidopsis genome 
sequence was completed in 2000, well ahead of schedule. Following the 
completion of sequencing the genome, NSF has been proceeding with the 
``2010 Project'' to determine the function of every gene in this model 
plant. Knowledge of the comparatively simple Arabidopsis genome will 
facilitate discovery of genes and their functions in other flowering 
plants, including valuable agricultural crops, energy crops and crops 
that will be the source of new pharmaceutical products.
    NSF-funded researchers studying Arabidopsis and economically 
important plants have learned from this research that some plants are 
more resistant than others to viral, bacterial or fungal diseases. 
Identification of specific disease-resistant genes will allow for the 
development of commercially important plants that are resistant to 
disease. Changes in Arabidopsis gene expression in response to light, 
temperature, water availability, salinity, air quality and other 
environmental factors have been found. Genes for cold tolerance have 
been identified. This is a genomic treasure of knowledge that combined 
with biotechnology will lead to the development of hardier food and 
energy crops resistant to heat, drought, cold and other environmental 
challenges. Scientists will have more effective tools to help prevent 
environmental, agricultural crop and forestry disasters with the 
increased knowledge available through genomic research.
    With the knowledge gained through finding similarities between 
genomes of different species of plants, scientists can manipulate 
genomes of grains, fruits and flowers to create improved crops 
including safer food crops with enhanced nutritional qualities. For 
example, research is contributing to improved, higher quality vegetable 
oil with reduced polyunsaturated fat, corn with higher quality protein, 
and foods with inactivated allergens.
    NSF-sponsored plant research has enabled scientists to successfully 
inactivate allergens in the major food crop, wheat and in other foods. 
Allergic reactions to wheat products such as bread and pasta should be 
significantly reduced when these experimental food crop products become 
commercially available.
    The White House-appointed National Science and Technology Council, 
Committee on Science, Interagency Working Group (IWG) on Plant Genomes 
has reported on the significant progress made with NSF-sponsored plant 
genome research. For example, NSF-supported researchers are developing 
methodologies that will enhance and facilitate use of the information 
encoded in the plant genome. These methodologies include microarray 
analysis, chromatin charting, and comparative genomics.
    The National Science and Technology Council's IWG cites the need to 
increase support for plant genome research to $1.3 billion over the 
next five years to reach objectives of its five-year plan. ASPB 
strongly endorses the recommendations of the National Science and 
Technology Council's IWG as outlined below in the IWG's January 2003 
report: National Plant Genome Initiative: 2003-2008:
  --$400 million for generating sequences and sequence resources for 
        genome structure and organizational studies will result in the 
        production of: (1) a completely finished rice genome sequence; 
        (2) completely finished and mapped sequences of gene-rich 
        regions of the maize genome; (3) highly accurate draft 
        sequences of gene-rich regions of several key plant species; 
        and (4) a variety of genome analysis tools to study structure 
        and organization of a large number of plant species of economic 
        importance.
  --$200 million for functional genomics studies will allow U.S. 
        scientists to participate in international projects to 
        determine the function of all of the genes in Arabidopsis and 
        rice. The resulting functional genomics research resources will 
        be shared freely and quickly, building a foundation for 
        functional genomics research for all plant species.
  --$300 million for translational genomics studies will enable a broad 
        community of scientists to begin applying the knowledge, 
        resources and tools of genomics to understand the fundamental 
        biology of plants and the underlying mechanisms for 
        economically important plant processes.
  --$250 million for data management and informatics tools development 
        will enable a broad community of both basic and applied 
        scientists to utilize the outcomes of NPGI (National Plant 
        Genome Initiative) research activities. $250 million is a 
        conservative estimate since all plant genome research 
        activities described above will include informatics as an 
        integral component, and thus the actual expenditure for data 
        management and informatics will be considerably higher.
  --$125 million for training, education and outreach will allow 
        establishment of a NPGI training grant program and 
        incorporation of training activities in all NPGI research 
        activities.
    The National Science and Technology Council's IWG is made up of 
representatives from the National Science Foundation, Department of 
Agriculture, Department of Energy, National Institutes of Health, White 
House Office of Science and Technology Policy and Office of Management 
and Budget.
    Plant genome research and research on the applications of plant 
biotechnology, supported by this Subcommittee have revolutionized the 
way scientists can improve plants. This is essential to meeting the 
growing national and world needs for food, much of the world's energy, 
industrial feed stocks, clothing and building materials, and for 
lifesaving medicines.
    We commend the Subcommittee for its fair and balanced support of 
biological, physical and social and behavioral sciences sponsored by 
the National Science Foundation. As the Subcommittee understands, 
biological research sponsored by NSF differs significantly from medical 
research sponsored by the National Institutes of Health (NIH). The 
fundamental biology questions addressed by NSF-sponsored researchers 
are not the same questions addressed by NIH-sponsored research.
    Future discoveries providing novel ways to contribute to a cleaner 
environment; better protection of limited fresh water and other 
resources; and more effective responses to severe weather conditions 
and other environmental stresses affecting plants and other organisms 
could be lost if there was inadequate support for the NSF Directorate 
for Biological Sciences.
    The nation's capabilities in fundamental biology research in 
plants, systematics, physiology, water relations, environmental stress 
and other areas would decline rapidly if the NSF Directorate for 
Biological Sciences received less emphasis for support. We appreciate 
the Subcommittee's recognition of the substantial differences between 
research sponsored by NSF and NIH. The nation benefits from support of 
each of the science disciplines.
    We strongly endorse and appreciate the efforts on the Subcommittee 
to double support for NSF over five years.
                                 ______
                                 
    PREPARED STATEMENT OF THE NATIONAL COUNCIL FOR SCIENCE AND THE 
                              ENVIRONMENT

                                SUMMARY

    The National Council for Science and the Environment (NCSE) urges 
Congress to appropriate the funds necessary to implement the National 
Science Foundation Authorization Act of 2002. The Act authorizes a 
doubling of the NSF budget over five years, as championed by Senators 
Bond and Mikulski. In fiscal year 2004, NCSE supports the authorized 
NSF funding level of $6.39 billion. In addition to increasing the total 
NSF budget to the authorized funding level, NCSE urges Congress to 
provide strong support across NSF's entire portfolio, including its 
environmental research and education portfolio.
    The NSF budget request for fiscal year 2004 falls far short of the 
funding level authorized. Senator Christopher Bond expressed his views 
on the NSF budget request as follows: ``To say I am very disappointed 
that the President's fiscal year 2004 budget request only provides a 3 
percent increase over fiscal year 2003 would be a drastic 
understatement.''
    Federal investments in R&D and science education are essential to 
the future well-being and prosperity of the nation and deserve the 
highest priority of Congress. The long-term prosperity of the nation 
and the maintenance of our quality of life depend on a steady and 
growing commitment of federal resources to science and technology. 
Environmental R&D is a critical component of the nation's R&D portfolio 
and the National Science Foundation plays a pivotal role in supporting 
environmental R&D. We encourage Congress to explore the role of 
environmental R&D in homeland security and counterterrorism.
    NCSE encourages Congress to strongly support full and effective 
implementation of the National Science Board (NSB) report, 
Environmental Science and Engineering for the 21st Century: The Role of 
the National Science Foundation, within the context of efforts to 
double the budget of the NSF. The NSB report calls for significant 
improvements in the way that NSF supports environmental research, 
assessment and education, and proposes that the Foundation invest an 
additional $1 billion per year in these areas, to be phased in over 
five years. NSF has taken many steps to implement the NSB report and 
deserves full support from Congress.
    NCSE emphasizes the need for increased funding for NSF's Priority 
Area on Biocomplexity and the Environment. In addition, we recommend 
full funding for two large projects--the National Ecological 
Observatory Network (NEON) and EarthScope--which would create 
unprecedented opportunities for environmental research.
    NCSE urges Congress to restore full funding for the Environmental 
Protection Agency's (EPA) Science to Achieve Results (STAR) graduate 
fellowship program. The fiscal year 2004 budget request for EPA would 
cut funding for the EPA STAR fellowship program by 50 percent, from 
$9.75 million in fiscal year 2003 to $4.875 million in the fiscal year 
2004 budget request.
    NCSE commends the Chairman and Ranking Member of the Senate 
Appropriations Subcommittee on VA, HUD, and Independent Agencies for 
their bipartisan leadership on science for the nation's future. No 
other Appropriations Subcommittee has a greater impact on the future of 
environmental science.

                              INTRODUCTION

    The National Council for Science and the Environment thanks the 
Senate Appropriations Subcommittee on VA, HUD, and Independent Agencies 
for the opportunity to provide testimony on the National Science 
Foundation budget request for fiscal year 2004.
    NCSE is a nonprofit, nonpartisan organization that has been working 
since 1990 to improve the scientific basis for environmental 
decisionmaking. Our work is endorsed by nearly 500 organizations, 
ranging from the U.S. Chamber of Commerce to the Sierra Club, including 
the National Association of Attorneys General, National Association of 
Counties, some 300 colleges and universities, and more than 80 
scientific and professional societies. As a neutral science-based 
organization, NCSE promotes science and its relationship with 
decisionmaking but does not take positions on environmental issues 
themselves.

                FEDERAL INVESTMENTS IN ENVIRONMENTAL R&D

    Federal investments in R&D and science education are essential to 
the future well-being and prosperity of the nation and deserve the 
highest priority of the Congress. The long-term prosperity of the 
nation and the maintenance of our quality of life depend on a steady 
and growing commitment of federal resources to science and technology.

                                  TABLE 1.--ENVIRONMENTAL R&D BY FEDERAL AGENCY
                                    (Budget authority in millions of dollars)
----------------------------------------------------------------------------------------------------------------
                                                 Environmental R&D (dollars in           Change (percent)
                                                           millions)            --------------------------------
                                               ---------------------------------   Fiscal     Fiscal     Fiscal
                                                                                 Year 2002  Year 2002  Year 2002
                    Agency                                                         Actual     Request    Actual
                                                  Fiscal     Fiscal     Fiscal       to         to         to
                                                Year 2002  Year 2003  Year 2003    Fiscal     Fiscal     Fiscal
                                                  Actual     Request    Enacted  Year 2003  Year 2003  Year 2003
                                                                                   Request    Enacted    Enacted
----------------------------------------------------------------------------------------------------------------
National Science Foundation...................      1,062      1,164      1,177        9.7        1.1       10.9
NASA..........................................      1,628      1,628      1,708        0.0        4.9        4.9
Environmental Protection Agency...............        592        617        643        4.2        4.4        8.7
Department of Energy..........................      1,840      1,649      1,813      -10.4        9.9       -1.5
Department of Defense.........................        400        471        498       18.0        5.7       24.7
Department of Commerce--NOAA..................        677        605        684      -10.6       13.1        1.1
Department of the Interior....................        623        608        627       -2.4        3.1        0.7
U.S. Department of Agriculture................        504        473        531       -6.3       12.3        5.2
National Institutes of Health.................         81         74         84       -7.7       12.9        4.1
Department of Transportation..................         68         67         71       -2.1        6.3        4.1
Smithsonian Institution.......................         40         41         41        3.8        0.0        3.8
Corps of Engineers............................         27         27         29        0.0        8.5        8.5
                                               -----------------------------------------------------------------
      TOTAL...................................      7,541      7,425      7,907       -1.5        6.5        4.9
----------------------------------------------------------------------------------------------------------------
Source: AAAS/NCSE estimates based on OMB data for R&D in the fiscal year 2003 Budget, agency budget documents,
  and information from agency budget offices.

    Environmental R&D is a critical component of the nation's R&D 
portfolio. NCSE estimates that federal funding for environmental R&D in 
fiscal year 2003 is approximately $7.9 billion, an increase of $366 
million or 4.9 percent relative to fiscal year 2002 (Table 1), based on 
an analysis of the federal R&D budget conducted jointly with the 
American Association for the Advancement of Science.
    The Appropriations Subcommittee on VA, HUD and Independent Agencies 
plays the largest role in setting funding levels for environmental R&D. 
It has jurisdiction over agencies that account for 45 percent of 
federal funding for environmental R&D.
    Congress has played a crucial role in determining the level and 
growth rate of federal funding for environmental R&D. The President's 
fiscal year 2003 budget request would have cut federal funding for 
environmental R&D by $116 million or 1.5 percent relative to fiscal 
year 2002. Congress restored the $116 million cut and added an 
additional $366 million above the President's fiscal year 2003 budget 
request (Table 1).
    In the fiscal year 2003 enacted appropriations bills, federal 
funding for environmental R&D increased by 4.9 percent relative to 
fiscal year 2002. However, federal funding federal funding for 
environmental R&D grew at approximately one-third the rate of total 
R&D, which increased by 13.8 percent to $117.3 billion. Federal 
investments in environmental R&D need to keep pace with the growing 
need to improve the scientific basis for environmental decisionmaking.
    The National Science Foundation plays a pivotal role in supporting 
environmental R&D. Environmental research often requires knowledge and 
discoveries across disciplinary and institutional boundaries. The NSF 
recognizes this and encourages multidisciplinary interactions within 
directorates and among directorates and programs, as well as with other 
federal agencies. The NSF has established a ``virtual directorate'' for 
environmental research and education. Through this virtual directorate, 
NSF coordinates the environmental research and education activities 
supported by all the directorates and programs. NSF's Environmental 
Research and Education portfolio has grown from $595 million in fiscal 
year 1999 to over $900 million in fiscal year 2003.

                   IMPLEMENTING THE NSF DOUBLING ACT

    The National Council for Science and the Environment urges Congress 
to implement the National Science Foundation Authorization Act of 2002, 
which passed Congress on November 15, 2002 and was signed into law by 
the President on December 19, 2002. A central goal of the Act is to 
double the budget of the National Science Foundation in five years. It 
authorizes a budget increase of 105 percent for the NSF, from $4.8 
billion in fiscal year 2002 to $9.8 billion in fiscal year 2007.
    NCSE commends the Chairman and Ranking Member of the Senate 
Appropriations Subcommittee on VA, HUD, and Independent Agencies for 
their sustained leadership in a bipartisan, bi-cameral effort to double 
NSF's budget over a five-year period. Senator Christopher Bond (R-MO) 
and Senator Barbara Mikulski (D-MD) initiated a letter signed by a 
bipartisan majority of 54 Senators aimed at doubling the budget of the 
NSF in five years. They were original co-sponsors of the National 
Science Foundation Doubling Act of 2002. Senator Bond said, ``I believe 
this bill underscores the critical role NSF plays in the economic and 
intellectual growth and well-being of this Nation,'' upon introduction 
of the legislation.
    The NSF Authorization Act has strong bipartisan support in 
Congress. Senator Barbara Mikulski said, ``with this bill, we take an 
important step to ensure the well-being of this nation and its 
citizens.''
    ``This is landmark legislation,'' said Science Committee Chairman 
Sherwood Boehlert (R-NY), who championed the bill in the House. ``From 
our nation's students, to our economy, and to our security, the fruits 
of this effort will be enjoyed for many years to come.''
    Rep. Nick Smith (R-MI), Chairman of the House Science Subcommittee 
on Research, said, ``These efforts will pay off in the form of 
continued scientific breakthroughs that will improve our lives in ways 
that we can only imagine today.''
    ``Passage of this bill is a great achievement,'' said Rep. Vernon 
Ehlers (R-MI). ``The research results, while not clear now, will reap 
huge benefits in the future.''
    The NSF Authorization Act of 2002 is a major milestone for the NSF, 
the scientific community, and the nation. In order to realize the 
outcomes envisioned by this legislation, Congress must appropriate the 
funding levels authorized in the NSF Authorization Act.

    NATIONAL SCIENCE FOUNDATION BUDGET REQUEST FOR FISCAL YEAR 2004

    The National Council for Science and the Environment urges Congress 
to appropriate the authorized funding level of $6.39 billion for the 
National Science Foundation in fiscal year 2004. The fiscal year 2004 
budget request would increase funding for NSF by 3.2 percent to $5.5 
billion. The fiscal year 2004 budget request of $5.5 billion falls far 
short of the $6.39 billion budget and 15 percent increase authorized in 
the NSF doubling act (Table 2).
    At a recent congressional hearing, Senator Christopher Bond (R-MO) 
expressed his views on the NSF budget request as follows: ``To say I am 
very disappointed that the President's fiscal year 2004 budget request 
only provides a 3 percent increase over fiscal year 2003 would be a 
drastic understatement.''
    In addition to increasing total NSF funding to the authorized 
level, NCSE urges Congress to provide strong support across NSF's 
entire research portfolio. When the NSF Authorization Act was 
introduced in the House of Representatives on May 7, 2002, the bill 
included language about the allocation of funding among ``the physical 
sciences, mathematics, and engineering.'' References to ``physical 
sciences'' as opposed to all fields of science could have negative 
consequences for the environmental sciences, geosciences, non-
biomedical life sciences, social sciences and interdisciplinary 
science. On May 22, 2002, the House Science Committee passed an 
amendment to the NSF authorization act that replaced ``physical 
sciences'' with ``sciences'' and made related revisions.
    The House Science Committee Report (House Report 107-488) on the 
NSF Authorization Act provides further guidance on the balance in the 
NSF's research portfolio: ``While the Committee is of the opinion that 
the mathematical, physical, and information sciences and engineering 
disciplines have been significantly underfunded, the Committee also 
recognizes that greater science funding for other disciplines, 
including the non-biomedical life sciences and the social sciences is 
also necessary . . . the committee strongly believes that all 
disciplines for which NSF provides support should receive significant 
budget increases.''
    NCSE supports the Science Committee's view that NSF's entire 
research portfolio--including the environmental sciences, geosciences, 
non-biomedical life sciences, social sciences, and interdisciplinary 
science--should receive significant budget increases. Although the 
fiscal year 2004 budget request would increase NSF's total budget by 
3.2 percent, several key programs that provide funding for 
environmental research would decline under the fiscal year 2004 budget 
request.

                                  TABLE 2.--NATIONAL SCIENCE FOUNDATION BUDGET
----------------------------------------------------------------------------------------------------------------
                                              Budget Authority (dollars in millions)          Change (percent)
                                      --------------------------------------------------------------------------
                                                                                              Fiscal     Fiscal
             NSF Program                 Fiscal   Fiscal Year  Fiscal Year    Fiscal Year   Year 2002  Year 2003
                                       Year 2002      2003         2004          2004       to Fiscal  to Fiscal
                                         Actual   Enacted \1\  Request \2\  Authorized \3\  Year 2003  Year 2004
                                                                                               \4\      Req. \5\
----------------------------------------------------------------------------------------------------------------
Research and Related Activities            3,612       4,056        4,106          4,800         12.3        1.2
 (R&RA)..............................
    Biological Sciences..............        510         571          562   ..............       12.1       -1.6
    Computer & Info. Science &               515         579          584   ..............       12.3        1.0
     Engineering.....................
    Engineering......................        471         531          537   ..............       12.7        1.1
    Geosciences......................        610         684          688   ..............       12.3        0.5
    Mathematical & Physical Sciences.        920       1,035        1,061   ..............       12.4        2.6
    Social, Behavioral & Economic            184         191          212   ..............        3.8       10.9
     Sciences........................
    Polar Programs...................        301         319          330   ..............        6.1        3.4
    Integrative Activities...........        106         147          132   ..............       39.0       -9.9
    Budget Adjustment \6\............         -4  ...........  ...........  ..............  .........  .........
Education and Human Resources (EHR)..        894         903          938          1,157          1.0        3.9
Major Research Equipment.............        139         149          202            211          7.0       36.2
Salaries and Expenses \7\............        170         193          226            214         13.0       17.2
Office of Inspector General..........          7           9            9              8         35.9       -4.6
                                      --------------------------------------------------------------------------
        Total NSF Budget.............      4,823       5,310        5,481          6,391         10.1       3.2
----------------------------------------------------------------------------------------------------------------
Source: NSF budget justification and data tables & AAAS (revised March 2003).

\1\ Fiscal year 2003 Enacted figures reflect the final fiscal year 2003 omnibus appropriations bill passed by
  Congress on Feb. 13, 2003 and signed by the President on Feb. 20, 2003.
\2\ Fiscal year 2004 President's budget request was released Feb. 3, 2003 before Congress passed the fiscal year
  2003 omnibus appropriations bill.
\3\ Fiscal year 2004 Authorized figures are from the NSF Authorization Act of 2002, which was passed by Congress
  Nov. 15, 2002 and signed by the President Dec. 19, 2002.
\4\ Percent change from fiscal year 2002 actual to fiscal year 2003 enacted appropriations.
\5\ Percent change from fiscal year 2003 enacted budget to the President's fiscal year 2004 budget request.
\6\ Adjustment from budget obligation to budget authority.
\7\ Includes NSB Staff Salaries.

    Biological Sciences Directorate.--Under the fiscal year 2004 budget 
request, funding for NSF's Biological Sciences Directorate would 
decline by 1.6 percent relative to the fiscal year 2003 enacted 
appropriations bill (Table 2). Within the Biological Sciences 
Directorate, the budget for Environmental Biology would decline by 2.8 
percent, Integrative Biology and Neuroscience would decline by 3.1 
percent, and Emerging Frontiers would increase by 11.6 percent.
    Geosciences Directorate.--Funding for the Geosciences Directorate 
would increase by 0.5 percent, but two of its three divisions would 
face cuts in fiscal year 2004 relative to the fiscal year 2003 enacted 
appropriations bill. Funding for the Earth Sciences Division would 
decline by 4.9 percent and funding for the Ocean Sciences Division 
would decline by 0.7 percent.
    Biocomplexity and the Environment Priority Area.--NCSE is 
particularly supportive of NSF's priority area on Biocomplexity and the 
Environment. This initiative provides a focal point for investigators 
from different disciplines to work together to understand complex 
environmental systems, including the roles of humans in shaping these 
systems.
    The Biocomplexity and the Environment initiative is a growing 
priority within NSF, as reflected by the growth of its budget from 
$59.0 million in fiscal year 2002 to $99.8 million in the fiscal year 
2004 budget request. This priority area has been expanded to include 
research in microbial genome sequencing and ecology of infectious 
diseases--to help develop strategies to assess and manage the risks of 
infectious diseases, invasive species, and biological weapons. We urge 
Congress to support this critical initiative and to consider funding it 
at a level of $136 million, as proposed in fiscal year 2000 budget 
request for NSF.
    Major Research Equipment.--The NSF budget request includes funding 
for the National Ecological Observatory Network (NEON) and EarthScope 
in its account for Major Research Equipment and Facilities 
Construction. These projects would provide major new opportunities for 
environmental research.
  --National Ecological Observatory Network.--NEON would be a 
        continental scale research instrument consisting of 10 
        geographically distributed observatories, networked via state-
        of-the-art communications, for integrated studies to obtain a 
        predictive understanding of the nation's environments. NSF is 
        requesting $12 million in initial funding for the first two 
        NEON observatories in fiscal year 2004.
  --EarthScope.--EarthScope would be a distributed, multi-purpose 
        geophysical instrument array that is designed to make major 
        advances in our knowledge and understanding of the structure 
        and dynamics of the North American continent. Three components 
        of the project would be the United States Seismic Array 
        (USArray), the San Andreas Fault Observatory at Depth, and the 
        Plate Boundary Observatory. NSF is requesting $45 million for 
        EarthScope in fiscal year 2004.
    We urge Congress to fund both NEON and EarthScope at the levels 
specified in fiscal year 2004 budget request. Both NEON and EarthScope 
were included in NSF's budget request for fiscal year 2001 but funding 
for these projects was not provided in the enacted appropriations bill. 
NSF's budget request for fiscal year 2002 did not contain any new 
starts for the MREFC account. In fiscal year 2003, the NSF budget 
request included initial funding for both NEON and EarthScope. Congress 
appropriated $30 million for EarthScope in fiscal year 2003 but 
deferred funding for NEON ``without prejudice,'' implying that the 
project was not rejected based on merit and may be funded in the 
future.
 national science board report on environmental science and engineering
    The National Council for Science and the Environment encourages 
Congress to support full and effective implementation of the National 
Science Board's report, Environmental Science and Engineering for the 
21st Century: The Role of the National Science Foundation, within the 
context of a doubling of the budget for the NSF.
    The NSB report sets out a bold, ambitious set of recommendations 
that could dramatically improve the scientific basis for environmental 
decisionmaking. The first keystone recommendation is as follows:

    ``Environmental research, education, and scientific assessment 
should be one of NSF's highest priorities. The current environmental 
portfolio represents an expenditure of approximately $600 million per 
year. In view of the overwhelming importance of, and exciting 
opportunities for, progress in the environmental arena, and because 
existing resources are fully and appropriately utilized, new funding 
will be required. We recommend that support for environmental research, 
education, and scientific assessment at NSF be increased by an 
additional $1 billion, phased in over the next 5 years, to reach an 
annual expenditure of approximately $1.6 billion.''

    NSF has taken many steps to implement the recommendations of the 
NSB. It has appointed an environmental coordinator and created a new 
position in the office of the Director. It has established a Priority 
Area on Biocomplexity and the Environment that provides new 
opportunities for multidisciplinary research on the interactivity of 
biota and the environment. NSF has formed an Advisory Committee on 
Environmental Research and Education. In January 2003, the Advisory 
Committee released a report entitled Complex Environmental Systems: 
Synthesis for Earth, Life, and Society in the 21st Century, which 
provides a 10-year outlook in environmental research and education for 
the NSF. The report presents pathways for building interdisciplinary 
bridges and increasing capacity to address environmental challenges. 
``The concept of synthesis-based research is a touchstone for 
environmental research and education,'' said Stephanie Pfirman, Past 
Chair of the Advisory Committee, ``and long-term support is necessary 
to fulfill its promise.''
    Full implementation of the NSB report will require strong support 
from Congress and a significant increase in funding for NSF's portfolio 
of environmental science, engineering and education.

                 EPA'S STAR GRADUATE FELLOWSHIP PROGRAM

    NCSE urges Congress to restore full funding for the Environmental 
Protection Agency's Science to Achieve Results (STAR) graduate 
fellowship program. STAR is the only federally supported fellowship 
program specifically aimed at graduate students in the environmental 
sciences and policy areas. From 1995 to 2001, EPA funded over 800 STAR 
fellows at 168 colleges and universities. The STAR fellowship program 
is highly competitive, with only 7 percent of applicants being awarded 
fellowships.
    The fiscal year 2004 budget request for EPA would cut funding for 
the EPA STAR fellowship by 50 percent, from $9.75 million in the fiscal 
year 2003 omnibus appropriations bill to $4.875 million in the fiscal 
year 2004 budget request. Last year, the EPA budget request for fiscal 
year 2003 would have eliminated all funding for new STAR fellowships. 
Congress responded by restoring full funding for the STAR fellowship 
program in the fiscal year 2003 appropriations process and we call upon 
Congress to restore full funding again in fiscal year 2004. NCSE urges 
Congress to appropriate at least $9.75 million for the STAR fellowship 
program in fiscal year 2004. A higher appropriation is needed to 
redress the impact of the cancellation of the STAR fellowship 
competition last year. The proposed elimination of the STAR fellowship 
in the President's fiscal year 2003 budget request led to the 
suspension of new fellowships beginning in February 2002, despite the 
fact that over 1,400 applications had already been received and 
reviewed for 100 new fellowships.

                HOMELAND SECURITY AND ENVIRONMENTAL R&D

    Environmental R&D is a critical component of homeland security. 
Homeland defense will benefit from a robust and balanced research 
agenda in addition to the rapid development of existing technologies. 
Consider, for example, research on the explosion of a ``dirty bomb'' in 
an urban area. In addition to research related to the treatment of 
victims, protection of first responders, and emergency response plans, 
a balanced research agenda would include interdisciplinary studies on 
the fate, transport, and clean-up of radionuclides and toxins in air, 
water, and land. Environmental scientists conduct research on chemical, 
isotopic and biological tracers on a broad range of length scales and 
time scales. They are well-positioned to contribute to homeland 
defense. We encourage Congress to explore the role of environmental R&D 
in homeland security and counterterrorism and to recommend actions that 
would improve the nation's capacity in this area.
    The National Council for Science and the NCSE commends the Chairman 
and Ranking Member of the Senate Appropriations Subcommittee on VA, 
HUD, and Independent Agencies for their bipartisan leadership on 
science for the nation's future. No other Appropriations Subcommittee 
has a greater impact on the future of environmental science. 
Investments in the environmental science continue to pay enormous 
dividends to the nation. Thank you very much for your interest in 
improving the scientific basis for environmental decisionmaking.
                                 ______
                                 
                 PREPARED STATEMENT OF AMERICAN RIVERS

    This year, American Rivers was joined by more than 400 national, 
regional and local organizations concerned with river conservation 
throughout the United States \1\ in calling for significantly increased 
funding for the following Environmental Protection Agency (EPA) 
programs and other programs funded through the Veteran's Affairs, 
Housing and Urban Development, and Independent Agencies (VA-HUD) 
Appropriations bill. I urge that these requests be incorporated in the 
VA-HUD Appropriations bill for fiscal year 2004.
---------------------------------------------------------------------------
    \1\ These groups have endorsed the ``River Budget for fiscal year 
2004'', 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.
---------------------------------------------------------------------------
                    CLEAN WATER STATE REVOLVING FUND

    With the passage of the Clean Water Act 30 years ago, Congress made 
a financial commitment to protecting and improving water quality 
through grants to municipalities for construction of wastewater 
treatment systems. In 1987, the construction grants program was 
converted to a revolving loan program, in which federal capitalization 
grants are made to states that then make low-interest loans to 
municipalities for wastewater, stormwater, and other water quality 
protection activities. The 1996 Safe Drinking Water Act also created 
state revolving funds (SRFs) for drinking water treatment and 
protection of source water and wellhead areas.
    Maintaining the nation's high-quality drinking water and wastewater 
services will require a substantial increase in spending over the next 
two decades. Aging infrastructure, increased population and sprawl have 
stressed existing water infrastructure systems, as evidenced by the 
yearly 1.2 trillion gallons of stormwater overflows from combined sewer 
systems that carry untreated sewage into the nation's rivers and other 
water bodies. A May 2002 study by the Congressional Budget Office 
estimates that from 2000 to 2019, annual costs for investment in the 
nation's water systems will average between $11.6 billion and $20.1 
billion for drinking water systems and between $13.0 billion and $20.9 
billion for wastewater systems.
    The SRF programs have been used to fund projects that reduce non-
point pollution, protect estuaries, prevent contamination of drinking 
source waters, and reduce polluted runoff by protecting natural areas 
and other ``green infrastructure,'' such as stream buffers. These 
approaches are often more cost-effective and provide a wide array of 
environmental and social benefits, including open space, wildlife 
habitat, recreation, and water supply.
    Congress should reauthorize the Clean Water SRF program at $3.2 
billion and the Drinking Water SRF at $1.5 billion, and appropriate the 
full amount authorized to both SRF programs.

         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. As we approach the first ``check-in'' for the 2000 federal 
Salmon Plan for the Columbia and Snake Rivers this September, federal 
agencies have failed to fulfill over 70 percent of its requirements.
    So far, Salmon Plan implementation has fallen well behind schedule, 
due in part to inadequate federal funding. Full funding for fiscal year 
2004 will require $529.3 million distributed among ten federal agencies 
through five different appropriations bills. The VA-HUD and Independent 
Agencies Appropriations bill provides funding to one of these agencies, 
the Environmental Protection Agency. EPA is charged with addressing 
water quality issues in the Snake and Columbia rivers, including the 
unnaturally high water temperatures and dissolved gas levels caused by 
the 29 federal dams in the Columbia River Basin.
    In fiscal year 2003, the EPA was one of only two agencies charged 
with implementing the Salmon Plan to receive sufficient funding. In 
fiscal year 2004, Congress should maintain the EPA's Columbia Basin 
budget at $18.3 million.

       TOTAL MAXIMUM DAILY LOADS, CLEAN WATER ACT SECTION 303(D)

    The water quality of America's natural water bodies is damaged and 
threatened by a wide range of activities and sources. Water quality 
impairments will not be cured without accounting for all of these 
sources and addressing problems in troubled watersheds in a 
comprehensive manner. The establishment of Total Maximum Daily Loads 
(TMDLs) under section 303(d) of the Clean Water Act is a sensible and 
necessary step in this process. States and the Environmental Protection 
Agency (EPA) must identify all sources of water quality impairment to 
rivers, streams and lakes that do not meet water quality standards, 
develop specific goals for improvement, and design plans to achieve the 
best overall results for the water bodies.
    However, this sensible process has not proceeded as quickly and 
efficiently as it should, due in part to a shortage of resources within 
regulatory agencies responsible for making the comprehensive 
assessments and strategies for improvement. Investigations of the harm 
caused by point source and non-point source pollution, physical 
alterations and habitat destruction in aquatic systems, and biological 
contaminants and invasive species can be complicated and must be done 
thoroughly and professionally. TMDLs must be developed in a way that is 
consistent with the Clean Water Act, is compatible with related water 
quality programs and regulatory processes, and leads to real 
improvements, rather than more paperwork and delay. The development of 
strong TMDLs requires adequate commitment and resources.
    In this, the 30th anniversary of the Clean Water Act, far too many 
of our nation's waters fail to support healthy natural communities of 
animals and plants and are dangerous or unsuitable for people to use 
and enjoy. Congress should show its continued commitment to restoring 
our natural heritage and appropriate $250 million for EPA's State 
Program Management Grants (Section 106 of the Clean Water Act) for 
grants to states for TMDL development and implementation in fiscal year 
2004.

                   NONPOINT SOURCE MANAGEMENT PROGRAM

    Every time it rains, silt, fertilizer, pesticides, oil, manure, and 
other pollutants flow into rivers and streams. As societal growth paves 
more land area, produces more air emissions, culverts and manipulates 
more streams and drainage channels, and generally encroaches further 
into naturally-functioning systems with human-designed environments, it 
damages water bodies in countless ways. Though the idea of water 
pollution often produces visions of pipes spewing industrial wastes or 
sewage into streams, these ``non-point sources'' of pollution degrade 
thousands of stream miles and hundreds of lakes, ponds, and wetlands. 
The damage caused by non-point source pollution includes habitat and 
aquatic life degradation, drinking water contamination, swimming area 
closures, lost recreational opportunities, fish kills, aesthetic 
degradation of waterways, and many other severe environmental and human 
health problems.
    While the Clean Water Act (CWA) established regulatory limits, 
targets, and penalties for point source pollution in 1972, it did not 
provide resources to address polluted runoff until 1987. That year, 
Congress recognized the need for greater federal leadership to reduce 
non-point source pollution by amending the CWA to establish the Section 
319 Non-point Source Management Program. The Section 319 program 
provides grant money that states, territories, and Indian tribes can 
use for a wide variety of non-point pollution reduction activities 
including technical and financial assistance, education, training, 
technology transfer, demonstration projects, and monitoring.
    The threat posed by non-point source pollution is as great as or 
greater than ever before and increasing. Congress should appropriate 
$250 million for EPA's Section 319 Non-point Source Management Program 
to help states and localities reduce runoff pollution.

       ENFORCEMENT OF DISCHARGE PERMITS UNDER THE CLEAN WATER ACT

    The Environmental Protection Agency's (EPA) ability to enforce 
environmental laws is critical to our nation's efforts to fulfill the 
Clean Water Act's stated objective of restoring waters to fishable and 
swimmable conditions. While the nation has made great progress in 
cleaning up its waters, we continue to need a strong enforcement 
presence by EPA because 40 percent of waters remain unsafe for fishing 
or swimming.
    The Clean Water Act prohibits discharges of pollutants through 
point sources into U.S. waters without a National Pollution Discharge 
Elimination System permit. These permits contain limits on what can be 
discharged, monitoring and reporting requirements, and other provisions 
to ensure that the discharge does not harm water quality or human 
health.
    Nationwide, about one-fourth of all major water polluters, nearly 
1,700 facilities, are operating without current permits to discharge 
wastes to the nation's waters. More than 750 major facility permits 
have been expired for two years, and 251 have been expired for 5 years. 
Many of these facilities dump huge amounts of highly toxic effluent 
into receiving waters. More than one-fourth of major facilities were in 
significant noncompliance with their permits over a recent 15-month 
period.
    To ensure that permits are current and properly complied with, EPA 
engages in enforcement activities, including inspections, sampling, 
testing, as well as civil and criminal enforcement actions. It is 
essential that EPA maintain a strong enforcement presence working with 
the states to undertake civil and criminal enforcement activities at 
facilities that can result in real improvements in environmental 
quality. For example, recent settlements with multiple cities across 
the country have helped clean our rivers and coastal waters of raw 
sewage overflows, improved operation and maintenance, and expanded 
treatment capacity. EPA needs adequate level-funding to conduct 
activities such as laboratory analysis and the hiring of expert 
witnesses to bring cases to make polluters pay for actions that harm 
the environment.
    The need to vigilantly guard the health of the nation's waters from 
illegal discharges is greater than ever before. It is essential that 
Congress fund the EPA Office of Enforcement and Compliance at a level 
sufficient to retain fiscal year 2002 staffing levels with adequate 
increases to allow for cost of living increases. Congress should fund 
EPA's enforcement programs at $485 million.

                         CHESAPEAKE BAY PROGRAM

    The Chesapeake Bay, the nation's largest estuary and one of the 
most ecologically productive in the world, is home to more than 15 
million people and 3,600 species of plants and wildlife. The 64,000-
square mile watershed drains more than 100,000 streams and rivers, 
provides important opportunities for recreation and refuge for fish and 
wildlife, and serves as a key resource for the prosperity of the 
region.
    Unfortunately, the ecological integrity and productivity of the 
Bay's watershed have been severely compromised by development, 
agriculture, over-harvesting of resources, and more than 2,500 small 
dams and other obstructions that block migratory fish from their 
historic spawning habitats. The impact on the Bay's important seasonal 
fisheries has been dramatic. Annual harvests of Bay shad have dropped 
from 17.5 million pounds to less than 2 million during the past 
century. Between 1976 and 1985, the commercial harvest of anadromous 
fish in the Bay declined by 82 percent.
    Concern over these threats culminated in the creation of the 
Chesapeake Bay Program (CBP) in 1983, establishing what is now a 
national and international model for estuarine research and 
restoration. The program focuses on restoring tributaries, underwater 
Bay grasses, and fish passage, and also reducing agricultural runoff 
pollution and toxics. Among other goals, the CBP hopes to reopen more 
than 1,350 miles of upstream spawning habitat for migratory fish by 
removing small dams and other blockages on the Bay's rivers by 2003. In 
the past decade, the program has reopened more than 1,000 miles of 
habitat to migratory fish.
    Restoring the Bay's fisheries would provide the region with a 
significant economic boost. According to the Fish and Wildlife Service, 
healthy fish populations in the Bay and its tributaries would generate 
$10 to $30 million per year in shad sport fishing alone.
    In fiscal year 2004, Congress should provide the CBP with $30 
million to better protect and restore this valuable ecosystem. In 
addition, Congress should make the Chesapeake Bay Small Watershed 
Grants Program, a popular funding source for education and restoration 
projects throughout the Bay watershed, a separate line item to ensure 
its long-term success and to help restore funding to other Bay program 
areas, including fish passage engineering, construction and 
coordination.

                      WATERSHED ASSISTANCE GRANTS

    Solving today's water quality challenges, especially habitat loss 
and non-point source pollution, requires the active involvement of 
local citizens who care about the water quality where they live and are 
willing to take action. Ideally, locally-based watershed partnerships 
provide the frameworks to focus public and private sector efforts to 
identify needs, define protection and improvement goals, implement 
solutions, and measure progress in protecting and restoring watersheds.
    Yet without a sustainable, healthy organizational structure and 
good leadership, the survival of local watershed partnerships becomes 
harder. Without a watershed steward, it becomes difficult to implement 
the actual on-the-ground restoration work. To address this problem, the 
U.S. Environmental Protection Agency (EPA) teamed up with citizen 
activists to institute the Watershed Assistance Grants program.
    Administered in collaboration with the EPA, the Watershed 
Assistance Grants program supports the growth, sustainability, and 
organizational capacity of local watershed partnerships across the 
United States in the form of grants. Its goals are essential to the 
river movement, as the program addresses a serious funding gap in local 
watershed protection efforts.
    Unfortunately, minimal program funding is available to build the 
strength of these partnerships. In the last three years, only 6 percent 
of the proposals received by the program were funded, with award 
amounts ranging from $1,000 to $30,000. To date, 1,360 proposals 
(requesting approximately $25 million) have been submitted, but only 80 
awards have been made to locally initiated watershed partnerships in 39 
states.
    Each year for the past two years, the program has reviewed $2 
million in worthwhile applications. In fiscal year 2004, Congress 
should provide the Watershed Assistance Grants program with $2 million 
to support innovative efforts that build the capacity of community-
based partnerships to conserve and restore watersheds.
                                 ______
                                 
 PREPARED STATEMENT OF THE STATE AND TERRITORIAL AIR POLLUTION PROGRAM 
   ADMINISTRATORS AND THE ASSOCIATION OF LOCAL AIR POLLUTION CONTROL 
                               OFFICIALS

    The State and Territorial Air Pollution Program Administrators 
(STAPPA) and the Association of Local Air Pollution Control Officials 
(ALAPCO) appreciate this opportunity to provide testimony regarding the 
fiscal year 2004 proposed budget for the U.S. Environmental Protection 
Agency (EPA), particularly regarding grants to state and local air 
pollution control agencies under Sections 103 and 105 of the Clean Air 
Act.
    STAPPA and ALAPCO are the national associations of air quality 
officials in 54 states and territories and more than 165 metropolitan 
areas across the country. The Clean Air Act gives state and local air 
quality officials the primary responsibility for implementing our 
country's clean air program on behalf of our citizens. These agencies 
must work to limit or prevent emissions of a host of pollutants from a 
variety of sources that have impacts on public health. These include 
particulate matter, ground-level ozone, toxic air pollution, and acid 
rain, among others. State and local air agencies must maintain the 
fundamental elements of their programs--the foundation of our clean air 
efforts--while, at the same time, addressing new and emerging problems.

                             RECOMMENDATION

    The President's fiscal year 2004 budget request calls for $228.5 
million for state and local air agency grants under Sections 103 and 
105 of the Clean Air Act, which is $5 million more than Congress 
appropriated for fiscal year 2003. While we appreciate this modest 
increase, the total is not sufficient to support our vital air quality 
efforts. Furthermore, the increase is earmarked for a specific 
purpose--air toxics monitoring--so it is not available to fund many of 
the different and varied programs that state and local air agencies 
must undertake. While we agree that monitoring toxic air pollution is 
very important, there are many other activities that are in great need 
of additional funding as well. The fact of the matter is that state and 
local air agencies are currently underfunded in general and are in need 
of substantial increases for numerous activities.
    We are very aware that there are tremendous budgetary pressures 
facing Congress, mostly due to the increased need for homeland security 
and expenses related to events in Iraq. As a result, many programs 
cannot be funded as robustly as needed. However, in light of the fact 
that air pollution poses a considerable threat to the public health of 
our country, we believe it should be considered one of our highest 
priorities. We recommend, then, that federal grants to state and local 
air quality agencies be increased by $25 million above the President's 
request, which is only a small share of the amount that is actually 
needed.

                    THE NEED FOR INCREASES IS GREAT

    It is well established that air pollution presents a pervasive 
national threat to public health and the environment. The health risks 
are not only significant, we know of no other environmental problem 
presenting greater risk. Air quality regulators at all levels of 
government have worked diligently for many years in pursuit of our 
clean air goals. In spite of the considerable improvements that we have 
achieved, clean, healthful air nationwide still eludes us.
    The magnitude of our air quality problem and the associated health 
effects, which will be discussed below, make it clear that funding for 
the control of air pollution should be a top priority. Unfortunately, 
the reality is that state and local air agencies are underfunded. 
Although states and localities devote significant resources to their 
air quality programs, air agencies have been operating for years with 
inadequate financial support from the federal government. As a result, 
many of our programs are not as robust as they need to be.
    A few years ago, STAPPA and ALAPCO, in cooperation with EPA, 
conducted a study of air program funding and estimated that federal 
grants to state and local air pollution control agencies under Section 
105 of the Clean Air Act fell short of our needs by nearly $100 million 
a year. While we have received modest funding increases in recent 
years, and additional grants are proposed for fiscal year 2004, these 
are simply not enough, especially in light of our expanded 
responsibilities. Unless our programs receive a substantially greater 
boost in funding, we will continue to face a serious financial 
shortfall, which will adversely affect our ability to protect and 
improve air quality. This shortfall will only become worse as greater 
demands are placed on our programs. Among the air program priorities 
for which state and local agencies require additional funding are 
hazardous air pollutants (HAPs); fine particulate matter, especially 
diesel particulate; compliance; inspections; monitoring; data 
improvements, including maintaining and improving infrastructures, 
emission inventories and modeling; haze and visibility monitoring; and 
outreach to and education of the public and regulated community.
    To address the problem of inadequate funds we have identified, we 
recommend that federal grants to state and local air pollution control 
agencies be increased in fiscal year 2004. While we believe an increase 
of $100 million would help our programs tremendously, we recognize that 
there are many other competing programs also in need of additional 
funding, especially this year. Therefore, we are requesting an increase 
of a quarter of that amount--$25 million.

               THE MAGNITUDE OF THE AIR POLLUTION PROBLEM

    Air pollution is a persistent, nationwide problem. Over 170 million 
tons of pollution are emitted into the air each year across the United 
States. One hundred and thirty-three million people live in areas of 
the country that violate at least one of the six health-based National 
Ambient Air Quality Standards (NAAQS), not to mention the many millions 
of people who are exposed to toxic air pollutants that cause cancer and 
other health problems. As noted, the health risks from air pollution 
are significant and far exceed those from almost every other 
environmental medium. State and local agencies must address a range of 
serious air quality problems, a few of which are briefly described 
below.
    Perhaps the most complex air quality problem we face is achievement 
and maintenance of the NAAQS for particulate matter and ozone. In 1997, 
EPA established a new standard for fine particulate matter 
(PM2.5). Although we are still working to complete the data-
gathering efforts necessary to determine which areas of the country 
violate the PM2.5 standard, one thing is very clear: 
PM2.5 poses the greatest health risk of any air pollutant, 
resulting in as many as 30,000 premature deaths each year. 
Additionally, fine particles are responsible for a variety of adverse 
health impacts, including aggravation of existing respiratory and 
cardiovascular disease, damage to lung tissue, impaired breathing and 
respiratory symptoms, irregular heart beat, heart attacks and lung 
cancer.
    Fine particles are not only emitted into the atmosphere directly 
from combustion processes, they are also formed secondarily in the 
atmosphere from such precursor emissions as oxides of nitrogen 
(NOX), sulfur dioxide and ammonia; in addition to their 
adverse health consequences, fine particles also contribute to regional 
haze. Based on preliminary air quality monitoring data, it appears that 
PM2.5 concentrations in over 170 counties throughout the 
U.S. exceed the health-based standard.
    Overall, progress in attaining clean air has been slowest with 
respect to ground-level ozone. Some parts of the country actually 
experienced increased levels of ozone in the past 10 years, and in 33 
national parks, ozone levels have risen by more than 4 percent. A 
significant factor in this trend is the increase we have experienced in 
NOX emissions, which are not only a precursor to ozone, but 
also a contributor to such public health and welfare threats as acid 
rain, eutrophication of water bodies, regional haze and, as mentioned, 
secondary PM2.5. Over the past 20 years, NOX 
emissions have increased by almost 9 percent, largely due to emissions 
from nonroad engines and diesel vehicles. Current data show that almost 
300 counties measure exceedances of the eight-hour ozone standard.
    The serious public health threat posed nationwide by emissions of 
hazardous air pollutants (HAPs) is another continuing concern we have. 
Last year EPA released the most recent results of its National-Scale 
Air Toxics Assessment (NATA), which provides nationwide estimates of 
exposure and health risks associated with 32 HAPs. While the NATA 
information reflects the situation of several years ago, it still 
provides the best indication we have of the magnitude of the problem. 
According to EPA, more than 200 million people in the U.S. live in 
areas where the lifetime cancer risk from exposure to HAPs exceeds 1 in 
100,000. Moreover, approximately 3 million face a lifetime cancer risk 
of 1 in 10,000. Considering that EPA has established 1 in 1,000,000 as 
the generally acceptable level of risk, these estimates not only 
illustrate the pervasive nature of the threat posed by HAPs, they also 
speak to the level of effort that will be required to reduce the risk 
and the high level of priority that should be placed on doing so.
    One HAP of special concern is mercury. Some portion of the mercury 
that is found in fish is the result of air emissions of that 
contaminant. The deposition of air emissions in our water bodies, and 
ultimately into our fish, is a significant problem, especially for 
those who rely on fish as an important part of their diets. Because of 
public health concerns, many states have had to issue advisories to the 
public about elevated concentrations of mercury in the fish that is 
caught in their water bodies. In fact, by 2001, 44 states had issued 
advisories, with 17 of them applying statewide. An additional nine 
states issued advisories for their coastal waters.
    The effect of air pollution on the nation's population is very 
troubling. This concern is only sharpened when we consider the adverse 
impact of air contaminants on one of our most sensitive and precious 
populations--our nation's children. Because they are still developing 
and spend more hours exercising outdoors, air quality has a greater 
impact on them. EPA recently published a study entitled, America's 
Children and the Environment (February 2003), which contains extremely 
disturbing data related to air pollution and children. For example, the 
report concludes the following:
  --in 2001, approximately 15 percent of children lived in counties in 
        which the one-hour ozone standard was exceeded on at least one 
        day per year;
  --in 2001, nearly 40 percent of children lived in counties that 
        exceeded the eight-hour ozone standard;
  --in 2001, approximately 25 percent of children lived in counties 
        that exceeded the PM2.5 particulate matter standard;
  --in 1996, all children lived in counties in which the combined 
        estimated concentrations of hazardous air pollutants exceeded 
        the 1-in-100,000 cancer risk benchmark; approximately 95 
        percent lived in counties in which at least one HAP exceeded 
        the benchmark for health effects other than cancer;
  --in 1999-2000, about 8 percent of women of child-bearing age had at 
        least 5.8 parts per billion of mercury in their blood (children 
        born to women with blood concentrations above that number are 
        at some increased risk of adverse health effects); and
  --between 1980 and 1995, the percentage of children with asthma 
        doubled, to 7.5 percent, and by 2001, 8.7 percent of all 
        children had asthma.
    The magnitude of the air quality problem and the associated health 
effects make it clear that significantly increased funding for the 
control of air pollution should be a top priority.

                    EXPENDITURE OF ADDITIONAL FUNDS

    STAPPA and ALAPCO recently collected information from their members 
to learn about funding priorities for state and local air pollution 
control programs. The report we compiled presents valuable information 
about the highest priorities of state and local agencies and how they 
would spend additional federal grant funds. We provided you this report 
when it was completed and would be happy to supply you with an 
additional copy if you wish.
    Among the general activities that state and local air agencies 
identified as their highest priorities, and those on which they would 
spend increased grant funds, are efforts addressing hazardous air 
pollutants; compliance, fine particulate matter, especially diesel 
particulates; inspections; monitoring; improvements in data, including 
maintaining and improving infrastructures, emission inventories and 
modeling; haze and visibility monitoring; and outreach and education 
for the public and regulated community. Depending on what the high-
priority issues in their areas are, state and local agencies identified 
a range of specific activities to which they would target a grant 
increase. These included the following, among others:
  --improve emission inventories of toxic air pollution;
  --increase the frequency of inspections of major and minor sources;
  --meet the various federal and public expectations under Section 112 
        (air toxics);
  --expand criteria pollutant monitoring;
  --improve risk assessment capacity;
  --reduce concentrations of fine particulates;
  --increase public outreach efforts;
  --improve small business compliance assistance;
  --purchase replacements for equipment that has outgrown its expected 
        usage;
  --increase the number of air toxics monitoring locations to better 
        characterize baseline concentrations and localized impacts; and
  --improve modeling tools to determine emission reductions needed.
    State and local air agencies' need for increased grants is very 
great; there are many critical activities that are currently 
underfunded. Many of these activities are the foundation of our air 
quality program and are, therefore, essential. Without additional 
federal grants, and the flexibility to target them to the activities 
that are most appropriate in individual states and communities, state 
and local air agencies will find it increasingly difficult to obtain 
and maintain healthful air quality.

                              EPA'S BUDGET

    Finally, notwithstanding the essential contributions of state and 
local air agencies to air quality, the federal government's job is 
critical as well. We need a strong and effective EPA to carry out its 
responsibilities if we are to achieve and maintain healthful air 
quality. Therefore, we recommend that Congress provide adequate funding 
for EPA so that the agency can continue its efforts related to 
particulate matter; mobile sources; national emission standards, 
including toxic air pollutant standards; training; health research and 
risk estimates; and modeling.

                               CONCLUSION

     We must always keep in mind that the most valuable asset our 
nation can ever have is a healthy population and a clean environment. 
In working to achieve our clean air goals, protecting these assets must 
be our highest priority. Accordingly, we strongly recommend and 
urgently request that Congress increase federal grants to state and 
local air quality agencies under Sections 103 and 105 of the Clean Air 
Act by $25 million in fiscal year 2004.
    Thank you very much for this opportunity to provide you with our 
testimony. Please contact us if you have questions or require any 
additional information.
                                 ______
                                 
       PREPARED STATEMENT OF THE PATH INDUSTRY STEERING COMMITTEE

    Mr. Chairman and Members of the Subcommittee, my name is Michael 
Chapman, and I am a home builder from Santa Fe, New Mexico. As Chairman 
of the Industry Steering Committee for the Partnership for Advancing 
Technology in Housing (``PATH'') program, I welcome the opportunity to 
submit testimony in support of continued funding for the PATH 
initiative at the fiscal year 2001 level of $10 million.
    First, let me thank you, Mr. Chairman, as well as Ranking Democrat 
Senator Mikulski and all the members of this subcommittee for your 
foresight and leadership in helping to support this program. Second, I 
would like to point out that the current HUD leadership has not put the 
PATH program in the Administration budget, making it necessary for the 
direction to come from this committee to ensure continued funding. 
Although I can't explain the rationale for HUD's position, PATH is 
clearly within the congressional mandate embodied in Title V of the 
basic HUD statute, that the

    ``Secretary shall require, to the greatest extent feasible, the 
employment of new and improved technologies, methods, and materials in 
housing construction, rehabilitation, and maintenance . . . with a view 
to reducing costs, and shall encourage and promote the acceptance and 
application of such advanced technology, methods, and materials by all 
segments of the housing industry''.

It is a goal of the Industry Steering Committee to educate the HUD 
leadership as to the importance of this program to the housing 
industry.
    The PATH program seeks to accelerate the creation and widespread 
use of advanced technologies in order to improve the quality, 
affordability, and durability of our nation's housing stock. A recently 
released report by the RAND Science and Technology Policy Institute 
makes a compelling case for federal investment in housing R&D programs 
such as PATH. It has long been recognized that housing is a major 
driver in the economy, and as such, innovation in housing has 
significant economic ramifications. The report states that ``innovation 
contributes positively to increased productivity and provides other 
benefits to all who are involved . . . [including] a broad range of 
housing industry participants from homebuilders to manufacturers, 
insurers, regulators, homeowners, and others.'' You should also know 
that the PATH program money is leveraging $5-6 million of private 
sector investment in program activities.
    Now in its fifth year of funding, the accomplishments of the PATH 
program are real and demonstrable, from funding for basic research 
activities at Universities to industry efforts at technology transfer.

                        PATH UNIVERSITY RESEARCH

    Due entirely to PATH and the interagency co-operation it has 
fostered, universities now have the only national research grant 
program for faculty in housing technology, and the only university 
program in housing technology in US history. HUD and NSF are 
collaborating on the PATH-NSF ``Program Awards in Housing Technology'' 
which provide funding to spur innovative basic research so researchers 
in universities and academic institutions can bring new conceptual 
approaches to the homebuilding community. PATH fosters this dedication 
and innovation by working directly with universities, connecting 
members of the academic research community with each other and to the 
housing industry. PATH makes it clear to Federal and industrial 
stakeholders that quality research on housing is being done in 
America's institutions of higher learning. To date, 28 universities 
have benefited from the Program awards, and numerous other faculty are 
starting to focus their research agendas for the benefit of America's 
housing. This includes work as varied as manufactured housing factory 
streamlining at Michigan State, studies of new house panel systems and 
information technologies at Virginia Tech, and new multifamily 
development systems at the University of Central Florida. Over the long 
term this will be of enormous benefit to housing, both in producing 
research results and in engaging students in housing technology 
curricula.

                 PATH GOVERNMENT/INDUSTRY COLLABORATION

    The inability to accurately determine the durability or predict the 
``service life'' of building materials exposed to outside weathering 
continues to be major barrier to innovation in housing. This is clearly 
illustrated by the dilemma faced by a manufacturer of a new product and 
the willingness of consumers to purchase this product. The manufacturer 
either can wait 5-20 years to fully develop the durability data from 
existing methods, or can introduce the product to the market without 
reliable durability data and expose the corporation to potentially 
significant liability.
    The service life prediction problem extends far beyond the housing 
industry. It encompasses everything from plastic toys for children, to 
coatings for automobiles and orbiting satellites. Despite the obvious 
need for improved service life prediction, it is one of a handful of 
scientific problems that has not experienced significant progress over 
the last 100 years. This problem has proven too complex to address with 
the resources of any individual entity such as a university laboratory 
or single corporation. PATH has recognized, facilitated and invested in 
a unique public/private sector partnership led by the Commerce 
Department's National Institute of Standards and Technology (NIST). The 
partnership includes four federal agencies, the Smithsonian Institution 
and eighteen major U.S. corporations. This multidisciplinary public-
private approach is leveraging knowledge discovered in skin cancer 
research and applying it to measuring and predicting the weathering of 
building materials.
    This NIST-led approach has developed a device known as ``SPHERE'' 
(Simulated Photodegradation by High Energy Radiant Exposure) which is 
illustrated in a separate handout. SPHERE compresses the time required 
to evaluate a material's response to weathering in two ways: first, it 
operates 50 times faster than outdoor exposure, and second, it can 
accommodate more than 500 samples distributed into as many as 32 
specimen chambers with known UV, temperature, and humidity conditions. 
Each chamber can generate exposures similar to a Texas summer dawn, a 
North Dakota winter night, a mid-summer Florida afternoon and a 
California sunset, plus up to 28 other environments, all at the same 
time. Materials exposed to the SPHERE's UV light for one day receive 
the equivalent of 50 days of sunlight.
    Although NIST is still in the early stages of this research, the 
SPHERE has already challenged long-held beliefs about the weathering of 
materials. For example, it is widely believed that paint fails through 
a process where it wears away due to intense sunlight exposure. This 
PATH-sponsored research has shown that, in reality, the coating fails 
through the formation of pits. Shown in another handout at an early 
stage of degradation, these pits are just one-twentieth the width of a 
human hair. They are large enough to breach the coating, yet small 
enough that the coating appears defect free to the eye. Surprisingly, 
these damaging pits are formed only when sunlight and water (humidity) 
are combined, and not just by intense sunlight.
    This result plus others embolden the private-sector partners to 
believe that this PATH research is on the cusp of fundamentally 
changing the methods used to predict durability. The ability to rapidly 
and accurately predict in-service performance allows manufacturers to 
deliver innovative products more quickly into the housing and other 
markets.
    This innovation will take many forms. Our private sector partners 
are actively considering two innovations. The first is materials 
specifically formulated for local climate durability. The second is 
tools enabling builders, owners, operators and even homeowners the 
ability to calculate the economic consequences of particular building 
material or formulation choices in constructed facilities.

                        PATH TECHNOLOGY SCANNING

    PATH has spent considerable time searching outside of the home 
building industry to identify promising technologies that could help 
meet the program's goals. Summaries of the findings have been published 
and widely distributed (see handouts). Dozens of technologies that are 
potentially applicable to home building have been identified. For 
example, the U.S. military is involved in research to develop fabric-
based materials that can transport power and signals. These types of 
breakthroughs could have a significant impact on the development of 
panelized construction for homes by providing highly durable materials 
that can have combined functions, such as wall coverings and power. On 
the private sector side, the composite materials industry is now 
developing materials that can serve as both the structure and the 
finish surface on a wall, floor, or roof. These are exciting 
developments. Our challenge is to work with the manufacturing and 
building communities to realize their potential and bring them into the 
building process.

                      PATH TECHNOLOGY ROADMAPPING

    The objective of PATH technology roadmapping is to identify 
technological research in home building and serve as a guide for 
research investments by government and industry. The roadmaps identify 
the main areas for research and development that can advance the PATH 
goals. Roadmapping results are being provided to private sector 
interests to guide their technology development and their investments 
in research and development. Through this process, new technologies 
will be generated and additional research needs will be identified.
    PATH initiated the overall roadmapping process during early 2000. 
Participation to date includes over 300 builders and remodelers, 
housing manufacturers, material and product suppliers, academicians, 
researchers, code officials and other stakeholders who identified and 
prioritized technologies that hold promise for achieving PATH's goals. 
The result is five specific roadmapping activities that are currently 
in different stages of development:
  --Information Technology to Accelerate and Streamline Home Building
  --Whole-House and Building Process Redesign
  --Energy Efficiency in Existing Homes
  --Technology Roadmapping for Manufactured Housing, and
  --Advanced Panelized Construction.
    For example in the Advanced Panelized Construction roadmap, an 
important first step was to identify materials from other industries 
that are stronger, lighter in weight, and more durable; and that could 
be used successfully in housing construction. One example is the honey-
comb technology which has been used for decades by the composite 
industry to build airplanes, subway cars, and other types of vehicles 
because it is strong, lightweight, and durable. Combining this 
technology with a durable high-pressure laminate finish could lead to 
the next generation of panels for house construction. The next step is 
to make the panels more cost effective to produce, and to design for 
the integration of utilities, such as electric wiring and plumbing.

                     PATH AND MANUFACTURED HOUSING

    Major strides have been made in the area of manufactured home 
innovation. According to the Congressional ``Millennial Housing 
Commission'' report, the manufactured housing industry provides 72 
percent of the nation's affordable housing. In the past three years, 
PATH research has helped develop approaches to eliminate moisture 
problems (the underlying cause of mold and material degradation), 
improve energy efficiency by more than 20 percent, increase factory 
production efficiencies, create more durable foundation systems able to 
withstand natural disasters, and expand the cost and quality advantages 
of factory manufacturing to a larger portion of the home building 
industry. PATH research plays a pivotal role in keeping housing costs 
under control for low and moderate income buyers.

                           FIELD EVALUATIONS

    There are over 40 PATH field evaluation projects that have been 
completed, are in progress, or are under development. As you can see by 
the stars on the map, these projects are distributed across the United 
States. I personally participated in a field demonstration in Santa Fe 
that utilized technologies that could greatly benefit housing in the 
arid western states. In this project we installed a rainwater 
collection system as well as a graywater reuse system. These systems 
allowed us to downsize the septic system, fully landscape the lots and 
even plant a small orchard while saving water.
    Another example of PATH's impact is a recently initiated field 
demonstration taking place on a Marine base in Oahu, working with the 
University of Hawaii and a military contractor to reduce the cost of 
steel construction. The U.S. military is particularly dependent on 
steel framing for their new homes because of the climates in which they 
typically build. In Hawaii, the Formosan termite has made steel framing 
a necessity for almost all new housing.
    A significant cost barrier inherent in residential steel 
construction is in fastening. The typical hammer and nails used in wood 
frame construction is extremely quick and efficient. By contrast, the 
screws and special fasteners used in steel framing are much more labor 
intensive and more expensive. One promising category of fastening 
methods is ``clinching''. The PATH Technology Inventory describes 
clinching as a method of joining two pieces of sheet metal by pressing 
them together into a die that forms a connection. Expensive fasteners 
such as self-tapping screws or pins are not required with clinching. 
However, the connections need to be field tested for ease of use by the 
labor force, laboratory tested for strength and corrosive resistance, 
and approved by code officials. Current clinching tools may also need 
to be redesigned for this application.
    Although the U.S. military is leading the way, the private sector 
is quickly following their lead. Hunt Building Company, an El Paso-
based military housing contractor, is working with PATH on field tests 
on military housing. A local production home builder in Hawaii is 
filling the same role on homes built for the private sector. Both 
companies are investing significant resources of their own in the 
clinching demonstration, which can potentially lead to lower 
construction costs and improved quality. We expect initial results on 
this project sometime this fall.

                               CONCLUSION

    In summary, the PATH program has had wide reaching impacts. PATH 
has been consistently praised by the National Academy of Sciences in 
three evaluation reports. PATH has awarded grants and contract work to 
over 60 firms including numerous small and minority businesses, 
universities, manufacturers, and trade associations. PATH has leveraged 
government funding with private sector investments. And PATH has 
created an environment of innovation in an industry that must innovate 
to have a strong future. We request your help and support to make the 
program continue.
                                 ______
                                 
   PREPARED STATEMENT OF THE NATIONAL ASSOCIATION OF COUNTIES, U.S. 
 CONFERENCE OF MAYORS, NATIONAL LEAGUE OF CITIES, NATIONAL ASSOCIATION 
 OF LOCAL HOUSING FINANCE AGENCIES, AND NATIONAL COMMUNITY DEVELOPMENT 
                              ASSOCIATION

    Mr. Chairman and Members of the Subcommittee, this statement is on 
behalf of the National Association of Counties, the U.S. Conference of 
Mayors, the National League of Cities, the National Community 
Development Association, and the National Association of Local Housing 
Finance Agencies. We appreciate the opportunity to present our views on 
fiscal year 2004 appropriations for the Department of Housing and Urban 
Development, and in particular, the two priority programs for local 
governments--the Community Development Block Grants (CDBG) and the Home 
Investment Partnerships program (HOME).
    We thank you, Mr. Chairman and Members of the Subcommittee for your 
continuing support for these priority local government programs. We 
were especially pleased by the $111 million increase in HOME formula 
funding included in the fiscal year 2003 omnibus appropriations bill.
    Mr. Chairman, local government officials urge you to increase CDBG 
formula funding in fiscal year 2004 to $5 billion and HOME formula 
funding to $2.25 billion. These programs work, they make a real 
difference in people's lives, and it is our sincere hope that they will 
be funded at levels that reflect the very real community development 
and affordable housing needs that exist across our country.

              WHY CDBG IS EFFECTIVE AND CRITICALLY NEEDED

    Now in its 29th year, CDBG is arguably the Federal government's 
most successful domestic program. CDBG helps communities tackle some of 
their most serious community development challenges. The CDBG program's 
success stems from its utility, i.e., providing cities and counties 
with an annual, predictable level of funding, which can be used with 
maximum flexibility to address unique neighborhood revitalization 
needs. Based on the fiscal year 2002 CDBG grantee data from the IDIS 
system, CDBG provided funding to 187,380 housing units. In addition to 
providing funding to housing units, the program created or retained 
over 90,000 jobs principally for low and moderate income persons.
    The great success of the CDBG program has come through dedicated 
practitioners working very hard to ensure good program performance and 
timely expenditure of funds. As cities face greater demands on staff to 
monitor subrecipients, undertake good effective program planning, the 
resources are just not there to get and keep staff properly trained. 
There have been no CDBG funding available for technical assistance and 
training at the national level or at the local field office level. 
Therefore, we ask the Subcommittee to include in this appropriations 
bill statutory language for a guaranteed source of funding for HUD and 
interested groups to provide technical assistance and training in much 
the same way as does the HOME program.
    Throughout its history, CDBG has garnered tremendous support from 
virtually all sectors, public and private. States and local governments 
have seen modest increases in formula funding which has been well 
received, however with the completion of the 2000 Census, the 
subsequent redistribution of funds, and with the new definition of MSA 
that will be incorporated into the CDBG program in fiscal year 2004, 
there will likely be an additional 80 to 100 new entitlement cities 
added to the program If funding for the CDBG formula program remains at 
its current level, all existing cities in the program will receive 
cuts. Many cities received substantial cuts resulting in their fiscal 
year 2003 allocation, resulting from the 2000 Census data. Should 
formula funding levels main stagnant, with approximately 80-100 new 
communities to share a shrinking pot, many community development 
programs will not receive enough funding to continue to operate. 
Therefore, we the locally elected officials, urge the Subcommittee to 
provide at least $5 billion in formula grants for CDBG in fiscal year 
2004.

              HOME INVESTMENT PARTNERSHIPS (HOME) PROGRAM

    The HOME Investment Partnerships (HOME) Program is also an 
effective block grant program; providing affordable, decent, and safe 
housing to thousands of families across the country. According to 
cumulative HUD data, since 1992 HOME has helped to develop or 
rehabilitate over 718,000 affordable homes for low- and very-low income 
families. Ninety percent of the HOME funds used for rental housing must 
be targeted to families with incomes at or below 60 percent of the area 
median. The balance may assist those with incomes up to 80 percent of 
the median income. The majority of HOME funds have been committed to 
housing that will be occupied by very low-income people and a 
substantial amount will assist families with incomes no greater than 30 
percent of median. As of the end of February 2003, more than 84 percent 
of HOME assisted rental housing was benefiting families at or below 50 
percent of area median income. Forty nine percent of all home-assisted 
rental housing (including tenant-based rental assistance) was helping 
families with incomes at or below 30 percent of area median income.
    HOME funds also help low- and very-low income families realize the 
dream of homeownership by providing for construction and rehabilitation 
of housing as well as providing the down payment and or closing cost 
assistance in the form of second mortgages necessary to bridge the gap. 
Since 1992, HOME funds have been committed to 140,170 homeowner units, 
with an additional 270,258 household receiving homebuyer assistance.
    HOME is cost effective and provides the gap financing necessary to 
attract private loans and investments to projects. For each HOME 
dollar, $2.92 of private and other funds has been leveraged since the 
program's inception. This clearly illustrates the effective and 
judicious use of HOME funds by participating jurisdictions.
    We are concerned that there is an increasing use of set-asides 
within HOME. We note that the Bush Administration has proposed a new 
$25 million innovative lead hazard demonstration program within HOME. 
We prefer the new lead hazard grant program that was funded in the 
fiscal year 2003 omnibus appropriations bill, aimed at communities with 
the highest lead hazard abatement needs, to the Administration's HOME 
set-aside. We support the Administration's proposal to fund housing 
counseling as a separate program, instead of as a set-aside under the 
program. We hope that this trend continues with other set-asides under 
HOME.
    We greatly appreciate the increase of $111 million in formula 
funding for the program in fiscal year 2003. However, with the 2000 
Census data, approximately 20 new participating jurisdictions will 
become eligible to receive HOME funds in fiscal year 2004, thereby 
eroding this increase in formula funding. We, therefore, urge you to 
fund the HOME program in fiscal year 2004 at a level of at least $2.25 
billion in formula grants.

                      SECTION 108 AND BROWNFIELDS

    We have serious concerns about the Administration's decision to 
zero out several important economic development tools in the fiscal 
year 2004 budget proposal, including the Section 108 loan guarantee 
program and the Brownfields Economic Development Initiative (BEDI) 
program. These programs fund much-needed investment in our communities, 
helping to create jobs and reclaim contaminated sites that can be made 
productive again. The Section 108 program provides communities with a 
source of financing for economic development, housing rehabilitation, 
public facilities, and large-scale physical development projects. BEDI 
annually provides $25 million in grants to communities for brownfields 
projects focused on economic redevelopment. In its fiscal year 2004 
budget, the Administration has proposed to shift all responsibility for 
the redevelopment of brownfields to the EPA. The EPA focuses on 
assessment and remediation of contaminated sites, not the redevelopment 
of the site, which is where HUD's expertise lies. We request that the 
BEDI program remain at HUD and that you follow the Administration's 
original proposal and fund BEDI at $50 million for fiscal year 2004. We 
ask you to fund Section 108 at its fiscal year 2003 level.

RENEWAL OF EXPIRING SECTION 8 RENT SUBSIDY CONTRACTS AND BLOCK-GRANTING 
                              OF SECTION 8

    Mr. Chairman, we commend the Subcommittee and the Congress for 
fully funding all expiring tenant-based and project-based rent subsidy 
contracts in fiscal year 2003 as in previous years. We urge you to do 
the same this year. The need for affordable housing continues to grow 
as housing prices increase faster than wages for low-income Americans.
    We note, too, that the Administration has proposed converting the 
Section 8 program into a block grant and turning program administration 
over to the states. We are strongly opposed to this proposal. The 
Section 8 voucher program is a highly cost-effective, market driven 
program. Though voucher utilization has become more difficult in recent 
years, a recent survey by leading public housing and private landlord 
groups shows that local Section 8 voucher administrators have adapted 
and utilization rates have gone up 6 percent in the last year. Moreover 
Section 8 is not only a successful means of providing decent, safe and 
affordable housing in its own right, but it is also an important 
lynchpin in supporting a wide variety of other housing programs such as 
homeless grants, HOPE VI and homeownership. We are also concerned that 
block granting will result in a reduction in the number of families for 
which the federal government will provide assistance. We do not believe 
that building a larger state bureaucracy is the most effective means of 
moving Housing Choice Voucher funds to the citizens who need them. We 
urge the Congress to reject this proposal.

                        HOMELESS HOUSING FUNDING

    Mr. Chairman, we support a funding level of $1.32 billion for 
homeless housing programs as proposed by the Bush Administration. We 
have been working with the authorizing committees to craft legislation 
converting the McKinney Act's homeless housing programs into a pure, 
formula-driven block grant program, like the CDBG and HOME block grant 
programs. In order for such a program to give sufficient funds to 
communities to carry out meaningful projects at the local level, it 
needs an appropriation of at least $1.3 billion. We support the 
existing Continuum of Care planning process and would recommend that 
this process be codified as part of the block grant. We also urge full 
funding of Shelter Plus Care contract renewals. We also support the 
Administration's proposed $50 million Samaritan Initiative. This 
initiative is intended to address the most pressing homeless issue--
chronic homelessness--to be joined with $10 million from the Department 
of Health and Human Services and the Veteran's Administration to fund 
services, such drug abuse treatment and primary health care for this 
population.

                         LEAD HAZARD REDUCTION

    According to HUD, approximately 25 million housing units have lead 
hazards. Of this number, 5.6 million house children under the age of 
six. At least 1.6 million of these units house low-income families with 
children under the age of six, the population most at-risk of elevated 
blood lead levels. This is a serious health problem that must be 
remedied.
    Programs such as CDBG and HOME assist this population with their 
rehabilitation needs, but these funds can only go so far. We want to 
thank Congress for providing $50 million for a new lead hazard 
reduction program that will begin in fiscal year 2004. This program is 
the first step to providing funding to eradicate lead-based paint from 
the nation's housing; however, because of the cost of abatement of lead 
hazards, much more funding is needed. We urge Congress to provide $75 
million for this program in fiscal year 2004, the same level as 
proposed initially by the Senate in fiscal year 2003. We also ask that 
Congress re-shape the program into a formula-allocated block grant to 
those areas that are most in need of the funds. A competition is too 
time-consuming for both grantees and HUD. It also doesn't provide the 
money to localities in a quick fashion.

                             PUBLIC HOUSING

    We note that the President's budget proposes to zero out the HOPE 
VI demolition and replacement of severely distressed public housing 
program. We oppose this recommendation. The HOPE VI program eliminates 
distressed public housing and replaces it with mixed-income 
developments. It harnesses the private sector, working in partnership 
with public housing agencies. Since 1993, the $3.9 billion appropriates 
for this program has resulted in the demolition of some 54,000 units 
and another 45,000 are planned for demolition.
    The fiscal year 2004 budget also proposes to fund the public 
housing operating program at $3.57 billion, down from the $3.6 billion 
appropriated in fiscal year 2003. However, the fiscal year 2003 
appropriation had to make up for a $250 million shortfall from fiscal 
year 2002. This left a shortfall in fiscal year 2003 that will have to 
be made up in fiscal year 2004. We urge the Subcommittee to provide 
sufficient additional funding in fiscal year 2004 to solve the 
shortfall going forward. In addition, with the continued shortfall, 
there is no opportunity to use operating funds to fund the drug 
elimination efforts envisioned when that program was terminated two 
years ago.

              ADMINISTRATION'S TAX FREE DIVIDEND PROPOSAL

    Though the issue is not before this Subcommittee, we want to advise 
you of our deep concern over the unintended adverse impact of the 
Administration's tax-free dividend proposal on two key affordable 
housing resources--the Low-Income Housing Tax Credit and tax-exempt 
housing bonds. According to an analysis of the proposal by Ernst & 
Young, the dividend proposal, if enacted, would result in a loss of 
40,000 units annually or 35 percent of the 115,000 currently produced. 
It would also add 25 to 50 basis points in additional borrowing costs 
to issuers of tax-exempt bonds, including housing bonds. This is a 
serious loss of critical housing units at a time of growing needs of 
households with worst-case housing needs--paying more than 50 percent 
of their income for rent or living in substandard housing. We are 
working with the tax-writing committees to protect the tax credit and 
bonds from the unintended impact of the proposal as it works its way 
through the legislative process. We urge the Subcommittee to join us in 
that effort.

                       FAITH BASED PROPOSED RULE

    The HUD programs administered by local governments have enjoyed a 
long and wonderful partnership with faith-based entities across the 
nation. Without the support of these and other non-profit groups, the 
meals on wheels programs, community center activities, day care and 
other much needed services would not be part of the daily lives of many 
of our citizens. HUD's proposed faith-based rule implies that these 
great partnerships between cities and their faith-based community--that 
have come to be common place--need federal intervention to ensure 
greater success. The locally elected officials and the community 
development and housing practitioners that administer HUD programs want 
you to know that we greatly support faith-based groups working with us 
in our communities and that there is no additional incentive required 
to strengthen the powerful relationships that currently exit.

                               CONCLUSION

    Mr. Chairman, local government officials believe that a strong 
Federal role in housing and community development programs must 
continue. Since the Housing Act of 1937, Congress has enunciated, and 
repeated in subsequent housing acts, that, as a matter of national 
policy, the Federal government has an obligation to assist states and 
local governments in providing decent, safe and sanitary housing for 
lower income households. Perhaps, Congress said it best in a 
``Declaration of National Housing Policy'' included in Section 2 of the 
Housing Act of 1949:

    ``The Congress hereby declares that the general welfare and 
security of the nation, and the health and living standards of its 
people, require housing production and related community development 
sufficient to remedy the serious housing shortage, the elimination of 
substandard and other inadequate housing through the clearance of slums 
and blighted areas, and the realization as soon as feasible, of the 
goal of a decent home and suitable living environment for every 
American family.
    We submit to you that, while progress has been made toward this 
goal, it has not been fully achieved. The Federal government must 
continue its commitment to this National Housing Policy, backed by the 
necessary resources with which to continue the battle against 
neighborhood deterioration and a decaying housing stock.''

    Mr. Chairman, we look forward to working with you and the 
Subcommittee in adequately funding HUD's Housing and Community 
Development Programs for fiscal year 2004. Thank you.
                                 ______
                                 
               PREPARED STATEMENT OF THE AMERICAN LEGION

    Mr. Chairman and Members of the Subcommittee, thank you for the 
opportunity to submit testimony reflecting the views of the 2.8 million 
members of The American Legion regarding the Department of Veterans 
Affairs' (VA) fiscal year 2004 budget request. As veterans' advocates, 
it is our job to ensure that VA is funded at a level that is adequate 
to fulfill the mandate ``to care for him who has borne the battle, his 
widow and his orphan.''
    On April 11, the House and Senate passed the budget resolution 
which lays out the funding levels for the appropriations of the federal 
government and it's agencies. Included in this resolution is an 
understanding that the VA mandatory levels (Compensation and benefit 
programs) will not be subject to budget offsets in fiscal year 2004. 
The Senate and House agreed to set the funding level for VA at $63.8 
billion in budget authority. The Conference also agreed to provide 
within that level $30 billion for discretionary spending for fiscal 
year 2004. This is a $3.5 billion increase from the levels appropriated 
for 2003, but is slightly less than the Administration's budget 
request.
    The American Legion is adamant that VA is provided full funding at 
these levels. In the wake of Operation Iraqi Freedom it is clear that 
VA will have a vital role in providing health care and transitioning 
programs to our returning service members. The ability of the VA to 
provide these necessary and earned benefits and programs will be 
incumbent on the funding provided by Congress.
    For over a decade, The American Legion has advocated allowing 
veterans to spend their health care dollars on the health care system 
of their choice. The American Legion believes the Veterans Health 
Administration (VHA) can efficiently expand to meet the health care 
needs of the men and women who have honorably served this nation in its 
armed forces--in war and in peace.
    The American Legion believes the level of funding proposed in the 
fiscal year 2004 budget request may meet the President's goals, but 
will lead to over 1.2 millions veterans leaving the system. The 
American Legion also has reservations about the budgetary impact on 
other aspects of VA operations, to include the Veterans Benefit 
Administration (VBA).

                              MEDICAL CARE

    The American Legion recommends $24.5 million for direct medical 
care in fiscal year 2004; however, strongly recommend to add, rather 
than offset, MCCF and authorize VA to bill, collect, and retain third-
party reimbursements from the nation's largest health insurance 
program--Medicare--for the treatment on nonservice-connected medical 
conditions on a fee-for-service basis.
    VA's integrated health care delivery system is not only the largest 
health care provider in the nation, but it has established itself as a 
formidable leader in the health care industry. Veterans receive quality 
health care and are choosing VA as their health care provider in record 
numbers. VA is currently struggling to meet their needs and, with VA's 
proposed fiscal year 2004 budget, it will continue to struggle.
    The President's fiscal year 2004 budget request introduces several 
proposals to generate increased revenues from the pockets of veterans 
through an enrollment fee, copayments and third-party reimbursements. 
According to VA, these proposals will reduce the resource demand by 
$1.3 billion collectively and hopefully encourage 1.2 million veterans 
to leave the system. The budget request also seeks management savings 
of over $1.1 billion. This adds up to a $2.4 billion offset to the 
requested $25.4 billion budget for medical care.
    The American Legion is concerned with several of the budget 
proposals:
  --Limit enrollment.--VA proposes to continue the suspension of 
        enrollment of new Priority 8 veterans. These veterans have 
        incomes above $24,644 for a single veteran and above the 
        Housing and Urban Development (HUD) geographic means test 
        level, to include noncompensable, 0 percent service-connected 
        veterans. Although these service-connected veterans may seek 
        health care for their service-connected disability, they are 
        prohibited from enrolling for treatment of or prescriptions for 
        any nonservice-connected medical conditions.
          The American Legion continues to disagree with this recent 
        decision. We believe denying veterans access to VA health care, 
        particularly while we prepare to go to war, is unacceptable. 
        Many recently separated veterans would fall into this Priority 
        Group. By denying health care to Priority Group 8 veterans, VA 
        is sending the message that these veterans are not welcomed, 
        even if they have the expendable income or private health 
        insurance coverage that VA can bill for the cost of their 
        nonservice-connected medical treatment. In some cases, a simple 
        ``zip code'' is the difference between being listed as a 
        Priority Group 7 or 8--not their honorable military service.
          In order for more veterans to access VA health care, 
        additional revenue streams must be generated to supplement the 
        discretionary funding. The American Legion strongly advocates 
        Congress authorize VA to bill, collect, and retain third-party 
        reimbursements from CMS for treatment of Medicare-allowable, 
        nonservice-connected medical conditions of Medicare-eligible 
        veterans. Since Medicare is a Federally mandated, pre-paid 
        health insurance program, The American Legion believes 
        Medicare-eligible veterans should be allowed to choose their 
        health care provider.
  --Assess an annual enrollment fee.--VA proposes a $250 annual 
        enrollment fee for non-service-connected (NSC) Priority 7 
        veterans and all Priority 8 veterans. Priority 7 veterans have 
        incomes above $24,644 for a single veteran and below the HUD 
        geographic means test level, to include noncompensable, 0 
        percent service-connected disabled veterans. This annual 
        enrollment fee would apply even if the veteran has third-party 
        health insurance that reimburses VA for the treatment of 
        nonservice-connected medical conditions. This annual enrollment 
        fee would apply even if the veteran were willing to make 
        copayments for treatment of nonservice-connected medical 
        conditions, pharmacy, and specialized care (like long-term 
        care). However, this annual enrollment fee does not guarantee 
        timely access to quality health care. According to President 
        Bush and Secretary Principi, these veterans are their primary 
        focus.
          The American Legion cannot support this proposal because it 
        is designed to discourage the enrollment of veterans based 
        solely on their income and not their honorable military 
        service. Furthermore, it does not guarantee these veterans 
        timely access to quality health care. There are Priority Group 
        7 and 8 veterans with military awards and decorations for 
        wartime service that, for the grace of God, were not seriously 
        wounded.
          The American Legion would urge Congress to reject this 
        proposal just as it did the Administration's plan last year to 
        charge Priority Group 7 veterans a $1,500 deductible.
  --Change the veteran's share of outpatient and pharmacy copayments.--
        This proposal entails reducing the pharmacy copayment burden 
        for Priority 2-5 veterans, while increasing Priority 7 and 8 
        pharmacy copayments from $7 to $15. It also increases 
        outpatient primary care copayments from $15 to $20 for all 
        Priority 7 and 8 veterans.
          While The American Legion applauds the reduction of the 
        pharmacy copayment for veterans in Priority Groups 2-5, the 
        recent increase in copayments from $2 to $7 was accompanied by 
        a decrease in the outpatient copayment from $50 to $15. The 
        American Legion would rather VA seek reimbursements from CMS 
        for all enrolled Medicare-eligible veterans being treated for 
        nonservice-connected medical conditions, before trying to 
        balance the budget on the backs of Priority Groups 7 and 8 
        veterans.
  --Require reimbursement for services provided to health maintenance 
        organization and preferred provider organization members.--This 
        proposal seeks to establish VA as a preferred provider for 
        members of Health Maintenance Organizations (HMOs) and 
        Preferred Provider Organizations (PPOs) and would obligate 
        these organizations to reimburse VA for health care provided to 
        their members.
          The American Legion believes this change would help VA 
        increase third-party reimbursements. The fact that VA currently 
        cannot bill HMOs and PPOs is unfair considering VA treats many 
        veterans who belong to these organizations. The American Legion 
        would welcome this change; however, it seem odd to mandate 
        private sector insurance plans to recognize VA as a preferred 
        provider and not mandate CMS to recognize VA as a Medicare 
        provider, especially since VA meets or exceeds most of CMS' own 
        quality performance standards. If CMS' goal is to provide its 
        beneficiaries with the best quality health care, VA should be a 
        recognized Medicare provider. In fact, CMS Director Scully 
        claimed before the Presidential Task Force To Improve Health 
        Care Delivery for Our Nation's Veterans (PTF) that he 
        encourages veterans to go to VA rather than private health care 
        providers.
  --Change the institutional long-term care services provided to 
        veterans.--This proposal would allow non-institutional, as well 
        as institutional workload, in community and State Home Nursing 
        programs along with VA Nursing to count toward the 1998 
        capacity level. VA would supposedly expand their total long-
        term care capacity by increasing non-institutional long-term 
        care.
          The American Legion believes the proposal will further 
        stagnate long-term care services. The passage of the Veterans 
        Millennium Health Care and Benefits Act (Public Law 106-117) on 
        November 30, 1999, was the first step toward ensuring a 
        comprehensive long-term care plan for veterans. The American 
        Legion fully supported this insightful decision by Congress, 
        especially with the aging veterans' population. It required the 
        VA to bring the census back to 1998 levels. So far they have 
        failed to do that. VA has the authority to establish copayments 
        for nonservice-connected veterans in need of long-term care--a 
        time in their lives when they and their families desperately 
        need help from VA. The President and the Secretary want to 
        reduce the number of long-term care beds without any 
        recommendations from the PTF or the Capital Assets Realignment 
        for Enhanced Services (CARES). In fact, the CARES process is 
        currently not addressing either long-term care or mental health 
        inpatient needs. The ``market plans'' currently being developed 
        by each VISN will not be including institutionalized care 
        involving long-term care or mental health. The American Legion 
        cannot accept this recommendation.

                    MEDICAL AND PROSTHETIC RESEARCH

    The American Legion recommends $445 million for medical and 
prosthetic research in fiscal year 2004.
    Two of the biggest challenges facing VA's Medical and Prosthetic 
Research Program are facility infrastructure and recruitment and 
retention. Like the rest of VHA's buildings, research facilities are in 
desperate need of repair. They have been neglected over the years due 
to budgetary constraints. Currently, R&D have nearly 30 facilities in 
varying states of disrepair. The condition of these facilities impacts 
the recruitment and retention of qualified researchers. The ability to 
maintain a state-of-the-art facility is vital to retaining talented and 
motivated researchers.
    The accomplishments of the VA research program cannot be 
overstated. The program has been recognized both nationally and 
internationally for its efforts toward the betterment of veterans' 
lives and advances in their health care. Without proper funding the 
program cannot possibly maintain its current level of success. The 
American Legion believes VA's budget request for $408 million is 
inadequate.

            MEDICAL CONSTRUCTION AND INFRASTRUCTURE SUPPORT

                       MAJOR & MINOR CONSTRUCTION

    The American Legion recommends $320 million for major construction 
and $240 million for minor construction to make a combined total of 
$560 million.
    Year after year, needed major and minor construction projects are 
not funded, because the money is just not there. A 1998 study conducted 
by Price-Waterhouse recommended that VA fund 2 percent to 4 percent of 
Plant Replacement Value (PRV) per year and to reinvest in new 
facilities to replace aging facilities. The conclusion of this analysis 
was that VA's reinvestment rate of .84 percent was significantly lower 
than the benchmark of 2 percent. That equates to hundreds of millions 
of dollars that conceivably could be used for major construction 
projects. Private consultants have been warning for years that dozens 
of VA patient buildings were at the highest level of risk for 
earthquake damage or collapse, yet funding continues to be woefully 
short of what is actually needed to correct this problem. The 
President's budget request of $422 million falls well short of funds 
needed to ensure the safety of the nation's veterans.

     GRANTS FOR THE CONSTRUCTION OF STATE EXTENDED CARE FACILITIES

    The American Legion recommends funding of $115 million for this 
program.
    The State Veterans Home Program is an important adjunct to VA's own 
nursing, hospital and domiciliary programs. The American Legion 
believes it must continue, and even expand, its role as an extremely 
vital asset to VA. This program has proven to be a cost-effective 
provider of quality care to many of the nation's veterans.
    The American Legion recognizes the growing long-term health care 
needs of older veterans and would like to reemphasize the essential 
service that the State Veterans' Home Program provides to these 
veterans. The program is a viable and important alternative health care 
provider to the VA system.

                 NATIONAL CEMETERY ADMINISTRATION (NCA)

    The American Legion recommends $150 million for the National 
Cemetery Administration in fiscal year 2004.
    The National Cemetery Administration (NCA) honors veterans with a 
final resting-place and lasting memorials that commemorate their 
service to the nation. More than two million Americans, including 
veterans of every war and conflict--from the Revolutionary War to the 
Gulf War--are honored by burial in VA's national cemeteries. Nearly 
14,000 acres of land are devoted to this formidable mission.
    The Veterans' Millennium Health Care and Benefits Act (Public Law 
106-117) required NCA to establish six new National Cemeteries. Fort 
Sill opened in 2001 under the fast-track program, while the remaining 
five, Atlanta, Detroit, South Florida, Pittsburgh, and Sacramento are 
in various stages of completion.
    Maintaining cemeteries as national shrines is one of NCA's top 
priorities. This commitment involves renovating gravesites by raising, 
realigning and cleaning headstones and markers. The work that has been 
done so far has been outstanding however, adequate funding is key to 
maintaining this very important commitment.

                     STATE CEMETERY GRANTS PROGRAM

    The American Legion recommends $37 million for the State Cemetery 
Grants Program in fiscal year 2004.
    The State Veterans Cemetery Grant Program continues to be a very 
popular and much needed program administered by VA. This program was 
designed to assist states in providing gravesites for veterans where 
NCA is unable to do so. This program is not intended to replace 
National Cemeteries, but to complement them. Grants for state-owned and 
operated cemeteries can be used to establish, expand and improve on 
existing cemeteries.
    The State Cemeteries accommodated over 15,000 burials in fiscal 
year 2001. In light of the aging veteran population and with deaths 
expected to peak at 687,000 in 2006, it is necessary that this program 
remain viable. Now is the time to ensure that funding is commensurate 
with the mission of the program.

                    VETERANS BENEFITS ADMINISTRATION

    The American Legion is gravely concerned by the proposed straight 
line staffing request for the Veterans Benefits Administration's (VBA) 
Compensation and Pension Service and for the Board of Veterans Appeals. 
There are long-term workload demands associated with the current 
backlog of pending claims that will extend well into fiscal year 2004. 
VBA acknowledges there will also be a continued influx of new and 
reopened claims, based on the enactment of expanded benefit 
entitlements by the 107th Congress, including the Combat Related 
Special Compensation Pay Program, an expectation of additional 
presumptive diseases, and recent precedent decisions of the courts.
    Despite assertions of improved quality decision making, the number 
of appeals being filed continues to increase as does the number of 
appeals requiring further development either by the regional offices or 
the Board of Veterans Appeals. The American Legion believes these 
organizations will require additional personnel, if they are to achieve 
the ambitious service improvement goals promised the nation's veterans 
and their families in this budget request.

        VETERANS BENEFITS ADMINISTRATION LEGISLATIVE INITIATIVES

    VBA's net mandatory funding request reflects the enactment of 
several legislative proposals. These include:
  --A two-percent COLA in compensation benefits. The American Legion 
        supports an annual cost-of-living adjustment in disability 
        compensation and DIC benefits.
  --Legislation to overturn the decision of U.S. Court of Appeals for 
        the Federal Circuit in Allen v. Principi, which held that VA 
        must pay compensation for alcohol or drug-abuse disabilities, 
        if they are secondary to a service-connected disability. The 
        American Legion is opposed to any effort to eliminate or 
        restrict a veteran's right to compensation for any disability 
        or disabilities that are determined to be secondary to or a 
        manifestation of the service connected disability. VA is 
        responsible for administering the law not making moral judgment 
        concerning what is or is not misconduct, as it did with the 
        issue of tobacco-related illnesses. Such legislation would be 
        an effort to punish certain disabled veterans for their 
        service-related problems.
  --Legislation to pay the full rate of compensation to certain 
        Filipino veterans and their survivors. The American Legion 
        continues to support this change in the law to recognize the 
        military service performed by these veterans during World War 
        II.
  --Legislation to extend the operations of the Manila VA Regional 
        Office for an additional five years. The American Legion favors 
        the VA's continued presence in the Philippines, in order to 
        provide timely service to these veterans and their families.
  --Amend the law to extend the time limit for education benefits for 
        members of the National Guard. Because the National Guard is 
        now such an integral part of the armed forces, The American 
        Legion believes this will be a much needed change in the law.
  --Amendment of the Montgomery GI Bill to provide for on-the-job 
        training for certain self-employment training programs. This 
        will assist veterans in taking advantage of additional training 
        through self-employment training programs.
  --Legislation authorizing the extension of the Education Advisory 
        Committee.
  --Terminate the Education Loan Program. If this program were, in 
        fact, not being utilized as it was originally intended, The 
        American Legion would not object to its termination.
  --Convert the Homeless Veterans Guaranteed Transitional Housing Loan 
        Program to grant program. The American Legion has been a strong 
        supporter of the Homeless Veteran Transitional Housing Program. 
        The American Legion would have no objection to making it into a 
        grant rather than a loan guaranty program.
  --Elimination of the 45-day rule for Death Pension. The American 
        Legion has sought the elimination of this restriction, since 
        enactment of OBRA 90.
  --Authorize entitlement to government grave marker or headstone for a 
        veteran's marked or unmarked grave, effective from November 1, 
        1990. This will enable the families of thousands of deceased 
        veterans to obtain a government marker or headstone to reflect 
        their honorable service to the nation.
  --Authorize the payment of the burial plot allowance to state 
        veterans' cemeteries. The American Legion has long favored this 
        additional support for the State Veterans Cemetery Program.
    Under the new budget format, the request for VBA provides for a 
total of $33.7 billion in mandatory funding for compensation, pension, 
education, vocational rehabilitation, and other benefit entitlements. 
Within this total, $26.3 billion will be required for the compensation 
program, $3.3 billion for the pension program, $1.9 billion for 
education, and $2.4 billion for the other veterans benefit programs. 
This represents an overall increase of $9.8 billion, over fiscal year 
2003. Compensation benefits will increase by $1.8 billion reflecting 
the proposed two-percent COLA, additional benefit payments as a result 
of Allen v. Principi, an increase in diabetes cases, and increases in 
the net caseload and benefit payments.
    Discretionary funding for VBA's nine business lines totals $1.2 
billion. While it provides for an additional 17 FTE for the Education 
Program, which is much needed, The American Legion is deeply disturbed 
by the lack of any increase in staffing for compensation programs. We 
believe this will constrain VBA's ability to address the many 
challenges emerging in fiscal year 2003, which will have profound 
budgetary and operational implications for the fiscal year 2004 budget.
    Given the varied issues that VBA is faced with, it is imperative 
that Congress critically evaluate the level of discretionary funding 
requested and whether this will enable the regional offices to operate 
efficiently and provide timely, quality service that this nation's 
veterans expect and deserve. Individuals currently on active duty must 
also be assured that VA will not only be ready and willing to assist 
them, but have physical capacity to provide them the timely, quality 
service they expect and deserve, without compromising current 
operations or benefits programs.
    Over the course of fiscal year 2002 and fiscal year 2003, VBA has 
been able to make substantial progress toward realizing Secretary 
Principi's goal of a pending case backlog of 250,000 cases with an 
average processing time of 100 days by the end of September 2003. In 
March 2002, the regional office backlog peaked with over 423,000 
pending cases requiring rating action. 40 percent of these cases were 
over six months old. There were also 147,000 case requiring some other 
type of action. Only 12 percent were six months or older. In addition, 
there were approximately 107,000 cases in appellate status. Of these, 
over 20 percent were cases that had been remanded by the Board of 
Veterans Appeals for further required development and readjudication. 
In human terms, there were over 670,000 claimants waiting and waiting 
for action on their case. Those with remanded appeals would have been 
waiting two to three years or longer.
    According to VA data, by January 2003, the number of cases awaiting 
rating action had been reduced to 330,300 with only 32 percent older 
than six months and the number of cases requiring some other type of 
action was down to 81,500 but over 28 percent were older than six 
months. However, the number of cases in appellate status had grown to 
over 122,000. These statistics give a false impression of improvement. 
The drop in the claims backlog has been achieved largely at the expense 
of those whose claims were on appeal at the regional offices. VBA's 
efforts and resources were focused almost exclusively on pending 
claims, while appeals, including remands, were virtually ignored, since 
there was no work credit toward the station's production goals. In 
response to The American Legion's criticism concerning the lack of 
action on appeals and the hardship imposed on disabled veterans, 
regional offices have, within the last several months, begun to address 
their appellate workload and pending remands, in particular.
    The backlog of claims and appeals are, in our view, a symptom of 
unresolved systemic problems that have for years adversely affected the 
claims adjudication and appeals process. These problems include 
frequent decision-making errors, lack of compliance with the VCAA's 
notice and development requirements, the absence of personal 
accountability, ineffective quality control and quality assurance, and 
inadequate training. The current work measurement system does not 
provide reliable, accurate data upon which to assess VBA's real 
resource needs. VBA is faced with a serious dilemma. While endeavoring 
to address these thorny quality-related issues, the regional offices 
are, at the same time, aggressively trying to process claims faster. 
From the results, it appears they still have not found a way to 
successfully balance these competing priorities. The American Legion 
remains concerned by the effects of VBA's emphasis on production rather 
than quality decision making, i.e., ensuring full and complete 
development with a decision that is fair and proper--the first time. 
This results in cases continuing to churn through the system, for the 
sake of an artificial goal.
    The straight line staffing level requested for fiscal year 2004 is 
based on the assumption that, with the realization of the Secretary's 
backlog reduction goal, VBA would be able to more effectively address 
the many quality-related problems as well other long-outstanding 
issues. Given past performance, The American Legion believes this is an 
unrealistic strategy and will not afford VBA the flexibility to cope 
with current workload demands, let alone some unanticipated 
contingency.
    The American Legion believes that an increase in staffing in the 
compensation and pension programs for fiscal year 2004 is both prudent 
and necessary. This reflects the increasingly complex nature of the 
claims and appeals process, the volume of additional work anticipated 
in fiscal year 2003-2004, and the ongoing need to rebuild the core 
adjudication staff to replace the increasing number of experienced 
decision makers who are retiring within the next one to two years.

                                APPEALS

    Staffing at the Board of Veterans Appeals in fiscal year 2004 will 
decrease by 3 FTE from the fiscal year 2003 level to 184 FTE. The 
proposed reduction in personnel is predicated on the expected lower 
volume of incoming new appeals and returning remands. However, given 
the number of appeals currently in the system and regional offices' 
continuing quality problems, The American Legion is concerned that the 
Board's new Development Program will require additional support both 
from the Board and from the C&P Service.
    Beginning in February 2002, the BVA was given the authority to 
further develop appeal cases rather than remanding them to the regional 
office. 15 FTE were assigned to this unit. By the end of fiscal year 
2002, of the 17,231 appeals decided, the Board had remanded 3,328 or 19 
percent. This figure is somewhat misleading, since, in addition to the 
regular remands, the Board has undertaken development of over 9,000 
cases that would have previously required a remand back to the regional 
office for further needed development and readjudication. Staffing for 
this unit is 32 FTE. The goal of the program is to ensure greater 
attention to full due process and quality decision-making, while 
providing claimants more timely action on the appeal. However, without 
a substantial improvement in the quality of regional office decisions, 
the BVA will have to assume more and more of the regional office's 
development and adjudication workload, which will require additional 
staffing resources.
    The American Legion is concerned that regional office's focus on 
speed and production versus quality and propriety is directly 
contributing to the growth of the appellate backlog, which now tops 
123,000 appeals. Each of these cases represents a veteran or a 
veteran's family who, after many months of waiting, is very 
dissatisfied with the decision they received on their claim for 
disability or death benefits. They will wait many more months before 
their case gets before the Board. In 2002, the average appeals 
resolution time was 731 days. This is projected to improve to 590 days 
in fiscal year 2003 and to 520 days in fiscal year 2004.

                               EDUCATION

    The American Legion commends the increased-funding request for 
educational programs and support staff for the fiscal year 2004 budget. 
The American Legion deeply appreciates Congress' attempts to provide 
for a stronger Montgomery GI Bill, (Chapter 30) including an increase 
in the monthly entitlement rate for active duty members from $900 to 
$985. However, due to the increased use of Reservists for homeland 
security and various overseas commitments around the world, there needs 
to be a significant increase in their monthly entitlement rates that 
are currently below $300 a month.
    The American Legion also acknowledges the proposed increase in 
benefits to children and spouses of veterans who died of a service-
connected disability or whose service-connected total disability is 
rated permanent, under Chapter 35 of title 38, United States Code. 
Having a stronger dependent/survivor educational benefit program is 
necessary to provide the nation with the caliber of individuals needed 
in today's all volunteer Armed Forces. Without providing incentives, 
the military of the 21st century will be hard pressed to carry out its 
mission.

                VOCATIONAL REHABILITATION AND EMPLOYMENT

    The American Legion is pleased with the funding level requested for 
the Vocational Rehabilitation and Employment program in fiscal year 
2004. The American Legion has always been a strong supporter of the 
services this program provides eligible service-disabled veterans. The 
training and education assist disabled veterans in becoming employable 
and helps them obtain and maintain suitable employment. The American 
Legion is pleased by the emphasis placed on the new Employment 
Specialist position as a means of redirecting the program toward the 
veteran's employment. During this time of economic uncertainty, 
meaningful employment should never be denied to veterans, especially 
those with a service-connected disabling condition.

                               CONCLUSION

    Mr. Chairman and Members of the Subcommittee, The American Legion 
has outlined many issues in this testimony today. We believe all of 
these issues are important and we are fully committed to working with 
each of you to ensure that America's veterans receive the entitlements 
they have earned. Whether it is improved accessibility to health care, 
timely adjudication of disability claims, improved educational benefits 
or employment services, each and every aspect of these programs touches 
veterans from every generation. Together we can ensure that these 
programs remain productive, viable options for the men and women who 
have chosen to answer the nation's call to arms.
    Thank you for allowing The American Legion the opportunity to 
submit testimony.
                                 ______
                                 
  PREPARED STATEMENT OF THE AMERICAN SOCIETY OF MECHANICAL ENGINEERS 
                             INTERNATIONAL

                      NATIONAL SCIENCE FOUNDATION

    The National Science Foundation (NSF) Task Force of the Council on 
Education of the American Society of Mechanical Engineers (ASME 
International) is pleased to provide comments on the NSF fiscal year 
2004 budget request. This portion of the statement represents the views 
of the NSF Task Force, an interdisciplinary committee of the Council on 
Education and is not necessarily a position of ASME International as a 
whole.
    ASME International is a worldwide engineering society focused on 
technical, educational and research issues. It conducts one of the 
world's largest technical publishing operations, holds some 30 
technical conferences and 200 professional development courses each 
year, and sets many industry and manufacturing standards.

                                OVERVIEW

    The National Science Foundation plays a critical leadership role in 
directing the nation's non-defense related scientific and engineering 
research. Through thoughtful and visionary planning, NSF has greatly 
contributed to the technological superiority that the United States 
enjoys today. ASME shares NSF's broad-based, cross-cutting vision for 
basic engineering and scientific research. As such, ASME strongly 
endorses the Foundation and its efforts to continually improve and 
expand the ``innovative ideas, outstanding people, and cutting-edge 
tools'' that comprise the nation's technological and scientific 
infrastructure.
    The Budget Request for fiscal year 2004 represents a 9.0 percent 
increase over the fiscal year 2003 Budget Request, but only 3.2 percent 
over the recent fiscal year 2003 Appropriation. Within this request, 
funding for the Engineering Directorate would increase to $537 million. 
NSF continues to include funding for major initiatives or Priority 
Areas in its budget request. The five standing major initiatives will 
increase. Information Technology Research will increase to $303 
million. Nanoscale Science and Engineering will be raised to $249 
million. Increases for Biocomplexity in the Environment to $100 
million, Mathematical Sciences to $89 million and for Human and Social 
Dynamics to $24 million have also been requested. In addition, NSF has 
identified a new thrust area for fiscal year 2004 called Workforce for 
the 21st Century for which $9 million in funds have been requested. 
Though not specifically identified as such, the Math and Science 
Partnerships (MSP) is essentially a seventh initiative area. This 
program began in fiscal year 2002 as part of President Bush's No Child 
Left Behind paradigm for K-12 math and science education.

                                                     TABLE 1
                                              [Dollars in millions]
----------------------------------------------------------------------------------------------------------------
                                                    NSF Agency Wide                    Engineering (ENG)
                                         -----------------------------------------------------------------------
                                            Fiscal      Fiscal                  Fiscal      Fiscal
                                           Year 2003   Year 2004    Percent    Year 2003   Year 2004    Percent
                                            Request     Request     Change      Request     Request     Change
----------------------------------------------------------------------------------------------------------------
Total Budget............................   $5,028.22   $5,481.20         9.0     $487.98     $536.57        10.0
    Salaries and Expenses...............      202.95      225.70        11.2     ( \1\ )     ( \1\ )     ( \1\ )
    Inspector General...................        7.70        8.77        13.9     ( \1\ )     ( \1\ )     ( \1\ )
Administration/Management...............  ..........  ..........  ..........        6.47        6.90         6.6

Total Program Budget....................    4,818.02    5,246.73         8.9      481.51      529.67        10.0
    Info. Technology Research...........      285.83      302.61         5.9       11.17       11.17         0.0
    Nanoscale Science & Eng.............      221.25      248.99        12.5       94.35      106.85        13.2
    Biocomplexity in the Envir..........       79.20       99.83        26.0        6.00        6.00         0.0
    Mathematical Sciences...............       60.09       89.09        48.3        0.91        2.91       219.8
    Human & Social Dynamics.............       10.00       24.25       142.5  ..........        2.00     ( \1\ )
    Workforce 21st Century..............     ( \1\ )        8.50     ( \1\ )     ( \1\ )  ..........     ( \1\ )
    SBIR................................  ..........  ..........  ..........       83.65      101.15        20.9
Remaining Funds.........................    4,161.65    4,473.46         7.5      285.43      299.59        5.0
----------------------------------------------------------------------------------------------------------------
NSF Budget overview with and without the initiative areas. Comparisons include both agency-wide and the
  Engineering Directorate.

\1\ Not applicable.

    Comparing the fiscal year 2004 Budget Request with fiscal year 2003 
is somewhat problematic given the late passage of fiscal year 2003 
appropriations covering NSF. For example, the overall 9 percent 
increase over the fiscal year 2003 Budget Request appears positive and 
consistent with Congress's goal of doubling NSF's budget in five years 
beginning with fiscal year 2004. However, the current request is only 
3.2 percent more that the recently passed fiscal year 2003 
appropriation. For this analysis, comparisons will be made between the 
fiscal year 2003 and fiscal year 2004 Budget Requests. It is important 
to note, however, that questions of balance (i.e. balance across the 
nation's science and technology research and development portfolio, 
balance between initiative driven research and core programs within 
NSF, and finally, balance between NSF's traditional basic research 
mission and its new math and science education mission) are much more 
critical when one considers a 3.2 percent increase versus a 9 percent 
increase.

                        THE TASK FORCE POSITION

    The NSF Task Force of ASME's Council on Education continues its 
strong endorsement of NSF's leadership role in guiding the nation's 
basic research and development activities. Throughout its existence, 
NSF has built an outstanding record of supporting a broad spectrum of 
research of the highest quality, from ``curiosity-driven'' science to 
focused initiatives. This record has been made possible only through 
strict adherence to the independent peer review process. ASME 
recognizes the importance and timeliness of NSF's initiative areas that 
address major national needs for the 21st century. However, as will be 
discussed in the next section, it is not clear that an optimum balance 
has been achieved.
    There are a number of particularly positive items in the fiscal 
year 2004 Budget Request, beginning with the planned increase in the 
size of graduate fellowship stipends. Ensuring a continuous stream of 
well-educated, highly qualified research scientists into leadership 
positions is critical to the survival and growth of the nation. In this 
respect, ASME strongly endorses NSF's planned increase in stipends for 
graduate fellows from $25,000 to $30,000. Making fellowship stipends 
attractive to the nation's best and brightest students is certainly a 
positive step. This serves to enhance the nation's pool of science and 
engineering educators and leaders.
    The increase in numbers of graduate fellowships is also especially 
positive. In comparison to the fiscal year 2003 Budget Request, it 
appears that, in addition to the 20 percent increase in stipends, there 
will be a concomitant 10 percent increase in the number of 
Fellows supported in fiscal year 2004. NSF is the only federal agency 
directly chartered to educate graduate students for research and 
development careers. It is therefore imperative that this be a major 
priority area in perpetuity. It is interesting to note however that 
$89.4 million is requested for the Graduate Research Fellowship (GRF) 
program to support 2,200 students in fiscal year 2004 while $42.5 
million for the GK-12 Fellowship program will support less than 900 
students. It is not clear that the GK12 program has sufficient ``value 
added'' to justify its higher cost per student. Nor is it clear that 
the correct balance between types of graduate fellowships has been 
struck. It is critically important that education-based programs do not 
jeopardize the nation's world leadership in basic research.
    In general, the Task Force also supports and applauds activities 
within ENG. NSF's vision of a committed balance between people, ideas 
and tools is exemplified within ENG. It is important to recognize that 
fundamental sciences and engineering funded by NSF quite frequently 
spawns next generation technologies. Examples of successes emerging 
from ENG include development of an artificial retina and a biocapsule 
for insulin delivery. ENG is also funding work on ``pico-newtons'', 
microscopic chains for magnetized particles that may be precursors of 
materials that will protect buildings from earthquakes.
    ASME has strongly supported the nanotechnology initiative since its 
inception as an NSF emphasis area in fiscal year 2000. In the past 
three years, funding for this initiative has grown substantially. With 
a growing record of research and development successes, the 
transitioning of nano-science and engineering into commercially viable 
technologies is becoming a pressing challenge for nano-science and 
engineering. For this reason, it is important that multi-institutional 
tools be developed in the near term in which access, maintenance and 
staffing issues have been resolved.
    Finally, ASME continues to endorse NSF's participation in K-12 
math, science and engineering education initiatives consistent with the 
agency's broader mandate to lead the nation's research and development 
enterprise. Most notably, NSF has again included $200 million in its 
fiscal year 2004 budget request for the Math and Sciences Partnership 
(MSP) program. The goal of MSP is coupling K-12 and higher education 
STEM education into a single integrated effort by encouraging 
universities to adopt STEM into their core missions.
    In this technological age, providing the highest quality math, 
science and technology education to all children should be a national 
imperative. The Task Force applauds President Bush's No Child Left 
Behind policy and NSF's role. However, the Task Force cautions that a 
proper balance' must be struck to preserve the integrity of NSF's 
fundamental research and development mission.

                         QUESTIONS AND CONCERNS

    Continuing with central themes raised in previous years, the Task 
Force's key questions and concerns arising from the fiscal year 2004 
budget request center on matters of balance. In particular, ASME is 
concerned with:
  --the gross funding imbalance in the federal R&D portfolio,
  --inadequate funding levels for existing grants,
  --insufficient support for core engineering programs at NSF.
    The overall imbalance in the federal R&D portfolio remains a major 
concern to ASME. The requested funding for NIH this year is almost half 
of the total non-defense R&D request. Focusing purely on health issues 
while the nation faces threats from dwindling energy supplies, aging 
infrastructure and geopolitical instability, to name but a few, is 
entirely inconsistent with a balanced leadership plan. Even the health 
science community is concerned that insufficient technology development 
in related fields may be the greatest impediment to major medical 
breakthroughs. Failure to adequately support broad, cross-cutting 
fundamental research inherent to most NSF programs continues to 
undermine the long-term health and vitality of the nation. As noted 
earlier, this is particularly nettlesome when considering that the 
fiscal year 2004 NSF Budget Request actually represents only a 3.2 
percent increase over fiscal year 2003 appropriations.
    NSF has had considerable success to date in stretching its funds to 
bridge (i.e. mask) imbalances in the federal R&D portfolio. Indeed, NSF 
richly deserves the governmental acclaim it has received for its 
efficiency and impact in managing basic research and development. 
However, this efficiency is coming at the expense of quality research. 
The projected median research award size for fiscal year 2004 is 
estimated to be $90,890 per year for three years. This is in general 
sufficient to support one graduate student and a senior investigator 
with only a limited amount remaining to actually conduct the research. 
An extended period of constant grant sizes has eroded buying power and 
the ability to adequately support professional development. Further, 
forming small teams (2-3 senior investigators) to pursue and define 
major initiative areas, often in interdisciplinary areas, is equally 
difficult. Thus to truly advance the frontiers of science and 
technology, significant increases must be made not only to the number 
of grants, but to the size of each grant as well. By way of reference, 
NIH's projections for the average size of new competitive research 
project grants (RPGs) in fiscal year 2004 are $358,300 per year with an 
average project duration of 3.8 years.
    Maintaining a fundamental knowledge base is essential for 
intelligent and effective response to rapidly evolving technological 
challenges facing the nation. Current world events, including the 
heightened awareness of homeland security needs, highlight the 
impossibility of predicting what scientific and engineering disciplines 
will be needed in response to future technology challenges. Meeting 
those needs will often come from applying state-of-the-art fundamental 
science and engineering knowledge in new and innovative ways.
    However, the record on funding core programs over the past few 
years has not been strong. Over the past five years, increases in 
funding for initiative areas have outstripped growth in core programs. 
That this trend will continue into fiscal year 2004 can be seen in 
Table I, where requested NSF funding across the entire agency and 
within ENG are compared with and without funding for the initiative 
areas. One can clearly see that funding for initiative areas (including 
the SBIR program) within ENG constitute a full 44 percent of the budget 
request for ENG. The increase for initiatives exceeds 17 percent. By 
comparison, Table I shows that funding for the rest of ENG, which will 
be considered as core programs, will only increase by 5 percent.
    A specific example of the unbalanced emphasis on initiative driven 
activity is the Chemical and Transport Systems (CTS) Subactivity in 
ENG. The total request for CTS in fiscal year 2004 is $66.2 million 
representing a $7.26 million or 12.3 percent increase relative to the 
fiscal year 2003 Budget Request. If one subtracts increases for the 
initiative programs, totaling $4.88 million, and $4.0 million 
transferred into ENG ``for a new Science and Technology Center (STC) on 
New Materials for Water Purification'', there will be a net decrease of 
$1.62 million in funds available for core CTS research programs. This 
is particularly noteworthy because funding for initiatives and the STC 
will total $36.1 million in fiscal year 2004, over 54 percent of the 
CTS request.
    This discussion, of course, is exacerbated in light of the recent 
fiscal year 2003 appropriations bill effectively reducing the total 
requested increase for fiscal year 2004 to 3.2 percent. Continued focus 
on initiatives at the cost of maintaining a balanced science and 
technology knowledge base may have unforeseen negative impacts in the 
future. The issues of balance raised in this statement need to be 
seriously considered.

                                SUMMARY

    The Task Force continues its enthusiastic support for the National 
Science Foundation and its leadership in articulating the nation's 
basic research and development vision. In fiscal year 2004, NSF has 
requested funding to expand major, cross cutting initiatives addressing 
pivotal technological issues facing the nation. This includes the 
nanotechnology initiative strongly endorsed by ASME. Expansion of the 
graduate fellows programs coupled with increases in stipend levels 
reinforces NSF's commitment to graduate education (i.e. developing 
people). The focus on developing people and ideas in general is 
certainly reflected throughout the ENG directorate's budget request as 
well. The challenge for this year appears to be maintaining a healthy 
balance between maintaining world R&D leadership and incorporating K-12 
math, science and engineering education and between supporting core 
programs and expanding key initiatives.
    There is great concern over the growing imbalance between life 
sciences funding and the rest of the nations research and development 
portfolio. Crises, such as those occurring in the gasoline and power 
production industries, reflect long term failure to value and support 
core research focused at advancing the nation's technological 
infrastructure. In addition, recent events strongly underscore the fact 
that it is impossible to know what part of the science and technology 
base will be needed on short notice to respond to rapidly developing 
opportunities or crises. The current budget plan does not appear to 
permit NSF to meet key fiscal year 2004 Performance Goals (i.e. Goals 
III-1 and III-2). Increasing the number and size of its awards with 
enable NSF to better position itself to fulfill its leadership 
responsibility in directing the nation's research and development 
activities.

             NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

    The ASME Aerospace Division would like to thank you for this 
opportunity to comment on the National Aeronautics and Space 
Administration's fiscal year 2004 budget request. Our statement will 
specifically address the nation's critical aeronautics research and 
development programs. This portion of the statement represents the 
views of the ASME Aerospace Division and is not necessarily a position 
of ASME International as a whole.
    For the past four years, ASME has been working with an Aviation 
Research and Development Coalition, comprised of 15 leading aerospace, 
aeronautics and aviation organizations, calling for a renewed national 
commitment to sustain U.S. leadership in aviation and aeronautics 
research and technology. Our organizations are extremely concerned that 
the United States is in grave danger of losing its position as the 
world leader in aeronautics and aviation. Our Coalition statement is 
attached.
    Since fiscal year 1998, NASA's aeronautics research budget has been 
cut in half. Last year, NASA introduced their ``Aeronautics Blueprint--
Toward a Bold Era of Aviation''--presenting an exciting vision of what 
could be achieved with additional investments in aeronautics research 
and development. Yet, even while NASA outlined technologies that the 
U.S. could invest in that would significantly lower noise, as well as 
emissions and fuel consumption, and reinvigorate basic and applied 
research in aeronautics and aviation, their budget was again cut--this 
time by $58 million in fiscal year 2003. While, NASA's fiscal year 2004 
budget reflects a 1 percent increase in aeronautics funding compared to 
fiscal year 2003, additional funding for aeronautics research over the 
next five years is projected to be reduced by 4 percent.
    According to a recently released report, ``The National Economic 
Impact of Civil Aviation,'' the total economic impact of civil aviation 
exceeded more than $900 billion and 11 million jobs to the U.S. economy 
in the year 2000, roughly 9 percent of the total U.S. gross domestic 
product. The U.S. aerospace and the air transportation industry has a 
major economic and employment impact in all 50 states and is a major 
force of civil, military and space manufacturing and air operations in 
nearly half of the nation's states.
    Decreased federal investment in aviation and aeronautics R&D is 
destined to weaken the economic competitiveness of the U.S. aviation 
industry. For the first time ever, Airbus won 50 percent of new 
aircraft orders during 2002. Our international competitors are well on 
their way to overtaking us in global air transportation markets. If the 
U.S. aviation industry is to continue to be a positive contributor to 
U.S. balance of trade, then we must have the ability to develop the 
next generation of aircraft that will enable it to compete 
internationally.
    Over the past several years, de-emphasis of long-term aeronautical 
research at NASA has impaired U.S. universities' ability to maintain 
vibrant aeronautical engineering programs. The nation is experiencing a 
diminishing pipeline of qualified aeronautical engineering students at 
both the undergraduate and graduate levels. Engineers and scientists do 
not consider aerospace a growth industry.
    Allow me to quote from the Aerospace Commission's report:
  --``There is a major workforce crisis in the aerospace industry. Our 
        nation has lost more than 600,000 scientific and technical 
        aerospace jobs in the past 13 years.''
  --``The aerospace workforce is `aging' and that 26-27 percent of 
        aerospace workers are eligible to retire by 2008. The average 
        of age of production workers is 44 in the commercial sector, 53 
        in defense and 51 at NASA.''
  --``In addition, the proportion of workers age 30 or younger dropped 
        by almost two-thirds, from 18 percent in 1987 to 6.4 percent in 
        1999.''
  --``U.S. graduates at the bachelor and master degree levels in 
        aerospace engineering and related disciplines have dropped by 
        47 percent and 39 percent, respectively, since 1990.''
    This is great cause for alarm. For the past 75 years American 
universities have provided creative, skilled engineers for national 
defense and aeronautical commerce. Our educational base has been 
declining and will continue to erode if we do not nurture and support 
basic aeronautics research in the United States. Two decades ago, we 
began to see manufacturing jobs move overseas. Today, we are witnessing 
white-collar jobs, including engineering, moving offshore as well. 
Investment in research and development is vitally needed to keep the 
U.S. on the cutting edge of high value, new technologies, including the 
development of advanced global air transportation systems. Without this 
investment, the U.S. will lose its technological edge and will continue 
to see engineering jobs move offshore.
    The United States has been at the forefront of discovery and 
innovation throughout the history of aeronautics and aviation. 
Honorable Robert S. Walker, the Aerospace Commission Chair and 
transition team senior advisor on science, space and technology, stated 
upon releasing the Commission's report, ``A strong aerospace industry 
is essential to enable the United States to defend itself, compete in 
the marketplace, maintain a highly skilled workforce, and provide all 
Americans with the ability to travel safely and securely anywhere in 
the world.''
    As we approach the centennial of the Wright Brothers' first flight, 
it is crucial that the United States re-establish preeminence in 
aviation and aeronautics research. We urge you to support aerospace as 
a national priority by providing robust and stable funding for NASA's 
aeronautics and development programs.
                                 ______
                                 
          PREPARED STATEMENT OF THE AMERICAN HEART ASSOCIATION

    Heart attack, stroke and other cardiovascular diseases remain 
America's leading cause of death, hospitalizations and a main cause of 
disability. The 950,000 deaths each year from cardiovascular diseases 
represent nearly 40 percent of all American deaths.
    The American Heart Association, with its 22 million volunteers and 
supporters, works to reduce disability and death from heart attack, 
stroke and other cardiovascular diseases. We commend this Committee's 
support of the Department of Veterans Affairs' Medical and Prosthetic 
Research program.

                            STILL NUMBER ONE

    Heart attack, stroke and other cardiovascular diseases have been 
America's No. 1 killer since 1919. Nearly 62 million Americans of all 
ages suffer from cardiovascular diseases. Hundreds of millions of 
Americans have major risk factors for cardiovascular diseases--an 
estimated 50 million have high blood pressure, 42 million adults have 
high blood cholesterol (240 mg/dL), nearly 49 million adults smoke, 
more than 129 million adults are obese or overweight and nearly 11 
million have confirmed diabetes. As the baby boomers age, the number of 
Americans afflicted by these often lethal and disabling diseases will 
increase substantially. Cardiovascular diseases cost Americans more 
than any other disease--an estimated $352 billion in medical expenses 
and lost productivity in 2003.
    Heart disease and stroke occur at all ages, but they are most 
common in Americans over age 65--a group that is nearly 12.4 percent of 
the U.S. population and will be 16.5 percent by year 2020. By 2020, the 
percentage of veterans over age 65 will be about three times that of 
the general population. The VA's planning models recognize that its 
aging patient population demands more care. As the veteran population 
ages, the number with heart disease and stroke will increase 
substantially.

                     HOW YOU CAN MAKE A DIFFERENCE

    We advocate for an fiscal year 2004 appropriation of $460 million 
for direct costs of the VA Medical and Prosthetic Research program and 
$45 million for research facility improvements. Our recommendation is 
consistent with that of the Friends of VA Medical Care and Health 
Research and the Independent Budget, a detailed analysis of VA funding 
needs developed by four of the major veterans service organizations and 
endorsed by more than 60 other groups. An appropriation of $460 million 
would accommodate biomedical research inflation and federal pay 
increases as well as a major new initiative in deployment health 
research and expansion in areas such as terrorism, emerging pathogens, 
special populations, quality improvement, chronic diseases, including 
heart disease and stroke, and diseases of the brain, including study of 
rehabilitation of stroke victims. The President's budget of $408 
million for direct costs of this vital program represents a 2.7 percent 
increase. This is inadequate to sustain the current level of effort or 
to accommodate new initiatives.
    The Association challenges our government to significantly increase 
funding for heart and stroke research supported by the VA Medical and 
Prosthetic Research program. We commend the VA for establishing a 
Rehabilitation Research Outcomes Center (REAP) targeting stroke 
patients. We urge the VA to not only expand this center, but also to 
augment the REAP on heart disease. These initiatives would help advance 
the battle against heart disease, stroke and other cardiovascular 
diseases. Our government's response to this challenge will help define 
the health and well being of citizens for decades to come. In addition, 
we recommend $45 million for facilities construction and renovation. 
The VA has had to defer almost $350 million of major and minor 
construction repairs on its aging research infrastructure. Delaying 
these renovations impairs the quality of VA medical research and 
threatens the VA's ability to recruit and retain first-class 
investigators.

     INSUFFICIENT VA RESOURCES DEVOTED TO HEART AND STROKE RESEARCH

    The VA Medical and Prosthetic Research program plays an important 
role in heart and stroke research and deserves the strong support of 
Congress. In fiscal year 2002, VA support for heart research was $23.8 
million (still below the high of fiscal year 2000), accounting for only 
4 percent of the fiscal year 2002 VA's Medical and Prosthetic Research 
budget. In fiscal year 2002, VA-supported stroke research represented 
$7.7 million or 2.1 percent of the research budget. We are concerned 
that insufficient money is being devoted to America's No. 1 killer--
heart disease--and our No. 3 killer--stroke. Both are major causes of 
permanent disability.

          VA HEART AND STROKE RESEARCH BENEFITS ALL AMERICANS

    The VA Medical and Prosthetic Research program is dedicated to 
``discovering knowledge and creating innovations that advance the 
health and care of veterans and the nation.'' While the primary purpose 
of the VA health care system is the provision of quality health care to 
eligible veterans, VA-supported research contributes to the quality of 
care by bringing talented and dedicated physicians into the VA system. 
In a recent survey, 62 percent of researchers indicated that they would 
not work in the VA without research opportunities. VA-supported 
research discoveries benefit veterans, science and the world's health.
    VA cardiovascular research is an integral part of the effort. VA 
cardiovascular researchers include nationally recognized, distinguished 
scientists and several Nobel Laureates. The VA supported Ferid Murad, 
M.D., 1998 Nobel Prize winner for research demonstrating the role of 
nitric oxide in regulating blood pressure. American Heart Association 
volunteer Gerald DiBona, M.D., was awarded the prestigious VA Middleton 
Award in 1995 for internationally recognized research on kidney and 
cardiovascular diseases.
    The Medical Research Service component of the VA Medical and 
Prosthetic Research program supports basic and clinical research, 
mainly investigator-initiated peer reviewed studies. It provides funds 
for support of VA-based faculty members (M.D.s or Ph.D.s) at various 
stages in their careers and research equipment. VA investigators 
provide core faculty support at major medical schools affiliated with 
VA institutions. This small but internationally recognized, highly 
competitive research program in fiscal year 2002 supported 3,167 
investigators at 115 VA-supported facilities.
    VA heart and stroke research is largely clinical. Hence, the VA is 
a major contributor to clinical research, playing a unique role because 
of its ability to immediately translate research findings into 
practice. VA research has produced landmark results and revolutionized 
treatment in heart disease and stroke. You and your family have 
benefited from VA heart and stroke research. Cutting-edge examples 
follow.
  --Heart Attack Diagnosis.--VA Researchers developed a simple, 
        inexpensive blood test that can rule out heart attack within 90 
        minutes with 100 percent accuracy, reducing critical care 
        admissions 40 percent and general hospital admissions 20 
        percent.
  --Aspirin and Angina.--An estimated 6.6 million Americans suffer from 
        angina (chest pain) due to insufficient blood supply to the 
        heart. In another landmark study, VA research found that 
        aspirin cuts deaths and heart attacks by 50 percent in patients 
        suffering from unstable angina.
  --Angioplasty Benefits.--In 2000, more than 1 million angioplasty 
        procedures were performed in our nation to restore blood flow 
        to the heart by widening narrowed arteries. VA research was the 
        first to evaluate angioplasty. Results showed that after 
        undergoing angioplasty, patients suffered less pain and can 
        exercise longer than those taking only medication. Another 
        study found clot-busting drugs had similar results to 
        angioplasty for heart attack survivors at savings of $3,000 per 
        patient. Annually, over 150,000 people are candidates for clot-
        busting drugs, according to the VA.

Heart Failure
  --Heart Failure Drugs.--A VA study, which has revolutionized heart 
        failure treatment, showed that heart medications can enhance 
        the heart's pumping ability and keep patients suffering from 
        heart failure alive and living more productive lives.
  --Heart Failure Diagnosis.--VA researchers developed a first-ever 
        blood test that emergency department doctors use to diagnose 
        heart failure in 15 minutes. More than 1,200 hospitals 
        nationwide use this test, which offers an option to exams, x-
        rays, stress tests and echocardiography to diagnose heart 
        failure. Conventional tests often require a hospital stay.
  --High Blood Pressure.--An estimated 50 million Americans have high 
        blood pressure, the most critical stroke risk factor and a 
        major cause of heart attack and heart failure. VA research has 
        confirmed private sector statistics demonstrating that 
        physicians increase the dose of antihypertensive medicines in 
        only 25 percent of patients. These patients, many who had their 
        blood pressure monitored, were poorly controlled. An 
        inexpensive computerized reminder system helps doctors manage 
        patients and cuts cost by reducing use of calcium channel 
        blockers. As a result of the VA-developed comprehensive model 
        of psychosocial and cultural factors on poor blood pressure 
        control, health care providers now incorporate the patients' 
        social and medical environments into the treatment regimen. 
        More aggressive blood pressure management will reduce heart 
        attacks and strokes. Challenging long-held beliefs, VA 
        researchers showed that malfunctioning kidneys are an important 
        cause of high blood pressure, rather than the result of high 
        blood pressure.
  --Cholesterol.--An estimated 11 million veterans are at increased 
        risk of heart disease due to high cholesterol levels, according 
        to the VA. A groundbreaking VA-supported clinical trial found 
        that daily use of the drug gemfibrozil raises HDL cholesterol, 
        the ``good'' cholesterol, by 6 percent, reduces coronary heart 
        disease risk by 22 percent and stroke risk by 31 percent. 
        Results could mean cost savings because gemfibrozil is cheaper 
        than statin drugs. This is the first study to show significant 
        reduction in risk of major cardiovascular diseases by raising 
        HDL, the ``good'' cholesterol, lowering triglycerides and not 
        changing LDL, the ``bad'' cholesterol. VA research showed the 
        effectiveness of cholesterol screening to determine levels of 
        HDL and LDL--even in patients older than age 65. Another study 
        found that soy protein added to a low-fat diet lowers 
        cholesterol in those with moderately high cholesterol levels.
  --Irregular Heartbeat Treatment.--An estimated 2 million Americans 
        suffer from atrial fibrillation, the most common irregular 
        heartbeat, which causes more than 75,000 strokes a year. VA 
        researchers corrected atrial fibrillation using the ``Maze 
        Procedure,'' with a hand-held radiofrequency probe to ``draw'' 
        ablation lines on the inside of the atria while the heart is 
        exposed. Previously, the ``Maze Procedure'' was performed by 
        cutting the atrium into multiple sections and then stitching it 
        back together--a lengthy and high risk procedure. Another study 
        of atrial fibrillation showed that digoxin was not effective in 
        controlling heart rate when used alone. However, when digoxin 
        was combined with a beta-blocker, patients achieved almost 
        perfect heart rate control. These results will enhance 
        treatment for atrial fibrillation and reduce stroke risk.

Stroke
  --Stroke Survivor Improvements.--Stroke is a major cause of permanent 
        disability and America's No. 3 killer. VA studies have produced 
        therapies to enhance quality of life for survivors. Researchers 
        have created a software program to assess and treat the stroke-
        related speech disorder aphasia. They have also shown that 
        strenuous exercise can benefit stroke survivors who are 
        paralyzed on one side of their body, and have developed a 
        rehabilitation procedure to restore arm movement. Researchers 
        have also identified seven pathways associated with motor 
        recovery from stroke, allowing more precise predictions about 
        functional recovery. In another study, VA researchers implanted 
        electrodes in leg muscles of stroke patients and used 
        sophisticated software to electronically stimulate muscles. VA 
        researchers were the first to demonstrate that robot-assisted 
        therapy is more effective than conventional treatment in 
        restoring upper limb movement.
  --Psychoeducational Program for Stroke Family Caregivers.--Most 
        stroke survivors are helped in the recovery process by a family 
        caregiver, usually the spouse. A pilot study testing a program 
        to reduce physical and psychological demands on family 
        caregivers found this intervention reduced depression and 
        caregiver burden and better prepared them for their role. 
        Initial results found that a telephone intervention may be as 
        helpful as the in-home program. Execution of this program could 
        have vital results for family caregivers of many of our 4.7 
        million stroke survivors.

     HEART AND STROKE RESEARCH CHALLENGES AND OPPORTUNITIES FOR VA

    Research advances have been made possible by congressional support 
of the VA Medical and Prosthetic Research program. Thanks to research, 
more Americans survive their heart attack or stroke. But, while more 
Americans are surviving, heart attack is still the single largest 
killer in the United States and stroke remains the No. 3 killer. The 
disability caused by heart attacks and strokes requires costly medical 
care and loss of productivity and quality of life. Clearly more work is 
needed if we are to win the fight against heart disease and stroke. 
These challenges create abundant research opportunities to advance the 
battle against heart disease and stroke. Examples of on going VA 
research are highlighted below.
  --Heart Failure.--Nearly 5 million Americans suffer from heart 
        failure, a major cause of hospitalization of Americans age 65 
        and older. A VA study is comparing the effects of three anti-
        clotting therapies (aspirin, warfarin or clopidogrel) in heart 
        failure patients. Another study is creating a large DNA bank of 
        sufferers to examine the genetic basis of heart failure. A 
        third study, the first large scale, international, randomized 
        clinical trial, is evaluating the effects of digitalis, a 200-
        year old treatment, in preventing heart failure deaths.
  --Inflamed Arteries.--Many heart attacks and strokes are the end 
        result of atherosclerosis or hardening of the arteries, the 
        disease process that causes obstructed blood vessels. VA-
        supported research has shown that inflammation may cause 
        atherosclerosis and may also cause previously stable 
        atherosclerotic plaques in arteries to become unstable, which 
        can lead to a heart attack or stroke. Scientists have 
        identified large numbers of receptors in heart blood vessels 
        that attract the blood cells that cause inflammation. If 
        researchers can create a way to block that receptor, 
        progression of atherosclerosis might be prevented.
  --Heart Attack.--An estimated 1.1 million Americans suffer a heart 
        attack each year. VA research is assessing cost-effective ways 
        to diagnose patients at risk of heart attack without costly 
        invasive procedures, including a computer analysis of the 
        heart's electrical signals during exercise and a new scoring 
        system in treadmill tests. They are examining long-term outcome 
        and risk factors for heart attack sufferers, for those who have 
        heart attack during surgery and for those who have heart bypass 
        surgery. Researchers have identified a molecular marker that 
        may help predict heart attack. They are studying if attacks can 
        be prevented by increasing levels of a protein that stimulates 
        blood vessel growth and helps repair damaged tissue. Findings 
        could save money, improve health and reduce surgery.
  --Angioplasty.--In the first study of its kind, the VA COURAGE trial 
        is comparing the effectiveness of angioplasty with medical 
        therapy versus aggressive medical therapy alone in patients 
        with heart disease. The results of this study could 
        revolutionize treatment of heart disease. In 2000, more than 1 
        million angioplasty procedures were performed to restore blood 
        flow to the heart by widening narrowed arteries.
  --Heart Bypass Surgery.--In 1999, VA doctors performed nearly 6,000 
        coronary artery bypass surgery procedures. VA researchers are 
        comparing two coronary artery bypass surgical procedures--
        standard coronary artery bypass surgery using a cardiopulmonary 
        bypass machine, versus surgery while the heart is still 
        beating, without requiring the bypass machine, to assess, among 
        other outcomes, how cognitive function is affected.
  --Stroke.--Stroke strikes about 700,000 Americans each year, leaving 
        about 1 in 4 survivors permanently disabled. Researchers found 
        restricting use of limbs unaffected by stroke can help patients 
        recover use of affected limbs more quickly and fully. Progress 
        in deciphering language of the brain's motor cortex could lead 
        to new technology that may reconnect damaged areas or 
        communication pathways of the brain and may restore lost 
        function after a stroke. Researchers are studying genetic 
        susceptibility to carotid atherosclerosis, a major cause of 
        stroke. A REAP will use an innovative approach to understanding 
        stroke and its often-debilitating effects, drawing on medical 
        research, exercise physiology and rehabilitation medicine. This 
        REAP will also serve as a unique training vehicle for early-
        career stroke researchers.
    The Medical Research programs highlighted below are of interest to 
the American Heart Association.
  --Investigator-Initiated Studies.--During fiscal year 2002 this 
        program constituted an estimated 73 percent of the Medical and 
        Prosthetic Research appropriated budget. These investigators 
        comprise the core of all VA research and provide the 
        preceptorship for career development awardees.
  --Cooperative Studies.--In fiscal year 2000 this program supported an 
        estimated 38 clinical trials. The VA offers a unique 
        opportunity for cooperative studies due to close linkage among 
        hospitals. These studies provide a mechanism by which research 
        on the effectiveness of diagnostic or therapeutic techniques 
        can achieve statistically significant results by pooling data 
        on patients from a number of VA hospitals. The Cooperative 
        Studies Evaluation Committee evaluates proposals developed by 
        teams of clinicians and biostatisticians. The VA has supported 
        landmark clinical trials in the cardiovascular field (e.g. high 
        blood pressure treatment and coronary artery bypass surgery).
  --Career Development Awards.--Applications for these awards are 
        reviewed both locally and by the VA Central Office. In response 
        to the Research Realignment Advisory Committee's suggestion to 
        rejuvenate this program, a renewed emphasis began in fiscal 
        year 1997 for the VA's Medical Research Service, Health 
        Services Research and Development Service and, for the first 
        time, Rehabilitation Research and Development Service. This 
        resulted in 188 Career Development Awards in fiscal year 2002.
  --Rehabilitation Research and Development Service.--Dedicated to 
        improving the quality of life of impaired and disabled veterans 
        through a full range of research, this intramural program has 
        been very important to veterans suffering from heart disease, 
        stroke and other cardiovascular diseases.

                             ACTION NEEDED

    Investment in medical research will lead to future returns. These 
include continued decreases in death rates from heart attack, stroke 
and other cardiovascular diseases, reduced federal outlays for hospital 
and long-term care, a well-trained cadre of medical researchers and a 
healthier society. Consistent with the Friends of VA Medical Care and 
Health Research and the Independent Budget, we advocate an fiscal year 
2004 appropriation of $460 million for direct costs of the Medical and 
Prosthetic Research program. This will allow maintenance of fiscal year 
2003 initiatives and implementation of new initiatives, including 
continuation of research momentum in heart disease and stroke and 
maintenance of VA's vital role in this field. We urge the VA to expand 
a Rehabilitation Research Outcomes Center, targeting stroke patients, 
and augment the REAP into heart disease and stroke to advance the fight 
against heart disease, stroke and other cardiovascular diseases--
America's No. 1 killer and a cause of permanent disability. Also, we 
recommend $45 million for facilities construction and renovation to 
enhance VA research and help recruitment and retention of quality 
investigators.
                                 ______
                                 
      PREPARED STATEMENT OF THE AMERICAN PUBLIC POWER ASSOCIATION

    The American Public Power Association (APPA) is the national 
service organization representing the interests of over 2,000 municipal 
and state-owned utilities in 49 of the 50 States (all but Hawaii). 
Collectively, public power utilities deliver electricity to one of 
every seven electric consumers (about 40 million people), serving some 
of the nation's largest cities. However, the vast majority of APPA's 
members serve communities with populations of 10,000 people or less.
    We appreciate the opportunity to submit this statement outlining 
our fiscal year 2004 funding priorities within the VA-HUD 
Subcommittee's jurisdiction.

         ENVIRONMENTAL PROTECTION AGENCY: ENERGY STAR PROGRAMS

    According to data compiled the Environmental Protection Agency 
(EPA), its Energy Star program helped save American businesses and 
consumers more than $5 billion and substantially reduced greenhouse gas 
emissions (the equivalent of the emissions released by 10 million cars) 
in the year 2000.
    Energy Star is a voluntary partnership program pairing EPA with 
businesses and consumers nationwide to enhance investment in 
underutilized technologies and practices that increase energy 
efficiency while at the same time reducing emissions of criteria 
pollutants and greenhouse gases. In particular, APPA member systems 
across the country have been active participants in a subset of the 
Energy Star program called ``Green Lights.'' The Green Lights program 
encourages the use of energy efficient lighting to reduce energy costs, 
increase productivity, promote customer retention and protect the 
environment.
    APPA appreciates the support of both the Administration and 
Congress for the programs encompassed by Energy Star and supports their 
continued robust funding.

   ENVIRONMENTAL PROTECTION AGENCY: LANDFILL METHANE OUTREACH PROGRAM

    APPA supports EPA's Landfill Methane Outreach Program (LMOP) and 
encourages the Subcommittee to continue its support as well. The 
Landfill Methane Outreach Program helps to partner utilities, energy 
organizations, states, tribes, the landfill gas industry and trade 
associations to promote the recovery and use of landfill gas as an 
energy source.
    Landfill gas is created when organic waste in a landfill 
decomposes. This gas consists of about 50 percent methane and about 50 
percent carbon dioxide. Landfill gas can be captured, converted, and 
used as an energy source rather than being released into the atmosphere 
as a potent greenhouse gas. Converting landfill gas to energy offsets 
the need for non-renewable resources such as coal and oil, and thereby 
helps to diversify utilities' fuel portfolios and to reduce emissions 
of air pollutants from conventional fuel sources.
    As units of local and state governments, APPA's member utilities 
are uniquely poised to embark on landfill-gas to energy projects. EPA's 
LMOP facilitates this process by providing technical support and access 
to invaluable partnerships to our members and the communities they 
serve.

                    COUNCIL ON ENVIRONMENTAL QUALITY

    APPA supports the Administration's request of $3.23 million for 
fiscal year 2004 for the White House's Council on Environmental Quality 
(CEQ). Public power utilities have experienced a general lack of 
consistency in federal government regulation, particularly involving 
environmental issues. While additional layers of government should be 
avoided, a central overseer can perform a valuable function in 
preventing duplicative, unnecessary and inconsistent regulation. CEQ is 
responsible for ensuring that federal agencies perform their tasks in 
an efficient and coordinated manner.
    Again, we appreciate your consideration of our priorities for the 
VA-HUD Subcommittee's fiscal year 2004 appropriations.
                                 ______
                                 
   PREPARED STATEMENT OF THE COALITION FOR EFFECTIVE NATIONAL SERVICE

    Mr. Chairman and Members of the Committee, the members of the 
Coalition for Effective National Service, a membership organization 
composed of national nonprofit grantees of the Corporation for National 
and Community Service, thank you for the opportunity to submit 
testimony. We thank you for your leadership and commitment to national 
service. It is because of your vision and leadership that more than 
300,000 AmeriCorps members in the last decade have dedicated themselves 
to serving the nation and their communities.
    We are now almost two years removed from the tragedy of September 
11, 2001. Yet in many ways, that awful time looms over us. According to 
the noted social scientist Robert Putnam ``in the aftermath of 
September's tragedy, a window of opportunity has opened for a civic 
renewal that occurs only once or twice a century.'' In spite of this 
window and in spite of President Bush's leadership, we have made 
limited progress in realizing the President's goal of a nation of

    ``.  .  .  citizens, not spectators; citizens, not subjects; 
responsible citizens, building communities of service and a nation of 
character.''

    This is a wonderful, measurable goal that if met, will truly 
transform America for the better. We believe that by growing 
AmeriCorps, fully funding the challenge grant program, and eliminating 
the ``cap'' on national nonprofits we can create a comprehensive 
national service movement that generates community volunteers, 
reinvigorates citizenship and democracy and sparks a new culture of 
service, citizenship, and responsibility in the United States.
    This has been a difficult year for AmeriCorps. The enrollment 
``pause'' and the confusion surrounding the National Service Trust have 
seriously disrupted programs at the local level. In his fiscal year 
2003 budget, President Bush called for an increase in funding to 
support 25,000 additional AmeriCorps members, but program funds were 
reduced and are now at their lowest level since 1994.
    In his fiscal year 2004 budget, the President again calls on 
Congress to increase the size of AmeriCorps. We urge you to honor the 
President's request.

 IN ORDER TO GROW AMERICORPS, WE WILL HAVE TO DRAMATICALLY EXPAND THE 
                  OPPORTUNITIES FOR AMERICANS TO SERVE

    AmeriCorps is a proven program that works. Expanding by 25,000 
members a year will be a terrific first step towards providing many 
more opportunities for Americans to serve, and we should continue to 
grow the program from there. Every American should be challenged and 
given the opportunity to serve. Many proven programs, such as Habitat 
for Humanity, YouthBuild, Jumpstart, Teach for America, the National 
Association of Service and Conservation Corps, City Year, are ready to 
go to scale and need only the resources to do so.
    Since 1994, more than 300,000 AmeriCorps members have produced 
significant results-meeting critical needs in education, public safety, 
health and human services, and the environment in every state across 
the nation. The following examples are just a few of the contributions 
made by AmeriCorps members over the past nine years:
  --Students tutored by AmeriCorps members improved their reading 
        performance more than the gain expected by the typical child at 
        their grade level;
  --Established, expanded, or operated 46,000 safety patrols;
  --Served more than 1 million at-risk youth in after-school programs;
  --Provided food, clothing, and other necessities to more than 5 
        million homeless people;
  --Provided job or career counseling to more than 550,000 people;
  --Immunized more than 1 million people;
  --Helped more than 650,000 seniors to live independently; and,
  --Recruited, trained, or supervised more than 2.5 million community 
        volunteers to help non-profits meet important community needs.
    More specifically, examples of the impact of national nonprofits 
include:
  --Teach For America participants have taught more than 1 million 
        students in low-income communities throughout America since the 
        inception of AmeriCorps;
  --City Year has engaged more than 700,000 citizens of all ages in 
        service around the country;
  --Jumpstart has prepared more than 10,000 pre-schoolers from low-
        income families to be ready to read when they start school;
  --The National Association of Community Health Centers has supported 
        health care services to more than 350,000 residents of 
        medically underserved areas;
  --Habitat for Humanity built more than 11,000 homes;
  --Public Allies has placed more than 1,000 future leaders in almost 
        600 partner organizations, served 300,000 people, and engaged 
        30,000 community volunteers; and,
  --In 2001-2002, AmeriCorps members serving with the Youth Volunteer 
        Corps of America recruited almost 5,200 Youth Volunteers for 
        service-learning projects, an additional 5,000 to implement 
        community service projects, and worked with 518 community 
        partners.
  --The National School and Community Corps has engaged more than 
        125,000 urban students in grades K-12 in programs during 
        school, after school, and in the summer resulting in increased 
        student achievement and attendance, reduced youth violence, and 
        improved school climates.
  --In 2001-2002, Northwest Service Academy AmeriCorps members and the 
        volunteers they generated cleared 380 acres of non-native 
        invasive plants, planted almost 175,000 native trees, plants, 
        and shrubs, restored more than 1,700 miles of trail and 
        provided environmental education to 36,000 students and 
        community members.
  --Over the past five years CLEARCorps members have protected more 
        than 2,500 children by controlling lead hazards in the homers 
        and have educated more than 75,000 parents and community 
        members on the causes and prevention of childhood lead 
        poisoning.
  --Since 1995, approximately 600 bilingual AmeriCorps members serving 
        with the Association of Farmworker Opportunity Programs have 
        trained almost 300,000 members of farmworker families in 
        pesticide safety. Serving in 23 states, and often working with 
        local health clinics and churches, they have provided free 
        environmental health training to growers, some of whom own 
        family farms.
  --In 2002 members of the National Association of Service and 
        Conservation Corps enrolled more than 24,000 people, provided 
        18.3 million hours of service to their communities, and 
        mobilized more than 11,000 community volunteers who contributed 
        an additional 1.8 million hours of service.
    All of this great work has been made possible by the federal 
government, not in running the programs, but in providing the resources 
and the umbrella organization to get this valuable work done.
    There are now more than 800 AmeriCorps programs nationwide, 
including 42 fully stipended ones operated by national nonprofits that 
are laying the foundation for a much more comprehensive system for 
national service. Other national nonprofits operate large Education 
Award Programs. With expanded resources and an increase in the quantity 
and quality of service opportunities for Americans, we believe that 
service can become a common experience for every American and that we 
can realize President Bush's powerful vision.
    Both the Commission on National and Community Service, established 
by President George H.W. Bush, and the Corporation for National and 
Community Service, established by President Clinton, took an innovative 
approach to developing national service in America. Rather than 
creating one single federal national service program, they recognized 
that national service is about citizenship; it should come from the 
bottom up, and the federal government should play the role of catalyst, 
resource provider, standard setter, promoter, and umbrella. Our 
programs respond to local needs.
    We need to continue to nurture an environment in which investment, 
growth, and best practices are encouraged. The end result will be high 
quality, cost-effective programs that meet real needs. This environment 
can be stimulated by leveraging investment from all sectors and 
stakeholders and by recognizing the unique contribution of national 
nonprofit AmeriCorps programs to the entire movement.

      FEDERAL INVESTMENT IS A POWERFUL CATALYST FOR DEVELOPING A 
                COMPREHENSIVE SYSTEM OF NATIONAL SERVICE

    Federal investment in national service, beginning with the 
administration of President George H.W. Bush in 1992, has allowed our 
organizations to grow to their current scale, serving communities all 
over the country. Federal investment hasn't displaced private 
investment; rather it has stimulated it, and national nonprofit 
programs have matched every dollar invested by the federal government 
through the Corporation for National and Community Service with private 
sector support, foundation funds, and fee-for-service work.
    National service programs across the country leverage significant 
private sector funds, and have the capacity to do much more. In a 1999 
survey, each AmeriCorps program was found to be involved with an 
average of 2-3 businesses. Programs like Public Allies match their 
federal monies 2:1, leveraging resources from partner nonprofit 
organizations that benefit from their services, and raising other 
contributions from individuals, foundations, and corporations.
    National service programs also leverage considerable state and 
local public sector funds. AmeriCorps has benefited school systems, in 
particular. School systems inn Atlanta, Philadelphia, Chicago, Oakland, 
and dozens of other cities have invested in AmeriCorps because its 
members are skilled, enthusiastic, dedicated, and provide important 
services as tutors, mentors and after school and summer counselors.
    The Coalition for Effective National Service enthusiastically 
supports President Bush's proposal to fund the challenge grant 
provision in the National and Community Service Act. A strategic use of 
federal matching fund challenge grants will leverage federal dollars 
and unleash private philanthropy to help established programs with 
proven track records to provide opportunities for young people to serve 
in many more American communities. We urge you to fully fund this 
initiative in fiscal year 2004.

 NATIONAL NON-PROFITS ARE A STRONG AND EFFICIENT DELIVERY VEHICLE FOR 
                            NATIONAL SERVICE

    National nonprofits that operate AmeriCorps programs have a unique 
role to play in the national service universe. Known as National 
Directs, these programs provide quality control and expertise, engage 
national companies as sponsors, and achieve economies of scale through 
centralized ``back office'' operations. However, in the spirit of 
experimentation and devolution, Congress placed a ``cap'' upon National 
Direct funding in 1997, shrinking it from 33 percent to about 17 
percent of total AmeriCorps program funds in fiscal year 2002. Because 
we are convinced that National Directs are crucial to promoting 
innovation, quality, replication, and sustainability in the national 
service field we urge you to eliminate this limitation.
    National Direct AmeriCorps programs operate in every state in the 
country. They share the following characteristics: they participate in 
a highly demanding national competitive process in order to receive 
funds from the Corporation for National and Community Service, they 
oversee operating sites in multiple states, and they are frequently 
housed within major national and international nonprofit organizations, 
such the American Red Cross and Habitat for Humanity. Others stand 
alone.
    National Directs have significant advantages that enable them to 
play a key role in building a comprehensive system and infrastructure 
for national service in America. They bring significant resources to 
the national service field including: the ability to build strong 
infrastructures, deeply committed Board members, developed business 
practices, skilled professionals, programs tested and implemented on a 
national scale, and the potential to partner with national companies 
and foundations on important projects and initiatives. National Direct 
programs include:
  --Teach for America, an independent nonprofit operating in 20 regions 
        nationwide, which places outstanding recent college graduates 
        in under-served urban and rural public schools to teach for two 
        years;
  --Habitat for Humanity AmeriCorps, housed within Habitat for Humanity 
        International and operating in eighteen states, which builds 
        and renovates houses with low-income families;
  --Youthbuild USA AmeriCorps, of Youthbuild USA, operating in 23 
        states, which recruits disadvantaged youth to construct low-
        income area housing and ``rebuild their neighborhoods as they 
        rebuild their lives'';
  --Jumpstart for Young Children, Inc. which pairs federal work-study 
        college students with preschool children struggling in early 
        learning programs in four states;
  --Community HealthCorps, operated by the National Association of 
        Community Health Centers in fourteen states, the District of 
        Columbia, and Puerto Rico which provides culturally appropriate 
        preventive and primary health care to medically underserved 
        populations and communities; and
  --National Collaboration for Homeless Veterans, operated by the 
        United States Veterans Initiative, which provides services to 
        homeless veterans to connect them with housing, employment, and 
        treatment services and to help them successfully reintegrate 
        into society.
    Quality control.--Like successful franchises, National Direct 
AmeriCorps programs create replicable service models to adapt to any 
area. National Direct programs do not start from scratch; they 
establish new programs on the basis of years of experience building 
local community relationships and uniting local resources, and they 
work with local leaders to establish new sites. National Direct 
operating sites work with their respective State Commissions, lending 
resources, attending trainings and program director meetings, and 
ensuring that program funders are recognized in the state's portfolio. 
In addition, about twenty parent organizations for National Direct 
operating sites also receive funding through some State Commissions. 
Often, working with local champions such as CEOs and mayors, national 
nonprofit programs have begun operations in a new locality with 
national direct funding and then have been brought into the State 
portfolio by the State Commission through the competitive stream.
    Expertise.--National Direct programs support community-based 
organizations by delivering federal resources while taking on the 
bureaucratic reporting and administration that go with it. Public 
Allies, for example, has placed AmeriCorps members in 550 community-
based organizations in seventeen regions across the country to date; 93 
percent of those organizations report strengthened capacity such that 
they will sustain the projects and relationships developed by their 
members.
    National reach.--National Directs have the potential to leverage 
investment on a large scale. For example, Cisco Systems, Compaq 
Computer Corporation, MFS Investment Management, and the Timberland 
Company have each committed more than $1 million to the City Year 
AmeriCorps program because of its national reach. Sponsorship for 
national nonprofits is of significant interest to multi-state 
corporations because it meets their employees' and customers' interests 
in serving in more than one location. Furthermore, sponsorship in one 
city by nationally recognized corporations and foundations frequently 
influences potential sponsors in another city. These are dollars that 
would not otherwise be leveraged by local service programs. National 
Directs have a unique capacity to enlarge the share of philanthropic 
dollars spent on service.
    Cost-effectiveness.--Because National Directs centralize standard 
operations, significant economies of scale and sustainability can be 
achieved. Centralized financial administration, such as single payroll 
and budget services, single audits, single legal representation, a 
shared line of credit, or a shared national endowment can sharply 
reduce costs per site. Standardized communications protocol leads to 
effective brand management, targeted research, and central evaluation, 
allowing reports on aggregate data from across the country. Also, 
national programs can quickly leverage and build upon local innovation. 
Best practices can be quickly and efficiently communicated across 
operating sites, shared corps recruitment and human resources systems 
leverage multiple applicants, and alumni have an instant cross-country 
network.
    Demonstrable impact.--National Directs are able to aggregate their 
results on a large scale and unify a range of service activities from 
multiple programs through a focused mission. Lines of accountability 
for service outcome are that much easier to control, and results are 
easier to collect. Below are some examples:
  --Teach for America reports that 96 percent of principals rated their 
        members as excellent or good in terms of achievement, 
        orientation, and drive to succeed; 97 percent would absolutely 
        hire their members again;
  --In 2001, members serving with the National Collaboration for 
        Homeless Veterans provided more than 10,000 homeless 
        individuals, of which nearly 6,500 were homeless veterans, with 
        services including: intake, case management, group support, 
        legal services, transportation, and housing;
  --Over a three-year period, Community Health Center members provided 
        a ``medical home'' for 27,644 residents of medically 
        underserved areas, provided 47,266 patient encounters to 
        improve health care utilization and cost effectiveness 
        (including understanding benefits, doctor instructions and 
        follow up), and generated 23,631 referrals to link patients 
        with other health and social services.
    Whether operated by national nonprofits, community- and faith-based 
organizations, universities, state and city departments, or 
foundations, AmeriCorps programs work. It is time to take national 
service to the next level through challenges to the private sector, 
increased resources, and restoration of the historical role for 
National Directs.
    As Americans, we now have a historic, and perhaps unique, 
opportunity to call all Americans to give back to their communities. We 
look back at the Greatest Generation with admiration and reverence 
because they overcame the Great Depression and fought a world war for 
freedom and democracy. Today, while we fight a global war on terrorism 
there are still great challenges here at home. We must capitalize on 
this moment in our history to challenge each and every citizen to 
answer the call to serve our nation and we must build a system of 
national service that enables them to do so. If we build that system, 
every generation of Americans will become a Greatest Generation, 
because they will rise to serve causes larger than themselves. The 
moment is here, but it is brief. It is up to us, working together, to 
secure national service for the next generation of young people and all 
Americans.
    The Coalition again thanks you for your leadership, your example, 
and your commitment to making service to community and country an 
opportunity for all Americans.
                                 ______
                                 
                PREPARED STATEMENT OF TEACH FOR AMERICA

    Mr. Chairman, Senator Mikulski and Members of the Subcommittee, 
thank you for the opportunity to submit testimony regarding the 
President's fiscal year 2004 budget proposal to provide $3 million for 
Teach For America. Mr. Chairman and Senator Mikulski, I applaud your 
commitment to national service and desire to help AmeriCorps realize 
its full potential. Thanks to your leadership and the work of this 
Subcommittee, Teach For America corps members have reached more than 
one million students in under-resourced school districts since the 
inception of AmeriCorps.
    I would like to take this opportunity to discuss Teach For America 
and our current growth plans. I will also focus on the $3 million line 
item in the President's fiscal year 2004 budget and explain why it is 
critical to Teach For America's ability to grow to scale.
    As you know, Teach For America is the national corps of outstanding 
recent college graduates of all academic majors who commit two years to 
teach in urban and rural public schools and become lifelong leaders in 
the effort to ensure that all children in our nation have an equal 
chance in life. We are a private, national non-profit organization, as 
well as one of the original AmeriCorps programs. Our teachers receive a 
salary from their local school district as well as education awards 
through AmeriCorps. These education awards can be used for graduate 
level education courses necessary to obtain teacher certification, to 
pay back qualified student loans, or for future education. Mr. Chairman 
and Senator Mikulski, since these awards are such a valuable asset for 
Teach For America corps members, I want to let you know how much I 
appreciate your recent efforts to provide adequate funding in the 
National Service Trust for education awards.
    Since 1990, when I founded Teach For America, our organization has 
grown from 500 corps members teaching in 5 regions to what will soon be 
3,500 corps members teaching in 20 regions during the 2003-2004 school 
year. Teach For America corps members are having an impact throughout 
our nation, from St. Louis to Baltimore, and from New Mexico's Navajo 
Nation to the Rio Grande Valley in South Texas.

                 TEACH FOR AMERICA MEETS CRITICAL NEEDS

    Our mission is to build a movement to eliminate the educational 
inequality that exists in our country today. By the age of nine, 
children in low-income areas are already three grade levels behind in 
reading ability (Source: National Center of Education Statistics, 
2000). As these children progress in the educational system, this 
achievement gap only widens, to the point that a child who grows up in 
a low-income community is seven times less likely to graduate from 
college than a child growing up in a more privileged area (Source: 
Education Trust, 1998).
    Our corps members help close the achievement gap for the students 
they reach during their two-year commitment. At the same time, they 
gain insight and added commitment that shapes them into an important 
leadership force, working from inside of education and from other 
sectors, for long-term change.

                              OUR PROGRAM

    We recruit the most highly sought-after college graduates of all 
academic majors, career interests, and backgrounds from leading 
colleges and universities. We then select corps members who demonstrate 
records of achievement and leadership, as well as a commitment to 
expanding opportunity for children in low-income areas.
    Admission to Teach For America is highly selective, with 
approximately 15 percent of our applicants gaining admission to the 
corps. Of our 2002 corps members, 89 percent held leadership positions 
on their campuses or in their communities. They earned average SAT 
scores of 1310 and average GPAs of 3.5. In addition, 38 percent of 
corps members are people of color.
    This year, 15,700 young people applied for only 1,900 slots as 
first year teachers. At many top schools, Teach For America is 
considered one of the most prestigious post-graduate opportunities. 
This year, 19 percent of Spelman's senior class applied to the corps. 
And at top, larger universities, Teach For America attracted 
significant portions of the student body: 5 percent of Yale and 
Princeton seniors applied, as did 4 percent of seniors at Michigan and 
Harvard. All are competing for the opportunity to teach in America's 
neediest schools.
    Corps members are selected into Teach For America if they 
demonstrate strong leadership characteristics such as achievement 
orientation, critical thinking, personal responsibility for success, 
and the ability to influence and motivate others, as well as high 
expectations for students and families in low-income communities and 
the desire to work relentlessly toward this particular mission.
    Those selected attend a summer training institute where corps 
members teach in local public summer schools and participate in a full 
afternoon and evening schedule of professional development activities. 
We aim to ensure that corps members internalize the overarching 
approach utilized by the most successful teachers in urban and rural 
areas; and that they gain skills in instructional planning and 
delivery; building a strong classroom culture; literacy development; 
and teaching the specific content-area and grade-level they will be 
teaching.
    Following the institute, corps members assume teaching positions in 
school districts in 20 urban and rural areas. They are clustered in 
schools and receive extensive ongoing support and professional 
development through Teach For America and through local teacher 
education programs.
    Following their two-year commitments, corps members can remain in 
teaching (and about 60 percent teach for at least a third year). We 
expect that they will ask themselves how they can have the greatest 
possible impact on the challenges they and their students experienced 
during their two years, and we provide a network of resources and 
support that they can tap into as they continue working in educational 
and social reform throughout their lives.

        IMMEDIATE IMPACT ON COMMUNITIES AND STUDENT ACHIEVEMENT

    Our success in recruiting and preparing exceptional classroom 
teachers has led education policy makers to highlight our impact on 
disadvantaged communities. Reflecting on his tenure as Superintendent 
of the Houston Independent School District, Secretary of Education Rod 
Paige noted, ``Every year, our best teachers came from Teach For 
America.''
    In a study released in August 2001, researchers at the Center for 
Research on Education Outcomes (CREDO) at Stanford University compared 
the impact of Teach For America corps members in Houston on their 
students' achievement to that of other teachers. Researchers found that 
the students of corps members, compared with students of other new 
teachers, achieved greater or equal gains on standardized tests in 
every subject and every grade level.
    Another way we evaluate corps member impact is through a bi-annual 
survey of principal satisfaction conducted by Kane, Parsons & 
Associates, Inc., an independent research firm. In the spring 2001 
survey by Kane, Parsons & Associates, principals credit Teach For 
America teachers as having positive effects on their schools and on 
student achievement. Almost four out of five principals reported that 
corps members are more effective than their other beginning teachers. 
An average of over ninety percent of these principals rated corps 
members as good or excellent on 22 indicators of effective teaching, 
including:
  --96 percent--Achievement orientation and drive to succeed;
  --94 percent--Knowledge of the subject matter;
  --98 percent--Ability to think logically and critically;
  --92 percent--Integrating into the school community; and
  --93 percent--Assuming responsibility for student achievement.

                            LONG-TERM IMPACT

    Teach For America is building a force of leaders and citizens with 
a lifelong commitment to addressing the issues they witness during 
their two years of service. Education Week, a leading national journal 
of K-12 education, profiled Teach For America's alumni in an article 
titled ``Most Likely To Succeed'' and called Teach For America a 
``leader-making machine.''
    According to a survey conducted in the fall of 2002, our alumni are 
deeply influenced by their Teach For America experience:
  --Nationally, 63 percent of our alumni are working full-time in 
        education, 37 percent as K-12 teachers and 26 percent as 
        administrators, in higher education, education-related non-
        profits and other positions in the field of education; and
  --Both within and outside of the education field, 79 percent of 
        alumni have been influenced in their career decisions by their 
        desire to expand opportunities in low-income neighborhoods, and 
        84 percent of alumni participate in civic activities motivated 
        by this same desire.
    Even more striking is the extent to which Teach For America alumni 
have already assumed leadership in the broader effort to improve 
education--they are running many of the most highly acclaimed charter 
schools in the country; they are turning around major urban schools as 
principals; they are winning some of the highest accolades teachers can 
win (as state and city teachers of the year); they are serving on 
school boards and advising Governors and Members of Congress on 
education policy; and they are leading model education reform, public 
health and economic development initiatives.

       TEACH FOR AMERICA NEEDS INCREASED FUNDING TO GROW TO SCALE

    Teach For America is in the midst of a 5-year expansion plan to 
more than triple the size of its teacher corps. Before this expansion 
effort, Teach For America had just over 1,000 teachers in 13 
communities and a budget of under $10 million. In 2004, Teach For 
America will have nearly 4,000 corps members in at least 21 sites and 
will need to raise a budget in excess of $30 million. At that scale, 
Teach For America teachers will reach more than 300,000 public school 
students every day in this country's lowest-income neighborhoods.
    Seventy-five percent of our funding comes from private sources, 
much of it from the local communities where our teachers teach. We have 
a highly diversified base of more than 2,000 private donors from all 
over the country. Top donors include Don and Doris Fisher's Pisces 
Foundation; the Broad Foundation; the Walton Family Foundation; the New 
Schools Venture Fund; Wachovia Corporation; and AT&T.
    To raise our expanded budget, we must significantly increase our 
private funding base while growing our federal funding proportionately. 
With adequate federal funding, we can expand to reach more communities 
and engage more recent college graduates while continuing to provide 
highly qualified teachers for America's neediest classrooms. The 
Corporation for National and Community Service's $3 million fiscal year 
2004 budget line item would allow us to maintain our current ratio of 
federal to private funding and enable us to execute our growth plan.

                               CONCLUSION

    I hope you will agree that we have demonstrated all the 
characteristics of an exemplary AmeriCorps program: we recruit talented 
young people into competitive positions in critical areas of public 
need; we have a significant impact in the communities we serve; we 
influence the civic commitment and career path of our corps members; 
and we leverage our public support for significant private resources. 
As we continue our efforts to more than triple in size and reach 
hundreds of thousands of children each year, we seek your support so 
that Teach For America can expand its scale and impact. Mr. Chairman 
and Members of the Subcommittee, we hope you will support the 
President's request for $3 million for Teach for America in the fiscal 
year 2004 budget.
                                 ______
                                 
          PREPARED STATEMENT OF THE AMERICAN THORACIC SOCIETY

    The American Thoracic Society (ATS) is pleased provide our 
recommendations for programs in the Department of Veterans Affairs (VA) 
medical and prosthetic research program and the Environmental 
Protection Agency.
    The ATS, founded in 1905, is an independently incorporated, 
international education and scientific society which focuses on 
respiratory and critical care medicine. The Society's members help 
prevent and fight respiratory disease around the globe through 
research, education, patient care and advocacy. The Society's long-
range goal is to decrease morbidity and mortality from disorders and 
life-threatening acute illnesses.
    Lung disease is a significant health problem in the U.S. Lung 
disease is the third leading cause of death in the U.S.--responsible 
for one in every seven deaths. More than 35 million Americans suffer 
from a chronic lung disease. Lung diseases cost the U.S. economy an 
estimated $144.9 billion annually in direct and indirect costs. Lung 
disease represents a spectrum of chronic and acute conditions that 
interfere with the lung's ability to extract oxygen from the 
atmosphere, protect against environmental and biological assaults, and 
regulate a number of vital metabolic processes. Lung diseases include: 
chronic obstructive pulmonary disease (COPD--which includes emphysema 
and chronic bronchitis), lung cancer, tuberculosis, pneumonia, 
influenza, sleep-disordered breathing, pediatric lung diseases, 
occupational lung diseases, sarcoidosis, asthma, acute lung injury and 
severe acute respiratory syndrome (SARS).

                     DEPARTMENT OF VETERANS AFFAIRS

VA Research Medical and Prosthetic Research Program
    The American Thoracic Society strongly supports the VA research 
program. The VA research program is a valuable tool for attracting and 
retain top-notch physicians to VA system. The VA research program also 
is an important source of training support for VA physicians. The VA 
research program also supports state-of-the-art research that is 
leading to better treatment and cures for all Americans. Most 
importantly, the VA research program is good for veterans. The research 
and training programs are focused on the unique needs of veterans.
    We applaud the Bush Administration and Department of Veterans 
Affairs Secretary Anthony J. Principi for recognizing the invaluable 
contribution VA research makes to deliver high quality care for 
veterans and toward improving the health of veterans and the nation. 
However, the proposed $10.6 million (2.7 percent) increase in the 
direct costs of the program is inadequate to sustain the current level 
of effort or to accommodate new initiatives.
    The Friends of VA Medical Care and Health Research (FOVA), a 
coalition of 82 medical, research, physician, academic, patient 
advocacy and Veterans organizations committed to quality care for 
veterans an fiscal year 2004 appropriation of at least $460 million for 
the direct costs of the VA research program and $45 million for 
research facility improvements. The ATS supports the FOVA 
recommendations for fiscal year 2004.
    The $460 million allows overall growth of $63 million (16 percent) 
over fiscal year 2003. An increase of this size is justified by the 
need to accommodate biomedical research inflation and federal pay 
increases as well as a major new initiative in deployment health 
research and expansion in areas such as terrorism, emerging pathogens, 
special populations, quality improvement, chronic diseases and diseases 
of the brain. We urge to the Subcommittee to support continued, steady 
growth in the annual appropriation.

VA Research Facility Renovation
    Separate from its recommendations for the VA research 
appropriation, FOVA also recommends the Committee to address the 
increasingly urgent need for improvements in VA's research facilities 
by recommending a specific allocation of $45 million for these needs. 
The ATS strongly supports FOVA recommendations for research facilities 
improvements.
    The ATS notes that the House VA-HUD subcommittee designated $25 
million for minor construction research facility improvements in the 
fiscal year 2003 VA-HUD bill. However, appears that conferees for the 
fiscal year 2003 Omnibus Appropriations legislation reduced the total 
minor construction budget to $15 million and did not make reference to 
funds available for research space rehabilitation.
    Despite having top-notch researchers, the VA system has a sub-par 
physical infrastructure for supporting research. Substandard facilities 
make VA a less attractive partner in research collaborations with 
affiliated universities; reduce VA's ability to leverage the research 
and development (R&D) appropriation with other federal and private 
sector funding; and make it difficult to attract cutting edge 
researchers, both clinician investigators and laboratory scientists, to 
pursue careers in the VA. Facility R&D Committees regularly disapprove 
projects for funding consideration because the facility does not have 
the necessary infrastructure and has little prospect of acquiring it.
    Under the current system, research must compete with other medical 
facility and clinical needs for basic infrastructure and physical plant 
support. Unfortunately, the minor construction appropriation is 
chronically inadequate to meet facility needs for clinical improvements 
much less research upgrades, and year after year the list of urgently 
needed research repairs and upgrades grows longer. The VA has 
identified 18 sites in urgent need of minor construction funding to 
upgrade their research facilities. These sites, plus the many 
facilities with smaller, but no less important needs, provide more than 
sufficient justification for an appropriation of $45 million 
specifically for research facility improvements.
    The ATS strongly encourages the Subcommittee on Veterans Affairs to 
support a fiscal year 2004 appropriation of at least $460 million for 
the direct costs of the VA research program and $45 million for 
research facility improvements.

                 ENVIRONMENTAL PROTECTION AGENCY (EPA)

    Nearly all lung diseases are impacted by air pollution. How well or 
poorly our lungs perform is contingent on the quality of air around us, 
making the impact of air pollution inescapable. Air pollution remains a 
primary contributor to a high prevalence of respiratory diseases.
    For nearly 40 years, the ATS has conducted scientific, public 
health and educational programs to fight air pollution and to improve 
the quality of the air we breathe. We remain strong supporters of the 
Clean Air Act and its amendments. We can attest to the significant 
impact that the Clean Air Act has had in improving the quality of our 
nation's air.
    However, much remains to be done. It is estimated that millions of 
Americans live in counties that do not meet current Clean Air Act 
health-standards, including our Nation's Capitol. EPA reports estimate 
that 170 million Americans live in areas that expose them to unsafe 
levels of ozone and particulate matter.
    Research has shown that air pollution is causing the premature 
death of literally thousands of people each year due to complications 
from exposure to air pollution.

The Administration's Clear Skies Proposal
    Despite its appealing name, the Administration's Clear Skies 
proposal will increase air pollution in the U.S. The proposal would 
delay the implementation of emissions standards and increase the 
overall amount of pollution released from industrial facilities. 
Enforcement of the existing Clean Air Act laws will reduce air 
pollution in the U.S. faster than the Administration proposal. Beyond 
delaying implementation and increasing total emissions, the 
Administration proposal would deny state authority to take action to 
address air pollution.
    We recommend the Subcommittee to transfer the $7.7 million 
Administration Clear Skies budget proposal to EPA implementation and 
enforcement of the existing Clean Air Act standards.

EPA Enforcement
    The ATS is encouraged that the Administration has proposed an 
increase in the EPA enforcement budget. However, we would note that 
cuts in the 2002 budget have eliminated over 100 positions from the EPA 
enforcement and compliance activities. A strong EPA enforcement program 
is needed to ensure all Americans can breath clean air.
    We are pleased that the President's budget restores the 100 FTE 
enforcement positions cuts in the previous budget, however, we note 
that federal enforcement activities are still 100 positions FTE short 
of what is needed to adequately protect our nation's environment and 
health.

EPA Asthma Research
    The ATS is pleased that EPA has launched an asthma research 
program. The medical community has long known that air pollution can 
exacerbate existing asthma. In fact, a recent study published in the 
February 2, 2002 issue of Lancet showed a relationship between exposure 
to high levels of ozone and the development of asthma in children.\1\ 
Additional research is needed to confirm and define the links between 
air pollution and asthma. The EPA Asthma Research programs will 
identify:
---------------------------------------------------------------------------
    \1\ R. McConnell, et.al., Asthma in Exercising Children Exposed to 
Ozone: A Cohort Study, Lancet, Feb. 2, 2002, p.386-391.
---------------------------------------------------------------------------
  --pollutants that contribute to the induction and exacerbation of 
        asthma, such as air toxics, byproducts of combustion, aerosols, 
        indoor allergens and environmental tobacco smoke;
  --susceptibility factors that contribute to asthma: genetics, prior 
        health problems, socioeconomic status, residence and exposure 
        history; and
  --risk assessment and risk management of environmental pollutants 
        relevant to asthma.
The ATS recommends the Subcommittee provide $12 million for the EPA 
Asthma Research program.

NAAQS Research
    The ATS strongly supports the EPA National Ambient Air Quality 
Standards (NAAQS) research program. The NAAQS research program provides 
valuable information about the health effects of exposure to polluted 
air. The NAAQS also help develop the monitoring and pollution control 
technology that will ultimately lead to cleaner air of all of America.
    We recommend a $50 million increase in the EPA NAAQS research 
program.

Fine Particulate Matter and Ozone
    Recent studies have confirmed the significant adverse impact that 
existing levels of smog and fine particles have on lung health. Two 
recent studies have made clear the need to proceed with enforcement of 
the health-based Clean Air standard established 1997. The Lancet study, 
referenced before, establishes a link between ozone and the development 
of asthma.\2\ A second study published in the March 6, 2002 edition of 
the Journal of the American Medical Association establishes a 
correlation between exposure to fine particulate air pollution and 
increased mortality from lung cancer and cardiopulmonary diseases.\3\ 
Despite the growing body of evidence that air pollution plays a direct 
role in causing lung disease, the EPA has yet to implement the new, 
more protective standards finalized in July 1997.
---------------------------------------------------------------------------
    \2\ Ibid.
    \3\ C. Pope, et.al., Lung Caner, Cardiopulmonary Mortality, and 
Long-term Exposure to Fine Particulate Air Pollution, JAMA, March 6, 
2002, p. 1132-1141.
---------------------------------------------------------------------------
    As the members of the Subcommittee know, the state of the 1997 fine 
particulate matter and ozone rules had been tied up in courts until 
recently. In March 2002, the U.S. Court of Appeals ruled that the 1997 
standards were a proper exercise of EPA's power. Now that all legal 
barriers have been removed, it is time EPA began enforcing its 1997 
health-based Clean Air Act standards.
    The ATS urges the Subcommittee to provide EPA with the resources to 
expeditiously implement and enforce the 1997 health-based standards.

New Source Review
    We are extremely concerned about Administration initiatives to 
weaken the Clean Air Act and undermine the enforcement of the law. In 
particular, we are concerned about the effort to undercut the Clean Air 
Act's New Source Review Program. New Source Review (NSR) is a simple 
concept, made extremely complicated by those who want to avoid 
complying with the law. Simply stated, the NSR program requires 
facilities that undergo modification that significantly increase 
emissions to install pollution control equipment. If the facility does 
not increase pollution, NSR does not apply. This program only applies 
when pollution increases. The NSR program is reducing pollution and is 
saving lives this year and every year. Legislative proposals promising 
greater air pollution reductions are no substitute for NSR. Such 
proposals must be implemented in concert with NSR, just as the current 
acid rain reduction program is. The public demands cleaner air and this 
program provides substantial public health benefits.
    We urge the Subcommittee to resist efforts by the Administration to 
weaken the implementation or enforcement of the EPA New Source Review 
program.

Tier 2 and Heavy Duty Vehicles Standards
    In 1999, the EPA established new tailpipe and gasoline standards 
for cars, light trucks, minivans and SUVs. The EPA also established new 
limits on sulfur in gasoline. When fully implemented, this program 
would be the equivalent of taking 164 million cars off the road. EPA 
calculates that the final rule will prevent as many as 4,300 deaths, 
more than 10,000 cases of chronic and acute bronchitis, and tens of 
thousands respiratory problems a year.
    In 2000, EPA established new emission standards for heavy-duty 
vehicles and diesel fuel. These standards provide dramatic pollution 
reduction. As a result of this program, each new truck and bus will be 
more than 90 percent cleaner than current models. The clean air impact 
of this program will be dramatic when fully implemented. This program 
will provide annual emission reductions equivalent to removing the 
pollution from more than 90 percent of today's trucks and buses, or 
about 13 million vehicles.
    We encourage the Subcommittee to provide EPA the resources 
necessary to proceed with implementation and enforcement of the Tier 2 
and Heavy-Duty Vehicle Standards.

Ozone Depleting Gases Transition
    The ATS supports the work of the EPA and the Food and Drug 
Administration (FDA) to complete the transition process of removing 
ozone-depleting gases from the U.S. market place as called for the 
Montreal Protocol. One of the few remaining uses of ozone deleting 
gases is chlorofluorocarbon (CFC) propelled drugs used to treat asthma 
and chronic obstructive pulmonary disease. Last year, the FDA published 
criteria for reviewing essential use exemptions for CFC propelled 
medications as non-ozone depleting drug formulations became available.
    The ATS, in conjunction with the American Lung Association and 
several other physician and patient organizations, has filed a citizen 
petition asking the FDA to end the essential use exemption for CFC 
propelled albuterol sulfate--a drug used to treat asthma and other 
obstructive lung diseases. Currently, there are two manufacturers who 
produce a non-ozone deleting formulation of albuterol sulfate. A third 
manufacturer is seeking FDA approval of its non-ozone depleting 
formulation of albuterol sulfate. Data from the U.S. and European 
markets has proven the new formulations to be safe and effective.
    We encourage the EPA to work with the FDA and the Department of 
State to develop a position to achieve adoption of a Protocol decision 
this year that deems albuterol non-essential for developed countries by 
2005 and takes other steps to bring timely and effective closure to the 
Protocol's essential use exemption.
    In conclusion, lung disease is a growing problem in the United 
States. It is America's number three killer, responsible for one in 
seven deaths. The ATS requests Congress' continued support for the VA 
and the EPA research programs to enable the pulmonology and critical 
care medicine community to continue with its efforts to find better 
ways to treat and prevent lung disease.
                                 ______
                                 
          PREPARED STATEMENT OF THE AMERICAN LUNG ASSOCIATION

    The American Lung Association is pleased to offer this testimony to 
the Committee on Appropriations Subcommittee on Veterans, Housing and 
Urban Development and Independent Agencies on the programs of the 
Environmental Protection Agency. The American Lung Association, 
established in 1904, is one of the nation's oldest voluntary health 
organizations. The American Lung Association is committed to fighting 
lung disease and promoting lung health.
    Lung disease is the third leading cause of death in the U.S.--
responsible for one in every seven deaths. More than 35 million 
Americans suffer from a chronic lung disease. These diseases cost the 
U.S. economy an estimated $144.9 billion annually. Lung disease 
represents a spectrum of chronic and acute conditions that interfere 
with the lung's ability to extract oxygen from the atmosphere, protect 
against environmental and biological assaults, and regulate a number of 
vital metabolic processes. We are talking about diseases that are very 
familiar--such as asthma, emphysema, chronic bronchitis, lung cancer, 
tuberculosis, pneumonia, and influenza--and others, which are much less 
well known. Lung disease touches virtually every American.
    Lung diseases are made worse by air pollution. How well or poorly 
our lungs perform depends on the quality of air around us, making the 
impact of air pollution inescapable.
    For nearly 40 years, the American Lung Association has conducted 
scientific, public health and educational programs to fight air 
pollution and to improve the quality of the air we breathe. We remain 
strong supporters of the Clean Air Act and its amendments. We can 
attest to the significant impact that the Clean Air Act has had in 
improving the quality of our nation's air.
    However, much remains to be done. EPA's own estimates show that 
over 170 million people live in areas with unhealthy levels of smog and 
soot based on current standards. We know people living in these areas 
suffer air pollution-related asthma attacks, are hospitalized for 
aggravated lung disease, lose days at work, school and play, and even 
face an early death.
    Research has shown that air pollution is causing the premature 
death of literally thousands of people due to complications linked to 
air pollution exposure.

               ADMINISTRATION'S AIR POLLUTION LEGISLATION

    The Administration's air pollution legislation, known as Clear 
Skies, will weaken the Clean Air Act and severely undermine efforts to 
curb air pollution. The plan will not reduce power plant emissions 
enough to clean the air or protect the nation's health. In fact, timely 
enforcement of the current Clean Air Act will provide greater pollution 
reductions sooner than the Administration's bill.
    Unfortunately, the Administration is currently focused on attempts 
to avoid implementation of existing clean air regulations. The 
Administration's proposal, which would not be fully implemented for 
more than two decades, would delay reaching important clean air goals 
even further. The plan preempts state authority to aggressively pursue 
clean air for their citizens. Indeed, air pollution clean-up plans 
needed to meet public health standards for smog and fine particles 
issued in 1997 are still years away.
    The American Lung Association strongly encourages the Subcommittee 
to redirect the $7.7 million proposed to fund Clear Skies into 
implementing the ozone and fine particle standards.

                      FEDERAL ENFORCEMENT FUNDING

    We are pleased to see that the President's budget has proposed an 
increase for Environmental Protection Agency enforcement. The $21 
million increase will add 100 positions. Unfortunately, due to previous 
cuts, the enforcement program is still down 100 positions from the 
fiscal year 2001 proposed level. We have much cleaner air today than we 
did in 1970 because of EPA's ability to enforce the law. Without strong 
continued federal leadership, the quality of our nation's air will 
suffer.
    The American Lung Association strongly encourages the Subcommittee 
to increase the enforcement and compliance program to restore all the 
positions that have been eliminated.

                        ASTHMA RESEARCH STRATEGY

    Last fall, the American Lung Association joined EPA Administrator 
Whitman to announce the release of the EPA Office of Research and 
Development's Asthma Research Strategy. The Asthma Research Strategy 
will guide EPA research efforts to address the significant issues of 
exposures, effects, risk assessment and risk management of 
environmental pollutants relevant to asthma.
    The Asthma Research Strategy will address the following issues:
  --pollutants that contribute to the induction and exacerbation of 
        asthma, such as air toxics, byproducts of combustion, aerosols, 
        indoor allergens and environmental tobacco smoke;
  --susceptibility factors that contribute to asthma: genetics, prior 
        health problems, socioeconomic status, residence and exposure 
        history; and
  --risk assessment and risk management of environmental pollutants 
        relevant to asthma.
We were pleased that the Administration requested an additional $1 
million for children's asthma research in this year's request bring the 
total request to $6.2 million.
    The American Lung Association strongly encourages the Subcommittee 
to double the investment in children's asthma research to $12.4 
million.

                          AMBIENT AIR RESEARCH

    The American Lung Association strongly supports the EPA National 
Ambient Air Quality Standards research program. This research program 
provides valuable information on the health effects of exposure to 
polluted air. This research is essential for the development of the 
most cost effective strategies and technologies needed for protecting 
public health from air pollution.
    The American Lung Association recommends a $50 million increase in 
the EPA National Ambient Air Quality Standards research program.

                           VEHICLES STANDARDS

    This year, EPA will propose new standards for non-road diesel 
engines. Commonly referred to as heavy equipment, this category 
includes vehicles used in a variety of applications in construction and 
agriculture. We expect EPA to propose emissions standards and fuel 
standards for these vehicles that are comparable to the new standards 
for on road heavy-duty vehicles and fuels. This rule will save 
thousands of lives each year. This proposal builds on EPA's previous 
initiatives to clean up heavy-duty diesel trucks and buses and cars, 
light trucks and SUVs. We expect this program to provide even greater 
benefits than the on-road rule. The American Lung Association strongly 
supports this EPA initiative that will bring tremendous air quality and 
public health benefits. Some have suggested that EPA reopen the widely 
supported rule for on road heavy-duty trucks and buses. The American 
Lung Association strongly urges EPA to move ahead with the new non-road 
rulemaking without reopening the on-road rule.
    The American Lung Association encourages the Subcommittee to 
provide EPA the resources necessary to proceed with non-road rulemaking 
and finalize the rule as soon as possible.

                           NEW SOURCE REVIEW

    We are extremely concerned about Administration initiatives to 
weaken the Clean Air Act and undermine the enforcement of the law. In 
particular, we are concerned about the effort to undercut the Clean Air 
Act's New Source Review program. New Source Review, also known as NSR, 
is a simple concept, made extremely complicated by those who want to 
avoid complying with the law. Simply stated, the NSR program requires 
facilities that undergo modification that significantly increase 
emissions, to install pollution control equipment. If the facility does 
not increase pollution, New Source Review does not apply. The NSR 
program is reducing pollution and saving lives this year and every 
year. Legislative proposals promising the potential of greater air 
pollution reductions in the years to come are no substitute for this 
effective clean-up program.
    The American Lung Association urges the Subcommittee to resist 
efforts by the Administration to weaken the implementation or 
enforcement of the EPA New Source Review program.

                   FINE PARTICULATE MATTER AND OZONE

    On March 26, 2002, the D.C. Circuit of the United States Court of 
Appeals rejected the last of the industry challenges to the National 
Ambient Air Quality Standards issued by the EPA in July 1997 for PM 2.5 
(fine particles) and 8-hour levels of ozone smog. After a five-year 
delay caused by specious industry litigation, we expect EPA to treat 
implementation of these standards as a matter of great urgency. We urge 
this committee to ensure that the agency does so.
    EPA's review of the health standards is once again overdue. The 
review of the National Ambient Air Quality Standards for Ozone and 
Particulate Matter was supposed to be completed by July 2002. It is 
critical that the EPA devote sufficient resources to complete the 
timely review of the health based air pollution standards.
    The American Lung Association urges the Subcommittee to direct EPA 
to complete the timely review of the ambient air quality standards.

                             MDI TRANSITION

    The American Lung Association is continues to work with the EPA and 
the Food and Drug Administration (FDA) to complete the transition 
process of removing ozone depleting substances from the U.S. market 
place as called for the Montreal Protocol. One of the few remaining 
uses of ozone depleting substances are CFC propelled drugs used to 
treat asthma and chronic obstructive pulmonary disease. Last year, the 
FDA published criteria for reviewing essential use exemptions for CFC 
propelled medications as non-ozone depleting drug formulations became 
available.
    The American Lung Association, in conjunction with several of 
physician and patient organizations, has filed a citizen petition 
asking the FDA to end the essential use exemption for CFC propelled 
albuterol sulfate--a drug used to treat asthma and other lung diseases. 
Currently, there are two manufacturers who produce a non-ozone 
depleting formulation of albuterol sulfate. Data from the U.S. and 
European markets have proven the new formulations to be safe and 
effective.
    The American Lung Association encourages the EPA to work with the 
FDA and the Department of State to develop a position to achieve 
adoption of a Protocol decision this year that deems albuterol non-
essential for developed countries by 2005 and takes other steps to 
bring timely and effective closure to the Protocol's essential use 
exemption. We believe this action is an important step to fulfill the 
U.S. commitment to phase-out all uses of ozone-depleting substances.
    The American Lung Association urges the Subcommittee to support the 
transition process to remove ozone-depleting gases.
    The American Lung Association thanks the Subcommittee for 
consideration of its views. We look forward to working with you to 
further promote and protect the health of the American public.
                                 ______
                                 
 PREPARED STATEMENT OF THE ASSOCIATION OF MINORITY HEALTH PROFESSIONS 
                                SCHOOLS

    Mr. Chairman and members of the subcommittee, thank you for the 
opportunity to express the views of the Association of Minority Health 
Professions Schools (AMHPS).
    I am Dr. John E. Maupin Jr., President of Meharry Medical College 
in Nashville, Tennessee and President of AMHPS. AMHPS is an 
organization which represents twelve (12) historically black health 
professions schools in the country. Combined, our institutions have 
graduated 50 percent of African-American physicians and dentists, 60 
percent of all the nation's African-American pharmacists, and 75 
percent of the African-American veterinarians.
    AMHPS has two major goals: 1) to improve the health status of all 
Americans, especially African-Americans and other minorities; and 2) to 
improve the representation of African-Americans and other minorities in 
the health professions. We are working toward achieving this goal by 
seeking to strengthen our institutions and fortify other programs 
throughout the nation that will improve the role of minorities in the 
provision of health care and research.

            AGENCY FOR TOXIC SUBSTANCES AND DISEASE REGISTRY

    Congress created the Agency for Toxic Substances and Disease 
Registry (ATSDR) to implement the health-related sections of law that 
protect the public from hazardous wastes and environmental spills of 
hazardous substances. The mission of ATSDR is to serve the public by 
using the best science, taking responsive public health actions, and 
providing trusted health information to prevent harmful exposures and 
illness related to toxic substances.
    ATSDR works in partnership with Environmental Protection Agency, 
the Centers for Disease Control and Prevention, and the National 
Institute of Environmental Health Sciences to carry out its public 
health activities. Since the September 11th attacks, ATSDR has worked 
with other federal, state, and local agencies to respond to the 
enormous aftermath of this tragedy. Approximately, one-fourth of the 
agency's 430 employees were directly involved in the response to 9/11 
at some time during fiscal year 2002.
    ATSDR is performing critical work in the field of environmental and 
toxicological studies that has a profound impact on public health. In 
order to carry out the level of activity that is called for in its 
mission statement, AMHPS recommends an appropriation of $95 million for 
ATSDR in fiscal year 2004, an increase of $12.2 million over fiscal 
year 2003.

   THE ATSDR/AMHPS COOPERATIVE AGREEMENT ON ENVIRONMENTAL HEALTH AND 
                          TOXICOLOGY RESEARCH

    In 1992, ATSDR identified a need for enhanced information on 38 
hazardous substances. Through a cooperative agreement between ATSDR and 
the Minority Health Professions Foundation (MHPF), the historically 
black health professions schools that I represent are engaged in 
research on twelve of these priority hazardous substances. They 
include:
  --Lead
  --Mercury
  --Benzene
  --Cadmium
  --Benzo (a) pyrene
  --Flouranthene
  --Trichlorocthylene
  --Toluene
  --Zinc
  --Manganese
  --Chlordane
  --Di-n-butylphthalate
    The productivity of this research program is evidenced by the 
number of publication and scientific presentations made by the funded 
investigators. To date, more that 55 manuscripts reporting the finding 
of the various research projects have been published in peer-reviewed 
and prestigious scientific journals. These journals include: Brain 
Research, Neurotoxicology, Journal of Neurochemistry, and Environmental 
Health Prospectives.
    Moreover, investigators have made more than 120 presentations at 
national and international scientific meetings, including the annual 
meeting of the Society of Toxicology, the Experimental Biology meeting, 
the International Congress of Toxicology meeting, and the International 
Society of Psyschoneuropharmacology meeting. Finally, the AMHPS/ATSDR 
Cooperative Agreement has contributed significantly to the training of 
students in toxicology and environmental health. Annually, more than 30 
students, both graduate and undergraduate, are actively involved in the 
research program.
    Mr. Chairman, AMHPS and ATSDR are completing ten years of 
successful research. We expect to continue with a new cooperative 
agreement in fiscal year 2003. In addition to basic toxicological 
research, the new cooperative agreement will focus on: 1) translation 
of environmental science into environmental medicine and public health 
practice; 2) development of a surveillance system to track disease, 
disability and dysfunction among targeted populations in communities of 
concern, and 3) investigations of the role of the environment in 
eliminating racial/ethnic health disparities.
    Traditionally, the AMHPS/ATSDR research partnership has been 
supported by ATSDR at a level of $4 million a year. For fiscal year 
2004, we encourage the subcommittee to support this important 
collaboration by directing $4 million within the ATSDR budget for the 
cooperative agreement.
    Thank you very much for the opportunity to present the views of the 
Association of Minority Health Professions Schools.
                                 ______
                                 
         PREPARED STATEMENT OF THE EZ/EC FOUNDATION CONSORTIUM

    I am Janet Levy, Executive Director of the EZ/EC Foundation 
Consortium. The Consortium is a partnership of ten foundations formed 
in 1997 to support successful implementation of the Empowerment Zone/
Enterprise Community Initiative and to help others learn from the work 
of EZ/EC sites. Our foundation members have included the Annie E. Casey 
Foundation, Cleveland Foundation, East Bay Community Foundation, Ford 
Foundation, Greater Kansas City Community Foundation, William and Flora 
Hewlett Foundation, Robert Wood Johnson Foundation, W.K. Kellogg 
Foundation, John D. and Catherine T. MacArthur Foundation, and 
Rockefeller Foundation.
    We appreciate this opportunity to respond to a request by the 
Empowered Communities Caucus to submit for both Senate and House 
Appropriations Committee consideration some insights about the Round II 
Empowerment Zones, based on effective approaches to community 
revitalization that the philanthropic sector has gained through its 
work over the past decade. Our experience points, in particular, to the 
importance of complementing incentives designed to create employment 
opportunities with strategies that help people prepare for and perform 
well in those jobs and that address other aspects of healthy community 
life. We also have learned of the important contribution to sustained 
success that comes from engaging all parts of the community in a strong 
partnership, a process that rarely is easy but which promises rich 
rewards to those who dedicate the required effort.
    These insights bear directly on an issue that is before the 
Subcommittees--whether continued grant-funded strategies are necessary 
to complement tax incentives in achieving successful and sustainable 
revitalization. Tax incentives are a promising mechanism for 
encouraging businesses to expand employment opportunities. But these 
mechanisms are not designed to nor can they support the workforce 
development, quality of life, and engagement strategies that, as we 
indicate above, are an essential complement in a revitalization effort. 
These latter strategies require a direct outlay of dollars. By assuring 
the availability of grant funds which can be used for these purposes--
whether for programming itself or to leverage even greater commitments 
of funds from state and local government and the nonprofit and 
philanthropic sectors--the federal government both secures and enhances 
the investment it is making through the provision of tax incentives. 
Based on our experience, we firmly believe that a combination of 
incentives and grants are the most promising route to achieve the 
laudable objectives of the EZ/EC Initiative.

         FOUNDATION-SPONSORED COMMUNITY REVITALIZATION EFFORTS

    The Consortium's member foundations, as well as many others, have a 
substantial history of commitment to low-income communities and of 
investment in efforts to revitalize areas of deep, persistent poverty.
    Beginning about a decade ago, these foundations launched a new 
generation of such efforts. Among the most notable in terms of their 
contribution to the current state of knowledge about community 
revitalization have been the Casey Foundation's New Futures, Rebuilding 
Communities and current Neighborhood Transformation and Family 
Development Initiative, the Ford Foundation's Neighborhood and Family 
Preservation Initiative, and the Rockefeller Foundation's Community 
Planning and Action Program.
    These experiments helped form the basis of new thinking about how 
best to challenge poverty and provide poor communities and their 
residents with greater economic opportunity and an improvement in the 
overall quality of life. Rather than focusing on fixing an isolated 
problem, such as housing, they considered the community as a whole. A 
vibrant community which supports its families and nurtures its 
children, offers jobs, decent and affordable housing, safety, good 
quality schools and outside-school opportunities for children and 
youth, and special supports when crises occur that threaten well-being. 
Effective revitalization likewise needed to be multifaceted, 
incorporating simultaneous and coordinated efforts to address economic 
opportunity, the skills and capacities of the community's residents, 
quality of life issues such as crime, and strengthening of the 
community's social fabric.
    These foundation-sponsored experiments also took the position that 
how decisions are made about programmatic content may be as important 
as the content itself. On the one hand, acknowledging the unique 
understanding each community has of its particular assets, 
opportunities and needs, the foundations gave their local partners a 
great deal of latitude in selecting the specific programmatic 
strategies they would pursue. But at the same time, the foundations 
pushed for a new kind of local decisionmaking, which would engage a 
broad range of stakeholders and would specifically encourage serious 
and consequential participation by residents of the targeted areas.
    From these experiments emerged guiding principles for the 
revitalization approach that came to be known as ``community-
building'':
  --Significant and sustainable revitalization requires simultaneous 
        and coordinated economic development, investment in a 
        community's human capital, and help to strengthen the social 
        fabric of the community.
  --Successful, sustainable revitalization requires harnessing the 
        knowledge, resources, capacity and commitment of all those with 
        a stake in the well-being of the community--the public sector, 
        the private sector, the nonprofit sector, and the residents.
  --Successful, sustainable revitalization is not a quick process. It 
        takes time and patience first to do the planning and build the 
        partnerships that provide a solid foundation, and then to 
        attract the jobs and implement the many projects that will be 
        needed to counter what often have been many years of 
        deteriorating conditions.

                 PHILANTHROPY AND THE EZ/EC INITIATIVE

    No matter how ambitious the efforts of the philanthropic sector to 
improve conditions in low-income communities, the resources of that 
sector could never come close to addressing the true scope of need. 
Therefore, foundations were heartened at the renewed commitment of the 
federal government reflected in the EZ/EC Initiative, especially 
because that commitment was grounded in the principles of sound 
community-building cited above.
    The philanthropic sector's experience was tapped even at the design 
stage of the EZ/EC Initiative, when the Carnegie Corporation convened a 
seminar for federal officials in which foundation executives, staff and 
experts shared the knowledge gained through a decade of 
experimentation. As the Initiative unfolded, foundations invested 
locally in the development of applications and then in implementation. 
Because it was the only entity trusted by the many diverse 
stakeholders, one community foundation even agreed to serve as the lead 
entity for the local effort.
    Complementing these individual actions, a group of foundations 
formed the EZ/EC Foundation Consortium to support successful 
implementation of the Initiative and to help others learn from the work 
of the sites. Our work has included various forms of technical 
assistance to sites, with special emphasis on peer exchange. Most 
recently, for example, we convened a meeting of Round I and Round II EZ 
directors, giving them an opportunity to share experiences and ideas on 
topics such as the use of tax incentives, ways to measure and report 
results, and ways to sustain accomplishments over time. We also have 
produced or have under development a variety of publications. Some give 
an overview of the EZ/EC Initiative in ways that complement 
publications by the federal government and researchers--for example, 
presenting photographs by young people that show how the Initiative is 
affecting their families and communities. Other publications under 
development will explore in some depth particular aspects of the 
Initiative, such as strategies to promote broad participation and the 
use of tax incentives by sites.

                  LESSONS FROM THE WORK OF EZ/EC SITES

    The Consortium has been a partner with and student of the work of 
EZ/EC sites since the early days of implementation. This work is a rich 
source of lessons that will be valuable guides for Round III 
Empowerment Zones and Renewal Communities, as well as for future 
efforts to revitalize distressed communities.
    Most relevant for the immediate purposes of this Subcommittee, the 
long experience of the Round I sites in particular offers specific 
insights about the combined and complementary contributions to be made 
by both tax incentives and flexible federal grants. Those communities 
had the benefit of assured funding throughout the ten-year designation. 
Their experience suggests that tax incentives that are designed well 
and marketed effectively can be an important tool to foster economic 
revitalization of distressed communities, especially with respect to 
large businesses. But, just as economic development itself is not 
enough to achieve and sustain the deep-reaching change that is needed, 
so too is it important to complement tax incentives with resources 
through which critical areas beyond economic development can be 
addressed.
    Federal grant dollars have been essential in allowing EZ/EC sites 
to pursue valuable components of revitalization such as:
  --Helping people prepare for, obtain and perform well in the jobs 
        made available through economic development activities.--Some 
        community residents begin with the experience and personal 
        wherewithal to take advantage of expanding economic opportunity 
        on their own. But, for many others, help in developing a resume 
        and presenting oneself to a potential employer, or in acquiring 
        the skills that employers are seeking, or in overcoming 
        barriers to employment may be essential. With federal grant 
        dollars, EZ/EC sites have been able to address not just job 
        development, but also workforce development, offering the pre-
        employment, connection to work, and on-the-job services that 
        have helped many community residents take advantage of 
        expanding opportunities to achieve real change in economic 
        well-being.
  --Addressing key quality-of-life issues that affect a community's 
        ability to attract and retain businesses and to nurture strong 
        and healthy families.--Businesses care about the financial 
        ``bottom line,'' which potentially is aided by tax incentives, 
        but they also care about the environment in which they operate. 
        A low crime rate assures safety and security for their workers 
        and their physical plant. The ability of workers to find child 
        care and help when crises arise reduces absenteeism and 
        turnover that detract from a business's financial success. 
        Young people who are getting a good education and developing 
        their talents through positive activities stay out of trouble 
        and promise businesses a strong and capable workforce in the 
        future. EZ/EC sites have used federal dollars, sometimes 
        directly for programming but more often to leverage major 
        contributions from other sources and better coordination of 
        existing services, to reduce crime, expand the availability and 
        quality of child care, and offer children and youth healthy and 
        productive ways to spend their time. At Detroit's Family Place 
        and Louisville's Nia Center, families can readily find the 
        services that once were scattered and difficult to access. In 
        the Rio Grande Valley, a decrepit facility that lacked even 
        running water has been replaced by a brand new Boys and Girls 
        Club built with the aid of an Empowerment Zone challenge grant. 
        At the United Teen Equality Center, developed with leadership 
        from the Lowell Enterprise Community, adolescents of diverse 
        ethnicities and backgrounds no longer face conflict on the 
        streets, but now gather in a place that nurtures cooperation 
        and positive growth.
  --Bringing all stakeholders together in effective partnerships that 
        allow each group to tap its particular strengths to contribute 
        to overall success.--A community's residents, government, 
        business, and nonprofit organizations all have a stake in 
        revitalization efforts and the community's well-being. And each 
        group brings assets to a potential effort--dollars to spend, 
        the promise of new jobs, an understanding of the market that is 
        created by a community's history, conditions, and desires. But 
        each group also brings its own frame of reference, experiences, 
        and operating style, and these must be woven together to shape 
        a collaborative venture that can pursue an ambitious and 
        complex agenda. These are not easy partnerships to form and 
        sustain, and not all EZ/EC sites have been successful. But for 
        those that have effectively used federal dollars to build the 
        capacity of the community and to help the diverse voices find 
        common ground in a shared vision for success, we see not only 
        near-term progress but also a foundation of ongoing leadership. 
        Village Centers in Baltimore and Community Trust Boards in 
        Philadelphia, for example, are vehicles through which community 
        residents have gained an understanding of economic development 
        and which now provide a forum where developers, residents, and 
        government can combine their assets to foster continuing 
        expansion of economic opportunity and improvement in the 
        community's quality of life for years to come.
    In summary, the experience of the philanthropic sector with 
community revitalization efforts and the Consortium's observations of 
the EZ/EC Initiative to date point strongly to the importance of 
working simultaneously on multiple fronts--expanding economic 
opportunity, investing in the community's human capital, and 
strengthening the community's social fabric. To do so requires vehicles 
as varied as the strategies. Tax incentives are one tool. But equally 
important are flexible dollars through which issues other than economic 
development can be addressed. For this reason, we believe that the 
success of Round II Urban Empowerment Zones likely will rest in 
substantial measure on their ability to draw on the full range of 
benefits which were envisioned when they were created.
                                 ______
                                 
    PREPARED STATEMENT OF THE NATIONAL SERVICE-LEARNING PARTNERSHIP

    The National Service-Learning Partnership calls upon Congress to 
include young people in citizen service by increasing the Federal 
investment in Learn and Serve America.
    I am Anthony Welch, Chair of the Board of Directors of the National 
Service-Learning Partnership. With more than 3,000 organizational and 
individual members, the Partnership is the nation's largest leadership 
organization devoted to strengthening service-learning. The Partnership 
urges you to increase funding for the Learn and Serve America program 
administered by the Corporation for National Service.
    Youth Citizen Service.--In his inaugural address, President George 
W. Bush challenged Americans to be ``citizens, not spectators'' and to 
help build ``communities of service and a nation of character.'' More 
recently, noted education historian, Dr. Diane Ravitch, noted that, 
``We must teach students to appreciate and defend our democratic 
institutions.'' During this time of great national purpose, we cannot 
overlook young people's eagerness to serve. In order to do so, however, 
they need the kind of opportunities and support that the educational 
method, service-learning, provides. The National Commission on Service-
Learning, chaired by former Senator John Glenn, called service learning 
``the single best way to educate young people for active citizenship in 
a democracy.'' Service-learning offers unique support for the American 
commitment to public schooling as a necessity for creating an informed 
citizenry.
    Service-learning.--Service-learning is a powerful form of service 
in which students design projects to meet community needs as part of 
their academic and civic studies. Using service-learning, elementary 
school students tutor younger students, and both improve their mastery 
of essential literacy skills. Math students make calculations that 
persuade the local authorities to install a traffic light near their 
schools so as to reduce accidents at a dangerous corner. History 
students research the local heroes identified on plaques in their 
community and share what they have learned at the annual Memorial Day 
ceremony. Language arts students hone their writing skills by 
organizing a campaign to reduce bullying on their school buses.
    Service-learning offers students such as these the kind of balanced 
education Americans want for students, according to a poll conducted in 
the fall of 2000 by Roper Starch Worldwide. Americans believe that 
service-learning can help prepare young people for work, citizenship, 
and lifelong learning. Furthermore, service-learning elicits the kind 
of engagement with learning that reinforces students' motivation to 
learn. When students apply new knowledge and skills to real challenges 
outside the classroom, they are far less likely to ask their teachers 
``Why do I have to learn this?''
    Prevalence of service-learning.--One third of public school 
students participate in service-learning. Most of this activity is 
supported by local resources. However, since former President George 
H.W. Bush signed the National and Community Trust Act of 1990, an 
important grant program under that law, Learn and Serve America, has 
engaged nearly 10 million students in serving others and their 
communities. Currently, 50 states and territories receive funds from 
Learn and Serve America, the only Federal program dedicated to 
promoting and supporting service-learning. Nearly 1.5 million students 
each year are involved in grassroots initiatives that address local 
concerns, and about 80 percent of each state's formula grant goes 
directly to support for school-community partnerships.
    Impact of Service-Learning.--In addition to being a cost-effective, 
service-learning works. A growing body of scholarly research and other 
evaluations demonstrate that when well implemented, service-learning 
improves students' academic achievement, civic engagement, preparation 
for the world of work, and responsible behavior. Alan Melchior of 
Brandeis University estimates that each dollar invested in service-
learning returns $4 in investment in the community. Service-learning 
research has identified many ways in which service-learning improves 
students' civic and academic engagement while strengthening their 
communities.
  --Service-learning promotes youth civic engagement.--Service-learning 
        is one of the most effective ways for young people to practice 
        the habits of civic responsibility. Scholars from universities 
        across the United States have found that students engaged in 
        high quality service-learning projects showed an increase in 
        the degree to which they felt aware of community needs, 
        believed that they could make a difference, and were committed 
        to service now and later in life. For instance, a study by Dr. 
        James Younis at Catholic University and Dr. Miranda Yates at 
        Brown University found that high school students who 
        participated in service-learning are more likely to be engaged 
        in a community organization and are more likely to vote 15 
        years after their participation in the program than those who 
        did not participate.
  --Service-learning supports students' academic achievement.--When 
        rigorous study in academic disciplines is linked with serious 
        work on real needs, students' motivation for learning 
        increases. Students participating in service-learning have 
        better grades and rates of attendance, as well as improved 
        attitudes to school.
  --Service-learning strengthens communities.--Community-based 
        organizations can do more with the help of students engaged in 
        service-learning. Furthermore, community members who 
        participate in service-learning see youth as valued resources 
        and positive contributors to community.
    The Need for Federal Action in the Fiscal Year 2004 Appropriations 
Cycle.--Within the Corporation for National and Community Service, 
Learn and Serve America serves the most participants. Despite a record 
of success, Learn and Serve America funding has remained essentially 
flat for the past 10 years. Increasing the Federal investment in Learn 
and Serve America will give a larger proportion of younger Americans 
the support they deserve to answer the national call to serve 
neighborhood and nation.
    Partnership asks for Increased Learn and Serve America Funding.--
The Partnership asks this subcommittee to increase funding for service-
learning through an incremental increase of $18 million during fiscal 
year 2004: $12 million to increase funding for grants made to K-12 
schools, tribes, and community-based organizations as part of the Learn 
and Serve program and $6 million to increase designated resources for 
technical assistance for Learn and Serve America grantees, including 
preparing practitioners to link service-learning to the teaching of 
history, civics, and civic education.
    A Time to Preserve and Protect Democracy.--Citizen service is for 
all of us. High-quality service-learning should become a core element 
of the educational experience of every elementary, middle, and high 
school student in the United States. By offering service-learning, 
policymakers, educators, and parents open the door to a multi-faceted 
education so that students may walk through it to become better 
citizens, better learners, and better workers.
                                 ______
                                 
           PREPARED STATEMENT OF THE ALLIANCE TO SAVE ENERGY

                              INTRODUCTION

    My name is David Nemtzow. I am the President of the Alliance to 
Save Energy, a bi-partisan, non-profit coalition of business, 
government, environmental, and consumer leaders dedicated to improving 
the efficiency with which our economy uses energy. Senators Charles 
Percy and Hubert Humphrey founded the Alliance in 1977. The leadership 
of the Alliance is also a partnership between the private sector and 
government chaired by Senator Byron Dorgan (D-ND) and co-chaired by 
Dean Langford the former CEO of Osram Sylvania. Over seventy companies 
currently participate in the Alliance's Associates program and with 
your permission Mr. Chairman I would like to include for the record a 
complete list of the Alliance's Board of Directors and Associates. This 
list includes the nation's leading energy efficiency firms, electric 
and gas utilities, and other companies committed to promoting sound 
energy use.
    Thank you for the opportunity to testify regarding the energy-
related components of the Environmental Protection Agency's (EPA) 
fiscal year 2004 budget request. Specifically, I respectfully urge you 
to significantly increase your support for the EPA's Energy Star 
program. The Energy Star program is an entirely voluntary program that 
yields significant economic returns to our nation's consumers while 
generating considerable environmental benefits for our nation--all 
through energy efficiency.
    The Alliance has a long history of advocating for, as well as 
researching and evaluating, federal efforts to promote energy 
efficiency. While many of these efforts include laws passed by this 
Congress and federal regulations and standards issued pursuant to those 
laws, we especially applaud efforts that rely on cooperative 
partnerships between government and business and between the federal 
and state governments, and not just government mandates. EPA's climate 
programs are entirely voluntary and address the national goals of 
broad-based economic growth, environmental protection, national 
security and economic competitiveness at the same time. The EPA's 
Energy Star program is a shining example of such a program. The Climate 
Protection Division at EPA which operates the Energy Star program works 
closely with the private sector manufacturers, retailers, building 
owners, and energy service providers, as well as state and local 
governments, non-profits, and other organizations to promote energy 
efficient products and buildings. And they do it extremely well--for 
every tax dollar spent by the Energy Star program, $75 or more of 
energy savings are returned. Last year alone, Americans with the help 
of Energy Star saved enough energy to power 15 million homes and avoid 
the greenhouse gas emissions from 14 million cars--all while saving 
over $6 billion.

            ENERGY EFFICIENCY AS A VALUABLE ENERGY RESOURCE

    Mr. Chairman, over the past 30 years, energy efficiency has met 
more of the country's energy needs than any other single domestic 
energy resource. Energy efficiency is a significant and valuable 
resource. Furthermore, energy efficiency measures are powerful and 
dynamic policy tools through which prices, supply, and emissions can be 
radically adjusted. While the Alliance to Save Energy believes that an 
effective energy policy must include a combination of measures that 
provide electricity, heating fuel, and motor fuel to Americans, it also 
believes that we must first go after the resource that is cheapest, can 
be delivered most quickly, and can stand up to all environmental 
scrutiny--that resource is energy efficiency.
    Energy efficiency gains have significantly improved the way we use 
energy. The U.S. economy grew nearly five times faster than did energy 
use from 1973 to 2001. A refrigerator sold today uses about 70 percent 
less energy than one built in the early 1970s. Since 1973, energy 
efficiency has saved the nation 27 quadrillion Btus (quads) of energy 
annually, more than one-fifth of total consumption, and about $150 
billion each year. The energy efficiency industry has become a vibrant 
part of the American economy. More than 5,000 companies provide energy-
saving equipment and services, contributing over $10 billion and a 
quarter-million jobs to our economy each year.
    But despite these new technologies and the integration of energy 
efficiency into the nation's energy policies and economy, we have 
barely scratched the surface of energy efficiency's potential. 
Technologies that dramatically increase the efficiency of electric 
distribution lines, lighting systems, air conditioning and 
refrigeration, and other products are moving out of laboratories. It 
seems that every year technological developments bring more and better 
measures at our disposal to reduce electricity demand, make homes more 
energy-efficient, and go further on less gasoline. But Mr. Chairman, we 
must make sure that we are able to maximize these resources.

              HOW ENERGY STAR CAPITALIZE ON THIS RESOURCE

    Mr. Chairman, EPA's Energy Star program has proven to be an 
extremely effective way for this nation to capitalize on the potential 
of energy efficiency as a resource. In fact, over the last decade, 
Energy Star successfully promoted the use of advanced technologies that 
are quite common today such as power management systems for office 
equipment, LED traffic lights, and low standby energy use. The 
President's National Energy Plan even recommends that the Energy Star 
program be expanded to include schools, retail buildings, health care 
facilities, and homes, and that the Energy Star labeling program be 
extended to cover more products. And, Mr. Chairman, the President Bush 
has publicly declared his strong support of the program.
    Energy Star's voluntary partnership program--which includes Energy 
Star Buildings, Energy Star Homes, Energy Star Small Business, and 
Energy Star Labeled Products--works by removing marketplace barriers to 
existing and emerging technologies, resulting in faster deployment of 
energy efficient technology into the residential and commercial sectors 
of the economy.
    Rather than providing financial subsidies or tax breaks, Energy 
Star develops voluntary partnerships and provides clear, reliable 
information to the public. The Environmental Protection Agency is 
uniquely qualified to operate these voluntary programs in the public 
interest with the confidence of market participants. The program has 
proved successful in providing information on technology opportunities, 
generating awareness of energy efficient products and services, and 
educating consumers about life cycle energy savings so that consumers 
can make informed purchases. In fact, the Energy Star label is a 
nationally recognized label for energy efficiency, used by many 
(including retailers and utilities) to promote efficiency. According to 
the EPA, as of 2002, the label has achieved more than forty percent 
awareness among the public.
    Providing the catalyst for many businesses, state and local 
government institutions, and consumers to invest in energy efficiency, 
Energy Star helps overcome market barriers through brand recognition, 
information, and positive publicity. Because Energy Star takes a 
strategic approach to energy management, it can produce twice the 
savings--savings for the environment and for consumers.

                   ABOUT THE ENERGY STAR PARTNERSHIPS

    Energy Star is composed entirely of voluntary partnerships, and 
they have grown since the early 1990s to include thousands of 
partnerships with product manufacturers, private and public building 
owners and operators, homebuilders, small businesses, utilities, and 
retailers. The sheer number of these partnerships is a testament to the 
fact that energy efficiency delivers ``pollution prevention at a 
profit.''
    Energy Star serves broad constituencies across every state in the 
country. Energy Star includes over 1,250 manufacturing partners of over 
35 different product categories, who make and market over 18,000 
different models of Energy Star qualified products. Energy Star assists 
over thousands of small businesses with their efforts to maximize the 
energy efficiency of their facilities. Energy Star's work with partners 
further advances the education of energy efficiency and the reduction 
in energy consumption. For example, by working with builders, Energy 
Star helps the customers of those builders make smart decisions--
decisions that will save the consumer money and the country pollution--
for as long as the home is standing. To date, more than 3,000 builders 
have built over 100,000 Energy Star-qualified homes, locking in 
financial savings for homeowners of more than $26 million annually. The 
Energy Star Building Partnership currently represents 17 percent of the 
U.S. building floor space.
    Recently, the Alliance to Save Energy asked many of Energy Star's 
partners if they would support our request for a significant increase 
in funding for these important programs. The response was remarkable. 
Over 650 businesses, from large businesses like Merrill Lynch & Co., 
Inc., the Target Corporation, and Exxon Mobil to smaller businesses 
like Target Aluminum, Inc. and Thomas Homes, Inc. (in Bridgeton, MO and 
Dunkirk, MD, respectively) and even schools such as the Howard County 
Public School System in Maryland pledged their support for these 
important programs. Each member of the Subcommittee will receive a copy 
of this letter with the list of businesses. With your permission Mr. 
Chairman I would like to include for the record a copy of this letter.
    Lowe's Companies, Inc., another company that has pledged their 
support for increased funding of the program, also recently committed 
to increasing nationwide sales of Energy Star qualified products in by 
twenty percent in 2003. While saving their customers money with reduced 
utility bills, Lowe's will also helped to reduce the emissions of 
greenhouse gases.
    Energy Star proves that environmental protection can not only be 
achieved without harming the economy, but also that such protections 
can act to boost consumer savings and economic growth. Energy Star 
provides the catalyst for many businesses, state and local government 
institutions, and consumers to invest in energy efficiency, which in 
turn yields multiple private and public benefits. It does this by 
providing access to information, improving brand recognition, and 
reporting positive publicity. This voluntary partnership program 
reduces pollution through cost-effective measures; promotes economic 
growth by stimulating investment in new technology; and helps ensure 
the reliability of our electric system by reducing peak demand.

             INVESTMENTS IN ENERGY STAR PAY BACK FOR YEARS

    While consumers who purchase Energy Star-labeled products save 
through the life of the product, product manufacturers get the economic 
boost and incentives from the purchases of these products. According to 
EPA, consumers and businesses saved more than $6 billion in 2002 alone 
by investing in energy-efficient technologies. In addition, EPA 
predicts cumulative net energy bill savings for consumer and businesses 
of $85 billion through 2012.
    Pollution savings are as dramatic as the financial savings. EPA 
estimates that emissions reductions averaging more than 35 million 
metric tons of carbon equivalent (MMTCE) per year between now and 2012 
were locked in last year based on actions already taken by EPA's 
Climate Protection program's voluntary partners. Because many of the 
investments in energy-efficient technology promoted by Energy Star 
offer a life of ten years or more, these investments will continue to 
deliver economic and environmental benefits through 2012 and beyond.
    The Energy Star program seeks to influence those capital investment 
decisions in a way that helps individual purchasers save money while 
simultaneously helping the nation meet its clean air and greenhouse gas 
emissions-reduction goals. All of this through voluntary participation 
in Energy Star, and the voluntary, market-based choices made by 
thousands of partners and millions of American consumers. No 
regulations, no government mandates.

    MUCH HAS BEEN ACCOMPLISHED, BUT HUGE POTENTIAL REMAINS UNTAPPED

    As noted earlier, Mr. Chairman, Energy Star ensures American 
consumers have access to information about the energy efficiency of the 
products they consume. However, Energy Star does not cover all 
products. The Alliance to Save Energy agrees with the President's 
National Energy Plan that notes, ``energy efficiency would be further 
promoted if the Energy Star program were expanded to a broader range of 
products.'' We believe, Mr. Chairman, that the Energy Star program 
should have the appropriate resources to do just that.
    While the Energy Star program has thus far made significant 
reductions in greenhouse gas emissions, opportunities to use energy 
efficiency to further eliminate pollution and cut energy bills remain 
untapped. Over 85 percent of the major air emissions in the U.S. are 
attributable to energy consumption. Furthermore, American families and 
businesses spend over $700 billion each year on energy bills according 
to the Energy Information Administration. As successful as the Energy 
Star programs have been, these programs could accomplish much more. 
According to EPA, a typical homeowner could save roughly thirty percent 
per year on their energy bills by using Energy Star-labeled products. 
Imagine how much Americans could save with the help of a stronger, even 
more effective Energy Star program.
    Unfortunately, these important programs have received a virtual 
level funding request for the past three years, even as the number of 
products and manufacturers in the Labeling program has greatly 
expanded, and the number of partners in the Buildings, Homes, and Small 
Business programs have soared.
    Appropriations to the Energy Star program go directly to fund the 
underlying research, program implementation, and technical assistance 
to partners. These funds are hugely leveraged through EPA's thousands 
of voluntary partnerships with product manufacturers, home builders, 
state and local government institutions, commercial building owners, 
and small businesses. For every federal dollar spent on these programs, 
EPA can show an average of $75 or more in energy bills savings and $15 
in private sector investment in energy efficient technology, reductions 
in greenhouse gas emissions of 1.0 metric ton of carbon equivalent, and 
an addition of over $60 to the economy.

                            RECOMMENDATIONS

    Mr. Chairman, I hope that I have helped to demonstrate the 
extensive value of EPA's Energy Star program. The Energy Star program 
has proven to be an extremely effective way to capitalize our nation's 
resource of energy efficiency and successfully make use of energy 
efficiency's ability to enhance energy security, reduce pollution, and 
provide economic value at the same time.
    The Alliance to Save Energy would like to respectfully recommend 
the Subcommittee take the following actions to best maximize the 
successful efforts of EPA's Energy Star program.
  --Last year, the Senate provided a $6.4 million increase in funding 
        for this program over the fiscal year 2002 levels. 
        Unfortunately, this was omitted in Conference. However, both 
        the Senate and Omnibus report marks the first time the Energy 
        Star program and its funding have been mentioned in a VA-HUD 
        appropriations report. I strongly encourage the committee to 
        again make its funding intent for the program clear with report 
        language.
  --In addition, due to the multiple benefits of the Energy Star 
        program, I respectfully request a significant increase in 
        funding for the program from the fiscal year 2003 levels of 
        $49.8 million.

                               CONCLUSION

    Over the past decade, the Energy Star programs have demonstrated 
their effectiveness by achieving great savings in the nation's 
collective energy bill and in energy-related pollution. They are well-
run, they are cost-effective, they have consistently exceeded their 
goals, and they have the support, even explicit endorsement of 
businesses across the country.
    While there are many demands on the countries financial resources, 
I respectfully urge greater support to what works. Energy Star has 
proven tremendously cost-effective and it can deliver even greater 
benefits to the nation with increased funding resources. Increasing 
funding for these programs in fiscal year 2004 is a high-return 
investment for the nation's economy and environment.
    Thank you for the opportunity to testify.
                                 ______
                                 
 PREPARED STATEMENT OF THE AMERICAN ASSOCIATION OF NURSE ANESTHETISTS 
                AND ASSOCIATION OF VA NURSE ANESTHETISTS

    The American Association of Nurse Anesthetists (AANA) is the 
professional association that represents over 28,000 certified 
registered nurse anesthetists (CRNAs) across the United States. The 
Department of Veterans Affairs (DVA) currently employs over 530 full 
time CRNAs with less than 50 representing contract or part time 
employees. We appreciate the opportunity to present our testimony to 
the subcommittee and to offer recommendations on ways to improve the 
retention and recruitment of CRNAs in continuing to provide access to 
quality of care for our nation's veterans.

                   BACKGROUND INFORMATION ABOUT CRNAS

    In the administration of anesthesia, CRNAs perform the same 
functions as physician anesthetists (anesthesiologists) and work in 
every setting in which anesthesia is delivered including hospital 
surgical suites and obstetrical delivery rooms, ambulatory surgical 
centers, health maintenance organizations, and the offices of dentists, 
podiatrists, ophthalmologists, and plastic surgeons. Today CRNAs 
administer approximately 65 percent of the anesthetics given to 
patients each year in the United States. They are masters prepared and 
meet the most stringent continuing education and recertification 
standards in the field, helping make anesthesia 50 times safer now than 
20 years ago according to the Institute of Medicine's 1999 Report, ``To 
Err is Human.'' CRNAs are also the sole anesthesia provider in at least 
70 percent of rural hospitals, which translates into anesthesia 
services for millions of rural Americans. In addition, CRNAs are the 
sole anesthesia providers in twenty percent of the VA facilities.
    CRNAs have been a part of every type of surgical team since the 
advent of anesthesia in the 1800s. Until the 1920s, anesthesia was 
almost exclusively administered by nurses. In addition, nurse 
anesthetists have been the principal anesthesia providers in combat 
areas in every war the United States has been engaged in since World 
War I. Most recently, 364 CRNAs have been deployed to the Middle East 
to ensure military medical readiness during the ``Operation Iraqi 
Freedom''. Data gathered from the U.S. Armed Forces anesthesia 
communities' reveal that CRNAs have often been the sole anesthesia 
providers, both at home and while forward deployed. For decades CRNAs 
have staffed ships, isolated U.S. Bases, and forward surgical teams 
without physician anesthesia support. The U.S. Army Joint Special 
Operations Command Medical Team and all Army Forward Surgical Teams are 
staffed solely by CRNAs. Military CRNAs have a long proud history of 
providing independent support and quality anesthesia care to military 
men and women, their families and to people from many nations who have 
found themselves in harms way. CRNAs also provide anesthesia services 
in the medical facilities of the Department of Defense, the Public 
Health Service, the Indian Health Service, the Department of Veterans 
Affairs, and countless other public and private entities.
    One of the differences between CRNAs and anesthesiologists is that 
prior to anesthesia education, anesthesiologists receive medical 
education while CRNAs receive a nursing education. However, the 
anesthesia part of the education is similar for both providers, and 
both professionals are educated to perform the same clinical anesthesia 
services. CRNAs and anesthesiologists are both educated to use the same 
anesthesia procedures and techniques in the provision of anesthesia and 
related services.
    CRNAs continue to provide the same standard of quality care in the 
administration of anesthesia as their MDA counterparts. That is why 
patient outcome data has consistently shown that there is no difference 
in outcomes between these two providers. With CRNAs administering 
approximately sixty-five percent of the anesthetics given to patients 
each year in the United States, the Institute of Medicine reported in 
their 1999 Report ``To Err is Human'' that anesthesia is fifty times 
safer now than twenty years ago.
    The practice of anesthesia is a recognized specialty within both 
nursing and the medical professions. Both CRNA's and anesthesiologists 
administer anesthesia for all types of surgical procedures; from the 
simplest to the most complex, either as single providers or in a ``care 
team setting''.
    Patients are just as safe receiving their anesthesia care from 
CRNAs or physician anesthesiologists, working individually, or from 
CRNAs and anesthesiologists working in anesthesia care teams. An April 
2003 study titled, ``Surgical Mortality and Type of Anesthesia 
Provider,'' analyzed the effect of different types of anesthesia 
providers on the death rates of Medicare patients undergoing surgery. 
According to the study, surgical death rates were essentially the same 
whether anesthesiologists or nurse anesthetists provided the anesthesia 
individually or worked together in anesthesia care teams.

  INCLUSION OF AAS UNDER THE VA HEALTH SYSTEM: WHERE IS THE OVERSIGHT?

    The VHA Handbook 1123 on Anesthesia Service expired on March 31, 
2003, with a new draft to be finalized shortly. In 2002, the 
Anesthesiology Field Advisory Committee for the Veterans Administration 
made revisions and changes to the March 27, 1998 VHA Handbook 1123 
through a collective method of meetings and conference calls. Proposals 
for changes were brought to the committee as a whole to ensure that any 
revisions considered would be discussed and voted on. Again, the 
directive for the Anesthesiology Field Advisory Committee is to ensure 
the best possible care in anesthesia for our veterans.
    It is the understanding of AANA and AVANA that as of March 3, 2003 
the latest revisions of the VHA Handbook 1123 were not approved in 
collective manner. Further, we were informed that Dr. Michael J. 
Bishop, MD, Director VA Headquarters Anesthesia included some revisions 
without committee approval. Specifically, Dr. Bishop included a new 
provider anesthesiologists assistants (AAs) under section (5) Local 
Facility Anesthesia Personnel marked (e) Ancillary Personnel in the VHA 
Handbook 1123 ``Anesthesia Services''.
    We are concerned that there was no proper oversight to include AAs, 
especially since there are no national qualification standards under 
Title 38 or pay category under Title 5 for AAs. Before the inclusions 
of AAs were made in the VHA Handbook 1123, were any ``quality of care 
studies'' on the safety record of AAs performed? How can VA simply 
allow AAs to practice in their facilities if AA's have ``no scope of 
practice'' within the Federal Government system? It seems apparent to 
us that until a study is conducted on AA's practice, and financial 
impact, they should not become a new provider in the VA system.
    There is little known about the practice of AAs, since they are not 
recognized providers of anesthesia in all 50 states. Further, only five 
states provide separate licensure for AAs (Alabama, Georgia, New 
Mexico, Ohio, and South Carolina). If most of the country does not 
recognize the AA practice, why should VA have AAs practice in a 
national arena on our men and women who have served in the military? 
The VA health system should continue to hold the highest standard of 
health care for the men and women who have served in our armed 
services. Therefore, we request that there is appropriate congressional 
oversight to include new providers under the VA system.
    The scope of training for AAs is severely limited. For example, the 
Emory program in Georgia does not provide clinical instruction in the 
administration of regional anesthesia. The AA curriculum is 
characterized by training that allows them to ``assist'' the 
anesthesiologist in technical functions. By contrast, nurse 
anesthetists are capable of high-level independent function and receive 
instruction in the administration of all types of anesthesia including 
general and regional anesthesia, conscious sedation, and monitored 
anesthesia care. The ability to make independent judgments and provide 
multiple anesthetic techniques are critical to meeting an array of 
patient and surgical needs. AAs have a very limited scope of practice, 
as they are required by law to administer anesthesia only under the 
close supervision of an anesthesiologist. Since AAs must work under the 
close supervision of an anesthesiologist, they cannot act independently 
and quickly in an emergency situation. Immediate and independent action 
is required when providing anesthesia, especially for those patients in 
the VA health system. In addition, AAs will not resolve the anesthesia 
provider shortage within the VA because there is already an increased 
demand for anesthesiologists.

    NURSE ANESTHESIA PROVIDER SHORTAGE: HOW THIS COMMITTEE CAN HELP

    While both types of health professionals can provide the same or 
similar services, it costs the Department of Veterans Affairs (DVA) 
significantly less to retain CRNAs because they draw a significantly 
lower salary than their physician counterparts. It is in the best 
interest of the DVA, and this Committee, to implement policies and to 
support initiatives that assist in the effort to maintain adequate 
numbers of CRNA employees in the DVA. Therefore, this Committee can 
greatly assist in the effort to attract and maintain essential numbers 
of CRNAs in the DVA by their support of competitive salaries and nurse 
anesthesia education programs.
    The current employment scenario for CRNAs and the DVA is 
complicated by the national nurse anesthesia provider shortage. The 
number of nurse anesthetist vacancies increased 250 percent from 1998-
2001, according to CRNA managers' surveys. Health professions staffing 
firms report CRNA recruitment rising by up to ten-fold from 1997-2000, 
making nurse anesthesia the second most recruited health professional 
specialty. In addition, this is compounded by the baby boom generation 
approaching retirement. As the number of Medicare-eligible Americans 
climbs, it compounds the number of surgical procedures requiring 
anesthetics. The solution is to increase funding for our nurse 
anesthesia schools, which are currently at capacity.
    As of the fall of 2002, the VA system had approximately forty to 
fifty CRNA vacancies. This is compounded by the number of CRNAs between 
the ages of fifty-two and fifty-four in the VA system that will be 
eligible for retirement by 2006, which is greater than fifty percent of 
the current work force. The DVA will not be able to keep up with the 
recruitment of CRNAs to meet the growing needs of the older veteran 
patient population at this rate. This workload will be exacerbated as 
the VA health system becomes the back up health system for the to the 
military medical system due to the military involvement in the war in 
Iraq. Therefore, this Committee can greatly assist in the effort to 
increase the number of CRNAs practicing in the VA through the support 
of nurse anesthesia education programs.
    The DVA is also looking for innovative ways attract nurse 
anesthetists to work in their facilities through educational 
opportunities. The DVA proposed a nurse anesthesia program beginning 
June 2004 with both the military and VA at Ft. Sam Nurse Houston 
Anesthesia program in San Antonio, TX. The pilot program would create 
ten openings for VA registered nurses (RNs) to apply to and attend a 
graduate program in nurse anesthesia at Ft. Sam Houston. After, their 
didactics are completed these student would do their clinical training 
at accredited VA facilities. Bridging the two programs would cost the 
VA program money in the short term, but savings in the long term with 
these CRNAs obligated to practice in the VA for two to five years after 
their board certification. This is similar to the Department of Defense 
anesthesia programs, where officers receiving a nurse anesthesia 
education, are obligated to serve in the military for an obligated 
four-year pay back. The cost to run the program the first year would be 
$450,000 including both set up and administrative costs. After wards, 
the cost would be $300,000 annually to continue to educate ten VA RNs 
to become nurse anesthetists. Both funding for student CRNAs and a 
faculty director are required to making this pilot program a success. 
Funding support for a VA nurse anesthesia program in conjunction with 
the Army nurse anesthesia program at Ft. Sam Houston, San Antonio, TX 
is one viable solution to both educating and employing CRNAs within the 
Veterans' health system.

                    LOCALITY PAY AND RETENTION BONUS

    One thing that consistently attracts and maintains good employees 
is an attractive salary. Competitive salaries would assist the DVA with 
retention of cost-effective CRNAs to provide anesthesia services for 
our nation's veterans. But providing competitive salaries for employees 
can be an ongoing battle, especially in the face of restricted budgets. 
This is where this Committee can help, by providing adequate funding 
for personnel through the locality pay adjustments, which are currently 
not competitive with the private market.
    If salaries cannot stay competitive in the face of a national 
nursing shortage, then the DVA will surely continue to face a shortage 
of CRNAs. Historically, the cost to correct such a problem has been 
steep. The DVA faced a severe shortage of CRNAs once before in the 
early 1990s, which was moderately corrected with the implementation of 
a locality pay system in 1991. In 1992, Congress expanded the authority 
of the local medical directors and allowed them to survey an expanded 
area to determine more competitive average salaries for CRNAs, which 
boosted pay and morale. Implementation of this expanded authority 
helped assist the DVA in making great leaps in retention and 
recruitment of CRNAs at that time, but times have changed. Due to the 
nationwide shortage of CRNAs over the last few years, salaries have 
increased in the private sector to stay competitive in employing CRNAs. 
This means that the DVA locality pay system is no longer competitive 
with the private sector, with new nurse anesthetist graduates choosing 
not to work in the VA health system.
    In a recent national survey conducted by Ms. Laura Cohen, the chief 
nurse anesthetist at the local New Orleans VA, showed only one of the 
hospitals surveyed had a competitive new graduating starting salary. 
The response rate for the VA CRNA salary survey was 76 (60 percent) of 
the 124 sites that employ CRNAs. Therefore the numbers only apply to 
those 76 stations, but it was felt that these stations are 
representative of the situation that exists regarding VA CRNA salaries. 
The results showed that our national average for both entry level pay 
and senior positions fall several thousand dollars below the national 
average. In some locations new graduate starting salaries are as much 
as $30,000 below the community. This is caused by the low pay 
categories for Nurse I/Step I to Nurse 4/Step 4, but also the fact that 
many station directors for VA facilities continue to use locality 
surveys at their discretion without the input of CRNA staff or 
disregard the results completely in the locality surveys.
    According to the CRNA Qualifications Standards, a new graduate CRNA 
should come into the VHA at Nurse I/Step 1. The results found that only 
one station could easily recruit a new graduate at the intended 
starting salary and 14 stations had beginning salaries that might be 
able to recruit, depending on location. Thus, a minimum of 61 stations 
and a maximum of 75 stations could not recruit a new graduate CRNA. 
Most stations facing this situation are bringing in a new graduate 
CRNAs at a much higher step in Nurse I to be competitive in the local 
market. This practice, while attractive to the new graduate, does 
nothing for retention of the current CRNA workforce with years of 
service and little hope of a salary increase.
    This same analysis revealed that 29 stations (39.1 percent) have 
Nurse III salaries that reach the federal maximum. The rest of the 
stations (61.9 percent) require Nurse IV, which can only be reached by 
the Chief Nurse Anesthetist, before the federal maximum salary of 
$126.5 thousand can be attained. Raising the Nurse I/Step 1 to the 
current market value and increasing the federal maximum salary would 
not only increase recruitment but also help greatly to retain the CRNAs 
already employed and continue the high standards of anesthesia care 
that the VA health system demands for the veteran population.
    Finally, creating a structure for recruitment and retention bonuses 
to help VA facilities attract and retain CRNAs. The VA needs to 
establish a bonus system for CRNAs, similar to the military structure 
for incentive special pay, to stay competitive in the marketplace.
    We strongly encourage this Committee to continue their role in 
facing this nursing shortage head on, by providing adequate funding for 
personnel. With the current shortage of nurse anesthetists, we must 
insure competitive salaries and education funding to retain and recruit 
high quality, cost-effective anesthesia providers. We look forward to 
working with this committee to ensure that veterans have continued 
access to quality health care at the VA.
                                 ______
                                 
  PREPARED STATEMENT OF THE AMERICAN SOCIETY FOR ENGINEERING EDUCATION

    On behalf of the American Society for Engineering Education 
Engineering Deans Council (EDC), I would like to express appreciation 
for the opportunity to present written testimony on fiscal year 2004 
appropriations for the National Science Foundation. I request that my 
testimony be made part of the record of the hearings on the fiscal year 
2004 NSF budget. The Engineering Deans Council of the American Society 
for Engineering Education (ASEE) is the leadership organization of more 
than 300 deans of engineering in the United States. ASEE is a non-
profit association established in 1893 and dedicated to the improvement 
of engineering and engineering technology education.
    I want to begin by thanking the subcommittee Members for their 
commitment to a strong budget for the National Science Foundation. The 
NSF plays a vital role in supporting and advancing basic research in 
science and engineering and in developing the human capital needed to 
advance science and technology. Funding levels for the agency greatly 
impact engineering educators, as well as the country as a whole.
    I want to thank Chairman Bond and Senator Mikulski for their 
leadership and persistence in advocating doubling the National Science 
Foundation's budget and their strong and continuing support for good 
budgets for the agency. I also want to extend the thanks of all the 
Engineering Deans Council to all of the other Members of the 
subcommittee for their support for doubling the NSF budget. The NSF 
Authorization Act of 2002 provides for doubling the NSF over a 5 year 
period. This Act represents a major milestone for the NSF and for the 
scientific community, because it authorizes increasing the budget of 
the NSF from its fiscal year 2002 level of approximately $4.8 billion 
to the level of $9.8 billion in fiscal year 2007.
    For the fiscal year 2004 NSF budget, the EDC recommends an increase 
of $1.09 billion above the fiscal year 2003 level of $5.3 billion, to 
provide the agency with a budget of $6.39 billion, the funding 
authorized in the 2002 law.
    At the outset I want to express the strong support of the 
Engineering Deans Council for the new 5-year Workforce for the 21st 
Century Initiative under which all the NSF directorates will be 
partnering in an integrated research and education effort to address 
science and engineering workforce needs.
    The NSF occupies a unique position, with the ability to influence 
the economic strength of the nation through research and innovation. 
Basic research funded through the NSF opens the doors for further 
discoveries that can advance medical care; improve communications 
equipment, and continue to create better civilian and military security 
systems. In the current climate of increasing global economic 
competition and a heightened need to protect our citizens and 
infrastructure, strong support of the NSF serves a vital national 
interest.
    Science and technology have become a core component of economic 
strength and competitiveness. The NSF brings special expertise to the 
task of identifying and promoting the basic science and engineering 
research that underlies the United States' world economic leadership. A 
growing chorus touts the importance of this kind of federal engagement 
with science and technology, including Federal Reserve Chairman Alan 
Greenspan, the Council on Competitiveness, and Business Week, among 
many others. As Chairman Greenspan said in 2002, ``there is just no 
question that if you're going to have technology as the base of your 
economy, which we do, research is crucial.''
    NSF is the sole federal agency charged with the important task of 
funding a broad range of research, spanning a wide variety of 
disciplines including basic science, engineering, mathematics, and 
computing. It provides necessary financial and intellectual support for 
scientists working on groundbreaking research, much of which will lead 
to innovations that could impact any number of emerging technologies. 
While NSF accounts for less than 4 percent of total federal research 
and development spending, the agency supports almost half of the non-
medical basic research at American colleges and universities. In the 
field of engineering, NSF provides nearly one third of all federal 
support for basic research and has contributed to important 
developments such as computer-aided design, fiber optics, 
biotechnology, advanced composite materials, and magnetic resonance 
imaging (MRI). Renewing support for research and equipment will allow 
the nation to take advantage of the opportunities presented by these 
new technologies, creating further economic opportunities and improving 
overall quality of life.
    NSF-sponsored research has led to many of the current developments 
in the area of homeland security. Recent NSF projects ranging from the 
study of the ecology of infectious diseases to the Scholarship for 
Service program, which trains students in information security, help 
bolster our nation's ability to prevent and respond to terrorist 
attacks. ``The scientific and engineering community is aware that it 
can make a critical contribution to protecting the nation from 
catastrophic terrorism,'' Lewis M. Branscomb, emeritus professor, John 
F. Kennedy School of Government, said in a 2002 National Academies of 
Science report.
    The benefits of a strong science investment are evident as the men 
and women of our armed forces respond to unprecedented threats to U.S. 
national security. Because of its superiority, much of it brought about 
by investments in S&T, this nation's military is successfully waging 
war against terrorism. In this new environment, characterized by 
unforeseen and unpredictable threats, maintaining and enhancing 
technological superiority will become even more imperative.
    Across all fields, NSF support for research produces first-rate 
results on modest levels of investment. NSF-supported work is 
exceptionally well managed, and attracts additional funding from 
outside sources on a regular basis. For example, an additional $86 
million in support from industry, other federal agencies, universities, 
and ten states leveraged NSF support for the Engineering Research 
Centers program. The agency has a diverse, responsive, results-oriented 
staff, efficient business processes that take advantage of staff 
knowledge and technology resources, and state-of-the-art business tools 
and technology. NSF has exceptional business practices, and won the 
only ``green light'' given out in the Office of Management and Budget's 
Executive Branch Scorecard report in December 2001. OMB Director 
Mitchell Daniels said that the NSF deserves to be strengthened, noting, 
``NSF is one of the true centers of excellence in the government where 
95 percent of the funds that taxpayers provide goes out on a 
competitive basis directly to researchers pursuing the frontiers of 
science at a very low overhead cost.'' NSF's management successes 
include doubling its budget between 1990 and 2000 while simultaneously 
decreasing the number of employees at the agency.
    Much of NSF's work looks beyond technological innovation by 
engaging new generations of students to aid in discoveries while 
gaining valuable skills that help prepare them for the cutting-edge 
research of the future. Many NSF grants require undergraduate students 
to be involved in performing federally funded research. K-12 teachers 
are invited to join in summer research programs at MIT's radio Haystack 
Observatory, and then are able to develop lesson plans that integrate 
modern scientific concepts and real life research processes. The NSF's 
Math and Science Partnership Program extends improved science education 
into classrooms by uniting local school districts with the faculties of 
nearby colleges and universities. NSF also helped to sponsor ``Deans 
Summit II: Fostering Campus Collaborations,'' earlier this year. The 
meeting catalyzed the formation of many partnerships between 
engineering and education deans to improve K-12 science and mathematics 
education.
    Engaging students in science from their pre-kindergarten education 
through college will help endow growing generations of Americans with 
the skills and interests necessary both to maintain U.S. leadership in 
economic, health, and military fields, as well as to function as 
citizens in an increasingly technology-driven society. A vibrant 
engineering education enterprise benefits civic, economic and 
intellectual activity in the country. Engineering graduates learn to 
integrate scientific and engineering principles to develop products and 
processes that contribute to economic growth, advances in medical care, 
enhanced national security systems, ecologically sound resource 
management, and many other beneficial areas. As a result, students who 
graduate with engineering degrees bring highly prized skills into a 
wide spectrum of sectors in the American workforce. Some conduct 
research that results in socially or economically valuable 
technological applications. Others produce and manage the technological 
innovations said to account for one-third to one-half of growth in the 
American economy. Still more bring advanced analytical abilities and 
knowledge of high technology to fields as diverse as health care, 
financial services, law, and government. Within all of these groups, 
the diversity of engineering graduates' backgrounds and viewpoints 
contributes to their ability to achieve the advances in innovation, 
productivity, and effectiveness that make them valuable contributors to 
the American workplace. As former Presidential Science Adviser Neal 
Lane observed: ``Chief executive officers of American industry say that 
the biggest threat to U.S. competitiveness in the next century is a 
shortage of technologically skilled workers. Those future scientists 
and engineers must come out of the nation's universities and colleges. 
The surest way to leave the United States vulnerable to this threat is 
to cut funding for the NSF.''
    Engineering graduates in particular bring highly prized skills into 
all sectors of the American workforce. The most advanced carry on the 
research that pays off in many surprising ways. Other engineering 
graduates produce and manage many of the technological innovations said 
to account for one-third to one-half of the recent growth in the 
American economy. Still others bring advanced analytical abilities and 
knowledge of high technology to fields as diverse as health care, 
financial services, law, and government. In the Addendum immediately 
following my testimony, I have attached additional documentation of the 
many ways NSF support is promoting engineering education and research 
at U.S. colleges and universities. This wealth of human capital owes 
much of its capacity to strategic NSF support for engineering 
education.
    A succession of predictable, sizable increases to the NSF budget 
will permit even greater development of human resources. In addition to 
the Math and Science Partnership initiative, NSF programs have become 
important vehicles for broadening the participation of under-
represented groups such as minorities and women in the fields of 
science, math, and engineering. Through programs like the Experimental 
Program to Stimulate Competitive Research (EPSCoR), NSF works to 
strengthen the research and development infrastructure of many rural 
and low-population states. Consistent growth in the NSF budget will 
permit the allocation and coordination of the activities needed to 
promote the broadest possible development of science, mathematics, and 
technology skills among all Americans.
    A $1.09 billion increase for the NSF budget will enhance the value 
of the agency's other cross-cutting initiatives. New funding for 
multidisciplinary mathematics research will enhance the transfer of 
results and applications from mathematics and statistics research to 
science and engineering disciplines, expanding the cadre of researchers 
trained in both mathematics and science. Dynamic interdisciplinary work 
across engineering and science disciplines promises startling advances 
in, for example, medicine, manufacturing, and communications. The 
assurance of steady resources over extended periods of time for high-
risk, high-reward endeavors--such as research in nanotechnology, 
biocomplexity, and high-speed computing--would greatly enhance their 
prospects for success. As Harold Varmus, former Director of the 
National Institutes of Health and currently President of the Memorial 
Sloan-Kettering Cancer Center, has said, ``it is crucial that leaders 
of science agencies be able to anticipate several years of steady 
growth during periods of expansion. These agencies make multi-year 
awards and are responsible for training and research infrastructure, as 
well as the operational costs of doing research.'' In an increasingly 
interdependent research system, the NSF is uniquely situated to 
initiate and promote productive exchanges across the full range of 
scientific and engineering disciplines.
    Thank you for the opportunity to testify. The Engineering Deans 
Council would be pleased to respond to any questions from you and your 
staff.

       ADDENDUM: EXAMPLES OF NSF PROGRAMS AT ENGINEERING SCHOOLS

    Securing Laptops.--As more and more sensitive information is 
carried on government laptop computers, theft or loss of these laptops 
becomes an issue of national importance. Zero Interaction 
Authentication (ZIA) technology developed by the University of Michigan 
with NSF support provides a way of automatically encrypting sensitive 
information on a computer when it is removed from the proximity of its 
authorized user. The technology combines a high level of security with 
a low level of user dependence to create a practical and easily 
implemented layer of protection.
    Modeling Buildings in 3-D.--Researchers at the University of 
Virginia and the University of North Carolina are developing technology 
to build extremely detailed three-dimensional computer models of the 
real world using laser rangefinders and digital cameras. The project, 
funded by the National Science Foundation, partners academic 
researchers with the FBI to investigate forensic scanning of crime 
scenes, the Thomas Jefferson Foundation to examine laser scanning for 
historical preservation, and with the New Orleans Museum of Art to 
explore virtual tourism using the resulting 3-D computer models.
    Improving Structural Engineering.--Lehigh University's ATLSS Center 
is one of 15 major experimental installations linked through the 
internet to make up the George E. Brown, Jr. Network for Earthquake 
Engineering Simulation (NEES) project. This project, funded in part 
through the NSF, involves ATLSS scientists in experimentation to 
improve the seismic design and performance of the nation's civil and 
mechanical infrastructure systems. Researchers from the ATLSS Center 
were recently involved in conducting inquiries into the collapse of the 
World Trade Center.
    Detecting and Fighting Breast Cancer.--Researchers at the 
University of Wisconsin-Madison, funded in part by the NSF, are 
developing non-invasive techniques for early stage breast cancer 
detection, monitoring, and treatment. Breast carcinomas significantly 
scatter microwaves, so an array of antennas sequentially transmits a 
low-power, ultra-short microwave pulse into the breast and collects the 
backscatter signal. The group hopes to adapt space-time signal 
processing algorithms for detecting and localizing small malignant 
lesions.
    Creating Higher Strength Steel.--The use of higher strength steels 
in automobiles is an economical way to reduce oil consumption and 
increase safety. Unfortunately, the use of higher strength steels is 
hindered by changes in other properties of the steel that increase with 
strength. Changes in processing and steel composition, being studied by 
researchers at Seattle University through a grant from NSF, will result 
in large savings of energy and other resources for the manufacturing 
sector and safer, more fuel efficient vehicles for consumers.
    Touching Virtual Objects.--Researchers at Georgia Tech are working 
with a grant from the NSF to develop ``Virtual Clay'', a new type of 
computer device that will allow users to see and feel a virtual 3-D 
surface. The device will not only be able to display a surface for the 
user to feel and touch, but it will also be able to be molded by the 
user and the resulting surface can be reproduced within the computer 
model. Potential applications range from design, scientific data 
visualization, and arts for use by the visually impaired.
    Reconfiguring Manufacturing Systems.--The NSF Engineering Research 
Center for Reconfigurable Manufacturing systems designs and studies 
equipment for the next generation of manufacturing facilities. In 2002, 
engineers at the University of Michigan unveiled the worlds' first 
full-scale reconfigurable machine too- an important step to designing 
more flexible and efficient factories for the future. Factories built 
around reconfigurable manufacturing technology will be able to respond 
to market demand more quickly, ultimately offering consumers more 
product choices at lower prices.
    Improving Airport Baggage Security.--A three-year NSF grant awarded 
in September 2001 is funding an examination of the nation's aviation 
security system. A University of Illinois professor of engineering is 
developing operations research models for aviation security operations 
and performing a computational analysis of algorithms for designing 
aviation security systems. The models will help security personnel 
target more quickly and accurately potential risks that might be 
lurking in baggage, passenger manifests, service routines, and other 
operations related to air traffic.
    Water Contaminant Removal.--Scientists at Penn State University are 
working to alleviate a common type of water contaminant called 
perchlorate which has been detected in the water supplies of 
approximately twelve million people, and has proved difficult to remove 
through conventional water treatment technologies. Penn State 
researchers are investigating biological treatment of perchlorate where 
microbes reduce the contaminant to innocuous oxygen and chloride. The 
commercial effect of this would be to save large amounts of money, 
which has been currently ear-marked for water purification to be used 
for both future development and current residential and commercial 
usage.
                                 ______
                                 
     PREPARED STATEMENT OF THE HUMANE SOCIETY OF THE UNITED STATES

    On behalf of our over 7 million members and constituents, The 
Humane Society of the United States (HSUS) appreciates the opportunity 
to submit testimony regarding fiscal year 2004 appropriations for the 
Environmental Protection Agency (EPA). We wish to thank the 
Subcommittee for directing the EPA to spend $4,000,000 for the 
research, development, and validation of non-animal, alternative 
chemical screening and prioritization methods. Prioritizing funding for 
non-animal test methods is a critical step, encouraging the EPA to 
promote and support these more humane, often faster, less expensive, 
and more scientifically sophisticated procedures. We wish to commend 
the Subcommittee for improving federal regulatory decision-making 
processes on chemical safety and for helping to reduce needless animal 
suffering. Our testimony for fiscal year 2004 focuses on the EPA's 
Office of Research and Development (ORD) and the agency's Endocrine 
Disruptor Screening Program (EDSP).
    The EDSP is the largest of several chemical testing programs 
administered by the EPA. These programs will collectively subject 
millions of animals to suffering and death in painful toxicity tests. 
Indeed, the EDSP itself is perhaps the largest government-sponsored 
animal testing program in history. Yet without the Subcommittee's 
intervention, the EPA's ORD budget has no identifiable program to 
develop alternative tests that can replace, reduce, or refine existing 
animal-based tests. We are still not seeing sufficient commitment from 
EPA to provide the initial investments needed to produce alternatives 
(or batteries of alternatives) to address issues such as the Endocrine 
Disruptors. Eli Lilly and Company eliminated its cat test for glucagon, 
replacing it with an alternative test, and calculated that it was 
saving $1 million a year as a result of the new test. However, it cost 
Eli Lilly $2 million to develop and validate the alternative. There 
will be a need for similar up-front investment by the EPA.
    The EPA, moreover, is not taking full advantage of an existing 
interagency committee with expertise in assessing new testing methods 
to evaluate their acceptability for regulatory use. The Interagency 
Coordinating Committee on the Validation of Alternative Methods 
(ICCVAM) is the federal government's focal point for assessing the 
validation and regulatory acceptability of new test methods. The EPA is 
a participating member of ICCVAM and was very involved in developing 
and approving the ICCVAM structure. Yet the EPA is bypassing the 
ICCVAM's review mechanism for many of the new tests in its EDSP, 
instead relying on in-house assessments. This move has worried many 
animal protection advocates as well as other stakeholders.
    The HSUS respectfully urges this Subcommittee to request that the 
ORD establish a substantial program to research and develop alternative 
methods (as it already committed to do for the High Production Volume 
chemical testing program but has not yet pursued), and that the EPA 
take full advantage of ICCVAM's expertise in evaluating new testing 
methods of multi-agency interest.

  RESEARCH AND DEVELOPMENT OF ALTERNATIVE TESTING METHODS AT EPA'S ORD

    The ORD budget in recent years has been approximately $500 million. 
Within these appropriations, it has been nearly impossible to identify 
funding by the ORD for non-animal alternative testing methods to meet 
EPA's specific needs in new testing programs. We believe that 
innovative non-animal alternative testing technologies would benefit 
from research and development funding. Therefore, we respectfully 
request that at least $10 million either from the existing budget or 
over and above the President's budget request be appropriated for 
research, development and validation of non-animal, alternative testing 
methods. Given the potential long-term benefits of such investment in 
alternatives development, it is surprising to us that the EPA is not 
already actively pursuing this approach. Activities funded by these 
allotments should be designed in consultation with the Office of 
Pollution Prevention and Toxic Substances.
    It would be appropriate for this funding to be targeted at testing 
methods with direct application to recent and new EPA testing programs, 
which include the EDSP, High Production Volume (HPV) chemical testing 
program, and the Voluntary Children's Chemical Evaluation Program 
(VCCEP). For example, there is a specific rat neurological development 
test that is widely regarded as inadequate but is still being proposed 
as one of the battery of tests under the VCCEP.
    The HSUS also asks that the Subcommittee require the EPA to submit 
a report to the Subcommittee by March 30, 2004 regarding expenditures 
and plans for additional expenditures for fiscal year 2004 funds under 
the EDSP.
    The request for $10 million represents approximately 2 percent of 
ORD's total budget, a modest but nonetheless significant commitment by 
EPA to alternative test methods. The HSUS would like to emphasize that, 
in making this request, we believe this course of action would also be 
in the best interests of human and environmental safety.

            THE ENDOCRINE DISRUPTOR SCREENING PROGRAM (EDSP)

    Under the 1996 Food Quality Protection Act (FQPA) and the Safe 
Drinking Water Act Amendments, Congress mandated that EPA determine 
whether certain substances may have an effect in humans that is similar 
to an effect produced by a naturally occurring estrogen, or such other 
endocrine effects as EPA may designate. The congressional mandate came 
as a response to public concern that exposures to synthetic chemicals 
in the everyday environment may be adversely affecting the endocrine 
systems of wildlife and humans, thereby causing reproductive and 
developmental anomalies.
    In response to Congress' mandate, the EPA formed the Endocrine 
Disruptor Screening and Testing Advisory Committee at the close of 
1996. This entity devised the testing framework for the EDSP. 
Currently, the proposed EDSP testing scheme consists of a battery of 16 
tests designed to assess the toxicity of up to 80,000 chemicals. These 
tests are largely animal-based. Some scientific estimates have 
projected that between 600,000 and 1.2 million animals will be killed 
for every 1,000 chemicals tested.
    Animal protection organizations and members of the public have 
serious concerns about the process by which the proposed EDSP tests 
will be evaluated. The FQPA stated that all screens and tests used in 
the EDSP should be properly validated, to ensure their relevance and 
reliability for assessing endocrine disruption. The proposed EDSP 
testing methods are all either new or revised for new endpoints, and 
therefore each should be evaluated for the EDSP as a matter of sound 
science. The natural entity to conduct this evaluation is the ICCVAM. 
Since its creation in 1994, the ICCVAM has benefited EPA and many other 
federal agencies, as well as research entities, by successfully 
evaluating the validity of new and revised testing methods 
(alternatives included) that have cross-agency relevance.
    In December of 2000, Congress upgraded ICCVAM from an ad hoc 
committee to a standing body, thereby solidifying its crucial role. It 
is clear that ICCVAM can provide a standardized assessment of the 
validity and regulatory acceptability of all EDSP tests and screens. 
This would be particularly appropriate given the level of interest in 
these methods by other federal agencies such as the Food and Drug 
Administration and other national and international organizations, 
including the Organization for Economic Cooperation and Development.
    However, EPA has developed a bifurcated validation plan for the 
EDSP that calls upon its own Science Advisory Board (SAB)/Science 
Advisory Panel (SAP) to review all the animal-based tests and screens, 
while asking the ICCVAM to review only the non-animal testing methods. 
This approach has many observers worried that the animal-based methods 
will be evaluated using lower standards than the non-animal methods. In 
addition to qualms voiced by animal protection advocates, the Advisory 
Committee on Alternative Toxicological Methods (ACATM) for the National 
Toxicology Program passed two unanimous resolutions questioning the 
EPA's plan and supporting the mission of ICCVAM. The Committee's 
primary concern was that both in vitro and in vivo methods be subjected 
to the same rigorous peer review and validation process to ensure the 
highest likelihood of acceptance by the regulatory agencies, the 
scientific community and the public.
    The HSUS strongly urges the Subcommittee to call on the EPA to use 
ICCVAM's expertise to assess the validity and regulatory acceptability 
of all EDSP tests and screens, with appropriate fiscal support from the 
EPA. Furthermore, ICCVAM should collaborate with EPA's SAB/SAP to avoid 
any unnecessary delay in the program. Among other things, ICCVAM's 
review of the EDSP testing methods can serve to ensure that proper 
consideration is granted for the replacement, reduction, and refinement 
of the use of animals in these proposed tests and screens.

                               CONCLUSION

    The HSUS respectfully requests that the VA-HUD Appropriations 
Subcommittee provide funding to the EPA with the direction that the ORD 
expand its research and development activities to include alternative 
methods. We also urge the Subcommittee to ensure that any new or 
revised testing methods with multi-agency or international interest be 
evaluated through the Congressionally-established ICCVAM for sound 
science and consistency with the replacement, reduction, or refinement 
of animal use.
    Finally, The HSUS requests language in the report accompanying the 
fiscal year 2004 VA-HUD and Independent Agencies Appropriations bill 
stating that no funds for the EPA may be used for the purpose of 
assessing data from an animal-based testing method when a non-animal 
test for the desired endpoint has been validated/accepted by the OECD 
or its member nations. This request will ensure that the EPA not only 
honors its stated concern for animal welfare, but also honors its 
international commitments to the latest scientific methods.
                                 ______
                                 
        PREPARED STATEMENT OF THE AMERICAN PSYCHOLOGICAL SOCIETY

    Mr. Chair, Members of the Committee: Thank you for this opportunity 
to present the views of the American Psychological Society (APS) on the 
fiscal year 2004 appropriations of the National Science Foundation 
(NSF). I am Alan Kraut, Executive Director of APS. We are a 15,000-
member organization of scientists and academics, most of whom are 
located in colleges and universities across the country. The NSF 
supports many members of the American Psychological Society, and much 
basic research in our field could not exist without NSF funding.
  --As a member of the Coalition for National Science Funding (CNSF), 
        APS strongly supports CNSF's recommendation of $6.39 billion 
        for the National Science Foundation in fiscal year 2004.
  --Within the NSF Budget, we ask the Committee to fully fund the 
        President's request for the Social, Behavioral and Economic 
        Sciences (SBE) Directorate.

            THE NATION'S PREMIERE BASIC RESEARCH ENTERPRISE

    CNSF's recommendation for fiscal year 2004 is based on the level of 
funding authorized for NSF in HR 4664, passed in the 107th Congress and 
signed by the President. This level of funding is the first step toward 
a much-needed doubling the Nation's premiere basic research enterprise. 
NSF is the primary funding source of non-medical basic research 
conducted at colleges and universities in the United States. Last fall, 
Congress passed an historical authorization bill for NSF, supporting a 
schedule of increases in NSF's budget from the fiscal year 2002 level 
of $4.79 billion to $9.84 billion in fiscal year 2007. The basic 
science community now turns to you, the appropriators, and asks you to 
make this authorization a reality.
    Both Congress and the Administration have expressed a high degree 
of confidence in NSF's mission and its efficient management of 
resources. The House Committee on Science made a clear case clear for 
the importance of basic science to our progress as a nation. As 
Chairman Boehlert noted, ``NSF-supported research [is] integral to 
progress in priority areas such as health care and national security, 
among others,'' could not be more accurate. He also noted, ``Science 
and technology have the potential to cure numerous domestic and global 
social ills--disease, poverty, hunger, cultural isolation and 
environmental degradation, just to name a few.'' But perhaps most 
relevant is this final statement by Mr. Boehlert: ``Advances in science 
and technology do not come cheap, or without focused effort.'' The 
increase that you and your colleagues in the Senate provided for NSF in 
fiscal year 2003, and the increase that we are recommending in fiscal 
year 2004, are important steps in offsetting the comparative 
underfunding that has characterized NSF's budget in the past several 
years. The scientific community is grateful for your support and it is 
our hope that you will continue to endorse the much-needed expansion of 
NSF's budget.

     THE SOCIAL, BEHAVIORAL AND ECONOMIC SCIENCES (SBE) DIRECTORATE

    Within the NSF budget, we ask the Committee to continue its history 
of support for behavioral and social science research at NSF. This 
Committee was instrumental in encouraging NSF to establish its Social, 
Behavioral, and Economic Sciences (SBE) Directorate a decade ago, and 
over the years has encouraged many of the initiatives coming out of 
that directorate. The fiscal year 2004 budget request to Congress 
contains a 10.8 percent increase for SBE, which would bring it to 
$211.7 million. (And of course to the extent that you appropriate funds 
for NSF above the requested amount, we ask that the SBE directorate 
share proportionately in such increases.)
    In fiscal year 2003 the President proposed a 6.3 percent increase 
for SBE. Unfortunately, when the dust settled, SBE received an increase 
of only 3.9 percent over fiscal year 2002. We are concerned about this 
shortfall, given the enormous potential of behavioral science to 
address many critical issues facing the Nation. To offset the previous 
year's underfunding, the SBE directorate received the largest proposed 
increase of any directorate in 2004. We ask this committee to fully 
fund the President' budget request for SBE in fiscal year 2004.
    Before addressing specific activities of the SBE directorate, I 
first want to provide a brief overview of basic psychological research, 
to give you an idea of the scope and breadth of the field that I 
represent.
    An Overview of Basic Psychological Research: Programs and 
initiatives that involve psychological science are our best chance to 
solve the enigma that has perplexed us for so long: How does the human 
mind work and develop? APS members include thousands of scientists who 
conduct basic research in areas such as learning, cognition, and 
memory, and the linked mechanisms of how we process information through 
visual and auditory perception. Others study decision-making and 
judgment; mathematical reasoning; language development; the 
developmental origins of behavior; and the impact of individual, 
environmental and social factors in behavior. The basic psychological 
research conducted by APS members has implications for a wide range of 
applications, including designing technology that incorporates the 
perceptual and cognitive functioning of humans; teaching math to 
children; improving learning through the use of technology; developing 
more effective hearing aids and speech recognition machines; increasing 
workforce productivity; and ameliorating social problems such as 
prejudice or violence. While this is a diverse range of topics, all of 
these areas of research are bound together by a simple notion: that 
understanding the human mind, brain, and behavior is crucial to 
maximizing human potential. That places these pursuits squarely at the 
forefront of several of the most pressing issues facing the Nation, 
this Congress, and the Administration.
    Progress and investments in psychological science will not simply 
lead us to a better understanding of how humans think, decide, 
evaluate, and adapt. It will lead us to revolutionary advances in our 
powers to predict, detect, and prevent. In this time of uncertainty, 
where we can come to rely so heavily on technology to keep us safe and 
confident, we must turn to cognition in order to maximize this 
technology. An understanding of how people process information will 
enable us to design technology and computers that fit our needs and 
make us comfortable when using them. The potential for advances would 
be limitless.

                     HIGHLIGHTS OF SBE INITIATIVES

    Turning now to the SBE Directorate, I'd like to highlight some of 
its programs. These initiatives exemplify SBE's essential leadership on 
the cutting-edge frontiers of research, and they illustrate the 
important work that will only flourish if adequately funded.
    Cognitive Neuroscience Initiative.--Theoretical work in behavioral 
science has greatly advanced our understanding of the basic mechanisms 
underlying memory, emotion, learning, and other psychological and 
cognitive processes. Recognizing the potential contributions of 
neuroscience to these and related areas, the directorate has added 
funds to these programs for the express purpose of bringing more 
neuroscience perspectives to bear on these topics, and to map these 
psychological mechanisms onto the physical dimensions of the brain. 
Cognitive neuroscience, within the last decade, has become an active 
and influential discipline, relying on the interaction of a number of 
sciences, including cognition, neurology, neuroimaging, physiology and 
others. The cross-disciplinary aspects of this field have spurred a 
rapid growth in significant scientific advances. Research topics 
examined under the program so far have included sensory processes, 
higher cognitive functions, language, learning, memory, and the list 
goes on. Cognitive neuroscientists are able to further clarify their 
findings by examining developmental and transformational aspects of 
these phenomena across the lifespan.
    NSF, with the right support, will have the ability to link advances 
in human thought and behavior to the natural and social sciences. Now, 
with brain imaging and other non-invasive techniques, we are poised to 
confirm and extend these theories through studies of the living brain. 
The Cognitive Neuroscience program solicits innovative proposals aimed 
at advancing an understanding of how the human brain supports thought, 
perception, affect, action, social processes, and other aspects of 
cognition and behavior. Scientists from a range of areas will be able 
to test theories about normal brain functioning; assess the behavioral 
consequences of brain damage; and reach new levels of understanding of 
how the brain develops and matures, in terms of both structure and 
function. The program is particularly interested in supporting the 
development of new techniques and technologies for recording, 
analyzing, and modeling complex brain activity.
    On a related note: A stable, long-term commitment to the study and 
development of new technology ensures continued advances in all fields, 
including our own discipline of psychological science, which is part of 
the broader behavioral and social science research enterprise. Emerging 
fields, such as behavioral genetics and cognitive neuroscience--which 
employ the latest in imaging and computing technology to unlock the 
mysteries of the mind and the origins of behavior--are examples of 
where gains in technology are necessary if we are to see a return on 
our investment in science. In addition, addressing human factors in the 
design of technology is essential; advances in technology will be 
severely undermined unless we incorporate what we know about 
perception, learning and memory, and other behavior-based processes 
that people draw on when using technology. Advances in science and 
technology will not only make the U.S. a world leader in many arenas, 
but will also contribute to better homeland security and a stronger 
economy.
    Developmental and Learning Sciences.--This initiative supports 
studies that increase our understanding of cognitive, social, and 
biological processes related to children and adolescents' learning in a 
variety of settings. Additional priorities are the support of research 
on learning and development that incorporates multidisciplinary, multi-
method, microgenetic, and longitudinal approaches. This program will 
lead to the development of new methods and theories, and assess peer 
relations, family interactions, social identities, and motivation. It 
examines the impact of family, school, and community resources, as well 
as assesses adolescents' preparation for entry into the workforce; and 
investigates the role of demographic and cultural characteristics in 
children's learning and development. The results of this initiative 
will add to our basic knowledge of children's learning and development 
and, ultimately, will lead to better educated children and adolescents 
who grow up to take productive roles as workers and as citizens.
    NSF's Children's Research Initiative.--Recognizing that a 
combination of perspectives--cognitive, psychological, social, and 
neural--is needed to fully understand how children develop and how they 
acquire and use knowledge and skills, the SBE directorate supports new 
interdisciplinary research centers that will focus primarily on 
integrating traditionally disparate research disciplines concerned with 
child development. Known as the Children's Research Initiative (CRI), 
this program is bringing together such areas as cognitive development, 
cognitive science, developmental psychology, linguistics, neuroscience, 
anthropology, social psychology, sociology, family studies, cross-
cultural research, and environmental psychology, to name only some of 
the relevant disciplines.
    Psychology researcher Stephen J. Ceci, of Cornell University, who 
is also an APS Fellow, leads one of the CRI's four research centers. 
The Cornell Institute for Research on Children will conduct rigorous 
multi-disciplinary research on issues of significance to children and 
their families. Specifically, the center will commission national teams 
of the nation's most distinguished developmental scientists to study 
policy relevant questions, and to create a consensus position for 
dissemination to the public. Ultimately, this project will place 
science-based information in the hands of Congress and other 
policymakers. On a different front, the North Carolina Child 
Development Research Collaborative is preparing to launch an 
interdisciplinary longitudinal study of early childhood, aimed at 
examining linguistic, emotional and intellectual changes from birth to 
school entry. The focus is on the individual in the context of social 
relationships. These two centers are just a sampling of what the CRI 
can accomplish. Over 80 proposals for new studies were received last 
fall, and this spring will see another round of competition for 
collaborative projects and more centers.
    The initiatives I just described are in the Division of Behavioral 
and Cognitive Science. Basic behavioral science supported by this 
division traditionally has included research in cognition, perception, 
language, development, emotion/affect, and social psychology. SBE's 
other main component, the Division of Social and Economic Sciences, 
also supports a substantial amount of basic psychological science. 
Examples of research topics being addressed in that division include: 
human dimensions of global change, group and individual decision 
making, risk management, and human factors. Research in these areas has 
the potential to increase employee and organizational productivity, 
improve decision making in critical military or civilian emergency 
situations, and inform the public policymaking processes across a range 
of areas.

                  CROSS-CUTTING BEHAVIORAL INITIATIVES

    The Science of Learning.--How people think, learn and remember is a 
core area of interest at NSF. Known as the science of learning, this 
field draws from a variety of research topics across psychology, such 
as brain and behavior, learning, memory, perception, social psychology, 
and development. The basic challenge for both the science and education 
communities is this: How can we apply and extend our knowledge of how 
people think, learn and remember to improve education?
    Last year, as this program was in the planning stages, we asked for 
your support. In the fiscal year 2003 appropriations report, you 
stated, ``the Committee recognizes that investment in basic, 
multidisciplinary research on learning is crucial to both successful 
educational reform and effective workforce development. In this regard, 
the Committee's recommendation includes support for the NSF Science of 
Learning Centers.'' We thank you for your support last year, and we ask 
that you continue to support this program in fiscal year 2004.
    NSF's Science of Learning program has two broad goals: improving 
our understanding of the learning process, and transferring that 
understanding into application. We have the knowledge base and a 
critical mass of top-flight scientists to help solve the educational 
and learning issues that have been identified by the government as high 
priorities. But getting that knowledge into the classroom is going to 
require a multi-disciplinary, multi-agency effort. This will be 
facilitated via investigations in human-computer interactions, 
cognitive psychology, cognitive neuroscience, and other activity 
related to child learning and cognitive development. Through the 
establishment of three or four multi-disciplinary Science of Learning 
Centers, NSF will for the first time attempt to focus the full range of 
science and research onto a scientific workforce objective. These 
centers will also provide a research base for the President's Math and 
Science Partnership.
    Human and Social Dynamics.--NSF's newest priority area, Human and 
Social Dynamics, will support multi-disciplinary approaches to better 
understand the causes and impact of social change, as well as to 
increase understanding of behavior and the human mind. This new 
priority area will expand knowledge of the cognitive and social 
structures that create and define change. Decision making under 
uncertainty and enhancing human performance are just two examples of 
topical areas that will be addressed in the early stages of this 
effort.
    One of the biggest challenges facing behavioral scientists is the 
better understanding of everyday human performance and action, and how 
such performance is influenced by rapid change. NSF is currently 
seeking research proposals that will examine this challenge. Research 
on cognition, development, behavior, emotion and language is converging 
with advances in biology, engineering, and technology. This convergence 
can be used to illustrate how we can improve performance in the face of 
rapid change. The early stages of research in this new area will 
enhance our fundamental understanding of basic research on human 
performance in the behavioral sciences, and will strengthen the links 
between this research and other relevant scientific communities, 
especially biology, engineering, and information technology. This 
priority area seeks to refine our knowledge about decision-making, 
risk, and uncertainty, and then take this new knowledge and translate 
it into improved decision-making techniques. Now more than ever, we 
live in a world where science such as this cannot afford to fail.
    In closing, I want to note that building and sustaining the 
capacity for innovation and discovery in the behavioral and social 
sciences is a core goal of the National Science Foundation. We ask that 
you encourage NSF's efforts in these areas, not just those activities 
I've described here, but the full range of activities supported by the 
SBE directorate and by NSF at large. Your support in fiscal year 2004 
will help NSF lay the groundwork for this long-overdue emphasis on 
these sciences.
    Thank you again for the opportunity to appear before you to present 
our recommendations. I would be pleased to answer questions or provide 
additional information.
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