[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 2005

                              ----------                              

                                       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 2005 budget 
request. Those statements submitted by the chairman follow:]

                     DEPARTMENT OF THE ARMY--CIVIL

 Prepared Statement of the Honorable John Paul Woodley, Jr., Assistant 
                  Secretary of the Army (Civil Works)

            THE CEMETERIAL EXPENSES BUDGET FISCAL YEAR 2005

    Mr. Chairman and distinguished members of the subcommittee, thank 
you for the opportunity to provide testimony before this subcommittee 
in support of the President's budget for the Department of the Army's 
Cemeterial Expenses program for fiscal year 2005.
    The Secretary of the Army, 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 2005 BUDGET OVERVIEW

    The fiscal year 2005 budget is $29,600,000, which is $600,000 more 
than the fiscal year 2004 appropriation of $29,000,000. The fiscal year 
2005 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 into the next 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, 2003
------------------------------------------------------------------------

------------------------------------------------------------------------
Gravesite Capacity--Developed Areas.....................         242,850
Total Gravesites Used...................................         215,181
Gravesites Currently Available..........................          27,669
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 
$17,846,000. It provides for the cost of operations necessary to 
conduct an average of 25 funeral services per day, accommodate 
approximately 4 million visitors each year, and maintain 652 acres of 
land and associated infrastructure. This program supports 94 of the 
cemeteries' total of 100 full time equivalent (FTE) work-years. 
Contractual services comprise $10,411,000, or 58 percent, of the 
Operation and Maintenance program, as follows:
  --$3,079,000 for tree and shrub maintenance.
  --$2,485,000 for grounds maintenance.
  --$1,400,000 for information/guard services.
  --$1,500,000 to develop an automated system for burial records, 
        gravesite locations, financial management, supplies and 
        equipment.
  --$485,000 for custodial services.
  --$1,462,000 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. The cost for utilities includes a credit for previous 
overpayments for water that were made based on estimated usage 
resulting in no charge for water in fiscal year 2005.
    One important aspect of the Operation and Maintenance Program is 
the continuing initiative to automate the administrative functions of 
the cemetery. Since the spring of 2000, the cemetery has contracted for 
a number of business reviews to determine the cost and feasibility of 
undertaking this initiative. These analyses resulted in an Information 
Management Strategy that was presented to the Office of Management and 
Budget (OMB) in May 2003. This strategy set forth the development of 
the Total Cemetery Management System, which is designed to improve 
performance as follows:
  --Transform the cemetery into a more customer service-oriented 
        organization that improves coordination among its stakeholders 
        and partners.
  --Increase information and services available to its customers 
        (family members and visitors).
  --Improve customer satisfaction.
  --Increase the efficiency and effectiveness of cemeterial processes 
        while reducing costs.
  --Reduce the risks associated with the manual data access and 
        maintenance process.
    The cost to implement the next phase of an automation initiative is 
estimated to be $5,000,000, and is an ongoing project. The $1.5 million 
included in the fiscal year 2005 budget will be used to complete the 
required OMB reports, plan and start the next phase of a multi-year 
automation effort.

Administration Program
    The budget includes $1,472,000 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 $10,282,000, consisting of the 
following projects:
  --$5,000,000 to complete Project 90 land development.
  --$75,000 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.
  --$1,640,000 to complete repairs at the equipment and vehicle service 
        complex.
  --$500,000 to repair roads and walkways.
  --$450,000 to repair flagstone and sidewalks.
  --$420,000 to continue the grave liner program.
  --$300,000 to repair storm and sanitary sewer lines.
  --$610,000 to design and build a stone boundary wall at the Facility 
        Maintenance Complex parking facility.
  --$400,000 to conduct utility surveys.
  --$500,000 to study upgrades for the visitor center and 
        administration building.
  --$187,000 to perform 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.
    Project 90 Land Development.--As the table displayed earlier in 
this statement illustrates, capacity in the currently developed area of 
Arlington National Cemetery will be exhausted by 2012. In order to 
extend the Cemetery's useful life to 2025, it is necessary to develop 
the remaining 40 acres of open land within its current boundaries. This 
involves the development of gravesite areas, roads, utilities and a 
boundary wall with niches for the placement of cremated remains. 
Approximately 26,000 additional gravesites and 5,000 niches will be 
provided when the development is complete.
    Significant crowding is already occurring due to the ever-shrinking 
land available in the Cemetery. This is compromising the dignity of 
funerals by distracting families at ongoing nearby services, as well as 
disruptions caused by daily maintenance required to be performed at new 
gravesites.
    The Project 90 land development is fully designed and $9.4 million 
in construction funds for Phase I were appropriated in fiscal year 
2003. Phase I consists of grading the site, relocating utilities, 
constructing roads and landscaping gravesite areas. Construction of 
Phase I is scheduled to begin this spring and be finished within 2 
years.
    The fiscal year 2005 budget includes $5 million for Phase II of 
Project 90. Phase II primarily entails construction of a new boundary 
niche wall that will hold the ashes of cremated remains on the inside 
of the wall. The niches and covers will be the same size and resemble 
those currently used at the existing Columbarium Complex.
    Ten-year Capital Investment Plan.--By our letter of February 5, 
2002, we provided this subcommittee with a 10-year plan that identifies 
the Cemetery's new construction, major rehabilitation, major 
maintenance and study proposals for the next 10 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 2005 budget includes $75,000 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, which consists of 
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 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. With this land 
transfer complete $3,300,000 of design will begin this year and the 
first year of construction is anticipated for 2007.
    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 2003, there were 3,903 interments and 2,342 
inurnments. In fiscal year 2004, we estimate there will be 3,925 
interments and 2,775 inurnments. Looking ahead to fiscal year 2005, we 
estimate there will be 3,975 interments and 2,825 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 2003, 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 2003, Arlington National Cemetery accommodated 
approximately 4 million visitors, making it one of the most visited 
historic sites in the National Capital Region. A study conducted in the 
1998-1999 time frame 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 2004 APPROPRIATION

    The additional $2,868,000 provided in the fiscal year 2004 
appropriation will be used to accelerate the Cemetery's automation 
project ($2,668,000), and address distressed headstones ($200,000). The 
0.59 percent rescission included in the fiscal year 2004 appropriation 
act (Public Law 108-199), amounts to $171,000 for Arlington National 
Cemetery, which has been applied to those additional funds provided.

                               CONCLUSION

    The funds included in the fiscal year 2005 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.
    Mr. Chairman, this concludes my testimony. We will be pleased to 
respond to questions from the subcommittee.
                                 ______
                                 

                  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 2005 funding of the Community Development Revolving 
Loan Fund (CDRLF) and to request $1.5 billion in fiscal year 2005 
borrowing authority for our Central Liquidity Facility (CLF), and 
slightly increased CLF operational expenses for the year.

 NATIONAL CREDIT UNION ADMINISTRATION COMMUNITY DEVELOPMENT REVOLVING 
                               LOAN FUND

    The National Credit Union Administration (NCUA) would like to thank 
the subcommittee for continuing its strong support of NCUA's Community 
Development Revolving Loan Fund (CDRLF).
    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.
    Congress established the CDRLF in 1979 to provide low-interest 
loans to credit unions that have been designated low-income by NCUA. 
NCUA has administered the CDRLF for 14 years. By year-end 2003, the 
CDRLF had provided to 224 loans totaling $33.9 million to low-income 
designated credit unions. In 1992, NCUA initiated a technical 
assistance grant (TAG) program in conjunction with the CDRLF which 
funded grants from the interest generated from outstanding CDRLF loans. 
To date, NCUA has provided 1,206 TAGs totaling $2.8 million.
    NCUA views the CDRLF as a resource for incubation monies for low-
income designated credit unions to initiate or develop services for 
members, thereby providing further opportunities to self-fund or obtain 
more substantial funding. Low-income designated credit unions use CDRLF 
loans to further community development efforts by funding member loan 
demand, provide additional member services, increase capacity to 
service members and improve the financial condition of low-income 
credit union members. TAGs support many of the services low-income 
designated credit unions provide to their members, including member 
financial literacy programs and electronic delivery systems.

Background
    The CDRLF was established by Congress (Public Law 96-124, Nov. 20, 
1979) through an initial $6 million appropriation to stimulate economic 
development in low-income communities. In 1990 the sole administration 
of the CDRLF was transferred to NCUA after having been administered by 
various Federal agencies.
    Congress did not provide additional appropriations for the CDRLF 
from 1979 to 1996. For fiscal year 1997, Congress appropriated an 
additional $1 million for the loan program with subsequent 
appropriations as follows:

------------------------------------------------------------------------

------------------------------------------------------------------------
Fiscal Year 1997...................      $1,000,000  Loans.
Fiscal Year 1998...................       1,000,000  Loans.
Fiscal Year 1999...................       2,000,000  Loans.
Fiscal Year 2000...................       1,000,000  Loans.
Fiscal Year 2001...................         350,000  TAG.
                                            650,000  Loans.
Fiscal Year 2002...................         350,000  TAG.
                                            650,000  Loans.
Fiscal Year 2003...................         300,000  TAG.
                                            700,000  Loans.
Fiscal Year 2004...................       1,000,000  TAG.
                                            200,000  Loans.
------------------------------------------------------------------------

    Administrative expenses related to the CDRLF are fully absorbed by 
NCUA. All appropriations, as well as any earnings generated from the 
CDRLF's assets, are provided to the intended low-income designated 
credit unions after any necessary adjustments to recognize potential 
losses in the loan portfolio.

Qualifying Applicants
    In order to qualify for participation in the CDRLF, credit union 
applicants must have a low-income designation and must serve 
predominantly low-income members. NCUA regulations define low-income 
members as those persons either earning less than 80 percent of the 
average for all wage earners as established by the Bureau of Labor 
Statistics or those whose annual income falls at or below 80 percent of 
the median household income for the Nation. The NCUA standard for 2003 
income for a household was $35,913 and $21,360 for an individual.

Revolving Loan Component
    The revolving loan component of the CDRLF is designed to assist as 
many qualifying credit unions as possible. Therefore, loans are limited 
to $300,000 and no credit union may have more than two separate loans 
at any one time. Loans must be repaid within 5 years, although a 
shorter repayment period may be considered.
    Generally, loans are required to be paid in semiannual installments 
with no principal balance repayment due during the first year. To 
combat the potential misuse of funds, NCUA regulations require that 
recipient credit unions must match the loan with funding from member 
share deposits or non-member deposits within the first year.
    Interest rates are set annually by the NCUA Board at a rate between 
1 and 3 percent. Due to the current interest rate environment, the NCUA 
Board has set a 1 percent interest rate for 2004.
    NCUA has authorized an open application period for participation in 
the loan program. This unrestricted application period enables low-
income credit unions--most of which have very few employees and limited 
resources--to develop and present a viable plan for better serving 
their fields of membership. The open application period also allows 
credit unions to implement projects and services on a more timely 
basis.
    During 2002, NCUA revised the loan program in an effort to achieve 
greater flexibility and mitigate risk. Although loan repayments 
accelerated during this period of time, the revised program offset the 
anticipated loss of loans with increased interest and applications for 
the loan program. During 2003, 11 credit union loan applications were 
received.
    Credit unions most likely to utilize the loan program are generally 
small in size with the median asset size of participating credit unions 
since 1990 being $3.4 million.
    To help ensure equality in loan approvals, a scoring system judges 
the purpose of the proposed use of funds, the financial condition of 
the credit union and management's capability of achieving the stated 
objective and operating the credit union in a safe and sound manner. As 
a regulator, NCUA has the added advantage of using credit union 
examinations to ensure the financial stability of loan grantees.

Technical Assistance Grants (TAGs)
    TAGs are generally awarded in amounts less than $5,000 and are made 
directly to low-income designated credit unions requiring assistance to 
further their outreach into the communities they serve. The grants 
assist these credit unions, generally less than $3 million in assets, 
in their efforts to improve service to their members by providing 
training opportunities to credit union staff, supplying funds for 
operational upgrades in recordkeeping, offering stipends to credit 
unions for summer student intern programs, promoting credit union 
services, developing training and consulting services for members and 
other worthwhile programs. With assistance provided through the TAG 
program, credit unions have also realized improved service in the 
delivery of financial products and services through enhanced 
technology. In 2003, 114 credit unions received more than $259,000 
specifically designated for technology improvements which includes 
upgrades in hardware and software, debit card programs and automated 
response systems.
    To ensure the funds are used solely for the purpose approved, 
grants are issued as reimbursements for goods or services previously 
approved by NCUA and much like the loan component of the CDRLF, TAGs 
are available to low-income designated credit unions throughout the 
year.
    Beginning in 2001, Congress specifically designated a portion of 
its annual appropriations for TAGs. Prior to 2001, the grant program 
was funded solely through earnings from outstanding CDRLF loans and 
never exceeded $250,000.
    Grant requests continue to exceed all available resources. In 2003, 
NCUA received requests for more than $1.2 million. Due to limited 
resources, NCUA was forced to decline requests for more than $750,000 
that could have been used to provide much needed services in low-
incomes areas. Earlier this year, Congress, recognizing the high demand 
for technical assistance, specifically designated $1 million of the 
total appropriation for the grant component of the CDRLF for fiscal 
year 2004. The additional funding will assist in expanding two existing 
programs available to participating credit unions--the student intern 
program and the Volunteer Income Tax Assistance program, as well as 
establish a number of new community development initiatives.
    From its inception in 1992, the CDRLF has provided 1,206 technical 
assistance grants totaling $2.8 million to low-income designated credit 
unions. In 2003, NCUA disbursed grants totaling $460,000.

Student Intern Program
    In 1996, NCUA established a student intern program funded entirely 
by the grant component of the CDRLF. The program is designed to provide 
low-income designated credit unions the opportunity for college 
students to contribute to the operations of the credit union while 
learning about the credit union community. The program makes grants 
totaling an average of $69,000 annually, with 28 low-income designated 
credit unions and their 28 credit union partners participating. Student 
interns participating in the program work at both the low-income 
designated credit unions and their partnering credit unions, affording 
them with the opportunity to share best practices between the 
institutions. Response from student and credit union participants has 
been extremely positive. The program is reevaluated annually to assess 
its ongoing impact and feasibility.

VITA Program
    In 2003, NCUA designated $50,000 for low-income designated credit 
unions establishing VITA (Volunteer Income Tax Assistance) sites. The 
VITA program is administered by the Internal Revenue Service to assist 
low-income and elderly taxpayers with income tax preparation, and to 
encourage low-wage earners to file for the Earned Income Tax Credit 
(EITC). Last year, NCUA granted 13 credit unions a total of $50,000 
dollars to offset some of the administrative burden associated with 
setting up these taxpayer clinics. With the increase in appropriated 
funds for fiscal year 2004 and expectations for increased 
participation, NCUA designated $75,000 for credit unions to set up VITA 
programs for 2005.

Other TAG Programs
    With the increased funding for fiscal year 2004, NCUA has 
designated funds for new targeted initiatives. NCUA recently announced 
three new TAG programs. This year, $350,000 has been made available to 
low-income designated credit unions for developing financial education 
programs, homeownership initiatives and training assistance.
    The specialized TAG programs emphasize initiatives that help 
communities develop self-sufficiency. The Financial Education 
Assistance Program is intended to provide members and potential members 
with practical money management skills, as well as an introduction to 
financial planning. Credit unions receiving funds through the 
Homeownership Assistance Program will utilize the funds to enhance 
their partnerships with affiliates of the Neighborhood Reinvestment 
Corporation, referred to as Neighbor Works Organizations, in 
establishing and improving mortgage lending/homeownership programs. The 
training program TAGs will cover tuition and travel costs associated 
with attending recognized training courses for credit union staff and 
leaders. Educated and informed credit union staff and volunteers are 
essential to providing safe and sound services to credit union members.
    NCUA is in the process of developing other TAG initiatives to 
assist credit unions in the enhancement of technology systems, 
expansion of financial services to underserved areas, the creation of 
individual development accounts (IDAs), the establishment of remittance 
programs and credit union mentoring opportunities. These programs will 
be announced in the second quarter.
    The CDRLF continues to provide low-income designated credit 
unions--particularly those of smaller asset size--the opportunity to 
obtain loans and technical assistance grants to improve and enhance 
services to their members. Though a small program, it provides valuable 
aid and assistance for those credit unions benefiting from this support 
while striving for self-sufficiency. Credit unions, through their 
cooperative structure, are funded through the share deposits of their 
members. The CDRLF provides needed assistance to further growth and 
viability of participating credit unions serving low-income fields of 
membership. Access to affordable financial services can provide 
underserved communities with a much needed alternative to high-cost 
lenders, allowing the residents to keep more of their money in their 
communities. 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 $800,000 over last 
year's funding level could provide the CDRLF program even greater 
ability to further growth and long-term viability of credit unions in 
low-income and underserved areas.
    national credit union administration central liquidity facility
    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, which 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 29 State and federally chartered corporate credit unions 
with approximately $74.5 billion in assets. The corporate credit union 
network provides operational and correspondent services, investment 
products and advice and short-term loans to its approximately 9,751 
natural person credit unions. 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 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 credit 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 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 CLF 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 CLF, loan demand has widely fluctuated in both volume 
and dollar amount.
    The CLF is authorized by statute to borrow from any source up to 12 
times its subscribed capital stock and surplus. Since fiscal year 2001, 
a borrowing limit of $1.5 billion has been approved by Congress. The 
continuation of the $1.5 billion cap for fiscal year 2005 will further 
assure that the CLF continues as a reliable, efficient backup liquidity 
source in times of need.
    It is important to note that CLF loans are not used to increase 
loan or investment volumes because by statute the proceeds from CLF 
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 2003 were $208,000, below 
the budget limitation of $309,000. Expenses were under budget due to 
lower travel expenses than anticipated due to a reorganization of CLF 
officers and low group agent fee expense.
    Total operating expenses for fiscal year 2004 are projected to be 
within our budget limitation of $310,000. In fiscal year 2004, pay and 
related benefits are higher than 2003 due to salary increases and 
higher agent fee expenses.
    For fiscal year 2005, the CLF is requesting an administrative 
expense limitation of $309,000. This figure is slightly lower than the 
previous year, a result of reduced expenses associated with projected 
operations for 2005.

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 1 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 2003 reduced the ratio 
from the year-end 2002 high of 70.8 percent down to a year-end 2003 
level of 69.8 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.
    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 1990's. 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.
    NCUA cannot foresee the exact circumstances that might necessitate 
a broad-based need for CLF lending but is dedicated to the principle 
that it must be ready and able to fulfill that purpose; a purpose 
established by Congress when it created the CLF. 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 well adapted to meet 
the unique needs of its member credit unions.

Summary
    During 2003, credit union assets and shares grew to $610 billion 
and $528 billion respectively, with net worth remaining a strong 10.72 
percent. The number of federally insured credit union members grew to 
over 82 million. These numbers demonstrate the continued safety and 
soundness of the credit union system.
    NCUA greatly appreciates the subcommittee's continued support of 
its 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.
                                 ______
                                 

                        SELECTIVE SERVICE SYSTEM

        Prepared Statement of Lewis C. Brodsky, Acting Director

                                PREFACE

    It is an honor to appear before you today again as Acting Director 
of the Selective Service System. I consider it a privilege to be here, 
but I bring with me the added understanding that events both national 
and international will require fresh perspectives and a clear 
recognition of changing realities in this new century. I welcome this 
opportunity to support the President's fiscal year 2005 appropriations 
request of $26,300,000 for the Selective Service System. I also welcome 
the challenge of meeting Agency goals that are all the more ambitious 
for their setting in today's necessary budgetary constraints. 
Naturally, Selective Service will continue pursuing its traditional 
goal of raising nationwide registration compliance among eligible young 
men. But even as the Agency honors its traditional mandate, it is 
securely focused on the future. Our agenda will be dominated by further 
implementation of our Process Improvement Program 2003, so-called PIP, 
in compliance with the President's Management Agenda. Using this self-
diagnostic tool, the Selective Service will continue to adjust its 
operational priorities, eliminate all remaining full-time military 
staffing, reduce part-time military officers and full-time civilians, 
and employ more state-of-the-art information technologies to accomplish 
its statutory missions while preserving maximum customer service. All 
personnel decrements will be a result of planned attrition and will not 
involve a Reduction-in-Force. Satisfying both goals would assure a 
Selective Service System that is fair beyond reproach while meeting the 
likely needs of the Department of Defense.
    No one awaits more eagerly than I the arrival of a new Director. 
Mr. William A. Chatfield's nomination by President Bush was sent to the 
Senate last September. And his confirmation hearing before the Senate 
Armed Services Committee took place at the end of January. We are 
awaiting further Senate action.

                              CAPABILITIES

    Selective Service stands ready to perform its mission. Should the 
President and the Congress authorize a return to a draft, the Agency 
can conduct a draft that is efficient, fair, and accepted by the 
public. 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 
United States, 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 and homeland security or service, if Congress and the White 
House so desire.
    Selective Service continues its close partnership with the 
Department of Defense by providing direct support to Armed Forces 
recruiting and accessions processing. Specifically, Selective Service 
provides names of registrants to the Secretary of Defense for 
recruiting purposes, in accordance with a provision in the Military 
Selective Service Act. 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 
Selective Service 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 its compliance with the Military Selective Service Act and 
providing these tangible services, the Agency also promotes an 
intangible national benefit. For present and future generations of 
America's young men, Selective Service is 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 14 months ago, I have made sure 
Agency activities conformed to President Bush's Management Agenda. 
Since I last appeared before you, we have completed a reexamination of 
our processes and begun implementation of a restructuring of the Agency 
to meet the most likely manpower needs of the Department of Defense 
(DOD) while finding improved ways of serving the public. I would point 
to three initiatives that we believe satisfy administration and 
Congressional charges to Federal agencies to evolve into performance-
based organizations.
    1. Process Improvement Project 2003 (PIP).--Expanding upon our 
fiscal year 2002 Agency's Workforce Restructuring Plan, a comprehensive 
``bottom-up review'' is completed with contractor assistance. After 
consulting with senior Defense manpower officials, it became apparent 
to me that the Agency's current organizational structure hasn't been as 
responsive or relevant to the contemporary needs of the DOD as it might 
be. Consequently, we shifted our programmatic vision from readiness to 
conscript large numbers of untrained men within 193 days of activation 
to a draft of smaller numbers of critical skills personnel within the 
same time frames. This necessary realignment reflects recognition of 
current realities and the latest DOD thinking. It is being accomplished 
within current resources and will result in less management overhead, a 
merging of offices and programs, and an increased potential for 
outsourcing some Agency functions. We are convinced the benefits 
accrued from strategic management of human capital, competitive 
sourcing, improved financial performance, expanded e-Government, and 
better integration between budget and performance will substantially 
increase Agency efficiency in its core and support processes. PIP 
recognizes no ``sacred cows.'' As I promised in my last appearance 
before you, Selective Service has placed all functions and programs on 
the table. Each structural change and staffing decision is being 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 87.7 percent in 2000. This 
decrease was cause for serious concern because we believe a compliance 
rate of less than 90 percent would contribute to a lack of public 
confidence. 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 Agency Directors since 1992 have 
placed a consistent priority on raising the registration rate. By 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. In 2002 we 
achieved a level of 90.9 percent. Our final accounting for 2003 is not 
yet complete, but initial indications are that nearly 93 percent of men 
18 to 25 years old were registered at the end of the past calendar 
year. The other good news is that the statistics for calendar year 2003 
are indicating a 77 percent compliance rate for ``on-time'' 
registration of men turning 18--a 4 percent increase over the previous 
year. Our recent high compliance rates represent a return to the high 
rates of the early 1990's. Since public trust in the Selective Service 
System is at stake, we will use every resource to continue these upward 
trends in compliance. In pursuit of that goal, we:
  --Continue to develop and distribute public service broadcast 
        messages to low compliance markets, together with printed 
        materials. To support this effort, we have distributed new 
        radio public service announcements in English and Spanish. 
        These high-quality products have been praised by listeners 
        around the country, and cost us only development, replication 
        and distribution--commercial air time valued at $1.8 million is 
        provided as free public service time.
  --Have continued revamping the interactive Selective Service pages on 
        the World Wide Web (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 calendar 
        year 2003, 76 percent of registrations reached the SSS through 
        electronic means, or about 152,000 registrations per month. 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 
        currently provide Selective Service with an average of 61,166 
        registrations per month. As of this month, 32 States, two 
        territories, and the District of Columbia have laws enacted. 
        These jurisdictions represent over 62 percent of the national 
        18-year-old male registrant population. We continue to work 
        closely with additional States where such legislation is 
        pending.
    3. Information Technology (IT).--The PIP resulted in new 
initiatives and significant changes to the current way the Agency does 
business. The resulting business cases will indicate what avenues SSS 
can take to modernize its core and support processes. These changes 
will require that the inventory of automated systems be modernized. The 
Agency is in the process of examining its IT architecture, both 
hardware and software, to identify new technology and to determine how 
best to implement the support structure for the new and revised 
business processes. We remain committed to investing in IT, as today's 
constrained resources permit, because we know that it enhances customer 
service, increases productivity, and compensates for limited human and 
fiscal resources.

                          ADAPTABLE TO CHANGE

    We are also ready to aid the Congress with any initiatives that 
might capitalize upon Selective Service's unique capabilities. There 
has been much dialogue among the public, private groups, and academia 
concerning a draft, volunteerism, homeland security, and national 
service. Selective Service has a wealth of experience in managing 
volunteers, and administering programs of alternative community-based 
service for men classified as Conscientious Objectors throughout its 
nearly 64 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 Selective Service 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. Selective 
Service can lend its expertise and ample experience to any appropriate 
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 2005 appropriation request of $26,300,000 will be invested 
prudently in one of the Nation's important security assets in an 
increasingly dangerous world. Its rationale for existence and its 
credentials have never changed: to provide a compact, cost efficient 
civilian 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 remains an active partner in 
the national preparedness community.
    Thank you, Mr. Chairman.
                                 ______
                                 

                 FEDERAL DEPOSIT INSURANCE CORPORATION

                      Office of Inspector General

     Prepared Statement of Gaston L. Gianni, Jr., Inspector General

    Mr. Chairman and members of the subcommittee, I am pleased to 
present the fiscal year 2005 budget request totaling $29.9 million for 
the Office of Inspector General (OIG) at the Federal Deposit Insurance 
Corporation (FDIC). This OIG budget has a rather unusual distinction in 
the Federal Government in that it reflects a decrease for the ninth 
consecutive year, after adjusting for inflation. This budget has been 
possible because of the improved health of the banking industry since 
the early 1990's, the major staff downsizing at the FDIC and within the 
OIG, and our internal efforts to improve our performance and 
productivity even with reduced budgets.
    As you know, the FDIC was established by the Congress in 1933, 
during the Great Depression, to maintain stability and public 
confidence in the Nation's banking system. Our Nation has weathered 
several economic downturns since that era without the severe panic and 
loss of life savings unfortunately experienced in those times. The 
Federal deposit insurance offered by the FDIC is designed to protect 
depositors from losses due to failures of insured commercial banks and 
thrifts. The FDIC insures individual deposits of up to $100,000. 
According to the Corporation's Letter to Shareholders, issued for the 
4th Quarter 2003, the FDIC insured $3.451 trillion in deposits for 
9,196 institutions, of which the FDIC supervised 5,313. The FDIC also 
promotes the safety and soundness of these institutions by identifying, 
monitoring, and addressing risks to which they are exposed.
    The Corporation reports that financial institutions have recently 
had record earnings. The rate of bank and thrift failures has remained 
at a relatively low level over the past 10 years, and the Corporation 
has substantially reduced its estimates of future losses from failures. 
Assets held in receiverships following bank failures are at 
comparatively low levels, and significant progress has been made at 
closing older receiverships. The insurance funds are now comfortably 
above the designated reserve ratio that could otherwise trigger 
increases in premiums assessed on insured depository institutions. 
These are important indicators of a healthy banking system, and the 
Corporation can take pride in its positive contributions in each of 
these areas.
    The FDIC OIG was established in 1989 in accordance with amendments 
added to the Inspector General (IG) Act. The OIG's program of 
independent audits, investigations, and other reviews assists and 
augments the FDIC's mission. Our efforts promote economy, efficiency, 
and effectiveness of FDIC programs and operations and protect against 
fraud, waste, and abuse.
    I am completing my eighth year as the first FDIC Inspector General 
appointed by the President and confirmed by the Senate and can see the 
fruits of our strategic planning through the results we have achieved 
during fiscal year 2003. I look forward to supporting the Congress, the 
FDIC Chairman, and other corporate management in meeting current and 
future challenges facing the FDIC and the banking industry.
    This statement discusses OIG accomplishments during fiscal year 
2003, our contributions to assist FDIC management, internal initiatives 
to improve the OIG, and management and performance challenges facing 
the FDIC. I am also providing additional details about our fiscal year 
2005 budget and how it will be spent.

      A REVIEW OF THE FDIC OIG'S FISCAL YEAR 2003 ACCOMPLISHMENTS

    The OIG's fiscal year 2003 achievements are impressive, and the 
results include:
  --$96.8 million in actual and potential monetary benefits;
  --193 non-monetary recommendations to FDIC management;
  --35 referrals to the Department of Justice;
  --43 indictments;
  --22 convictions; and
  --5 employee/disciplinary actions.
    More specifically, our accomplishments included 43 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 a total of 47 audit and evaluation reports, which included about 
$431,000 in questioned costs and $2.1 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 
2003 Performance Report shows that we met or substantially met 27 of 
our 34 goals, or 79 percent. In a measurable way, this achievement 
shows 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 audit, investigation, and evaluation work 
that contributed to these accomplishments follow.
    Material Loss Review of the Failure of Southern Pacific Bank, 
Torrance, California.--The OIG issued the results of its material loss 
review of Southern Pacific Bank and determined that the failure 
occurred because of ineffective corporate governance at the 
institution, leading to a potential loss of about $91 million. The 
report contained recommendations designed to improve the bank 
supervision process and promote the safety and soundness of FDIC-
supervised institutions. The report also raised an issue related to 
oversight of parent holding companies of industrial loan companies--one 
that we are pursuing in ongoing work.
    Investigation into the Failure of Oakwood Deposit Bank Company.--
Following the failure of Oakwood Deposit Bank Company on February 1, 
2002, the OIG, Internal Revenue Service Criminal Investigation, and the 
Federal Bureau of Investigation initiated a joint investigation. The 
ongoing investigation has thus far led to the conviction of the bank's 
former president and Chief Executive Officer. After pleading guilty in 
May 2003 to bank embezzlement and money laundering, the former bank 
president was sentenced in September 2003 for his role in the fraud 
scheme that caused the failure of the 99-year-old bank. The defendant 
was sentenced to 14 years' imprisonment to be followed by 5 years' 
supervised release and was ordered to pay $48,718,405 in restitution.
    The investigation leading to the defendant's plea found that he 
began embezzling funds from the bank in 1993 with a loan to a family 
member. He admitted to altering bank records and creating paperwork in 
order to conceal the embezzlement, which resulted in losses to the bank 
of approximately $48.7 million and led to the bank's insolvency. As 
part of his plea, the defendant forfeited any and all of his interest 
in property controlled by Stardancer Casinos Inc. and its subsidiaries, 
as he was an investor and part owner of Stardancer. In late 1998, the 
defendant began investing embezzled bank funds into Stardancer Casinos 
Inc., a casino gambling operation originally headquartered near Myrtle 
Beach, South Carolina. Over the course of the next 3 years, the 
defendant embezzled over $43 million to purchase casino vessels and 
fund the operations of the casino business. The defendant forfeited 
bank accounts relating to Stardancer and two other companies identified 
in the investigation. He also forfeited real estate and investments in 
Florida, Ohio, Texas, and South Carolina; his interest in any of the 
Stardancer vessels and equipment; $520,450 in currency seized by the 
government; and any substitute properties owned by him but not 
identified in the investigation as the proceeds of criminal activities.
    Investigation of Scheme to Defraud Community Bank of Blountsville, 
Alabama.--In October 2003, an ongoing investigation by the OIG and FBI 
into an alleged fraud scheme at Community Bank of Blountsville, 
Alabama, led to a 25-count indictment against the bank's former 
chairman and chief executive officer (CEO), the bank's former vice-
president for construction and maintenance, and the owner of a 
construction services company. The indictment charges the three 
defendants with bank fraud, misapplication of bank funds, false 
statements to a financial institution, and false entries in the books 
and records of a financial institution. The indictment also charges the 
former CEO with money laundering and filing false tax returns, and 
seeks from him forfeiture of $3.45 million. The three defendants 
allegedly conspired to use $2.15 million in bank funds for construction 
work on the CEO's personal projects, including a 17,000-square-foot 
home. While the CEO obtained more than $5 million in bank loans to 
build his house, he allegedly used more than $1.34 million of those 
funds for other purposes.
    Previously in the investigation, a couple who owned a construction 
company were found guilty on charges of bank fraud and conspiracy to 
commit bank fraud and were sentenced to 18 months' incarceration and 
ordered to pay restitution totaling $178,000. Our investigation found 
that the couple submitted invoices for construction work purportedly 
performed for Community Bank. Some of the invoices were for work never 
performed, and other invoices were for personal construction work 
performed for the bank's CEO, his relatives, and the bank's vice 
president of construction and maintenance. Evidence was presented at 
trial to show that the records of the bank were falsified to reflect 
that the work was completed at the bank's facilities.
    Investigation of Fraud by Securities Dealer Misrepresenting FDIC 
Affiliation.--Following an FDIC OIG investigation, a securities dealer 
was sentenced in the Riverside County District Court, Riverside, 
California, to serve 6 years' imprisonment and ordered to pay $20,000 
in fines. The sentencing was based on his plea of guilty in October 
2002 to an amended complaint charging him with selling unregistered 
securities, fraud, and theft. The subject, doing business as Jeffco 
Financial Services, was licensed to sell securities through San 
Clemente Services, Inc., another company involved in the sale of 
brokered certificates of deposit (CDs). Relying on information they 
were provided regarding FDIC insurance coverage, investment yields, 
fees, and commissions, investors purchased approximately 1,241 CDs 
totaling $67,390,735 from Jeffco Financial Services. The felony 
complaint to which the subject pleaded guilty lists the names of 59 
individuals or entities to whom he offered or sold unregistered 
securities which are described in the complaint as ``investment 
contracts in the form of interests in custodialized CDs.'' He also 
pleaded guilty to making misrepresentations regarding ``annual average 
yield,'' theft of property exceeding $2.5 million in value, and 
participating in a pattern of felony conduct involving the taking of 
more than $500,000. The FDIC OIG investigation was initiated based on a 
referral by the FDIC's Division of Supervision and Consumer Protection 
of information obtained during the examination of a bank indicating 
irregularities in deposits the bank had placed with San Clemente 
Services.
    Evaluation of the FDIC's Information Technology Security Program.--
In our 2003 independent evaluation of the FDIC's Information Security 
Program, required by the Federal Information Security Management Act, 
we concluded that the Corporation had established and implemented 
management controls that provided limited assurance of adequate 
security over its information resources. However, we reported that 
continued management attention was needed in several key management 
control areas, including contractor security, enterprise-wide IT 
architecture management, certification accreditation of major IT 
systems, and IT capital planning and investment control. The report 
highlights 10 key areas where the Corporation needed to focus attention 
to address information security weaknesses.
    Our semiannual reports to the Congress provide many other examples 
of OIG accomplishments. These reports can be found on our Web page at 
www.fdicig.gov/semi-reports/oig.pdf or by contacting our office.

Assistance to FDIC Management
    In addition to 2003 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 management is seeking 
to make improvements. Among these contributions were the following 
activities:
  --Reviewed 86 proposed corporate policies and 4 draft regulations and 
        offered comments and suggestions when appropriate.
  --Commented on the FDIC's strategic and annual performance plans, and 
        annual performance report.
  --Provided advisory comments on the FDIC's 2003 Annual Performance 
        Plan and 2002 Annual Report.
  --Provided the Corporation with an updated risk analysis document on 
        the Quality of Bank Financial Reporting and Auditing and 
        Corporate Governance.
  --Participated in division-level conferences and meetings to 
        communicate about our audit and investigation work and 
        processes.
  --Assisted an FDIC team in developing a paper on the ``Root Causes of 
        Bank Failures from 1997 to the Present.''
  --Provided technical assistance and advice to several FDIC groups 
        working on information technology issues, including 
        participating at the FDIC's information technology security 
        meetings. We also participated in an advisory capacity on the 
        Information Technology Subcommittee of the Audit Committee.
  --Conducted an annual review of the Corporation's internal control 
        and risk management program.
  --Provided oversight to several major system development efforts.

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 couple of years, we took several initiatives that continue to have 
great significance on our work and operations.
    The OIG participated in a significant downsizing and restructuring 
initiative with the Corporation. 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 and is now 
organized around four operational directorates: Resolution, 
Receivership, and Legal Services; Supervision and Insurance; 
Information Assurance; and Resources Management. A fifth directorate, 
Corporate Evaluations, performs corporate-wide and other evaluations.
    During this past year we have continued to invest in our people and 
the performance capacity of the OIG. During fiscal year 2002, we issued 
a Human Capital Strategic Plan, which outlines four objectives to 
maximize the return on our human capital investments. The objectives 
relate to workforce analysis; competency investments; leadership 
development; and a results-oriented, high-performance culture. Two 
objectives of the plan were substantially met during this past year and 
each will serve as the basis for future important human capital 
projects. The OIG Business Knowledge Inventory System and the OIG Key 
Competencies Project together provide valuable information to the OIG 
on its skills and knowledge and will help identify where we need to 
make investments in training, professional development, and 
recruitment.
    Six competencies were developed that we believe all OIG staff need 
to contribute successfully to the OIG mission and goals. These 
competencies form the basis for performance expectations of every OIG 
employee, including executives. The competencies are: achieves results, 
communicates effectively, demonstrates teamwork, exhibits technical 
competency, demonstrates responsibility and self-development, and leads 
effectively. Each of these competencies has been further defined with 
subsidiary criteria describing the types of performance behaviors 
included under the competency. We believe full integration of these 
core competencies into the OIG's human capital system will help foster 
a greater results-oriented, high-performance culture and enhance 
accomplishment of OIG strategic goals and objectives.
    Our 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 hosting an interagency 
symposium on the Federal Information Security Management Act of 2002. 
Representatives from 44 Federal agencies attended the symposium to 
share information, ideas, and best practices related to the 
implementation of FISMA. We also co-sponsored a second Emerging Issues 
Symposium with the Offices of Inspector General of the Department of 
the Treasury and the Board of Governors of the Federal Reserve System, 
bringing together distinguished speakers who shared their perspectives 
on the banking and financial services community with Inspector General 
staff in the interest of enhancing the value that OIGs can add to their 
agencies by successfully addressing risk areas. We also conducted our 
fifth external customer survey regarding satisfaction with OIG 
operations and processes. In keeping with the spirit of the 25th 
anniversary of the IG Act, all OIG staff had an opportunity to recommit 
to the mission of the OIG during an office-wide conference held in 
October 2003. Our conference focused on the FDIC OIG's mission, vision, 
and core values. In pursuit of our mission, vision, and values, we 
designed several sessions at the conference so that our staff could 
discuss how their service contributes to accomplishing our strategic 
goals.

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 its annual report to the President. In addition, my office 
led the PCIE initiative to update and revise the Quality Standards for 
Federal Offices of Inspector General (Silver Book). I also represented 
the OIG community within government before the Congress, delegations of 
foreign visitors, and professional organizations.
    Also, I played an active role in many of the community's activities 
celebrating the 25th anniversary of the IG Act, including meeting with 
President Bush, participating in IG interviews on C-Span's Washington 
Journal, and awarding 134 individuals and teams at the community's 
annual awards program. On December 1, 2003, the President signed a 
joint congressional resolution recognizing the IG community on its 25th 
anniversary and its accomplishments fostering good government.
    Finally, the FDIC OIG completed a peer review of the nationwide 
audit operations of the Department of Commerce.
         management and performance challenges facing the fdic
    In the spirit of the Reports Consolidation Act of 2000, the OIG 
annually identifies the top management and performance challenges 
facing the FDIC. We have worked with the FDIC to prepare our annual 
assessment. Our update of the challenges as of December 19, 2003, was 
included in the FDIC's performance and accountability report dated 
February 13, 2004. The challenges capture the risks and opportunities 
we see before the Corporation in the coming year or more. In addition, 
these challenges serve as a guide for our work. Notwithstanding the 
current strength of the banking industry, the Corporation must continue 
to be vigilant because challenges are ever-present and can threaten the 
Corporation's success. I will briefly discuss each of the challenges 
and, where appropriate, describe OIG initiatives that address the 
challenge.
    1. Adequacy of Corporate Governance in Insured Depository 
Institutions.--Corporate governance is generally defined as the 
fulfillment of the broad stewardship responsibilities entrusted to the 
Board of Directors, Officers, and external and internal auditors of a 
corporation. 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.
    To assist the Corporation in meeting this challenge, we conducted 
two audits this past year that relate to material losses caused by the 
failures of the Connecticut Bank of Commerce, Stamford, Connecticut and 
the Southern Pacific Bank, Torrance, California. The audits concluded 
that these banks failed because of ineffective corporate governance, 
including the external auditors' issuance of unqualified opinions on 
the banks' financial statements, and led to an estimated loss of almost 
$200 million to the insurance funds. Our work on eight other material 
loss reviews we have conducted since 1993 also identified inadequate 
corporate governance as the primary cause of each failure.
    We also conducted two audits related to the FDIC's examination of 
institutions for compliance with anti-money laundering requirements. 
The first audit focused on the FDIC's implementation of the United and 
Strengthening America by Providing Appropriate Tools Required to 
Intercept and Obstruct Terrorism Act of 2001 (Patriot Act). We found 
that the FDIC had not issued guidance to its examiners for those 
provisions of the Patriot Act requiring new or revised examination 
procedures, because the FDIC was either coordinating the issuance of 
uniform procedures with an interagency committee or waiting for the 
Treasury Department to issue final rules. As a result of our audit, the 
FDIC promptly issued interim guidance to its examiners and the uniform 
rules were issued 2 months later. The second audit focused on the 
FDIC's supervisory actions taken to address violations of the Bank 
Secrecy Act of 1970 (BSA). We concluded that the FDIC needs to 
strengthen its follow-up process for BSA violations and has initiatives 
underway to reassess and update its BSA policies and procedures. We 
recommended actions intended to strengthen the FDIC's monitoring and 
follow-up efforts for BSA violations, update guidance for referring 
institution violations to the Treasury Department, and provide 
alternative coverage when State examinations do not cover BSA 
compliance. FDIC management concurred with the recommendations and is 
taking corrective action.
    2. Protection of Consumer Interests.--The availability of deposit 
insurance to protect consumer interests is a very visible way in which 
the FDIC maintains public confidence in the financial system. 
Additionally, as a regulator, the FDIC oversees a variety of statutory 
and regulatory requirements aimed at protecting consumers from unfair 
and unscrupulous banking practices. The FDIC, together with other 
primary Federal regulators, has responsibility to help ensure bank 
compliance with statutory and regulatory requirements related to 
consumer protection, civil rights, and community reinvestment.
    The OIG's recent coverage in this area includes reviews of 
compliance with the Gramm-Leach-Bliley Act, Community Reinvestment Act, 
and the Fair Lending Act. We plan to review new FDIC compliance 
examination procedures in 2004.
    3. Management and Analysis of Risks to the Insurance Funds.--The 
FDIC seeks to ensure that failed financial institutions are and 
continue to be resolved within the amounts available in the insurance 
funds and without recourse to the U.S. Treasury for additional funds. 
Achieving this goal is a significant challenge because the insurance 
funds generally average just over 1.25 percent of insured deposits and 
the FDIC supervises only a portion of the insured institutions. In 
fact, the preponderance of insured assets are in institutions 
supervised by other Federal regulators. Therefore, the FDIC has 
established strategic relationships with other regulators surrounding 
their shared responsibility of helping to ensure the safety and 
soundness of the Nation's financial system. Economic factors also can 
pose a considerable risk to the insurance funds. The FDIC actively 
monitors such factors as interest rate margins and earnings in the 
financial sector in an effort to anticipate and respond to emerging 
risks.
    To assist the FDIC in meeting this challenge, we conducted audits 
that focused on FDIC examiners' assessments of commercial real estate 
loans and high-loan growth, implementation of statutory prompt 
corrective action provisions and a number of other audits related to 
supervision and insurance issues. We also issued a follow-up report to 
an earlier report entitled ``The Effectiveness of Prompt Corrective 
Action Provisions in Preventing or Reducing Losses to the Deposit 
Insurance Funds'', dated March 26, 2002. Our ongoing work relating to 
safety and soundness examinations is assessing the effectiveness of the 
Corporation's examination assessment of bank management. In addition, 
we plan to review examination assessment of capital and supervision of 
industrial loan companies.
    4. Effectiveness of Resolution and Receivership Activities.--One of 
the FDIC's primary corporate responsibilities includes planning and 
efficiently handling the resolutions of failing FDIC-insured 
institutions and providing prompt, responsive, and efficient resolution 
of failed financial institutions. In this regard, the depositors of 
insured banks and savings associations are a unique responsibility for 
the FDIC. These activities maintain confidence and stability in our 
financial system. Notably, since the FDIC's inception over 70 years 
ago, no depositor has ever experienced a loss of insured deposits at an 
FDIC-insured institution due to a failure.
    To address this area we reviewed the FDIC's efforts to ensure that 
bank customers have timely access to their insured deposits at failed 
institutions. Also, we conducted an audit to assess the FDIC's 
Readiness Program to respond to a series of failures exceeding the 
FDIC's capacity to handle with its own resources. A focus of our future 
work will be the Asset Servicing Technology Enhancement Project, which 
is designed to provide an integrated solution that supports the FDIC's 
current and future asset servicing functions based on adaptable 
computing technology and data sharing that is compatible with industry 
standards.
    5. Management of Human Capital.--Human capital issues pose 
significant elements of risk that interweave all the management and 
performance challenges facing the FDIC. The FDIC has been in a 
downsizing mode for the past 10 years as the workload from the banking 
and thrift crisis has been accomplished. As a result, FDIC executives 
and managers must be diligent and continually assess the goals and 
objectives, workload, and staffing of their organizations and take 
appropriate steps to ensure that the workforce has the right experience 
and skills to fulfill its mission. The Corporation has created the 
Corporate University to address skill levels and preserve institutional 
knowledge in its five main lines of business. The Corporation is also 
in the process of revamping its compensation program to place greater 
emphasis on performance-based initiatives.
    The OIG recently completed an evaluation of the Corporation's human 
capital framework and we have a series of reviews planned to address 
the various components of the human capital program, with the next 
being strategic workforce planning.
    6. Management and Security of Information Technology Resources.--
Management and security of information technology resources remains one 
of the Corporation's most expensive and daunting challenges. 
Information technology (IT) continues to play an increasingly greater 
role in every aspect of the FDIC mission. Our work required under the 
Federal Information Security Management Act of 2002 has shown that the 
Corporation has worked hard to implement many sound information system 
controls to help ensure adequate security. However, daunting challenges 
remain due to the ever-increasing threat posed by hackers and other 
illegal activity. We have urged the FDIC to stay the course in 
developing an enterprise-wide IT architecture that maps current and 
``to be'' states of business processes and the supporting information 
systems and data architecture. Additionally, we have emphasized 
completing system certification and accreditation processes to test the 
security of deployed IT assets.
    We have addressed this area through our previously mentioned annual 
evaluation of FDIC's Information Security Program. In addition, we have 
completed and ongoing assignments covering the IT capital planning and 
investment control process to assist the Corporation in this area. We 
also plan to routinely test the controls of selected major business 
systems supporting critical functions such as premium assessment, 
resolution and marketing, and human resource management.
    7. Security of Critical Infrastructure.--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.
    To assist the FDIC in this area, we reviewed the progress the 
Corporation has made in implementing its Information Security Strategic 
Plan. Also, we conducted a review of the adequacy of the FDIC's 
approach to assessing business continuity planning at FDIC-supervised 
institutions. In addition, our ongoing work includes coverage of 
physical security and business continuity planning for the FDIC.
    8. Management of Major Projects.--The FDIC has engaged in several 
multi-million dollar projects, such as the New Financial Environment, 
Central Data Repository, and Virginia Square Phase II Construction. 
Without effective project management, the FDIC runs the risk that 
corporate requirements and user needs may not be met in a timely, cost-
effective manner.
    The OIG has performed several reviews of these projects, and our 
results pointed to the need for improved defining, planning, 
scheduling, and control of resources and tasks to reach goals and 
milestones. The Corporation has included a project management 
initiative in its 2004 performance goals and established a program 
management office to address the risks and challenges that these kinds 
of projects pose. We will continue to focus on the major corporate 
initiatives discussed above.
    9. 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. Therefore, 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.
    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 requirements definition, the consideration of contractor 
security in acquisition planning, incorporation of information security 
requirements in FDIC contracts, oversight of contractor security 
practices, and compliance with billing guidelines. Our audits continue 
to assist the Corporation in this area.
    10. Assessment of Corporate Performance.--The Corporation has made 
significant progress in implementing the Government Performance and 
Results Act of 1993 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.
    The OIG has played an active role in the evaluation of the 
Corporation's efforts in this area and we have additional reviews 
planned that will look at the Corporation's budgeting and planning 
process and its strategic and annual planning process under the Results 
Act.

               THE OIG'S FISCAL YEAR 2005 BUDGET REQUEST

    The proposed fiscal year 2005 OIG budget includes funding in the 
amount of $29,965,000 or $160,000 less than fiscal year 2004. This 
budget will support an authorized staffing level of 160, a further 
reduction of 8 authorized staff (5 percent) from fiscal year 2004. The 
budget must also absorb higher projected expenses for salaries, 
employee benefits, and other costs that will increase due to inflation. 
This will become the ninth consecutive year OIG budgets have decreased 
after adjusting for inflation. The graph below shows the OIG's budget 
history since I became the Inspector General in 1996.



    The FDIC 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.
Budget by Strategic Goals and Major Spending Categories
    For fiscal year 2005, the OIG developed the budget based on the 
four strategic goals outlined in its Strategic Plan and discussed 
earlier in this statement. The four strategic goals, along with their 
associated budget dollars, are listed as follows:



    The following chart shows the distribution of the OIG's budget by 
major spending categories. Mostly, the OIG budget is comprised of 
salaries and benefits for its employees and the necessary funding for 
travel and training expenses.



    As I discussed earlier, the OIG has significantly downsized not 
only in the last few years, but also since 1996. The OIG has decreased 
its authorized level of 215 staff for fiscal 2002 to 160 for fiscal 
2005--about a 26-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 57 percent. Overall, FDIC staffing 
declined from 9,151 to 5,300 from 1996 to 2003. The graph below shows 
the authorized OIG 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 through the collaboration of the 
President, the Congress, this subcommittee, 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 by strengthening our own operations and efficiency. 
Our budget request for fiscal year 2005 is modest in view of the value 
we add. Like many governmental organizations, we are faced with 
succession planning challenges, which are of particular concern in a 
downsizing environment. We have begun to address this issue through a 
modest recruitment program; however, any further downsizing could have 
a serious impact on this effort. We seek your continued support so that 
we will be able to effectively and efficiently conduct our work on 
behalf of the Congress, FDIC Chairman, and the American public.
    Having just celebrated the 25th year since passage of the Inspector 
General Act and the 15th anniversary of the FDIC OIG, I take pride in 
my organization and the entire Federal Inspector General community and 
its collective achievements. Building on this legacy, we in the 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 provide a written statement on the American Battle 
Monuments Commission's fiscal year 2005 Appropriation Request. The 
special nature of the American Battle Monuments Commission (ABMC) 
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.

                               ABMC FOCUS

    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 24 permanent memorial cemeteries and 
25 monuments, memorials, and markers in the United States and 15 
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 94,135 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.

                             ABMC SERVICES

    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 receive from us letters authorizing fee-free 
passports for overseas travel to visit a loved one's grave or memorial 
site. During fiscal year 2003, over 8 million people visited our 
cemeteries and monuments worldwide; more than half of these visitors 
were American citizens. Photographs of individual headstones and 
sections of the Tablets of the Missing on which the service person's 
name is engraved are also available. We mount these photographs 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 Armed Forces 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 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.

                            ABMC CHALLENGES

    The most significant challenge facing ABMC for the next several 
years will be the relatively weak position of the U.S. dollar against 
the Euro. This challenge affects our ability to move forward in 
completing our core operating programs.
    From fiscal year 1998 through fiscal year 2001, the dollar was 
strong against foreign currencies with which we dealt. Due to this 
strength, we were able to transfer foreign currency gains to our 
Foreign Currency Fluctuation Account (FCFA) with the U.S. Treasury to 
accommodate future losses. However, since fiscal year 2002, we have 
been faced with significant losses with respect to the Euro, and have 
transferred most of our prior year gains from our FCFA to offset our 
operating accounts.
    At the time preparations of the fiscal year 2005 budget began, we 
anticipated that the dollar was gaining strength against the Euro. At 
the time we submitted our budget to the Office of Management and Budget 
(OMB), we did not believe we would require additional funding to offset 
foreign currency losses because we expected the dollar to strengthen. 
Among other indicators, the European Bank had given indications that it 
would lower interest rates which would have weakened the Euro against 
the dollar. That never happened and based on the current trend; we 
anticipate that our FCFA balance will be depleted by the end of fiscal 
year 2004. Unless we are able to replenish our FCFA, we will have to 
reduce our spending in core operating programs to accommodate foreign 
currency losses, thus slowing the rate that we modernize our 
infrastructure and pushing out our timeline for achieving productivity 
goals. It is most difficult to predict what the strength of the dollar 
versus the Euro will be as we execute fiscal year 2005. However, if the 
dollar ranges from where it is today to as much as 5 percent stronger, 
we can anticipate losses of between $6 and $8 million in fiscal year 
2005 that would have to be offset by realigning funding in all areas 
including the infrastructure modernization and productivity programs. 
Such actions could have a dramatic negative impact on our operations in 
fiscal year 2005.
    As an organization responsible for operating and maintaining 
permanent burial facilities for our country's Honored War Dead, we do 
not have the option of closing or consolidating cemeteries.

       ABMC'S CONTRIBUTIONS TO THE PRESIDENT'S MANAGEMENT AGENDA

    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, 2003, and 2004 we continued to replace outdated equipment, 
enhance our automation systems, and make improvements in our 
operations. In order to continue productivity program enhancements, we 
are requesting $1.0 million for fiscal year 2005.
    Managing our human capital demands that we place 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. We expect this project to be completed 
during fiscal year 2004.
    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, now and in the future.

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 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 an IMP in fiscal year 2001 to examine in detail the 
infrastructure of our facilities and bring them up to today's 
standards. Through this program 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. During fiscal year 
2004, we are dedicating $2 million to IMP, and are requesting $2 
million for fiscal year 2005 to continue these essential projects in 
addition to the $1.8 million needed to continue normal engineering and 
maintenance operations.

Improved Financial Performance
    Since 1998, the 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 
informed decisions. Our new accounting system moves us toward that 
goal. Looking to the future, we have included funding in our fiscal 
year 2005 budget to continue our transition 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 except 
Tunisian Dinars. 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, eliminating funds held outside the 
Treasury in foreign bank accounts, and implementing real-time 
automation to worldwide funds transfers.
    Our new integrated accounting system and our successes on 
international electronic funds payment and full financial audits are 
moving the ABMC toward new levels of financial excellence. We look 
forward to the challenges of fiscal year 2005.

Expanded E-Government
    Our efforts to expand e-government go beyond the use of electronic 
funds transfers overseas. They include how we deliver our services to 
our customers--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. Our Internet Web site 
allows visitors to gather information on our organization, cemeteries, 
memorials, and their locations. To aid in our internal operations, our 
European Region maintains our intranet web site which provides details 
on our ongoing operations. In addition, we made the WWII Registry 
developed in conjunction with the World War II Memorial project a web-
based system to make it accessible to a broader audience than those who 
visit the memorial itself. We eventually plan to convert the dated 
video system at the Korean War Veteran's Memorial with a similar web-
based database of Korean War Dead.
    We are also supporting the administration's efforts to reduce the 
number of payroll providers within the Federal Government. In December 
2003, we converted our internal, manual payroll operations for U.S. 
General Service personnel to a web-based system provided by the General 
Services Administration (GSA). We are currently in the process of 
converting the Foreign Service National (FSN) payroll operations with 
an expected completion date later this calendar year.

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.
    To further improve the link between budget and performance we are 
studying the implementation of a Cemetery Evaluation Review System. 
Once fully implemented we expect to use this to measure the impact of 
applied resources to our cemeteries in order to better focus our 
efforts.

                        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 and fiscal year 2004, 
Congress provided an additional $4.0 million and $9.0 million 
respectively to continue this project. We developed a contract proposal 
and have begun the initial pre-design phase. The President's Budget 
includes $9.1 million in our fiscal year 2005 request, as suggested by 
Congress in our fiscal year 2004 appropriation, to complete funding for 
this important project. Our objective is to achieve an appropriate and 
comprehensive design and begin construction during fiscal year 2005.

Vietnam Veterans Memorial 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. Sufficient private funding was received 
to begin installation of the plaque in March 2004. Work should be 
completed by summer 2004.

World War II Memorial
    For the past 11 years much of the Commission's attention has been 
focused on designing and constructing a World War II Memorial on the 
National Mall in Washington, DC. After 8 years of planning, 6 years of 
public debate, and 4 years of fund-raising, construction of the 
memorial began in September 2001. The memorial will be dedicated on May 
29, 2004.
    In completing this project we ensured that the memorial and its 
components were designed for the maximum service life and for effective 
maintainability. We also contracted for repair work on the adjacent 
Reflecting Pool as an added protection against, and prevention of water 
seepage into the memorial.
    The total estimated cost of the memorial project is $178.3 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 
completion in 2004. We have received $195 million in cash and pledges 
from all sources. Congress directed that any funds remaining after all 
project costs have been paid will remain in the World War II Memorial 
Trust Fund to be administered by ABMC. The funds may be used solely to 
benefit the World War II Memorial.

                           ABMC'S COMMITMENT

    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 2005 is $41,100,000.
                                 ______
                                 

                DEPARTMENT OF HEALTH AND HUMAN SERVICES

            Agency for Toxic Substances and Disease Registry

 Prepared Statement of Henry Falk, M.D., M.P.H., Director, Agency for 
     Toxic Substances and Disease Registry and National Center for 
   Environmental Health, Centers for Disease Control and Prevention, 
                Department of Health and Human Services

    Mr. Chairman, Senator Mikulski, other distinguished members of the 
subcommittee, thank you for the opportunity to provide this testimony 
on behalf of the Agency for Toxic Substances and Disease Registry 
(ATSDR).
    The President's budget for fiscal year 2005 includes $76,654,000 
for ATSDR. This funding will support the Agency's ongoing activities 
and provide additional support for two critical programs.
    This testimony will address: (1) ATSDR's achievements over the past 
year in carrying out its mission under Superfund to evaluate and 
prevent adverse health impacts from exposure to hazardous substances; 
(2) ATSDR's plans for fiscal year 2005, emphasizing programs to enhance 
understanding of the health impacts from exposures to asbestos-
contaminated vermiculite ore originating in Libby, Montana, distributed 
to more than 200 facilities across the United States; and (3) steps 
taken to maximize the ATSDR's public health impact and efficiency 
through a partial administrative and management consolidation with the 
National Center for Environmental Health of the Centers for Disease 
Control and Prevention (CDC).

                ATSDR'S ACHIEVEMENTS IN FISCAL YEAR 2003

    Last year was busy and productive for ATSDR. The services ATSDR 
provides to communities help to identify and address possible 
associations between exposures to hazardous substances in the 
environment and health problems. These services are available and 
accessible to the full spectrum of communities, from remote rural areas 
to heavily populated urban neighborhoods, that have been scarred by 
industrial hazardous waste sites, the legacy of mining, or contaminated 
drinking water.

Leveraging ATSDR's Resources Through Partnerships
    In 2003 ATSDR continued to leverage its resources through a strong 
emphasis on partnerships with a variety of entities including other 
Federal agencies, State, and local health departments, universities, 
and the industrial sector. Partnerships with State health departments 
enhance the Agency's ability to respond in a timely manner to the 
hundreds of community requests and releases of hazardous substances 
that threaten public health each year. Partnerships also serve as a 
mechanism for building Federal, State, tribal, and local public health 
capacity to respond to public health concerns related to environmental 
contamination.
    In fiscal year 2003, ATSDR provided over $10 million to fund 
cooperative agreements with 30 State health departments, one 
commonwealth, and one tribe. ATSDR worked closely with these partners 
to complete 120 public health assessments of potential health threats 
from environmental exposures, including over 50 public health 
assessments related to sites on the United States Environmental 
Protection Agency's (EPA) National Priorities List. ATSDR and its 
partners also issued more than 230 health consultations and numerous 
responses to requests for technical assistance from State or Federal 
agencies, members of Congress, and the public. In addition, ATSDR and 
partners worked on more than 50 health studies in various phases of 
development and implementation. Health studies are peer-reviewed public 
health research activities that serve the dual functions of providing 
important information to communities, and advancing scientific 
understanding of the relationship between exposures to hazardous 
substances and particular health outcomes. Each of these categories of 
activities draws on the unique mixture of expertise at ATSDR that 
bridges the health and environmental fields.
    In all aspects of its work, ATSDR pays particular attention to the 
unique needs of vulnerable subpopulations such as children, pregnant 
women, and economically disadvantaged people that may be exposed to 
contaminants from multiple sources. For example, ATSDR and EPA 
currently fund 11 Pediatric Environmental Health Specialty Units, 
located at academic medical centers throughout the United States. 
Through these units, pediatricians with expertise in environmental 
health are available to consult with physicians and families concerning 
children who may have been exposed to mercury, lead, pesticides, or 
other hazardous substances. The pediatric units also offer referrals, 
and training for health care professionals related to pediatric 
environmental medicine.
    ATSDR also has a longstanding cooperative agreement with the 
Minority Health Professions Foundation (MHPF) to conduct research to 
fill gaps in our knowledge about the effects of hazardous substances on 
human health. The program provides students at MHPF institutions the 
opportunity to conduct groundbreaking research in toxicology, 
epidemiology, and environmental assessment. For example, one recent 
study found that newborns may be at risk for effects from exposure to 
maternal blood lead levels of less than 10 micrograms per deciliter, 
CDC's level of health concern.

Terrorism Preparedness and Response
    Through more than 20 years experience in addressing public health 
aspects of responding to chemical releases at Superfund sites, ATSDR 
has developed considerable expertise in toxicology and other areas 
directly applicable to chemical terrorism preparedness and response.
    In recognition of its emergency preparedness and response 
capabilities, ATSDR often is looked to by other Federal agencies for 
assistance related to training, environmental sampling, medical 
toxicology and enhancing collaboration between the emergency response 
and the public health and medical communities. For example, in April of 
2004 the Chemical Safety and Hazard Investigation Board requested 
assistance from ATSDR in coordinating with the medical community in 
connection with a large release of allyl alcohol (used in the 
manufacture of polymers, pharmaceuticals, and pesticides) from a 
manufacturing plant in Dalton, Georgia, which resulted in the 
evacuation of several hundred citizens. In particular, the Board had 
concerns about inconsistencies in the number of people reporting to the 
local hospital for treatment. In response, ATSDR emergency response and 
other personnel traveled to the location of the chemical release, and 
were able to determine the number of people accessing medical care as a 
result of this event, and the severity of their health complaints. The 
preparedness and response capabilities that enabled ATSDR to contribute 
in responding to this chemical release are the same as would be needed 
in responding to a terrorism-related or other intentional chemical 
release.
    In addition, ATSDR regional staff, located in each of the 10 EPA 
regional offices, work with EPA staff and State partners on a daily 
basis to prepare for emergencies and to conduct response exercises. The 
capacity of ATSDR regional staff to assist in an emergency is enhanced 
through ATSDR's cooperative agreement with the American College of 
Medical Toxicology (ACMT), under which local medical toxicologists are 
available to consult with ATSDR on short notice in planning for and 
responding to chemical emergencies. In addition, in coordination with 
ATSDR, ACMT has provided several informative educational sessions on 
``Chemical Agents of Opportunity'' and on responding to chemical 
emergencies, for State and local partners, as well as ATSDR, CDC, EPA, 
the Department of Justice, other Federal agencies, and congressional 
staff.
    ATSDR also provides leadership and subject-matter expertise for CDC 
in response to weapons of mass destruction, chemical, radiological and 
bio-environmental contamination events. For example, an ATSDR medical 
toxicologist consulted with the State of South Carolina, U.S. Postal 
Service and EPA following the mailing of the toxin ricin last year. 
Teams are always on call for deployment in the event of a terrorist 
incident or other chemical emergency.

Building on ATSDR's Experience and Expertise at Superfund Sites
            Libby, Montana
    ATSDR has testified in past years regarding its extensive health 
screening program and related studies documenting the severe health 
impacts resulting from exposure to asbestos-contaminated vermiculite 
ore mined at the W.R. Grace mine in Libby, Montana. On August 26, 2003, 
the Federal District Court in Missoula, Montana ruled that the United 
States is entitled to recover the entire $11.3 million in costs 
incurred by ATSDR through December 31, 2001, as well as future costs 
incurred by ATSDR after that date, in responding to asbestos 
contamination and evaluating and addressing the public health impacts 
of exposure to asbestos from this mine.
    ATSDR is continuing activities related to Libby, including: (1) 
funding the State of Montana to conduct screening and surveillance of 
the at-risk population of the Libby community; (2) the Libby Tremolite 
Asbestos Registry; (3) health education for communities and health care 
providers about vermiculite and asbestos exposure; (4) grants to 
university-based researchers to study disease progression in former 
vermiculite workers so that timely interventions can be developed; and 
(5) a pilot mesothelioma surveillance program in New York, New Jersey, 
and Wisconsin.
    As discussed later in this testimony, ATSDR's work in Libby laid 
the foundation for ATSDR's fiscal year 2005 proposal related to 
evaluating the health threats to former workers and to their family 
members at facilities across the country that processed asbestos-
contaminated ore from Libby.

            Reducing Childhood Lead Exposure
    The adverse impacts of lead exposure on the developing child are 
well established. ATDSR, in conjunction with State and local public 
health officials, is working to reduce childhood exposure to lead at a 
number of Superfund sites. For example, last year ATSDR expanded the 
scope of its longstanding involvement at the Tar Creek Superfund site 
in Ottawa County, Oklahoma. ATSDR continues to provide support to the 
Oklahoma State Department of Health and the Ottawa County Health 
Department for blood lead screening in children and community education 
on measures to prevent exposure to lead. In addition, ATSDR is 
reviewing available environmental data to determine significant 
pathways of exposure to lead, and assessing the relationship of blood 
lead data to potential environmental lead sources such as residential 
soil and waste piles of mine tailings.
    In Herculaneum, Missouri, ATSDR and the Missouri Department of 
Health Services are providing public health education and conducting 
other activities to address a public health threat posed by 
contamination from a lead smelter. Initial blood-lead screenings 
revealed high levels of lead in the blood of young children. However, 
data from follow-up testing of those children in 2002, analyzed by 
ATSDR in 2003, revealed dramatic declines in the percentage of children 
with blood lead levels equal to or above 10 micrograms per deciliter, 
the CDC recommended level of action. For example, in 2001, 28 percent 
of children younger than 6 years of age who were tested had blood lead 
levels equal to or above 10 micrograms per deciliter. By 2002, that 
percentage had been cut in half, to 14 percent. Moreover, in 2001, 45 
percent of children younger than 6 years of age and living closest to 
the lead smelter had blood lead levels at or above the 10 micrograms 
per deciliter level of action. By 2002, the percentage had been reduced 
to 17 percent.
    In May of 2003, ATSDR and the Missouri Department of Health and 
Senior Services collaborated in convening a workgroup to consider 
options for future health studies in Herculaneum, Missouri. The 
workgroup recommended a two-phase approach, first to reevaluate 
existing environmental and blood lead data, and second to study the 
health effects of lead in the community. Protocol development and study 
details are expected to be complete by the end of fiscal year 2004, 
with data collection slated to begin in the first quarter of fiscal 
year 2005.
    ATSDR also contributed to reducing childhood lead levels in 
children near the Bunker Hill Superfund site in Kellogg, Idaho, where 
blood lead levels were among the highest of children tested near any 
Superfund site. Beginning in 1986, ATSDR funded a lead-intervention 
program of health education, health care provider training and blood 
lead screening, carried out by the local health department. Long-term 
monitoring shows that the blood lead levels in children 6 years of age 
or younger living near the Bunker Hill site decreased to levels found 
in the United States general population. The Panhandle Health District 
reported to ATSDR that its 2003 screenings of children continue to 
reveal blood lead levels within the program goals.

            Studying Health Impacts of Exposure to Volatile Organic 
                    Compounds (VOCs)
    ATSDR is undertaking activities at several Superfund sites to more 
fully explain the relationship between exposures to VOCs in drinking 
water, and adverse health outcomes.
    For example, in North Carolina ATSDR is engaged in an extensive 
study of certain birth defects and childhood leukemia among families 
who lived on the base at Camp Lejeune. The study is focused on 
potential in utero exposures of children born to women who lived at the 
base while pregnant between 1968 and 1985. The study was initiated 
because during this time period trichloroethylene (TCE, a degreaser) 
and tetrachloroethylene (PCE, a dry-cleaning solvent) were found in the 
drinking water supply for some of the family base housing. Earlier 
studies involving Superfund sites in Woburn, Massachusetts and Dover 
Township, New Jersey, suggested an elevated risk of childhood leukemia 
in children with prenatal exposure to VOCs.
    The first phase of the study at Camp Lejeune included a survey to 
identify children with specific birth defects and childhood cancers. 
During the first phase, 12,598 surveys were completed. The birth 
defects and cancers reported in those surveys are being verified, with 
permission from the families, through searches of medical records.
    In July 2003, ATSDR issued an interim report on Camp Lejeune 
recommending that a case-control study be conducted to examine the 
relationship between exposure to the contaminated drinking water in 
women who lived on the base while pregnant, and selected birth defects 
and childhood cancers in their children. ATSDR developed the study 
protocol and is acquiring data necessary for historic reconstruction of 
the base drinking water system through computer modeling. This modeling 
will enable ATSDR to identify which base housing units received the 
contaminated water and is necessary for determining whether there is an 
association between the contaminants in drinking water and certain 
birth defects and childhood cancers.
    ATSDR's experience with evaluating exposure to VOCs in Dover 
Township, New Jersey, and more recently at Camp Lejeune, has 
contributed to efforts over the past year in the Village of Endicott, 
in Broome County, New York. ATSDR is assisting the New York State 
Department of Health (NYS DOH) in an effort to address health concerns 
of residents related to potential exposure to VOCs emanating from a 
groundwater plume at the IBM site in Endicott. As first steps, the NYS 
DOH is evaluating the incidence of certain conditions in newborns whose 
parents lived in the study area at the time of the infants' births, and 
estimating the incidence of all types of cancer, including childhood 
cancer, for the areas in Endicott potentially impacted by VOC vapors in 
indoor air.

            Studying Health Impacts of Exposure to Polychlorinated 
                    Biphenyls (PCBs) and Dioxins
    ATSDR funds research by State universities and health departments 
under the Great Lakes Human Health Effects Research Program (GLHHERP). 
GLHHERP grantees conduct epidemiologic research and educational 
programs to inform residents about exposure to persistent toxic 
substances, including polychlorinated biphenyls (PCBs). This program 
has helped inform residents about fish-consumption practices to avoid 
unsafe exposures, especially for children, the elderly, and women of 
childbearing age. ATSDR also is supporting the development and 
implementation of a 3-year pilot program in the Upper Peninsula of 
Michigan, to educate vulnerable populations about fish advisories and 
to assess the effectiveness of advisories. Under this pilot program, a 
State university and intertribal council in Michigan will take measures 
to increase awareness about exposures to toxic substances from eating 
contaminated fish, and to evaluate observance of fish consumption 
advisories among American Indian communities, anglers and their 
families, and others who rely on Great Lakes fish as a subsistence 
food.
    Building on its foundation from research regarding exposure to PCBs 
in the Great Lakes, ATSDR is supporting research on health impacts of 
PCB exposure at a Superfund site in Anniston, Alabama. On the basis of 
blood data reviewed by ATSDR, Anniston residents have some of the 
highest levels of exposure to PCBs found in a non-occupational setting 
in the United States. In 2003, ATSDR awarded $1.5 million to 
Jacksonville State University to conduct, with a consortium of 
researchers and community members, a multiyear study of the potential 
health effects of PCB exposure among residents of Anniston. Study 
protocols and initial data collection are scheduled to be completed 
during fiscal year 2004, with data analysis beginning in fiscal year 
2005.

            Health Registries
    One of ATSDR's responsibilities under Superfund is to establish and 
maintain registries of diseases and of people exposed to toxic 
substances. In recent years ATSDR has seen an increase in recognition 
of the important function served by registries and a rise in the demand 
for its expertise in developing and managing registries. ATSDR embarked 
on three new and significant registries in the past year: (1) the 
Tremolite Asbestos Registry; (2) the World Trade Center Health 
Registry; and (3) the Rapid Response Registry.
    In 2003, ATSDR initiated the Tremolite Asbestos Registry, a 
registry of people exposed to tremolite asbestos from Libby, Montana. 
The registry is expected to enroll 10,000 to 15,000 people, including 
former Libby vermiculite mining and mill workers, family members and 
others who shared a residence with a vermiculite worker, and community 
members who meet eligibility criteria. The Tremolite Asbestos Registry 
will provide a means to locate and provide information to participants 
to ensure that they and their health care providers receive the latest 
medical recommendations and research findings pertaining to asbestos-
related diseases. The registry will also be an invaluable resource for 
future research related to the health impacts of asbestos exposure.
    In September of 2003, the New York City Department of Health and 
Mental Hygiene (NYC DOHMH), in partnership with ATSDR, began data 
collection for the World Trade Center Health Registry. Data collection 
for the Registry will continue for 1 year. The purpose of the Registry 
is to provide a central database for research to assess injuries and 
other physical and mental health effects among people exposed to the 
World Trade Center disaster. Information obtained will provide a more 
complete picture of health effects among a broad spectrum of the 
impacted population, including residents, office workers, school 
children, and emergency responders. Approximately 79,810 potential 
registrants have been identified through employee lists and telephone 
and website registrations. As of April 20, 2004, interviews of 31,921 
people had been completed.
    ATSDR developed the Rapid Response Registry to provide the capacity 
to timely identify and obtain information in a timely fashion from 
persons potentially exposed to environmental chemicals in an emergency 
event. Having obtained prior approval of the registry and associated 
questionnaires, and by training staff in its rapid use and deployment, 
we will be able to significantly reduce the time needed to collect 
potentially time-sensitive information in an emergency. Teams, in 
collaboration with State and local government agencies and private 
response organizations, will identify and enroll exposed and 
potentially exposed individuals within hours of an incident, to help 
document their presence at or near an emergency event. This 
information, maintained in a central registry, will provide health 
officials with essential information necessary for both short-term and 
long-term follow-up with exposed or injured individuals, or their 
survivors. Contact information will enable officials to provide 
information to affected individuals about possible exposures, potential 
health impacts, updates, and available educational information, and 
will allow for follow-up contacts by health officials to assess current 
and future medical needs.

                 PRIORITY PROJECTS FOR FISCAL YEAR 2005

    The President's fiscal year 2005 budget request includes an 
increase of approximately $3 million to support two critical 
initiatives.

Evaluating and Tracking the Health Consequences of Exposure to Asbestos
    Results of ATSDR's medical screening program and studies of 
residents in Libby, Montana highlight the seriousness of the health 
threat from exposure to the asbestos-contaminated vermiculite ore mined 
in Libby. ATSDR's medical screening program in Libby revealed that 
nearly 18 percent of the approximately 7,300 people evaluated have 
abnormalities of the lining of the lung consistent with exposure to 
asbestos. Among workers and household contacts evaluated, the 
prevalence of these abnormalities was 51 percent and 26 percent, 
respectively. ATSDR's review of 20 years of death certificates showed 
that mortality in the Libby area due to asbestosis was 40 to 80 times 
higher than expected, and lung cancer mortality was 20 percent to 30 
percent higher than expected. Mortality due to mesothelioma was also 
elevated.
    The vermiculite ore mined in Libby, Montana was shipped to more 
than 200 sites around the United States for processing. ATSDR and its 
State partners are conducting detailed exposure pathway evaluations and 
health statistics reviews at 28 of the highest priority sites. These 28 
priority sites were selected either because EPA determined further 
action was necessary to address current contamination, or because a 
site processed 100,000 tons or more of vermiculite from the Libby mine. 
The findings from these priority sites will be used to inform future 
decisions related to evaluation of the remainder of the more than 200 
sites.
    To date, ATSDR and State partners have completed evaluations for 7 
of the 28 priority sites, including sites in Beltsville, Maryland, 
Denver, Colorado, Santa Ana, California, West Chicago, Illinois, and 
Minot, North Dakota. Each of the 7 completed health consultations 
concludes that former workers were exposed to significantly elevated 
levels of asbestos from vermiculite exfoliation (``popping'') 
operations: historical data indicate airborne fiber levels within these 
facilities at concentrations as high as 700 times the Occupational 
Safety and Health Administration's current permissible exposure limit 
for asbestos. ATSDR expects health consultations for the remainder of 
the 28 sites to be completed this year.
    Each of the 7 health consultations includes a recommendation to 
identify and locate former workers and their household contacts for the 
purpose of evaluating potential health effects and providing health 
education. Many workers and household contacts may be unaware of their 
exposure, and many have moved away from the location where the 
processing occurred. Knowledge of past exposure may be beneficial for 
implementation of proactive public health interventions, such as 
smoking cessation, which are known to be effective to some extent in 
limiting adverse health impacts of asbestos exposure.

            Fiscal Year 2005 Initiative
    Of the approximately $3 million increase for ATSDR in the 
President's budget request, $2.5 million is requested for pilot medical 
screening related to a subset of the 28 priority sites. ATSDR will 
identify and locate former workers and their household contacts at each 
pilot site. Eligible workers and household contacts will be offered 
baseline medical screening (such as pulmonary function testing and 
chest X-rays) to evaluate the presence of asbestos-related pleural 
abnormalities. In addition, ATSDR will expand the Tremolite Asbestos 
Registry to enroll eligible persons from sites outside of Libby, 
Montana, and will offer health education on managing risks associated 
with asbestos exposure. Further evaluation and follow-up of former 
workers from other priority sites may be conducted in the future, if 
indicated, on the basis of pilot site results.

Supporting the World Trade Center Health Registry
    Another ATSDR priority for fiscal year 2005 is to continue support 
of the World Trade Center Health Registry. The Registry is at this 
point the second largest of its kind in United States history, behind 
the Three-Mile Island Registry. Ultimately, data from the health 
registry on the health of registrants exposed to smoke, fumes, and 
other hazardous substances released by the World Trade Center collapse, 
will enable researchers to observe exposure and health patterns that 
may not be apparent to individual physicians. The Registry will enable 
the NYC DOHMH to contact members of the exposed population with 
educational and other information.
    With the additional funds, ATSDR and the NYC DOHMH can continue the 
core functions of the Registry, including maintaining a Registry office 
in New York City; retaining trained staff to maintain the database, 
conducting follow up interviews and community outreach activities; 
performing basic data analyses; developing quarterly reports; 
responding to public inquiries; and disseminating findings and health 
alerts as necessary.
    ATSDR will use $500,000 of the approximately $3 million increase in 
the President's fiscal year 2005 budget, along with $1 million of base 
funds, for a total spending level of $1.5 million to cover the entire 
expected cost of this project for fiscal year 2005. This will continue 
the maintenance work of the World Trade Center Health Registry, 
supported in fiscal year 2004 by $500,000 from ATSDR and a commitment 
of $1.5 million under a Memorandum of Understanding with EPA.

     MAXIMIZING ATSDR'S IMPACT AND EFFICIENCY THROUGH CONSOLIDATION

    In January of 2003, Dr. Julie L. Gerberding, Director of the CDC 
and Administrator of ATSDR, issued a Statement of Intent committing to 
the administrative and management consolidation of ATSDR and the CDC's 
National Center for Environmental Health (NCEH) to achieve a 
coordinated structure and common leadership. The consolidation is based 
on major concepts in the December 2000 Report Shared Vision for 
Environmental Public Health at CDC and ATSDR. The purpose of the 
consolidation is to enhance the environmental public health programs 
and activities at CDC and ATSDR, by building on the complementary 
expertise of NCEH and ATSDR.
    ATSDR continues to be a separate Agency and implements its 
authorities under Section 104 of CERCLA through its existing Divisions, 
which have not been changed by the consolidation. The ATSDR Office of 
the Assistant Administrator and the NCEH Office of the Director were 
merged to join like functions while maintaining the existing 
organizational construct of the Divisions and Program Offices within 
each respective organization.
    I am pleased to report that the Department of Health and Human 
Services approved our proposed organizational structure, and 
implementation of the consolidation is going very well. Key positions 
in the consolidated Office of the Director have been filled. Personnel 
who performed similar administrative duties in the separate 
organizations are now working together in consolidated offices.
    ATSDR's funding continues to be maintained separately from NCEH and 
tracked in accordance with appropriations, budget, and accounting 
requirements. ATSDR has hired an outside accounting expert to provide 
recommendation on how best to allocate the costs of the joint Office of 
the Director.
    We have also created a joint terrorism preparedness and response 
coordinating office to oversee terrorism and emergency activities 
across NCEH and ATSDR. This has led to improvements in our preparedness 
and ability to respond to events promptly. For example, NCEH and ATSDR 
physicians and other staff members receive joint training on emergency 
health care methods and techniques. Joint training is underway on the 
care and treatment of people exposed in radiation emergencies. Our 
response to the recent ricin incident in the Senate Office Building 
benefited from a team that included ATSDR regional and headquarters 
staff, as well as NCEH medical toxicologists.
    ATSDR has also made a number of structural changes, including 
creation of a new division, the Division of Regional Operations, which 
previously operated within the Office of the Director. This change will 
result in additional support of front-line staff and more efficient and 
effective services for State and local health departments.
    We expect that the administrative and management consolidation of 
ATSDR and NCEH will enhance environmental health programs and services 
in this country. Through improved coordination and increased 
efficiencies, the consolidation will allow us to redirect resources to 
front-line public health service.
    Thank you for the opportunity to provide this testimony.
                                 ______
                                 

                 NEIGHBORHOOD REINVESTMENT CORPORATION

       Prepared Statement of Kenneth D. Wade, 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 228 community development organizations 
serving nearly 2,500 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.
    In January, Neighborhood Reinvestment Corporation's Board of 
Directors appointed Kenneth D. Wade as its fourth executive director. 
While he is new to the position of Executive Director of Neighborhood 
Reinvestment, Ken Wade has been actively engaged in the senior 
management of the Corporation for over 13 years. Most recently, he held 
the position of Director of National Initiatives, Programs and 
Research, and previously the position of New England District Director. 
Under the leadership of our former executive director, Ellen Lazar, Ken 
was closely involved in developing the Corporation's strategic plan 
that will continue to guide the work of Neighborhood Reinvestment. 
Thanks to his career experiences with youth programs and neighborhood 
revitalization in Boston's communities, Ken understands the unique 
challenges facing America's communities. Also, having served at the 
neighborhood level, he has a personal understanding and appreciation of 
the support provided by Neighborhood Reinvestment Corporation, with its 
commitment to providing timely and flexible assistance to its national 
network of locally-controlled NeighborWorks organizations.
    The Neighborhood Reinvestment Corporation was created by Congress 
in 1978. Since then, Neighborhood Reinvestment and its affiliated 
NeighborWorks network have worked to expand housing opportunities for 
low- and moderate-income Americans, to revitalize distressed 
communities, and create a network of excellence in the community 
development field. In fiscal year 2003, the NeighborWorks system 
leveraged its $104 million appropriation to generate nearly $2 billion 
of direct investment in communities. These funds helped more than 
83,000 families obtain and maintain safe and affordable rental and 
homeownership units and provided over 75,000 families with high-quality 
pre- or post-purchase homebuyer educational services. This could not 
have been accomplished without this subcommittee's support. For fiscal 
year 2004, Neighborhood Reinvestment Corporation received an 
appropriation of over $114 million, and Neighborhood Reinvestment looks 
forward to reporting our outcomes to you next year.

                  OVERVIEW OF THE NEIGHBORWORKS SYSTEM

    Over its 25-year history, the NeighborWorks System has proven to be 
an increasingly effective and efficient vehicle for leveraging 
significant private-sector resources in support of community 
revitalization and affordable-housing efforts. Comprised of 
Neighborhood Reinvestment Corporation, local nonprofit organizations in 
our NeighborWorks network, and the specialized secondary market 
Neighborhood Housing Services of America, the NeighborWorks System 
relies on public-private partnerships and uses modest Federal funds to 
leverage significant private investment. Innovations that are generated 
in response to locally identified needs are a hallmark of the 
NeighborWorks System.

Neighborhood Reinvestment Corporation
    Neighborhood Reinvestment Corporation's partnerships with local 
housing and community development organizations support residents, 
businesses, and local governments in their efforts to revitalize their 
communities and provide affordable housing opportunities for low- and 
moderate-income families. Neighborhood Reinvestment engages in four 
core activities:
  --Build and Sustain a Network of Excellence.--The Corporation 
        provides competitive grant funding, training, technical 
        assistance and access to specialized secondary market services 
        to NeighborWorks organizations. These organizations are closely 
        monitored and thoroughly reviewed to maximize both the 
        efficiency and effectiveness of the system and steward Federal 
        dollars.
  --Foster Innovation.--The Corporation nurtures new ideas from within 
        the NeighborWorks network and the affordable housing and 
        community development field. By strategically allocating 
        resources, the Corporation has developed innovative programs 
        such as the NeighborWorks Campaign for Homeownership and the 
        Multifamily and Rural Initiatives.
  --Build Skills and Performance in the Housing and Community 
        Development Field.--The Corporation operates national 
        NeighborWorks Training Institutes in major cities throughout 
        the United States open to anyone involved in affordable housing 
        and community revitalization, particularly private- and public-
        sector practitioners and community leaders.
  --Leverage Strategic Partners and Resources.--Founded on a three-
        component partnership model of government, private corporations 
        and residents, Neighborhood Reinvestment accomplishes its 
        mission by using its Federal appropriation to leverage private 
        investment and involvement.
    These activities individually and collectively build the 
productivity and strength of the NeighborWorks network and the broader 
community development field.

NeighborWorks Network
    NeighborWorks organizations are located in our Nation's largest 
cities, as well as suburban neighborhoods, small towns and rural areas. 
Regardless of their target communities, each of the 228 NeighborWorks 
organization operates under the direction of a local board of directors 
comprised of local residents, lenders and other business leaders, and 
representatives from local government. This three-pronged, public-
private partnership approach to community development is crucial to the 
NeighborWorks system's successes. To achieve their locally-identified 
goals, members of the NeighborWorks network utilize the laboratory 
environment that Congress intended to achieve creative strategies, 
collaborate on best practices, and develop flexible financing 
mechanisms.
    Each NeighborWorks organization is responsible for setting its own 
strategies, raising its own funds, and delivering its own services. 
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 home rehabilitation or repair, small-
business loans, and loans for the acquisition and development of 
residential and commercial real estate. The NeighborWorks network is 
the leading national community development nonprofit network with 
extensive expertise in designing, originating, and servicing small non-
conventional loans to lower-income families. However, clients often 
require more than a loan. NeighborWorks organizations also provide 
extensive training, counseling and personalized assistance. This 
concentrated effort pays dividends by creating comprehensive 
opportunities for families to build assets, which on a large scale also 
help to revitalize distressed communities.

Neighborhood Housing Services of America
    Neighborhood Housing Services of America (NHSA) works in 
partnership with Neighborhood Reinvestment Corporation to meet the 
special secondary market needs of NeighborWorks organizations and their 
clients. NHSA is governed by an independent board of directors, 
composed of representatives from these private sector investors, 
NeighborWorks organizations, and local civil servants. 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 loans from NeighborWorks organizations, 
thereby allowing organizations to originate loans with flexible rates 
and terms based on the borrowers' needs. NHSA's loan purchases provide 
an ongoing stream of capital into NeighborWorks organizations' 
revolving loan funds, allowing them to meet additional needs within 
their communities.
    NHSA leverages Neighborhood Reinvestment's financial support by 
securing private-sector capital from a pool of socially-responsible 
national institutional investors, including insurance companies, 
financial institutions, foundations and pension funds. Proceeds from 
these investments are used to purchase NeighborWorks loans.

                 SELECTED OUTCOMES FOR FISCAL YEAR 2003

    Thanks to your continued support, Neighborhood Reinvestment's 25th 
anniversary year produced new levels of achievement. Congress provided 
Neighborhood Reinvestment Corporation with an appropriation of $104.3 
million. The NeighborWorks network leveraged these resources to:
  --Generate nearly $2 billion of direct investment in targeted 
        communities;
  --Leverage $18 in direct investments in communities for each dollar 
        Congress appropriated to Neighborhood Reinvestment;
  --Provided affordable housing opportunities to more than 83,000 
        families; and
  --Provided pre- and post-purchase homebuyer education and counseling 
        services to over 75,000 families.

                PROJECTED OUTCOMES FOR FISCAL YEAR 2005

    For fiscal year 2005, the Corporation requests an appropriation of 
$115 million. At this funding level, Neighborhood Reinvestment will be 
able to maintain its current level of services to the NeighborWorks 
network, including continued support of increasing homeownership, with 
a particular focus on increased and improved housing counseling 
efforts.
    A $115 million appropriation will allow the NeighborWorks system 
to:
  --Leverage nearly $2.3 billion in direct total investment in 
        distressed rural, suburban and urban communities;
  --Use each dollar Congress appropriates to leverage nearly $20 from 
        other sources;
  --Assist more than 83,000 families obtain and maintain safe and 
        affordable rental and homeownership housing;
  --Provide pre- and post-purchase homeownership counseling and 
        financial literacy training to nearly 86,000 families; and
  --Own and/or manage 41,000 units of affordable rental housing.
    To support these accomplishments, the Neighborhood Reinvestment 
Corporation and NHSA will:
  --Conduct 240 organizational assessments of member organizations;
  --Provided almost 11,000 individuals with training, amounting to more 
        than 210,000 contact hours;
  --Disburse 71 percent of Neighborhood Reinvestment's congressional 
        funding in the form of grants; and
  --Purchase $66 million in loans from NeighborWorks organizations.

                    PRIORITIES FOR FISCAL YEAR 2005

    In developing the Corporation's fiscal year 2005 budget, 
Neighborhood Reinvestment sought to continue its work from prior years, 
while defining more aggressive expectations for the NeighborWorks 
system. Neighborhood Reinvestment has always worked to be good stewards 
of the funds that Congress has entrusted to us, and the Corporation 
continues to diligently work to maximize our efficiency and 
effectiveness. In order to meet these expectations, Neighborhood 
Reinvestment and the NeighborWorks system will continue to:
  --Build and sustain a network of excellence;
  --Foster innovation;
  --Build skills and performance in the housing and community 
        development field; and
  --Leverage strategic partners and resources.

Build and Sustain a Network of Excellence
    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 and families remains relevant and critical. 
Neighborhood Reinvestment and the NeighborWorks network continue to 
operate in underserved communities that are home to a variety of 
citizens who lack access to decent, affordable housing, financial 
products, services, and the kind of investments that sustain 
communities.
    NeighborWorks organizations function as partnerships of local 
residents, lenders and other business leaders, and local government 
representatives. They produce creative strategies, share innovative 
best practices, and develop flexible financing mechanisms. When these 
organizations are supported and work together, they create a nimble 
network of high performing nonprofits, where the whole is greater than 
the sum of its parts. In order to facilitate, encourage and promote 
this network of excellence, the Neighborhood Reinvestment Corporation 
provides guidance, assistance and oversight of the NeighborWorks 
network in the following ways.

            Financial Support
    Equity capital grants are a critically important financing vehicle 
that Neighborhood Reinvestment provides on a competitive basis to 
NeighborWorks organizations for capital and revolving loan funds that 
support real estate development and lending. NeighborWorks 
organizations use these grants to provide the equity and gap financing 
necessary to originate loans for home purchases, property 
rehabilitation and small businesses, and provide equity and financing 
for real estate development. Eligible activities also include capital 
costs associated with the acquisition and development of residential 
and commercial real estate for long-term ownership by a NeighborWorks 
organization.
    Neighborhood Reinvestment also provides expendable grants to 
NeighborWorks organizations to strengthen and increase their ability to 
develop and administer responsive products and services. These 
competitive grants are awarded for activities that address the full 
range of organizational, administrative and financial management and 
development issues faced by nonprofit housing and community development 
organizations. 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 
and its initiatives.

            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. These professionals provide 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. 
The guiding principles observed by Neighborhood Reinvestment include a 
mandate to design and deliver our services in a manner that 
consistently builds the capability of network organizations to fulfill 
their vitally important missions and increases their capacity to 
sustain their efforts over time. Our goal is to increase self-reliance 
and programmatic expansion among network members.

            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.
    Organizational assessment enhances the performance and productivity 
of NeighborWorks organizations, while assisting in building the 
capacity of our affiliates to function in a highly effective manner. 
Assessments also offer the opportunity to evaluate the use of 
Congressionally appropriated funds from Neighborhood Reinvestment, and 
evaluate the capacity of affiliate organizations to meet NeighborWorks 
network membership standards and performance objectives.
    Through a system of continuous monitoring, each NeighborWorks 
organization is subject to an annual organizational 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, and appropriate action is taken.

            Expansions, Organizational Mergers and New Affiliates
    In today's community development industry, employing an effective 
and efficient growth strategy does 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, responsive service delivery, 
and expanded coverage. Mergers of local housing and community 
development organizations 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 with 
goals, values, programs and accomplishments compatible with the focus 
and priorities of the NeighborWorks network. In a given year, 
Neighborhood Reinvestment extends an invitation to join the 
NeighborWorks network to up to 10 organizations.
    Through the affiliation process, Neighborhood Reinvestment enables 
an organization to increase its productivity and realize a greater 
return on the investment of time and money. Chartering a new 
NeighborWorks organization requires extensive educational and 
partnership-building efforts, usually over a period of about 12 to 18 
months.

Foster Innovation

            Providing Affordable Rental Opportunities
    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 and/or manage 
more than 44,000 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 appropriated 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 121 
units affordable to families with extremely low-incomes. In fiscal 
years 2003 and 2004, Congress appropriated an additional $10 million 
set-aside for multi-family housing. These investments will enable 
NeighborWorks organizations to expand these precious affordable rental 
opportunities to new communities, thus enhancing the impact of 
federally-appropriated funds. The rental housing has been, and will 
continue to be, developed in diverse 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.

            Championing Homeownership for Lower-Income Americans
    For years, the NeighborWorks system has led the nonprofit 
homeownership industry, bringing homeownership opportunities to all 
Americans. Research confirms what common sense suggests: responsible 
homeownership is good for families, neighborhoods, the economy and the 
Nation. Homeownership is the largest source of wealth for the majority 
of American families, and therefore, their key toward improving their 
lives and the opportunities for their children. Lack of access to 
homeownership adversely affects minority citizens, female-headed 
households and immigrant families.
    From its inception in 1993, the NeighborWorks Campaign for Home 
Ownership has brought lower-income families into the economic 
mainstream by helping them achieve one of their primary life goals: 
owning a home. Neighborhood Reinvestment achieved this by partnering 
with lenders, insurance companies, secondary markets, government, and 
the real estate community.
    Over the last 10 years, the NeighborWorks Campaign for Home 
Ownership has created more than 71,000 new homeowners and provided 
counseling to over 413,000 individuals. As a result, $6.6 billion is 
invested in America's communities, serving to help families build 
wealth and to revitalize neighborhoods.
    The Campaign for Home Ownership has established high standards for 
service delivery, training, and technical assistance, and encouraged 
local NeighborWorks leaders to engage in peer-mentoring. Key to the 
Campaign's success, NeighborWorks organizations establish clear, 
aggressive goals, while maintaining high quality standards. Innovative 
tools, such as Full Cycle LendingSM, NeighborWorks 
HomeOwnership CentersSM, Financial Fitness, and Housing 
Choice Voucher-Section 8 homeownership, have also been developed.
    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 an active 
partner in the development of the White House's initiative on 
increasing minority homeownership. The Corporation has held a national 
symposium, conducted targeted case studies with leading housing 
researchers, and set national goals for serving minority first-time 
homebuyers. Since the President announced the goal, the NeighborWorks 
network has helped 10,000 minority families achieve the American dream 
of home ownership.
    Building on a strong record of success, the Campaign for Home 
Ownership has set the following goals from 2003-2007:
  --Create 50,000 new homeowners, including 30,000 minority homebuyers.
  --Assist 50,000 families to preserve homeownership and improve their 
        homes through home maintenance and repairs, delinquency 
        counseling and foreclosure prevention, and mortgage 
        refinancing.
  --Establish 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, and homeowner counseling.
            Financial Fitness
    More recently, Neighborhood Reinvestment and members of the 
NeighborWorks network have developed a new financial education program 
called Financial FitnessSM. Neighborhood Reinvestment has 
developed a partnership with the Federal Deposit Insurance Corporation 
for use of the FDIC's ``Money Smart'' financial literacy program to 
teach money management skills. The Corporation has developed standards, 
training materials, and developed 420 trainers through the 
NeighborWorks Training Institute. Since 2001, more than 8,100 consumers 
have graduated from the program, 58 percent of whom are minorities and 
67 percent are women. This program intends to give participants an 
increased understanding of basic finances and healthy financial 
relationships that benefit both the individual and the community.
    While 91 percent of participants are current renters hoping to 
bolster their credit and savings in preparation to purchase a home in 
the future, Financial Fitness has also proven a successful strategy to 
preserve homeownership for existing owners facing income instability or 
high debt. Since 2002, the Campaign for Home Ownership has enhanced its 
emphasis on not just promoting, but also sustaining homeownership. In 
addition to Financial Fitness, the NeighborWorks Campaign for 
HomeOwnership is working with the Fannie Mae Foundation to develop new 
post-purchase standards and best practices. This effort will help 
NeighborWorks organizations better provide home maintenance services, 
delinquency and foreclosure prevention counseling, and mortgage 
refinance loans. This expanded effort serves the interests of not only 
the homeowner, but also the community as a whole.

            Housing Choice Voucher 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 towards this effort is the Section 8 homeownership 
option. Strong technical and financial support from the Neighborhood 
Reinvestment Corporation has enabled NeighborWorks organizations to 
serve a critical role 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 who partner with Public Housing Authorities 
(PHAs).
    In recognition of the early success of this effort, the 
Corporation's fiscal years 2001, 2002 and 2003 appropriation included a 
total of $20 million set-aside to develop capacity and effective 
partnerships in support of the U.S. Department of Housing and Urban 
Development's Section 8 homeownership option. Most of the set-aside 
funds were used to capitalize NeighborWorks organizations' revolving 
loan funds serving as a source for second mortgages, with a smaller 
portion of the set-asides 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 appropriated set-asides 
also supported a performance-monitoring component with assistance from 
a third-party consulting and research firm. Additionally, Neighborhood 
Reinvestment's local, regional and national training efforts on the 
Housing Choice Voucher Homeownership Program have served an important 
role in influencing the Public Housing Authorities across America to 
develop and implement homeownership programs.
    As of September 2003, the set-asides helped fund more than 60 
NeighborWorks organizations develop partnerships with 73 PHAs, which 
provided 2,204 families with pre-purchase homebuyer education, and 
resulted in over 378 new homeowners. The income of these families was 
between 60 and 80 percent of their area's median income. These 
entrepreneurial partnerships are built upon the NeighborWorks network's 
solid homeownership experience in pre- and post-purchase counseling, 
innovative mortgage financing and in leveraging public resources and 
private investment. The results of this program offer evidence of that 
this powerful local public-private partnership can assist those 
Americans who are often locked out of homeownership.

            Supporting Rural Development
    In 1990, three NeighborWorks affiliates identified their primary 
service areas as rural communities. By the end of fiscal year 2003, 
that number had grown to 73 organizations, which is approximately one-
third 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.
    In fiscal year 2003, NeighborWorks organizations serving rural 
areas assisted more than 5,000 families in buying or rehabilitating 
their homes, and leveraged more than $500 million in direct investment. 
The network has also enhanced its ability to address the unique needs 
in rural communities by creating a capital fund for rural development. 
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 $2.5 million, 45 loans have been closed since 1994, totaling 
more than $4.4 million. These loans have supported the production of 
432 units of affordable housing and 22 units of commercial space and 
community facilities, and leveraged more than $35.8 million in total 
project financing.

Build Skills and Performance in the Housing and Community Development 
        Field
    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 
NeighborWorks Training Institute offers more than 150 courses and 
reaches more than 5,000 people a year from more than 4,000 communities 
across America. Participants at the Training Institutes come from all 
50 States, Puerto Rico and the District of Columbia.
    The NeighborWorks Training Institutes are typically scheduled four 
to five times each year at various locations around the country. 
Courses are offered in eight tracks: homeownership and community 
lending, affordable housing, community building, community economic 
development, construction and production management, management and 
leadership, and neighborhood revitalization and rural development. The 
Institutes also host symposia on cutting-edge topics involving 
nationally recognized experts, special-issue workshops, and peer-to-
peer networking opportunities. Approximately half of the attendees of 
the Institutes come from organizations external to the NeighborWorks 
network. This is one of the many ways that the support Congress 
provides Neighborhood Reinvestment Corporation reaches not only the 
2,500 NeighborWorks-assisted communities, but also the broader 
community development field.
    Neighborhood Reinvestment has recognized that experienced housing 
and community development practitioners have few options for continuing 
education and skill development. Neighborhood Reinvestment's own 
Training Institutes, like others in the field, focus primarily on 
meeting the critical needs of less seasoned professionals.
    Beginning in 2002, Neighborhood Reinvestment introduced a unique 
program for Executive Directors of community development organizations 
practitioners, in partnership with Harvard University. The Advanced 
Practitioner Program 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.

Leverage Strategic Partners and Resources
            Partnerships
    Neighborhood Reinvestment Corporation embodies the principle of 
cross-sector partnership in all major projects and programs. 
Nationally, the Corporation is engaged in partnership with many major 
financial institutions such as Bank of America and Citibank, both 
government-sponsored enterprises, and large retailers such as Sears. 
The benefits of these partnerships accrue to local NeighborWorks 
organizations, receiving financial assistance, in-kind support, and 
business opportunities.

            Financial Resource Leverage
    In fiscal year 2005, the NeighborWorks System will use the $115 
million appropriation to leverage more than $2.3 billion in other 
sources. The Federal appropriation provides unique flexibility to be 
the ``first in'' on large-scale development projects, which then 
stimulates private sector interest to support the majority of 
development costs. The strong partnership base of the NeighborWorks 
system has built a solid national reputation for quality and stability. 
In 2005, Neighborhood Reinvestment will nurture and grow these 
partnerships locally and nationally, in order to meet the aggressive 
goal of leveraging almost $20 for each $1 of Federal appropriation.

            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. Money for the revolving 
loan funds 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 2003, more than $113 million from local 
NeighborWorks organization's revolving loan funds was 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. Sixty-eight percent of 
loans made through NeighborWorks revolving loan funds are made to very 
low- or low-income households, 51 percent to minority-headed 
households, and 46 percent to female-headed households. The liquidity 
of many local revolving loan funds is supported by selling loans to 
NHSA.
Conclusion
    Neighborhood Reinvestment Corporation thanks the committee for the 
opportunity to brief you on our work, and the outcomes that were 
generated as a result of Neighborhood Reinvestment's congressional 
appropriation. The NeighborWorks System and Neighborhood Reinvestment's 
congressional appropriation represents a precious asset for 228 
community development organizations and more than 2,500 communities 
across America. With our leveraging of dollars, NeighborWorks has been 
efficient and effective in ensuring the maximum impact of our Federal 
appropriation. Congress has allowed Neighborhood Reinvestment to be 
flexible and responsive to local needs; as a result, families and 
communities are stronger and more self-reliant.
    Neighborhood Reinvestment Corporation is committed to continuing to 
build healthy, strong and safe communities all across America. Your 
continued support is vital to us in accomplishing this goal.
                                 ______
                                 

               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 2005 budget request of $17,623,000 for 
the United States Court of Appeals for Veterans Claims.
    The Court's fiscal year 2005 budget request includes $1,100,000 
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 fiscal year 2004 appropriation to the Court in Public Law No. 
108-199 was $15,938,000, of which $1,175,000 was the amount requested 
by the Representation Program. Our fiscal year 2005 budget request 
reflects an increase over the budget authority for Court operations for 
fiscal year 2004. Three factors account for the increase. The first 
reflects a budgeted pay adjustment for all Court personnel consistent 
with that generally anticipated for all Washington, DC, area government 
employees and also taking into consideration the differential between 
the amount budgeted in this category for fiscal year 2004 and the 
actual pay adjustment mandated during fiscal year 2004. The second 
factor is the statutory authorization for a temporary increase in the 
number of judges. The third is a request for funding for feasibility 
studies preparatory to the design and construction of a Veterans 
Courthouse and Justice Center (Veterans Courthouse). I will discuss 
each of these matters further.
    The first significant increase in the Court's budget request for 
fiscal year 2005 is in personnel compensation and benefits. The 
increase in pay and benefits ($590,000 over the Court's fiscal year 
2004 appropriation) is caused by three major factors: (1) The budgeted 
pay increase in fiscal year 2004 was 2.2 percent while the actual 
increase used as a base is 4.1 percent (pursuant to the Omnibus 
Appropriations Act, Public Law No. 108-199), an increase of almost 90 
percent--1.9 percentage points--over the fiscal year 2004 
appropriation; (2) the budgeted fiscal year 2005 pay adjustment of 1.5 
percent for all personnel (based on OMB recommendations); and (3) the 
amount, based on valuation by an outside actuary, that must be 
contributed to the Court's retirement system (JRS). As in the past, the 
budgeted fiscal year 2005 pay-adjustment assumption for all nonjudicial 
Court personnel is in conformance with OMB assumptions, with no 
differentiation between the Economic Cost Indicator and locality pay, 
including necessary funding for benefits. We have used the 1.5-percent 
pay adjustment requested in the President's budget. If the Congress 
decides, as it did for fiscal year 2004, that the civilian pay 
adjustment should be the same as that for the uniformed services, the 
additional cost to the Court would be $162,000. The Court's 
contribution to the JRS assumes, based on prior practice, that all 
judges will participate and that once participation is effectuated it 
will include opting into the survivor annuity program. The fund is 
invested solely in government securities.
    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 (because one or both of the last two of the original 
judges to retire will not be replaced). We have attempted to budget as 
prudently as possible for this temporary judicial increase. As with our 
fiscal year 2004 budget request and appropriation, we have included, as 
part of the fiscal year 2005 budget request, funding for two additional 
chambers for use during fiscal year 2005 (personnel and benefits, 
office buildout, furnishings, equipment, and supplies).
    The Court requests funding for 98 full-time equivalent (FTE) 
positions. As with our fiscal year 2004 budget request and 
appropriation, the increase in staffing over the fiscal year 2003 level 
results solely from the new judgeships. 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 (of appeals and petitions) over the past 
12 years is summarized in the following table, which also appears on 
page 4 of the Court's fiscal year 2005 Budget Request:

----------------------------------------------------------------------------------------------------------------
                                                                                                   New Cases as
                                                                     BVA Total     New Cases to   Percent of BVA
                                                                      Denials         USCAVC          Denials
----------------------------------------------------------------------------------------------------------------
Fiscal year 1992................................................          10,946           1,742            15.9
Fiscal year 1993................................................           9,734           1,265            13.0
Fiscal year 1994................................................           6,194           1,142            18.4
Fiscal year 1995................................................           6,407           1,279            20.0
Fiscal year 1996................................................          10,444           1,620            15.0
Fiscal year 1997................................................          15,865           2,229            14.0
Fiscal year 1998................................................          15,360           2,371            15.4
Fiscal year 1999................................................          14,881           2,397            16.1
Fiscal year 2000................................................          14,080           2,442            17.3
Fiscal year 2001................................................           8,514           2,296            27.0
Fiscal year 2002................................................           8,606           2,150            25.0
Fiscal year 2003................................................          10,228           2,532            24.7
----------------------------------------------------------------------------------------------------------------

    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. Over the last 3 fiscal years, the number of new 
cases as a percentage of BVA denials has risen substantially over the 
level in fiscal year 2000 and earlier years.
    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 2003, the 
Court acted on 1,559 applications, up from 1,104 applications in fiscal 
year 2002 (a 41 percent increase), more than double the 776 
applications in fiscal year 2000 (the first year for which EAJA-
application figures are available). 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 amount of the Court's fiscal year 2005 budget 
request. The budget for all other objects reflects a net increase of 
$1,170,000. Of this increase, $915,000 would be used for feasibility 
studies preparatory to design and construction of a Veterans 
Courthouse. The Court has requested the Department of Defense (DOD) to 
consider using for this purpose a site on presently available Pentagon 
Reservation land (either the Hayes, Eads, or Fern Street parking lot, 
located south of Interstate 395, just north of Army Navy Drive). It is 
my understanding that the DOD has initiated a feasibility study to 
determine the ``highest and best possible use'' of these three sites in 
Arlington, Virginia. On March 11, 2004, the Chairman and ranking 
minority member of the House Committee on Veterans' Affairs introduced 
a bill (H.R. 3936) to require DOD to report on the feasibility of 
locating a new courthouse for the Court on or proximate to the Pentagon 
reservation; this would include, of course, the feasibility of the 
Court's participation in any DOD development project involving these 
parking-lot sites. That committee held a hearing on this bill on April 
29, 2004, at which I presented testimony in support of this bill.
    In addition to the Court, occupants of the Courthouse would be 
members of those constituencies that regularly practice before the 
Court--VA General Counsel Group VII, the Representation Program, and 
the appellate litigation staff of the Disabled American Veterans (DAV), 
the Paralyzed Veterans of America (PVA), and the National Veterans 
Legal Services Program (NVLSP). The Court has been working with the 
General Services Administration (GSA) and exploring various courthouse 
alternatives; the GSA has preliminarily estimated that the Veterans 
Courthouse would require 121,000 gross square feet or 112,000 rentable 
square feet of interior space. (It is not anticipated that, if 
additional veterans organizations were to occupy space, there would be 
any significant impact on square-footage requirements.) The GSA could 
work with the DOD to coordinate predesign and preconstruction studies 
to determine the feasibility of use of one of the sites for the 
Veterans Courthouse and would provide input during design and 
construction based on guidelines for Federal courthouses and act as the 
Federal leasing agent once construction was completed. The Court and 
its constituencies that have expressed an intent to relocate to the 
Veterans Courthouse pay (or expressed a willingness to pay, based upon 
present rental costs) over $3.7 million per year for rent. The GSA 
anticipates that, at least for the Court and VA, rental costs at our 
present location will increase substantially in the not-too-distant 
future. Arlington County government officials have indicated that they 
support the location of the Veterans Courthouse on one of these sites 
and have offered to assist in this project.
    As H.R. 3936 recites, the Courthouse ``would express the gratitude 
and respect of the Nation for the sacrifices of those serving and those 
who have served in the Armed Forces, and their families.'' Given these 
past, present, and future sacrifices, I cannot imagine a higher or 
better use for one of these present parking-lot sites than a stand-
alone, dedicated Veterans Courthouse and Justice Center, which would 
express our Nation's strong commitment to ensuring justice for every 
veteran who--in Abraham Lincoln's words--``shall have borne the battle 
and for his widow and his orphan.'' The Pentagon Reservation site would 
be the ideal setting, given its proximity to the Pentagon, Arlington 
Cemetery, and the soon-to-be-constructed Air Force Memorial and would 
be a timely and tangible means of demonstrating to the Nation's 
veterans and their families how much their sacrifices are valued.
    The request for funding also anticipates essentially uncontrollable 
increased costs for rent and for other services. These services include 
cross-servicing for payroll and finance and accounting support and for 
GSA property and disposal services; also included are increases in the 
cost of the contract with the U.S. Marshals Service for court security 
officers and in the Court's share of the cost of paying for guards in 
the building and garage pursuant to a GSA contract with the Federal 
Protective Service. In addition, a $15,000 increase for travel reflects 
an increase in the cost of travel, the temporary addition of judges, 
plans to conduct oral arguments at law schools and thereby promote 
education in veterans' law (as discussed further in the next 
paragraph), and training and possible relocation costs associated with 
the new judicial appointments. Finally, there is a net decrease of 
$10,000 realized in the supplies and materials and equipment 
categories.
    Last year, in my statement in support of the Court's budget request 
for fiscal year 2004, I updated you on two continuing 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. During the past 2 years, the Court held oral 
argument at five area law schools (Catholic University, Georgetown 
University, the University of Baltimore, American University, and 
Howard University), and one of the schools (Catholic University) 
offered an evening course in veterans benefits law during the Fall 2002 
semester (the course is scheduled to be repeated in Fall 2004). The 
voluntary bar association continues to operate successfully, drawing 
its dues-paying members (currently over 240) 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 membership from among the Court's practitioners, 
including members outside the Washington, DC, geographic area, to 
support the Court's initiative to promote education in veterans 
benefits law. These practitioners are working with law professors and 
law schools throughout the country in exploring various means to expose 
future attorneys to this practice area.
    In conclusion, I appreciate this opportunity to submit this 
testimony on the Court's budget request for fiscal year 2005. 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.
                                 ______
                                 

                   CONSUMER PRODUCT SAFETY COMMISSION

              Prepared Statement of Hal Stratton, Chairman

    Thank you for this opportunity to present to the subcommittee the 
appropriation request for the Consumer Product Safety Commission (CPSC) 
for fiscal year 2005. The Consumer Product Safety Commission is an 
independent agency charged with protecting the public from unreasonable 
risks of serious injury or death from more than 15,000 types of 
consumer products under the agency's jurisdiction. Deaths, injuries and 
property damage from consumer product incidents cost the Nation more 
than $700 billion annually.
    Since its inception, the Consumer Product Safety Commission has 
delivered critical safety benefits to America's families and has made a 
significant contribution to the 30 percent decline in the rate of 
deaths and injuries related to hazardous consumer products. We are 
proud of our mission, and we appreciate the subcommittee's strong 
support of the Commission and its goals over the years.
    The CPSC budget request for fiscal year 2005 is $62,650,000. This 
year's requested level of funding is an increase of $3 million over our 
fiscal year 2004 budget and is almost exclusively to be used for 
mandated staff salary and benefit increases and General Services 
Administration office space rent increases.
    Mandated Federal pay increases are the largest part of this request 
at $1.8 million. This figure is based on the estimated 1.5 percent 
increase proposed by the President for 2005. Additional mandated salary 
costs also include staff within-grade increases, staff retirement 
benefit increases, and staff health insurance benefits increases. Taken 
together, these increases total over $2.3 million.
    Additionally, the General Services Administration's proposed annual 
increase for space occupied by CPSC in our headquarters, laboratory and 
field locations is $339,000. We are not increasing our space; in fact, 
in the past 5 years, CPSC avoided space rent increases of over $1 
million annually because our field telecommuting initiative allowed us 
to reduce space requirements.
    Finally, we are requesting $80,000 for operation of a new fire data 
system. Reduction of fire deaths and injuries is a major effort by the 
agency and accurate data on consumer product involvement is critical. 
This initiative builds on a successful pilot conducted in 2002 designed 
in response to a General Accounting Office criticism of the statistical 
deficiencies of the National Fire Incident Reporting System (NFIRS) 
operated by the U.S. Fire Administration and used by CPSC for our fire 
death and injury estimates.
    I would also like to call to your attention the planned 
modernization of CPSC's aging laboratory facility. While we are not 
seeking funding in our current budget request for this project, I want 
to take this opportunity to update the subcommittee on our progress. 
GSA studies have shown that simply maintaining the existing structures 
is not cost effective. We have been working with GSA since 1999 to 
develop a modernization plan for the former military installation built 
in the 1950's that serves as our laboratory facility. An architectural 
firm under contract to GSA is now developing the full costs for 
implementing the master plan approved last year by the local planning 
commission. As these cost estimates become available, we will keep you 
further advised.
    A number of Senators have expressed interest in our largest hazard 
reduction activity, and that is reducing fire injuries and deaths. 
Under our previous Strategic Plans, we had a target to reduce the rate 
of fire deaths by 10 percent from 1995 to 2005. I am pleased to report 
that from 1995 to 1998, the fire death rate was reduced by nearly 15 
percent. Because of this success, we decided to retain this as a 
strategic goal with a new target of an additional 20 percent reduction 
from 1998 to 2013. Past standard-setting and compliance activities have 
contributed to the general decline in fires and fire deaths and show 
that the agency is effective in reducing fire hazards. For this reason, 
we are accelerating our efforts.
    I would also like to update the subcommittee on our efforts with 
regard to enhancing our ability to measure the number of clothing-
related burn injuries, including sleepwear related injuries, to 
children. In July of last year, CPSC launched the Burn Center Reporting 
System. This system is capturing information on clothing-related burn 
injuries to children directly from burn centers throughout the country. 
All burn centers that treat children have been asked to report to CPSC.
    The system went into operation on July 1, 2003. As of this date, 
participating centers have reported over 100 cases. CPSC staff are 
investigating every one of these cases to determine the hazard 
mechanisms and the role of the clothing in the incident. This 
additional reporting tool supplements data collected by CPSC's other 
systems and enhances our ability to measure the number of clothing 
related burn injuries to children. For the record, I would like to 
thank publicly the American Burn Association and the Shriners Hospitals 
for Children for their substantial support in making this effort a 
success. We will be submitting a full written report to the 
subcommittee later this year.
    CPSC has added a new strategic safety goal this year, and that is 
to reduce the rate of pool and in-home drowning of children under 5 
years of age. Annually, an average of 248 children younger than 5 
drowned in swimming pools. In addition, an average of 167 children of 
that age group drown each year from other hazards in and around the 
house including such common household products as large buckets. It is 
the second leading cause of death in the home for children under the 
age of 5.
    CPSC is currently developing an action plan to foster greater 
consumer awareness and learn more about the circumstances and trends 
relating to childhood drownings. In addition, the staff is developing 
new guidelines that will be helpful to communities, code developers, 
and industry in further addressing this drowning hazard in pools and 
spas. We will be launching a safety campaign and public education 
initiative this summer, as well as looking at potential new standards 
and engaging in rigorous compliance enforcement to reduce the number of 
childhood drownings.
    Our proposed budget seeks to build on recent accomplishments and 
allow the flexibility to initiate new efforts when hazards emerge. Last 
year, CPSC completed 280 cooperative recalls involving about 40 million 
product units. In 2003 we completed four civil penalty cases that 
resulted in almost $2 million in fines. In addition, we secured five 
criminal convictions for violations of the Federal Hazardous Substances 
Act.
    CPSC sampled and tested shipments containing over 32 million 
fireworks in 2003. We prevented over 1 million illegal firework devices 
from entering the United States in 2003. In addition, CPSC in 
conjunction with the Department of Justice and the Bureau of Alcohol, 
Tobacco and Firearms and Explosives seized tens of thousands of illegal 
devices. In addition, other port surveillance activities prevented 
nearly 400,000 lighters that failed to have child-resistance safety 
devices from entry.
    In 2003 our public information initiatives were supported by 232 
press releases, our consumer hotline, radio and TV interviews, almost 2 
million distributed publications, e-mail alerts and our National Injury 
Information Clearinghouse. In just the first 4 months of 2004, our 
award winning website, www.cpsc.gov has seen more than 12.6 million 
hits. Each of these visits to our website has the potential to save a 
life.
    Also in 2003 CPSC was pleased to join forces with Amazon.com and 
eBay to call their customers attention to products offered for sale on 
their auction sites that might have been recalled and to direct them to 
CPSC's web site for recall information. Another innovative outreach 
program is our national campaign, in partnership with the National 
Association of Resale and Thrift Shops, Goodwill Industries 
International and the National Safekids organization, to alert the 
public to the sale by thrift stores and other resale stores of 
hazardous products that have been recalled or banned or do not meet 
current safety standards. Our goal is to eliminate thousands of 
hazardous and recalled products from the secondary market. Our video 
news release for this new initiative on thrift and retail stores 
reached over 24 million viewers.
    The creation of Recalls.gov is another significant CPSC safety 
effort. This is a partnership that CPSC initiated with six other 
Federal agencies to develop a one-stop-shop for all Federal product 
recalls. This new website is an easy to use portal for your 
constituents to access and find out all recall actions on one single 
website.
    We will continue to work hard at the Consumer Product Safety 
Commission to reduce the deaths, injuries and property loss associated 
with hazardous products. They cost the Nation hundreds of billions of 
dollars every year. Our budget request will help us to reduce these 
costs and the tragic injuries and loss of life they represent. Thank 
you.
                                 ______
                                 

                    GENERAL SERVICES ADMINISTRATION

                   Federal Citizen Information Center

              Prepared Statement of Teresa Nasif, Director

    Mr. Chairman and members of the subcommittee, thank you for the 
opportunity to present the fiscal year 2005 budget request for the 
Federal Citizen Information Center (FCIC).
    For millions of people, FCIC embodies the best of government--
practical, down-to-earth, and dedicated to meeting their needs. In 
dramatically increasing numbers, citizens are visiting FirstGov.gov, 
the official portal of the U.S. government, for instant, free access to 
a great variety of government information and services--from Federal, 
State, and local agencies. They are also e-mailing or calling FCIC's 
toll-free National Contact Center with questions about how to check 
social security benefits, find specialized tax forms, learn about the 
latest product recalls, or apply for a student loan. And, as they have 
for more than 30 years, they continue to send for publications from the 
distribution center in Pueblo, Colorado. As technology provides new 
ways for citizens to access information and interact with their 
government, FCIC has responded by developing simple, user-friendly 
services that millions of citizens rely on each year.
    In fiscal year 2003, citizens placed 1.76 million calls, requested 
5.92 million print publications, received 990,000 e-letter subscription 
mailings, made 60,000 e-mail inquiries, and completed 202 million web 
page views, for a program total of 210.73 million contacts, as compared 
to a fiscal year 2002 total of 123.57 million contacts. A significant 
reason for the large increase from fiscal year 2002 to fiscal year 2003 
is that FirstGov.gov, the official portal to the U.S. Government, 
became part of FCIC on June 30, 2002, and fiscal year 2003 shows the 
first full year impact of having FirstGov.gov page views included in 
FCIC public contacts.
    The Federal Citizen Information Center program mission and goals 
are also interwoven with the administration's E-Gov initiative, USA 
Services. The aims of USA Services are to present a single government 
face to citizens who need timely and consistent responses about 
government programs, and in so doing, enable the Federal Government to 
become more citizen-centric. An important component of USA Services is 
its ``front door,'' a well publicized, easy-to-access point of contact 
for all citizens.
    In fiscal year 2004, FCIC entered its first full year of operations 
as the infrastructure provider for USA Services, the ``front-door'' to 
the government. As such, FCIC operates the service delivery channels by 
which citizen questions are answered via the web, phone, e-mail, or 
print publications.
    In a move that will save Federal dollars as well as streamline 
citizen access to government services, FCIC will also receive and 
respond to telephone calls, and e-mails that are misdirected within the 
Federal Government. As of March 2004, USA Services has 20 Federal 
partners who have formally agreed to forward misdirected citizen 
inquiries to the National Contact Center (NCC), and who are working 
with USA Services to streamline citizen access to Federal information. 
FCIC uses its well-established agency liaison program to offer these 
services to Federal agencies, as well as to offer to set up a system 
for handling basic, frequently asked questions that can be answered 
directly by FCIC without a referral to another agency. Just as agencies 
save money and time by participating in FCIC's publication distribution 
program, they can also benefit by taking advantage of FCIC's telephone 
and e-mail answering services.
    FCIC uses a variety of methods to measure the quality of its 
service to citizens. Among these are the volume of contacts; the 
results of the American Customer Satisfaction Index (ACSI) survey; 
direct feedback from users via e-mail, telephone, and usability 
testing; the amount and nature of press coverage and awards received. 
In fiscal year 2003, FirstGov.gov received the coveted Innovations in 
American Government Award from Harvard University and the Ford 
Foundation. FirstGov.gov's January 2004 ACSI scores averaged 74.5. This 
puts it within reach of top-ranked Google at an ACSI average of 80. It 
far exceeds the current average for all of the government websites 
using the ACSI, which is 69.
    The pueblo.gsa.gov website, the Pueblo, Colorado publications 
center, and the National Contact Center also continue to receive highly 
favorable recognition and press coverage throughout the United States. 
Citizens have given FCIC high marks on the accessibility and usefulness 
of information, as FCIC scored a 79 on the 2003 American Customer 
Satisfaction Index for citizens who ordered print publications. The 
toll-free National Contact Center received the 2003 Government Customer 
Support Excellence Award for Overall Customer Support Excellence. Also, 
FCIC received free advertising space and airtime worth $9.6 million 
during fiscal year 2003.
    Taken all together, these performance measures provide a clear 
picture of how FCIC is using new technology and innovation, combined 
with proven practical programs, to provide the highest quality service 
and the best value to increasing numbers of American citizens.
    In fiscal year 2004, FCIC will award a new contact center contract 
to provide an expanded range of services in support of its ongoing 
mission, the mission of USA Services, and the missions of other Federal 
agencies. During fiscal year 2005, FCIC will conduct pilot studies of 
web chat and co-browsing to assess the public's demand for these 
services and determine the best ways of offering them in the future. As 
NCC capabilities expand, the amount of information it provides to the 
public will grow, both through normal day-to-day operations and through 
services provided to a variety of customer agencies and E-Government 
initiatives.
    The requested appropriation for fiscal year 2005 totals $14.907 
million, an increase of $990,000 from fiscal year 2004. This amount 
covers 6 additional FTE that will enable FCIC to enhance web content 
and security and to provide account services to customer agencies.
    In fiscal year 2005, FCIC will be responding not only to the ever-
changing needs of citizens, but will also be assisting other government 
agencies in meeting those needs. In keeping with the goals of the E-Gov 
initiative USA Services, FCIC will provide an expanded array of 
services to a growing number of Federal agencies. From publication 
development and distribution, to educational media promotion, to Web 
site posting, to handling of toll-free telephone calls, to responding 
to citizen e-mail inquiries, FCIC will enable Federal agency clients to 
deliver their information and services to citizens through programs 
that have been proven to be responsive, efficient and cost effective. 
The end result of all FCIC activities in fiscal year 2005 will be a 
higher standard of government service that builds public confidence and 
trust in all citizens.
    Mr. Chairman, again I thank you for the privilege of presenting the 
Federal Citizen Information Center's budget request for fiscal year 
2005. I hope the committee will agree that FCIC is a valuable program 
and that it will look favorably upon our request.
                                 ______
                                 

          U.S. CHEMICAL SAFETY AND HAZARD INVESTIGATION BOARD

Prepared Statement of Carolyn W. Merritt, Chairman and Chief Executive 
                                Officer

    Senator Bond, Senator Mikulski, and distinguished members of the 
committee, in the last 12 months, the U.S. Chemical Safety Board has 
continued to advance its life-saving mission of preventing serious 
accidents at facilities that produce and use chemicals. We thank the 
committee for having provided the Board with increased resources for 
the current fiscal year. Our current budget of $8.2 million with a 
$447,000 emergency fund allows the Board to take on an unprecedented 
number of significant accident investigations and studies.
    The Committee's growing investments in this agency are paying off. 
Earlier this year, we achieved probably the most noteworthy success in 
our 6\1/2\-year history. On September 30 of last year, the Board voted 
to recommend that New York City modernize the control of hazardous 
materials under its existing 86-year-old municipal fire code. The 
recommendation followed an 18-month Board investigation of a chemical 
accident in downtown Manhattan, where at least 36 people were injured 
when hazardous chemicals--improperly mixed in the basement of a 
commercial building--exploded and caused the building to partially 
collapse. The Board's investigation showed how weaknesses in the 
antiquated fire code were handicapping New York City fire inspectors, 
preventing effective oversight and enforcement of good hazardous 
material safety practices in the city.
    The Board's September meeting in New York City received extensive 
public attention, and within weeks legislation was introduced in the 
city council to begin the process of modernizing the fire code. The 
Board testified twice before the city council in support of our 
recommendations, and in March 2004 the city announced that it will be 
hiring a new staff to spend the next couple of years overhauling the 
entire city fire code. This process is expected to lead to city's 
adopting an accepted model code, like the International Fire Code, as 
other cities have done. At the end of this process, 8 million New 
Yorkers will be considerably safer.
    What is happening right now in New York City is a striking proof of 
the value of independent, non-regulatory, root-cause investigations of 
accidents. While society has a strong impulse to find fault and punish 
wrongdoing when accidents like this occur, our own small agency is 
dedicated to discovering the true root causes of these events and 
promoting real safety in the future.
    The Board's budget is modest in comparison with the cost of even a 
single large chemical accident. As you know, we are now engaged in two 
of the most complex and difficult investigations the CSB has ever 
undertaken. These are the investigations of last year's catastrophic 
dust explosions at West Pharmaceutical Services in Kinston, North 
Carolina, and CTA Acoustics in Corbin, Kentucky. These accidents took 
13 lives and injured scores of workers. Two large industrial plants 
were idled, disrupting hundreds of jobs and undermining the fragile 
economies of two small towns. The overall cost from these two accidents 
alone will run to hundreds of millions of dollars.
    The Board's independent investigations and recommendations help 
prevent costly disasters like those in North Carolina, Kentucky, and 
New York City. We seek additional funds for the Board's work in fiscal 
year 2005 to further advance this mission. One of our main strategic 
challenges over the next several years is to gain greater awareness and 
acceptance of the safety improvements we have recommended, based on our 
accident investigations. Many of our specific safety recommendations 
are directed to individual companies that have experienced major 
accidents.
    It is vitally important, however, that we transmit our lessons and 
recommendations to other audiences beyond the specific recommendation 
recipients. To make progress nationally, we need thousands of other 
companies to learn about the causes of accidents, study our findings, 
and make changes in their operations--before more accidents occur. 
Promoting those actions will fulfill an important part of our mission. 
That is why we have requested additional funding of $450,000 for fiscal 
year 2005--to disseminate our safety information in ways that lead to 
new prevention initiatives. These funds will allow us to hire three new 
staff and establish a working program.
    I offer several examples where the Board's safety findings--put 
into the right hands--can help prevent future accidents and save lives. 
First, there may be hundreds of other plants around the country today 
that have hidden hazards from combustible dust--chemical dust that can 
explode as it recently did in North Carolina and Kentucky. Many 
engineers and managers remain unaware of this danger. Getting them the 
right information promptly is critically important. Despite the 
notoriety surrounding the major dust explosions early in 2003, dust 
explosions continue to occur with great frequency. We receive reports 
of smaller dust fires and explosions on virtually a weekly basis. On 
October 29, 2003, 8 months after the explosion in Kentucky, the Board 
began investigating yet another fatal dust explosion, this time at an 
automotive parts factory near Fort Wayne, Indiana. Two men were burned 
severely; one of them later died. Clearly more needs to be done.
    There are many other examples where the Board has potentially life-
saving information that needs wider understanding, especially among 
small businesses that have limited resources and limited expertise in 
process safety, engineering, and risk assessment. In March 2004 we held 
a public meeting in Louisville, Kentucky, to approve our final report 
on a fatal explosion at a food additive plant there. People in the 
community were distressed to learn that straightforward, inexpensive 
safety equipment could have prevented the blast. As one plant neighbor 
lamented, ``For the want of a safety valve, a man was killed.'' It 
sounds simple enough: providing a pressure relief system for any vessel 
exposed to dangerous internal pressure. Yet in 7 of the 19 major 
accidents the Board has investigated since 1998, inadequate pressure 
relief was either a primary cause or a contributing factor. Once again, 
more needs to be done to get the word out.
    As a former industrial manager, let me tell you that nothing 
motivates you to act--to make any investments, arrange any training, 
install any safety equipment--like the knowledge of what terrible 
disaster may happen if you fail to act. That is where the CSB, with its 
almost 7 years of experience investigating the worst accident sites in 
the country, has unique credibility and value.
    Investigations will continue to be the mainstay of our work, and 
you can see from the number of investigations begun and completed since 
2002 that I have put the main emphasis in that area, consistent with 
the direction from this committee. Our request seeks additional funding 
to continue to bolster the Board's investigative work. First, we ask 
your support to hire a new accident investigator with expertise in the 
area of human factors. As many of you know who follow aviation safety, 
the interface between fallible human beings and complex technological 
equipment is the source of many accidents. Adding a new specialist 
investigator will allow the CSB to investigate the ``human factors'' 
that contribute to deadly chemical accidents in complex manufacturing 
plants.
    Next, we also request funds to hire a new technical writer-editor. 
The CSB's main products are lengthy written reports. To date, all these 
reports have been funneled through a single technical writer, creating 
a bottleneck to report production. Additional funds will support hiring 
a second individual to accelerate report production and maintain report 
quality. We also plan to further expand work to put our reports and 
findings into plain language, useful to workers, members of the public, 
and other non-technical users.
    Over the past year, we have begun by publishing two-page plain-
language Investigation Digests of our investigative reports. Seven 
digests have already been published and we are now planning to issue 
digests of each of our investigation reports, in both English and 
Spanish. These digests are receiving extremely positive feedback from 
trade associations, labor leaders, educators, and safety trainers. 
Recently, the PACE International Union requested 12,000 copies of one 
of our digests for training workers on how to maintain safety during 
process changes. I believe that we have just begun to tap the demand 
for this kind of plain-language product.
    In keeping with our primary focus on investigations, I am also 
seeking an increase of $400,000 to our new investigative emergency 
fund. As the committee recognizes, major accident investigations--like 
our investigation in North Carolina where an entire plant was leveled--
have significant and unforeseeable costs. Physical evidence and the 
recollections of eyewitnesses are short-lived, and when a major 
accident occurs the Board cannot realistically await a supplemental 
appropriation from Congress before beginning its work.
    In this year's budget, the committee has created a $447,000 
emergency fund of ``no-year money''--available until it is expended. 
The use of the money is restricted to extraordinary investigative 
expenses, and we have not as yet tapped any of the funds. In seeking an 
increase to this fund, we recognize that extraordinary expenses for 
testing and contractual support of a major investigation can easily run 
over the $447,000 ceiling currently in place. For example, 
extraordinary expenses from our North Carolina and Kentucky dust 
explosion cases last year exceeded $450,000. Therefore we are 
requesting an additional $400,000 in no-year money for fiscal year 
2005, to bring the total emergency fund to $847,000. The Board is 
confident that this sum will be sufficient to initiate investigations 
of any major disasters that may occur.
    Additional increases, detailed in our agency's Budget 
Justification, will fund an expected January 2005 civilian pay increase 
and modestly increased contract costs associated with the Board's 
investigations, public affairs, and information technology programs. 
Increased costs for the latter items are a direct result of the Board's 
increased investigative workload.
    The past year has been one of significant achievement by the 
Chemical Safety Board. I believe that, with the committee's strong 
support, the agency has become a powerful voice for the protection of 
workers, plants, and communities from deadly chemical hazards. I ask 
for your continued support so that the CSB may fulfill the full breadth 
of responsibilities that Congress has envisioned. The remainder of my 
statement provides additional details on the accomplishments of the 
past year and the work that lies ahead.

                  HIGH LEVEL OF MISSION ACCOMPLISHMENT

    In fiscal year 2003, the Board initiated a total of twelve accident 
investigations, completed five accident investigations, a case study, 
and a safety bulletin. The investigation reports included a total of 90 
new safety recommendations to government, industry, labor, and other 
organizations. A summary of the current and recently completed 
investigations follows.

Recently Completed Investigations
    D.D. Williamson & Co. (Louisville, Kentucky).--On the morning of 
April 11, 2003, one worker was killed at a food additive plant when a 
process vessel became over-pressurized and failed catastrophically. The 
explosion caused extensive damage to the plant and triggered a 
secondary release of 26,000 pounds of aqueous ammonia, requiring a 
community evacuation. The Board approved the final investigation report 
on March 12, 2004, at a public meeting in Louisville. Recommendations 
were issued to the company and also to the Commonwealth of Kentucky to 
increase awareness about existing regulations on the importation and 
inspection of used pressure vessels.
    Catalyst Systems (Gnadenhutten, Ohio).--On January 2, 2003, a 
vacuum dryer containing nearly 200 pounds of benzoyl peroxide exploded, 
injuring one worker and damaging a production facility. The Board 
approved a case study report in October 2003 describing good practices 
for handling of explosive peroxides, which are widely used in industry.
    First Chemical Corp. (Pascagoula, Mississippi).--On October 13, 
2002, a violent explosion occurred in a nitrotoluene distillation tower 
sending heavy debris over a wide area. Debris damaged the control room 
and narrowly missed a large storage tank that contained highly toxic 
anhydrous ammonia. The final CSB report on this investigation was 
approved at a Board public meeting in Pascagoula on October 15, 2003. 
In addition to recommendations to the facility and its new owner, 
Dupont, the CSB recommended that Jackson County improve its emergency 
notification system to better protect and inform residents about 
chemical accidents. CSB also recommended that the American Chemistry 
Council improve its Responsible Care voluntary safety program to ensure 
that companies like First Chemical are fully analyzing process hazards.
    Kaltech Industries (New York City).--On April 25, 2002, an 
explosion occurred at a sign manufacturer in the Chelsea neighborhood 
of downtown Manhattan, injuring 36 people, including 14 members of the 
public. The sign company occupied the basement of a mixed-use 
commercial building. The CSB found that the accident resulted from 
mixing two incompatible waste chemicals, lacquer thinner and nitric 
acid, without following basic safety procedures.
    In the course of the investigation, the Board held a public hearing 
on April 16, 2003, in New York City, where city officials and fire code 
experts discussed the adequacy of hazardous materials controls under 
New York City's 1918-era municipal fire code. On September 30, 2003, 
the full Board met again in New York City, approving its final report 
and citing the city's fire code as a contributing factor in the 
explosion. The Board called on the Mayor and City Council of New York 
to adopt a modern set of control measures for hazardous materials, such 
as those contained in the International Fire Code. On March 5, 2004, 
the city announced its decision to move forward with a complete 
revision of the code.
    BLSR Operating Ltd. (Rosharon, Texas).--On January 13, 2003, a 
vapor cloud deflagration and fire erupted at a small petroleum waste 
disposal facility in rural Texas south of Houston, killing three 
workers and injuring four. The CSB concluded that the fire could have 
been prevented if the companies involved had recognized the hazards of 
the wastes being handled and transported; had safer procedures for 
handling flammable wastes; and if the companies and regulators had 
better oversight of the operations. On September 17, 2003, the Board 
made a series of safety recommendations to prevent a recurrence, 
calling on the Texas Railroad Commission to require all permitted 
drillers and producers in the State to furnish workers with appropriate 
hazard information.
    DPC Enterprises (Festus, Missouri).--On August 14, 2002, a chlorine 
transfer hose ruptured during a rail car unloading operation at a 
chlorine repackaging facility near St. Louis. Automatic emergency 
shutdown valves malfunctioned and the leak continued. Several hours 
elapsed before outside emergency responders in full protective gear 
were able to reach the rail car and contain the leak. By that time, 
48,000 pounds of potentially deadly chlorine had been released to the 
atmosphere. Three workers and 63 residents sought medical treatment.
    Investigators determined that the ruptured hose had the wrong 
materials of construction. On December 4, 2002, the CSB issued a safety 
advisory to all users of chlorine transfer hoses, urging them to verify 
their hoses are correctly constructed. On May 1, 2003, the Board 
approved its final report on the DPC Enterprises investigation at a 
public meeting in Festus. The CSB found that better equipment 
maintenance and quality assurance procedures would have prevented the 
release. In addition to recommending changes at DPC Enterprises, the 
Board called on Jefferson County to improve its community notification 
systems for chemical emergencies. The CSB also called on the chlorine 
industry and hose distributors to collaborate in making chlorine hoses 
more readily identifiable throughout the supply chain.

Current Investigations
    Formosa Plastics (Illiopolis, Illinois).--On April 23, 2004, five 
workers were fatally killed and three others were seriously injured 
when an explosion occurred in a polyvinyl chloride (PVC) production 
unit at a Formosa Plastics plant located east of Springfield, Illinois. 
The explosion forced a community evacuation and lighted fires that 
burned for several days at the plant. The CSB is conducting a full 
investigation of this accident.
    MFG Chemical Inc. (Dalton, Georgia).--On the evening of April 12, 
2004, a chemical reactor overheated at the MFG Chemical manufacturing 
plant, releasing hydrochloric acid and allyl alcohol. The resulting gas 
cloud sent 184 people to a local hospital and forced the evacuation of 
nearby residents. The CSB is conducting a full investigation of this 
accident.
    Giant Industries (Gallup, New Mexico).--On April 8, 2004, four 
workers were seriously injured when highly flammable gasoline 
components were released and ignited at the Giant Industries Ciniza 
refinery in northwestern New Mexico. Unknown to personnel, a shut-off 
valve connecting to a distillation column was apparently in the open 
position, leading to the release and subsequent explosions. The CSB is 
conducting a full investigation of this accident.
    DPC Enterprises (Glendale, Arizona).--On November 17, 2003, there 
was a release of chlorine gas from a DPC Enterprises chlorine 
repackaging facility near Phoenix. Fourteen people, including ten 
police officers, required medical evaluation for possible chlorine 
exposure. More than 4,000 households and businesses were ordered to 
evacuate. The release occurred when excess chlorine vapors from a rail 
car unloading operation were diverted to a recapture system known as a 
scrubber. The scrubber malfunctioned, releasing the gas.
    Hayes Lemmerz (Huntington, Indiana).--On the evening of October 29, 
2003, a series of aluminum dust explosions severely burned two workers, 
injured a third, and caused property damage to an automotive parts 
manufacturing plant in Huntington, Indiana, near Fort Wayne. One of the 
severely burned men subsequently died. CSB plans to issue its final 
investigation report on this accident in fall 2004.
    Isotec (Miamisburg, Ohio).--On September 21, 2003, a violent 
explosion destroyed an underground distillation tower at the Isotec 
chemical manufacturing plant in Miamisburg, Ohio, injuring one worker. 
The explosion ruptured a carbon monoxide gas pipe and led to a 
precautionary overnight evacuation of about 2000 residents. CSB expects 
to issue a case study report on this accident in summer 2004.
    Honeywell (Baton Rouge, Louisiana).--On July 20, 2003, there was a 
release of chlorine gas from the Honeywell chemical plant in Baton 
Rouge, Louisiana. The accident resulted in the hospitalization of four 
plant workers and required residents within a half-mile radius to 
shelter in their homes. On July 29, 2003, a worker was fatally injured 
by exposure to antimony pentachloride when a gas cylinder released its 
contents to the atmosphere. On August 13, 2003, two plant workers were 
hospitalized for exposure to hydrofluoric acid. CSB is investigating 
all three incidents; on March 30, 2004, the Board convened a community 
meeting in Baton Rouge to present its preliminary findings and receive 
comments from residents.
    CTA Acoustics (Corbin, Kentucky).--On February 20, 2003, an 
explosion and fire seriously damaged the CTA Acoustics manufacturing 
plant, fatally injuring seven workers. The facility produced fiberglass 
insulation for the automotive industry and used a combustible phenolic 
resin powder as a binder for the fiberglass. CSB investigators have 
found that the initial explosion and fire occurred on a production line 
that was partially shut down and being cleaned at the time of the 
incident. During the cleaning, a thick cloud of dust dispersed around 
the line. The dust was likely ignited by a fire that spread from the 
production line's oven, which had malfunctioned earlier and was being 
operated with its door open.
    On July 8, 2003, the Board held a community meeting in Corbin 
attended by several hundred people. Board investigators presented their 
preliminary findings and fielded questions and comments from concerned 
residents and workers. The Board's investigation is now continuing with 
a detailed examination of components of the malfunctioning oven. 
Investigators are also examining why many CTA personnel were unaware of 
the catastrophic potential of resin dust that had accumulated on 
surfaces around the plant. The Board expects to issue its final report 
on this investigation in late 2004.
    Technic Inc. (Cranston, Rhode Island).--On February 7, 2003, a 
worker was seriously injured in an explosion at a plant that 
manufactures precious metal processing chemicals. The explosion 
occurred during maintenance on a ventilation system connected to 
multiple chemical reactors, evidently due to an accumulation of 
reactive material inside. CSB plans to issue its final report on this 
investigation in summer 2004.
    West Pharmaceutical Services (Kinston, North Carolina).--On January 
29, 2003, an explosion and fire destroyed the West Pharmaceutical 
Services plant causing six deaths, dozens of injuries, and hundreds of 
job losses. CSB investigators have found that the fuel for the 
explosion was a fine plastic powder used in producing rubber goods. 
This polyethylene dust accumulated above a suspended ceiling over a 
manufacturing area at the plant and provided the major energy for the 
blast.
    On June 18, 2003, the Board held a community meeting in Kinston, 
attended by several hundred people. Board investigators presented their 
preliminary findings and took questions and comments from the audience. 
The Board's final report is expected in late 2004.

Hazard Studies and Bulletins
    Dust Hazards.--Prompted by the fatal dust explosions at West 
Pharmaceutical Services, CTA Acoustics, and Hayes Lemmerz in 2003, the 
CSB has launched a systematic investigation of dust explosion incidents 
over the last several decades. Preliminary reviews point to a number of 
other tragic events in recent years, including major fires and 
explosions at the Malden Mills factory in Lawrence, Massachusetts 
(December 1995); the Ford Motor River Rouge plant in Dearborn, Michigan 
(February 1999); the Jahn Foundry in Springfield, Massachusetts 
(February 1999); and Rouse Polymerics International in Vicksburg, 
Mississippi (May 2002). These accidents caused numerous deaths and 
injuries as well as extensive property damage and economic losses.
    A main purpose of the hazard study will be to assess the overall 
effectiveness of current codes and standards for preventing dust 
explosions. At present, the U.S. Occupational Safety and Health 
Administration (OSHA) does not have specific standards for controlling 
combustible dust hazards in many industrial facilities. National 
standards are in place for dust hazards in coal mines and grain 
handling facilities. The Board plans to examine whether current 
regulations are adequate and also how to improve awareness of dust 
hazards among industrial managers nationwide.
    Sodium Hydrosulfide Handling.--As an outgrowth of the Board's 
November 2002 Georgia Pacific investigation, CSB staff are conducting a 
review of other incidents involving sodium hydrosulfide, the chemical 
which reacted at a Georgia Pacific paper mill to release toxic hydrogen 
sulfide gas from a process sewer, killing two contract workers and 
injuring eight others. CSB expects to issue a safety bulletin 
highlighting good practices for handling sodium hydrosulfide in summer 
2004.
    Nitrogen Asphyxiation Hazards.--In June 2003 the CSB completed a 
nationwide review of incidents similar to the March 1998 nitrogen 
asphyxiation incident at Union Carbide in Hahnville, Louisiana, which 
the CSB investigated. The new CSB study identified a total of 85 
incidents that occurred in the United States between 1992 and 2002 and 
involved exposure to dangerous nitrogen-enriched, oxygen-poor 
atmospheres. Together these incidents caused 80 deaths and 50 injuries. 
The CSB developed a safety bulletin on nitrogen asphyxiation hazards, 
highlighting a variety of good practices to avoid such incidents. The 
CSB also developed a short safety pamphlet and training slide 
presentation on nitrogen hazards.

Safety Recommendations Program
    Recommendations are the 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 the Board has issued a recommendation, CSB 
recommendations staff encourage adoption and track implementation 
activities. The Board aims for a cumulative 80 percent acceptance rate 
for our recommendations.
    We have continued to receive excellent cooperation from 
recommendation recipients over the past year and have received numerous 
responses indicating positive actions underway or planned. In fiscal 
year 2003, the CSB successfully closed 10 outstanding safety 
recommendations. While these safety actions represent important 
progress that will help prevent accidents, the Board will continue to 
work for faster progress in this area. As we have increased our output 
of investigation reports and safety recommendations, our ability to 
track adoption of those recommendations has not kept pace. As a result, 
the CSB will this year be doubling the amount of staff time allocated 
for closing recommendations. The Board has just completed hiring a 
senior-level recommendations staff supervisor, who will oversee the 
program and will report directly to the CEO.
    The recommendations program continues to deliver important safety 
improvements around the country. Earlier, I mentioned how the Board's 
recommendations have motivated New York City to modernize its 86-year-
old fire code. Earlier, in March 2003, the Board completed an 
investigation of a catastrophic chemical fire in Brazoria County, 
Texas, south of Houston. The Board found that the county had no fire 
code for unincorporated areas, and as a result a facility that stored 
more than a million gallons of combustible petrochemicals lacked basic 
fire protection--such as smoke alarms, sprinklers, and fire walls. A 
small fire that started overnight spread to engulf and destroy the 
entire multi-acre facility, which had employed about 100 workers. Less 
than a week after receiving a safety recommendation from the CSB, 
Brazoria County supervisors voted to adopt the International Fire Code.
    The Board continues to press for effective actions on the control 
of reactive hazards--the dangers associated with uncontrolled chemical 
reactions at industrial sites. The Board's 2002 hazard study, Improving 
Reactive Hazard Management, documented 167 serious reactive chemical 
accidents over the past two decades. Those accidents caused more than 
100 fatalities as well as numerous injuries and huge property losses. 
The CSB found that more than half the chemicals involved in these 
accidents are currently exempt from Federal process safety regulations. 
In September 2002 the Board called on OSHA and EPA to revise those 
rules to broaden coverage of reactive hazards.
    In June 2003, the Board organized and co-sponsored (with OSHA and 
EPA) a daylong stakeholder roundtable meeting in Washington, DC, to 
discuss possibilities for reforming the process safety rules. The Board 
was highly encouraged by statements from both industry and labor 
representatives at the meeting in favor of broader regulatory coverage 
for reactive chemicals. All parties recognized the seriousness of the 
problem and the need for more actions to prevent catastrophic 
accidents. In August 2003, 2 months after the meeting and less than a 
year after the Board's hazard study, New Jersey acted to add reactive 
chemicals to the State's list of regulated ``extraordinarily hazardous 
substances''--an action that will result in additional safety controls 
among New Jersey chemical plants. The Board continues to hope that 
similar action will be forthcoming at the Federal level and is working 
toward that end.

CSB Expands Community and Web-Based Outreach
    The CSB has found great value in conducting its public business in 
the communities that are directly impacted by chemical accidents. CSB 
public and community meetings have garnered hundreds of audience 
participants and received widespread news coverage among local and 
regional news media, reaching audiences that number in the millions. 
The CSB's objective, scientific investigations are proving to be one of 
the most important ways that community members can learn about the 
causes of chemical accidents and ways they can participate with 
companies to help prevent future occurrences.
    Over the past year, the Board has held public meetings, community 
meetings, and hearings in Louisville, Kentucky; Pascagoula, 
Mississippi; Festus, Missouri; Kinston, North Carolina; Corbin, 
Kentucky; Baton Rouge, Louisiana; and twice in New York City. The Board 
has continued to offer free webcasts of significant public meetings, 
which reach hundreds of additional viewers who are unable to attend the 
meetings in person.
    In August 2003, the Board launched a completely revised version of 
its popular website, CSB.gov, with streamlined access to CSB accident 
reports, video webcasts, safety recommendations, and other information. 
Selected information is now being made available in the Spanish 
language as well as English, and we plan to increase this service in 
coming months. In December 2003 the Board launched a new live incident 
news service from CSB.gov, with updates from around the world every 15 
minutes, a popular feature among safety professionals who track 
chemical accidents.

                      INSPECTOR GENERAL OVERSIGHT

    During fiscal year 2004, the CSB will be transitioning to a new 
Inspector General (IG) shared with the Environmental Protection Agency. 
In January 2004, the CSB received its last program audit report from 
its outgoing Inspector General, the IG of the Department of Homeland 
Security (formerly the IG of the Federal Emergency Management Agency). 
That report included 11 new recommendations for improving agency 
operations. The CSB responded to all 11 recommendations and will be 
moving forward with implementation over the coming year.
    While the report highlights some important areas for improvement, 
particularly in the tracking of chemical incidents and open safety 
recommendations, I was pleased by the generally positive conclusions of 
this final audit report. The Inspector General found, for example, that 
``. . . the CSB increased its productivity and stability under new 
management during the past year. The CSB is progressing toward meeting 
its statutory responsibilities and has increased the number of 
investigations it performs.'' (IG Report, p. 1) Of note to the 
committee will be the outgoing Inspector General's assessment that 
``the CSB lacks the resources to investigate all accidents within its 
purview.''

                           HOMELAND SECURITY

    In accordance with new committee report language this year, the CSB 
has sought discussions with the Department of Homeland Security (DHS) 
on a new Memorandum of Understanding (MOU). The MOU will describe terms 
of cooperation between the two agencies. The Board will report back to 
the committee by June 2004 on its progress, and we look forward to 
further support and encouragement from the committee to promote the 
swift negotiation and completion of this agreement.
    I also draw the committee's attention to recent Board findings that 
have important ramifications for homeland protection. CSB's 
investigations typically include an examination of the adequacy of 
local emergency response to chemical accidents. Three of our recent 
investigations revealed a lack of sufficient local preparation for a 
major chemical event. I refer to Board investigations at First Chemical 
Corporation in Pascagoula, Mississippi; Isotec in Miamisburg, Ohio; and 
DPC Enterprises in Festus, Missouri.
    These investigations found that local authorities have difficulty 
notifying residents of a chemical release and informing them of the 
appropriate safety actions, such as evacuation or sheltering. In 
Missouri, lack of adequate planning beforehand prevented emergency 
responders from containing a serious chlorine release for several 
hours. If the wind had been blowing in a slightly different direction 
that day, the plume would have drifted over a residential area, with 
potentially grave consequences. While I believe all these communities 
are working aggressively to address the gaps that were uncovered, it is 
likely that other communities around the country may have similar 
shortcomings in their preparations to survive a terrorist attack on a 
chemical plant.
    We communicated the Board's concerns in this area to Homeland 
Security oversight committee members in correspondence last year. We 
also anticipate discussing these concerns with DHS officials as we 
proceed with an interagency agreement. I thank the committee for 
seeking the Board's assistance and cooperation on these vital homeland 
security issues. As the foregoing examples show, I believe this is an 
area where the Board can make a positive contribution.

                               CONCLUSION

    The last 18 months mark a major turnaround for the Chemical Safety 
Board. Following several years of organizational challenges, the CSB is 
now producing considerable value for the taxpayers--issuing reports, 
studies, and recommendations that safeguard workers, plants, and the 
public from chemical accident hazards. The Board is back on track as a 
strong, nimble Federal agency that works closely with industries and 
communities that suffer deadly chemical disasters. The CSB's work helps 
to save lives and make plants and communities safer. I urge the 
committee's support for modest budget increases that will allow the 
Board to be even more effective in the future.

                       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 2005 budget request.
    The subcommittee requested that public witnesses provide 
written testimony because, given the Senate schedule and the 
number of subcommittee hearings with Department witnesses, 
there was not enough time to schedule hearings for 
nondepartmental witnesses.]

      Prepared Statement of the American Society for Microbiology

    The American Society for Microbiology (ASM) appreciates the 
opportunity to submit testimony on the fiscal year 2005 appropriation 
for the Environmental Protection Agency (EPA). The ASM is the largest 
single life science organization in the world, comprised of more than 
43,000 members. ASM members are involved in research to improve human 
health and the environment and work in academic, industrial, medical, 
and governmental institutions worldwide. The ASM's mission is to 
enhance the science of microbiology, to gain a better understanding of 
life processes, and to promote the application of this knowledge for 
improved health, and for economic and environmental well-being.
    The EPA's mission is to protect human health and to safeguard the 
natural environment (air, water, and land). The ASM believes that sound 
public policy for environmental protection depends on adequately funded 
programs of intramural and extramural research based on scientific peer 
review to assure that support is awarded to research that has both 
quality and relevance. The Nation spends comparatively little on 
environmental research, even though health and the environment are 
often integrally related. It is essential that the EPA's Science to 
Achieve Results Research (STAR) program and Indoor Air Quality 
research, Clean and Safe Water research, and Surface Water Protection 
and Drinking Water research programs be adequately funded in the EPA 
budget.
    Unfortunately, the EPA budget proposes a 12 percent funding cut for 
EPA science and technology programs below the fiscal year 2004 
allocation, despite the importance of these programs to addressing 
increasingly complex environmental problems. ASM urges Congress to 
provide increased funding for EPA science and technology programs. EPA 
depends on excellent research programs to evaluate risk, develop and 
defend protective standards, anticipate future health and environmental 
threats, and to identify solutions to environmental problems.

                          STAR GRANTS PROGRAM

    EPA's Office of Research and Development (ORD) manages the STAR 
grants program, which is a competitive, peer-reviewed, extramural 
research grants program intended to increase access to the Nation's 
best scientists and engineers in academic and other non-profit research 
institutions. Research sponsored by the STAR program allows the EPA to 
fill information gaps that are not addressed completely by its 
intramural research programs, and to respond to new and emerging issues 
that the agency's laboratories are not able to address.
    The EPA budget requests a 35 percent, or $35 million, cut in 
funding for the STAR grants program from fiscal year 2004. The National 
Academy of Sciences (NAS) has urged the continuation of and investment 
in the STAR program. In 2003, the NAS released a report titled, ``The 
Measure of STAR: Review of the U.S. Environmental Protection Agency's 
Science to Achieve Results (STAR) Research Grants Program'', which 
argues that the STAR grants are a critical means for the agency to 
access scientific expertise that it does not have in-house, and to 
respond quickly to emerging issues.
    Since its inception in 1995, STAR research projects have resulted 
in articles in highly respected, peer-reviewed journals, and have 
already helped to improve our understanding of the causes, exposures 
and effects of environmental pollution and microorganisms in the 
environment. ASM urges Congress to fully restore funding for the STAR 
grants program to the fiscal year 2004 level of $100 million. At 
present, STAR focuses on critical research areas, including the health 
effects of particulate matter, drinking water, water quality, global 
change, ecosystem assessment and restoration, human health risk 
assessment, endocrine disrupting chemicals, pollution prevention and 
new technologies, children's health, and socio-economic research.
    A typical STAR grant is funded at $500,000, with full funding the 
first year, and may last up to 3 years. With the proposed budget 
request, approximately 70 fewer individual research projects will be 
awarded. The proposed 35 percent cut in funding for the STAR program 
would:
  --Eliminate 50 grants in fiscal year 2005 across all areas of the 
        ecological research program.
  --Redirect $5 million from research to a pollution prevention 
        outreach program in another part of the EPA. Redirecting these 
        funds would eliminate $3 million in STAR funding, which is 
        EPA's contribution to the EPA-National Science Foundation (NSF) 
        partnership.
  --Cut $4.9 million, which would eliminate the entire STAR grant 
        research program on endocrine disruptors. The funds would 
        otherwise have supported research on the extent to which humans 
        and wildlife are exposed to endocrine disruptors, an area that 
        the NAS and the World Health Organization have identified as an 
        important research gap.
  --Eliminate STAR research in fiscal year 2005 on how and where 
        mercury moves through the environment.
  --Eliminate ORD's contribution to the five EPA established, 
        university-based centers affiliated with 22 universities to 
        address concerns about hazardous substances in the environment.

                        STAR 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 unique to the EPA and is integral to its role as 
steward of the environment. Unfortunately, the EPA budget proposes a 40 
percent, or $4 million, cut for fiscal year 2005.
    ASM believes the Fellowship program is one of the 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. More than 1,300 applicants 
compete each year for approximately 100 fellowships through a rigorous 
merit review process.
    The proposed cut of the fellowship program will significantly 
reduce the number of fellowships granted. ASM urges Congress to restore 
funding for the STAR fellowship program to its fiscal year 2004 level 
of $10 million. Additionally, ASM 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. This issue will become more 
pronounced as time goes on, increasing the need for more support for 
this fellowship program.

                          WATERBORNE PATHOGENS

    Although the American public enjoys safe drinking water, waterborne 
disease outbreaks caused by pathogenic bacteria, viruses, and parasites 
continue to be reported periodically. Surface water and groundwater 
sources can be contaminated with many different types of chemical 
substances and microorganisms. Furthermore, the disinfection process 
itself creates a number of potentially toxic chemical byproducts. EPA 
conducts the necessary research to provide a strong scientific 
foundation for standards that limit the public's exposure to drinking 
water contaminants and disinfection byproducts. This research supports 
major regulatory activities including the Microbial/Disinfection 
Byproduct Rules, and future decisions on unregulated pathogens and 
chemicals. EPA is conducting research on waterborne pathogens, arsenic, 
disinfection byproducts, and other chemical contaminants to protect the 
Nation.

                           INDOOR AIR QUALITY

    Every breath we take, indoors and out, we inhale not just life-
sustaining oxygen but dust and smoke, chemicals, microorganisms, and 
particles and pollutants that float on the air. The average human 
inhales approximately 10 cubic meters of air daily. Because most people 
spend about 22 hours each day indoors, poor indoor air quality (IAQ) 
affects both public health and national productivity. At present, a 
shortage of IAQ research leaves much unknown about cause-and-effect 
specifics, but there is little doubt that contaminated buildings are 
attracting more attention as occupants develop often vague symptoms 
followed by remediation, litigation, and other costly outcomes.
    Although IAQ issues are often viewed as a problem of modern 
buildings, connections made between air and disease date to ancient 
times. Long before the germ theory of disease and its indictment of 
pathogenic microorganisms, humans associated foul miasmas like ``sewer 
gas'' with infectious diseases such as malaria. Initially, prevention 
of disease transmission by infectious pathogens became the principal 
concern of early public health advocates. Today we understand that 
airborne non-pathogenic organisms, fragments of microbial cells, and 
by-products of microbial metabolism also cause problems. ASM believes 
that more research is needed in this area for the safety and protection 
of human health.

                               CONCLUSION

    Well-funded research is needed to address emerging issues affecting 
the environment and human health. For EPA to fulfill its mission to 
protect human health and to safeguard the natural environment, ASM 
urges Congress to increase funding for the EPA's science and technology 
programs to their fiscal year 2004 level.
    The ASM appreciates the opportunity to provide written testimony 
and would be pleased to assist the subcommittee as it considers its 
appropriation for the EPA for fiscal year 2005.

                                                             SCHEDULE OF FEDERAL AWARDS 2004
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                Federal                       Grants        Receipts or                       Grants
Federal Grantor/Pass-through Grantor/Program Title     Cost       CFDA      Program or    Receivable  1/      Revenue     Disbursements/  Receivable  12/
                                                      Center     Number    Award Amount       1/2004        Recognized     Expenditures       31/2004
--------------------------------------------------------------------------------------------------------------------------------------------------------
MAJOR PROGRAMS:
    Resident Postdoctoral Research................        783     93.283     $999,381.00      $89,902.49  ..............  ..............      $89,902.49
                                                   -----------------------------------------------------------------------------------------------------
      Total Major Programs........................  .........  .........      999,381.00       89,902.49  ..............  ..............       89,902.49
                                                   -----------------------------------------------------------------------------------------------------
OTHER FEDERAL ASSISTANCE:
    HHS:
        NIGMS-MARC................................        789     93.88       431,300.00  ..............  ..............  ..............               0
        Environmental Micoorganisms...............        694     93.856       10,000.00  ..............  ..............  ..............               0
        DNA Repair and Mutagenesis................        457     93.393       25,000.00  ..............  ..............  ..............               0
        Summer Institute..........................        848     93.856       24,000.00          532.99  ..............  ..............          532.99
        Conf Biofilms.............................        425     93.121       25,000.00       25,000.00  ..............  ..............       25,000.00
        Environmental Pathogens...................        694     93.856       10,000.00  ..............  ..............  ..............               0
        Microbial Triggers of Disease.............        666     93.855        5,000.00  ..............  ..............  ..............               0
        Candida and Candidiasis...................        434     93.121       10,000.00  ..............  ..............  ..............  ..............
    National Science Foundation:
        Plant Biotechnology.......................        678     47.074       15,000.00  ..............  ..............  ..............               0
        Pathogens.................................        697     47.074      110,000.00       33,608.72  ..............  ..............       33,608.72
        Sub Contract BioSciEd Net.................        787     47.076      100,000.00       30,838.75  ..............  ..............       30,838.75
        Beyond Microbial Genomics.................        691     47.074       15,000.00  ..............  ..............  ..............  ..............
    U.S. Department of Energy:
        DNA Repair and Mutagenesis................        457     81.049       20,000.00  ..............  ..............  ..............               0
        Prokaryotic Development...................        472     81.049       10,000.00  ..............  ..............  ..............               0
        Geobiology................................        675     81.049       15,000.00  ..............  ..............  ..............               0
        Microbial Ecology and Genomics............        676     81.049       25,000.00  ..............  ..............  ..............               0
        Multicellular Cooperation.................        671     81.049       15,000.00  ..............  ..............  ..............               0
        Systems Microbiology......................        691  .........       10,000.00        6,461.06  ..............  ..............        6,461.06
    USDA:
        Conference Salmonella.....................        421     10.206       10,000.00       10,000.00  ..............  ..............       10,000.00
        Pre-harvest Food Safety...................        663     10.001        5,000.00        5,000.00  ..............  ..............        5,000.00
        Pre-harvest Food Safety...................        663     10.2         25,000.00       19,350.00  ..............  ..............       19,350.00
        Pre-harvest Food Safety...................        663     10.206       10,000.00        7,000.00  ..............  ..............        7,000.00
        Conf Salmonella Pathogenesis..............        421     10.206       10,000.00  ..............  ..............  ..............               0
    EPA:
        Microbial Eolocy..........................        676     66.5         20,000.00  ..............  ..............  ..............               0
        Infectious Disease GI Tract...............        670     66.606       50,000.00  ..............  ..............  ..............               0
        PO HHS/FDA Pre-harvest Food...............        663  .........       10,000.00       10,000.00  ..............  ..............       10,000.00
        PO US Dept of Army........................        475  .........       10,000.00  ..............  ..............  ..............               0
                                                   -----------------------------------------------------------------------------------------------------
          Total Other Awards......................  .........  .........    1,025,300.00      147,791.52            0.00            0.00      147,791.52
                                                   -----------------------------------------------------------------------------------------------------
          Total Federal Awards....................  .........  .........    2,024,681.00      237,694.01            0.00            0.00      237,694.01
--------------------------------------------------------------------------------------------------------------------------------------------------------

                                 ______
                                 
      Prepared Statement of the American Society for Microbiology

    The American Society for Microbiology (ASM) appreciates the 
opportunity to submit testimony on the fiscal year 2005 appropriation 
for the National Science Foundation (NSF). The ASM is the largest 
single life science membership organization in the world, comprised of 
more than 43,000 members. The ASM's mission is to enhance the science 
of microbiology, to gain a better understanding of life processes, and 
to promote the application of this knowledge for improved health, and 
for economic and environmental well-being.
    The NSF is the premier source of Federal support for mathematic, 
scientific, and engineering research and education across many 
disciplines. NSF support plays a critical role in the health of the 
Nation's academic system, which is the source of new ideas and human 
resources in science. Although NSF represents less than 4 percent of 
the total Federal funding for research and development (R&D), it 
accounts for approximately 13 percent of all Federal support for basic 
research and 40 percent of non-life-science basic research at U.S. 
academic institutions. NSF's broad support for basic research, 
particularly at U.S. academic institutions, provides not only a key 
source of funds for discovery in many fields, but also unique 
stewardship in developing the next generation of scientists and 
engineers. NSF is also the principal Federal agency charged with 
promoting science and engineering education at all levels and in all 
settings, from pre-kindergarten through career development. This helps 
ensure that the United States has world-class scientists, 
mathematicians and engineers, and well-prepared citizens.
    ASM appreciates the support that both the Congress and the 
administration have demonstrated for the National Science Foundation 
through the enactment of the NSF Authorization Act of 2002 (Public Law 
107-368). Public Law 107-368 authorizes a 5-year period of 15 percent 
annual budget increases for the NSF. We encourage Congress to act upon 
their commitment and increase funding for NSF by 15 percent, or $837 
million, for fiscal year 2005, raising the NSF budget to $6.4 billion. 
Increasing NSF's budget by 15 percent will allow for additional 
investments in grants, fellowships, and in cross-cutting research 
priorities like Biocomplexity in the Environment, and Nanoscale Science 
and Engineering. This recommendation is consistent with that of the 
Coalition for National Science Funding.

                         RESEARCH GRANT FUNDING

    Fundamental research in the biosciences has laid the foundation for 
exploring the human genome and now offers new possibilities for 
understanding the living world from molecules to organisms to 
ecosystems, providing new discoveries applicable to health, 
environment, agriculture, and energy. The fiscal year 2005 budget 
request for NSF is $5.57 billion, a 3 percent or $167 million increase 
over fiscal year 2004. This current level of funding will provide for a 
2.2 percent increase in the average size of awards to $142,000 per year 
for an average duration of 3 years, assuming there will be a decrease 
in the number of awards from fiscal year 2004. For core research areas 
of the biological sciences, it will increase the average size of awards 
to $190,750 (median award size $140,250) per year for 3 years from 
$181,670 (median award size $138,070) per year in fiscal year 2004. 
However, the number of research grants will drop by 2.5 percent, and 
the funding rate will drop by 1 percent to 19 percent.
    Improving productivity of researchers requires increasing the 
average award size. ASM applauds efforts to increase the average award 
size, but is disappointed with the decrease in the number of research 
grants that will be funded. Increasing NSF's budget by 15 percent would 
allow NSF to increase the size of the awards and increase the number of 
grants awarded.
    The biological sciences program provides support for research to 
advance understanding of the underlying principles and mechanisms 
governing life. Research ranges from the study of the structure and 
dynamics of biological molecules, such as proteins and nucleic acids, 
through cells, organs and organisms, to studies of populations and 
ecosystems. It encompasses processes that are internal to the organism 
as well as those that are external, and includes temporal frameworks 
ranging from measurements in real time through individual life spans, 
to the full scope of evolutionary time.

                    BIOCOMPLEXITY IN THE ENVIRONMENT

    As the world faces significant scientific and societal challenges, 
including the prospect of rapid environmental and climatic changes, 
biological threats, and the complicated question of long-term 
environmental security, the NSF has developed an interdisciplinary 
program called Biocomplexity in the Environment (BE). BE is designed to 
give NSF the capability to respond to the demand for new approaches to 
investigating the interactions of all living things at all levels--from 
their molecular structures to genes to organisms to ecosystems to urban 
centers--and the environment. Fundamental study of complex 
environmental systems is a key element of local, national, and global 
security and critical to the development of new scientific and 
technological capabilities.
    Microorganisms are key components of soils and aquatic 
environments, and play profoundly important roles in the distribution 
and activity of plants and animals. Understanding the distribution and 
activities of microorganisms is essential for addressing numerous 
environmental challenges. However, only a small percentage of Earth's 
microbial species are known, which leaves large gaps in our ability to 
predict the directions of environmental change.
    Two priority areas within BE are relevant to the enhanced 
fundamental understanding of microorganisms important to nature and to 
human health. These priority areas are:
  --Microbial Genome Sequencing is an interagency effort with the U.S. 
        Department of Agriculture (USDA) which uses high throughput 
        sequencing of microorganisms of fundamental biological 
        interest, agriculture, forestry, food and water quality, or 
        value in understanding potential agents of bioterrorism. Genome 
        sequence information will provide the basis for understanding 
        the physiology, pathology, and ecology of these organisms. This 
        knowledge can be applied to detection of organisms and to 
        understanding microbial adaptation to extreme environments, 
        which could lead to the economic uses of microorganisms. 
        Emphasis will also be placed on sequencing of microbes and 
        their association with other organisms, such as plants, 
        animals, and other microbes.
  --Ecology of Infectious Diseases is an interagency partnership with 
        the National Institutes of Health (NIH) for the development of 
        predictive models and discovery of principles for relationships 
        between environmental factors and transmission of infectious 
        agents. Potential benefits include the development of disease 
        transmission models, understanding unintended health effects of 
        environmental change, and improved prediction of disease 
        outbreaks, emergence, and reemergence. Examples of 
        environmental factors include habitat transformation, 
        biological invasion, biodiversity loss, and contamination.
    This effort to expand multidisciplinary research will result in 
more complete understanding of natural processes, of human behaviors 
and decisions in the natural world, and ways to use new technology 
effectively to sustain life on earth. The President has requested level 
funding for BE in fiscal year 2005. Increasing NSF's budget by 15 
percent would allow NSF to increase its investment in the BE effort.

                   NANOSCALE SCIENCE AND ENGINEERING

    The Nanoscale Science and Engineering effort encompasses the 
systematic organization, manipulation and control of matter at atomic, 
molecular, and supramolecular levels. With the capacity to manipulate 
matter at the nanometer scale (one-billionth of a meter), science, 
engineering, and technology are realizing revolutionary advances, in 
areas such as individualized pharmaceuticals, new drug delivery 
systems, more resilient materials and fabrics, catalysts for industry 
and computer chips.
    NSF has been a pioneer among Federal agencies in fostering the 
development of nanoscale science. ASM supports the President's request 
of $305 million in fiscal year 2005, a 20.3 percent increase over 
fiscal year 2004, for the Nanoscale Science and Engineering effort. Of 
this amount, $5.85 million will go the Biological Sciences, a 10.2 
percent increase over fiscal year 2004. A total of $174 million will be 
used for Fundamental Research and Education, and of this:
  --$24.5 million will be devoted to Biosystems at the Nanoscale, a 
        $3.5 million increase over fiscal year 2004. Biosystems at the 
        Nanoscale support the study of biologically based or inspired 
        systems that exhibit novel properties and potential 
        applications. Potential applications include improved drug 
        delivery, biocompatible nanostructured materials for 
        implantation, exploiting functions of cellular organelles, 
        devices for research in genomics, proteomics and cell biology, 
        and nanoscale sensory systems, such as miniature sensors for 
        early detection of cancer.
  --$11.5 million for Nanoscale Processes in the Environment to support 
        studies on nanoscale physical and chemical processes related to 
        the trapping and release of nutrients and contaminants in the 
        natural environment. Potential benefits include artificial 
        photosynthesis for clean energy and pollution control, and 
        nanoscale environmental sensors and other instrumentation.
  --$22.2 million devoted to Multi-scale, Multi-phenomena Theory, 
        Modeling and Simulation at the Nanoscale, to support theory, 
        modeling, large-scale computer simulation and new design tools 
        and infrastructure in order to understand, control, and 
        accelerate development in new nanoscale regimes and systems.
    Research at the nanoscale is needed to advance the development of 
the ultra-small technology that will transform electronics, materials, 
medicine and many other fields.

                NATIONAL ECOLOGICAL OBSERVATORY NETWORK

    The National Ecological Observatory Network (NEON) will be a 
continental scale research instrument consisting of geographically 
distributed infrastructure, networked via state-of-the-art 
communications, for integrated studies to obtain a predictive 
understanding of the Nation's environment. It will transform ecological 
research by enabling studies on major environmental challenges at 
regional to continent scales. Scientists and engineers will use NEON to 
conduct real-time ecological studies spanning all levels of biological 
organization and temporal and geographical scales.
    The President has requested a $12 million increase for NEON over 
fiscal year 2004 for a total of $16 million in fiscal year 2005. In 
fiscal year 2004, $4 million was allocated to the Biological Sciences 
Directorate to develop the NEON Coordinating Consortium (NCC) and 
Project Office. These units will refine the NEON project, scope, 
budget, and schedule for research infrastructure. The President has 
requested level funding for fiscal year 2005 for finalizing the 
development of the NCC and Project Office, and for funding research on 
enabling technologies. The remaining $12 million will go to the Major 
Research Equipment and Facilities Construction Account to initiate 
construction of the first two NEON observatories.
    It is estimated that 1,400 field biologists will use NEON annually. 
A larger number of scientists, students, resource managers, and 
decision makers will make use of NEON data, both directly and 
indirectly, through the network capabilities and data distribution and 
sharing technologies via the network and the internet. Increasing NSF's 
budget by 15 percent would allow NSF to increase its investment in 
NEON. NEON is a resource that has the potential to transform ecological 
research.

                               CONCLUSION

    The NSF plays a key role in support of basic science in the United 
States and knowledge gained from NSF studies directly benefits industry 
and contributes to the Nation's economy and international competitive 
position. The NSF is in a singular position among all the Federal 
research and development agencies to support fundamental research in 
important areas including, microbiology and molecular biology. ASM 
urges Congress to protect ongoing and future U.S. scientific and 
technological advancements by supporting a 15 percent budget increase 
in fiscal year 2005 for the NSF. The ASM also believes NSF should 
continue to emphasize fundamental, investigator initiated research, 
research training, and science education as its highest priorities.
    The ASM appreciates the opportunity to provide written testimony 
and would be pleased to assist the subcommittee as it considers its 
appropriation for NSF for fiscal year 2005.
                                 ______
                                 
     Prepared Statement of the Association of State Drinking Water 
                             Administrators

                              INTRODUCTION

    The Association of State Drinking Water Administrators (ASDWA) is 
pleased to provide testimony to the VA, HUD and Independent Agencies 
Subcommittee on Fiscal Year 2005 Appropriations for the U.S. 
Environmental Protection Agency. ASDWA represents the State drinking 
water programs in each of the 50 States and territories in their 
efforts to ensure the provision of safe, potable drinking water to more 
than 275 million consumers nationwide. ASDWA's primary mission is the 
protection of public health through the effective management of State 
drinking water programs that implement the Safe Drinking Water Act 
(SDWA).

                            TODAY'S MESSAGE

States Need Increased Federal Support
    State drinking water programs strive to meet their public health 
protection goals through two principal funding programs--the Public 
Water System Supervision Program (PWSS) and the Drinking Water State 
Revolving Loan Fund Program (DWSRF). Since enactment of the 1996 Safe 
Drinking Water Act Amendments, the State role in public health 
protection has increased dramatically in both scope and complexity. 
Since September 2001, State drinking water programs have accepted 
additional responsibilities to work with all public water systems to 
ensure that critical drinking water infrastructure is protected and 
that plans are in place to respond to a variety of possible emergency 
scenarios.

                      HOW STATES USE FEDERAL FUNDS

The PWSS Program
    To meet the requirements of the SDWA, States have accepted primary 
enforcement authority for oversight of ongoing regulatory compliance 
and technical assistance efforts for 160,000 public water systems to 
ensure that potential health based violations do not occur or are 
remedied in a timely manner. Going beyond these longstanding core 
responsibilities, since 1996, State drinking water programs have 
participated in the development and implementation of more than 20 new 
regulations and strategic initiatives designed to enhance the 
protection of public health. States are also implementing an array of 
proactive initiatives to protect public health from ``source to tap''--
including source water assessments and controls; technical assistance 
with water treatment and distribution; and enhancement of overall water 
system capacity. State activities go far beyond simply ensuring 
compliance at the tap.

The DWSRF Program
    The DWSRF program is less than 10 years old, having been created 
under the SDWA Amendments of 1996. In that short period of time, State 
drinking programs have accomplished much. Through prudent fiscal 
management and oversight, States have managed to leverage their 
resources to fund nearly $7 billion in low or no interest loans to more 
than 3,000 communities. Of those totals, approximately 74 percent of 
the loans and 40 percent of the dollars have gone to smaller 
communities serving populations of less than 10,000 people.

New Security Responsibilities
    Since the terrorist attack in September 2001, States have taken 
extraordinary measures to meet the security-related needs of the 
drinking water community. State drinking water programs have endeavored 
to respond to the significant number of requests for assistance, 
information, and financial support from the systems under their purview 
and to determine how best to ensure that drinking water supplies are 
protected in the event of further terrorist activities. States have 
also been instrumental in providing support and assistance to systems 
in assessing whether a contamination event has occurred and, if so, 
evaluating the magnitude of the public health implications. States have 
devised training and technical assistance programs, initiated new 
communications structures, and begun the work of integrating the 
concepts of enhanced security concerns throughout all aspects of the 
drinking water program.

                    WHY INCREASED FUNDING IS NEEDED

    States must accomplish all of the above-described activities and 
take on new responsibilities while responding to escalating pressures 
to further cut their budgets, streamline their workforces, and operate 
with less State-provided financial support. State drinking water 
programs have always been expected to do more with less and States have 
always responded with commitment and ingenuity. However, State drinking 
water programs are now in crisis.
    In 2002, ASDWA asked each State to complete a self-analysis of 
their program needs. All 50 State drinking water programs responded. 
The results, compiled into a document entitled ``Public Health 
Protection Threatened by Inadequate Resources for State Drinking Water 
Programs: An Analysis of State Drinking Water Programs Resources, 
Needs, and Barriers'', document a shortfall of approximately $230 
million between the funds available to States and the amount needed to 
fully implement State drinking water programs. This ever-widening gap 
is projected to grow to approximately $370 million by 2006.
    Although the 1996 SDWA Amendments authorized the PWSS Program at 
$100 million per year and the DWSRF at $1 billion per year; through 
fiscal year 2003, the last year for which comparable figures are 
available, funds for neither program were requested or appropriated at 
the authorized amount. Through fiscal year 2003, States and territories 
received only 87 percent of the PWSS authorization and just 82 percent 
of authorized levels for DWSRF funds that enable them to make loans to 
drinking water systems. In fiscal year 2003, although the PWSS 
appropriation was increased to $102.6 million, the amount has been 
reduced by an across-the-board rescission and the approximately 7 
percent taken off the top to meet EPA tribal and direct implementation 
needs. No increase was provided for the DWSRF. These actions, in 
effect, have amounted to a net decrease in funds each year as the 
spending power of these dollars steadily declined due to inflation and 
cost of living increases. Meanwhile, the demands on State drinking 
water programs have increased exponentially, as discussed earlier.
    States must contribute a 25 percent match to be able to receive 
Federal PWSS program funds and 20 percent to receive their DWSRF 
funding allocation. Because the needs are so great, States also bring 
additional dollars to the table through fee programs, general fund 
allocations, and other sources. However, many States no longer have the 
luxury--or ability--to continue to overmatch their contributions to 
support and sustain Federal programs.

      FISCAL YEAR 2005 REQUEST LEVELS AND SDWA PROGRAM OBLIGATIONS

The PWSS Program
    This year, the State PWSS program request level in the 
administration's budget has increased to $105.1 million. If approved, 
and unless the request amount suffers another rescission, this action 
would provide an additional $2 million for States to use for public 
health protection activities. While States are appreciative of these 
new funds, they are a literal drop in the bucket (an average of $40,000 
per State), in view of the magnitude of the needs documented in the 
aforementioned State resource needs report. Substantial new 
appropriations are needed for the PWSS program and we would recommend 
that the subcommittee double the requested level to begin to address 
the State resource gap or at least provide funding that would represent 
substantial movement in that direction. These new dollars are sorely 
needed so that States can manage to maintain effective implementation 
of all of their pre-1996 core responsibilities and take on an 
overwhelming list of additional tasks, programs, and regulatory 
implementation requirements such as those for the arsenic, 
radionuclides, and microbial disinfection byproducts rules. States also 
must continue in their responsibilities to ensure that public health is 
protected through preventive measures such as waterborne disease 
surveillance, risk communication, sanitary surveys, laboratory 
certification, permitting, and emergency response.
    ASDWA respectfully requests that the subcommittee appropriate an 
amount substantially greater than the requested amount of $105.1 
million in recognition of the current State drinking water resource gap 
in order to support the PWSS Program for fiscal year 2005. (Doubling of 
the requested amount would be in the range of the current gap.)

The DWSRF Program
    The fiscal year 2005 DWSRF program request in the President's 
budget is once again $850 million. The primary purpose of the DWSRF is 
to improve public health protection by facilitating water system 
compliance with national primary drinking water regulations through the 
provision of loans to improve drinking water infrastructure. The 1999 
EPA Drinking Water Infrastructure Needs Survey indicated that water 
system needs total $150.9 billion over the next 20 years to comply with 
SDWA mandates and that $102.5 billion is needed today to address 
pressing public health needs. In 2002, EPA developed its own ``gap 
analysis'' and reported that drinking water capital needs over a 20-
year period (2000-2019) are estimated to range from $154 billion to 
$446 billion with a point estimate of $274 billion. Of note is that 
neither of these assessments included the impacts of security upgrades 
now being required of water systems. Despite these documented needs, 
the maximum DWSRF appropriation has been $850 million. Without 
significant increases, the DWSRF will never be able to meet the SDWA 
compliance and public health protection goals for which it was 
designed.
    ASDWA respectfully requests that the subcommittee appropriate at 
least $2 billion to support the DWSRF Program for fiscal year 2005 and 
further requests that, in the absence of authorizing legislation for 
fiscal year 2004 and beyond, the backlog of $3.48 billion in unfunded 
authorizations through fiscal year 2003 also be appropriated to assist 
States and water systems in meeting current public health and security 
related infrastructure needs.

Security Responsibilities
    The fiscal year 2005 budget request includes $5 million for State 
drinking water programs to continue to expand their security 
activities, particularly for small and medium systems. States are 
obligated to provide technical assistance, training, and support as 
drinking water systems strive to meet the security requirements imposed 
by the Bioterrorism Act of 2002. Since September 11, States have worked 
to provide accurate and timely information to the drinking water 
community on potential threats, effective countermeasures, and 
available technical assistance to enhance the physical and cyber 
security programs of water utilities. States have developed coordinated 
communications processes within and across State government, with 
appropriate Federal agencies, and with the drinking water utilities 
under their purview to ensure that immediate response can be made in 
the event of a credible threat or event.
    ASDWA respectfully requests that the subcommittee appropriate at 
least $5 million to support State drinking water program security 
initiatives in fiscal year 2005.

                      STATE ACCESS TO DWSRF FUNDS

    ASDWA's own research into State program needs to sustain the 
effectiveness of this public health program under the DWSRF shows that 
States face significant barriers in accessing and utilizing the funds 
effectively: 62 percent of the States cannot meet the multiple match 
requirements (basic program access plus additional match dollars to be 
able to use certain set-aside funds) attached to the DWSRF and 76 
percent of all State drinking water programs have difficulty in 
overcoming the inherent tension between use of the fund for 
administrative versus infrastructure needs. One ``no cost'' solution 
would be to eliminate the dollar-for-dollar match requirement for the 
10 percent program management set-aside. (The current dollar-for-dollar 
match requirement is on top of an existing 20 percent match for the 
fund as a whole; thus making it, in reality, a 120 percent match 
requirement.) This action would require no new funds and would go a 
long way toward helping State drinking water programs meet their 
obligations under the SDWA.
    ASDWA advocates an amendment to the DWSRF provisions at SDWA 
Section 1452(g)(2) that would eliminate the additional dollar-for-
dollar match requirement for States to access the 10 percent set-aside 
for program implementation activities and would appreciate the support 
of the Appropriations Committee in this regard.

                               CONCLUSION

    A strong drinking water program supported by the Federal-State 
partnership will ensure that the quality of drinking water in this 
country will not deteriorate and, in fact, will continue to improve--so 
that the public can be assured that a glass of water is safe to drink 
no matter where they travel or live. States are willing and committed 
partners. Additional Federal financial assistance is needed, however, 
to meet new regulatory and security needs. In 1996, Congress provided 
the authority to ensure that the burden would not go unsupported. In 
2004, ASDWA asks that the promise of that support be realized.
    ASDWA appreciates the opportunity to provide this testimony to the 
subcommittee for its consideration and stands ready to work with the 
subcommittee to ensure the continued protection of public health 
through provision of safe drinking water.
                                 ______
                                 
        Prepared Statement of the American Geological Institute

    Chairman and Members of the subcommittee, I appreciate this 
opportunity to present testimony on behalf of the American Geological 
Institute (AGI) in support of fiscal year 2005 appropriations for the 
National Science Foundation (NSF). The fundamental research funded by 
NSF has fueled our Nation's economic growth and contributes to 
improvements in our health, safety, and quality of life. This 
subcommittee has shown leadership in expanding the Federal investment 
in fundamental research, leadership that will be even more critical in 
the coming year. AGI urges the subcommittee to provide the requested 
amount for the EarthScope project in the Major Research Equipment, 
Facilities and Construction account and to go beyond the President's 
request by expanding support for the Geosciences Directorate within the 
Research and Related Activities account. Both EarthScope and the core 
programs of the Geosciences Directorate represent an important 
investment in the future of our Nation and our planet.
    AGI also supports the Coalition for National Science Funding and 
its stated target of a 15 percent increase in total funding for the 
Foundation. This is the amount specified in Public Law 107-368 enacted 
in December 2002.
    AGI is a nonprofit federation of 42 geoscientific and professional 
societies representing more than 100,000 geologists, geophysicists, and 
other earth scientists. Founded in 1948, AGI provides information 
services to geoscientists, serves as a voice for shared interests in 
our profession, plays a major role in strengthening geoscience 
education, and strives to increase public awareness of the vital role 
the geosciences play in society's use of resources and interaction with 
the environment.
    Geoscience research plays an increasingly important role in an 
ever-growing range of scientific and societal problems, and Federal 
investments in geoscience research should increase accordingly. Global 
climate change, natural disasters, energy resources, and water quality 
are just a few of the issues that benefit from improved geoscience 
knowledge and understanding. Federal investments in geoscience R&D 
continue to pay enormous dividends, and both the Federal Government and 
the Nation clearly have a stake in maintaining the health of the basic 
science on which applications and policy decisions ultimately must be 
based.
    NSF support for geoscience research activities covers the entire 
spectrum from individual investigators to major research centers and 
large research programs. Many of the most creative and important 
advances in geoscience research continue to be made by individual 
investigators and small research teams that are the backbone of the 
research and graduate education system. NSF should maintain and enhance 
support for this vital component of geoscience research.
    As noted in the NSF budget request, the Foundation has placed a 
special emphasis on investments in the physical sciences. We applaud 
the foundation's emphasis on the need to restore balance and hope that 
the subcommittee views this commitment to the physical sciences 
broadly, including the many subdisciplines of the geosciences within 
that terminological umbrella. While the decline in funding for many 
non-biomedical disciplines is real, any such refocusing should remain 
broad enough to ensure the multidisciplinary nature of today's science, 
mathematics, engineering, and technology research. A balance must be 
found that maintains NSF's hallmark of supporting the most promising 
ideas in research and education.

                      NSF GEOSCIENCES DIRECTORATE

    The NSF Geosciences Directorate is the principal source of Federal 
support for academic earth scientists and their students who are 
seeking insight into the processes that ultimately sustain and 
transform life on this planet. The President has requested a small 
increase (about 2 percent) for this directorate as a whole, including a 
2.7 percent increase to the Earth Sciences Division and a 2 percent 
increase to the Ocean Sciences Division. Moreover, within the $728 
million requested for the directorate, there are funds targeted at NSF-
wide priorities, which are primarily broad interdisciplinary research 
and education efforts. Recognizing that these agency priorities areas 
can result in cutting-edge research and technology, we are nonetheless 
concerned that the President's request would jeopardize the 
directorate's core programs to fund what should be complementary 
initiatives. By meeting the authorized funding level within the 
Research and Related Activities account, the subcommittee would allow 
NSF to strengthen core research by increasing the number and duration 
of grants.

            NSF MAJOR RESEARCH EQUIPMENT ACCOUNT: EARTHSCOPE

    AGI urges the subcommittee to support the NSF Major Research 
Equipment, Facilities and Construction budget request of $50.8 million 
for EarthScope. Taking advantage of new technology in sensors and data 
distribution, this multi-pronged initiative--begun thanks to the 
subcommittee's support in fiscal year 2003--will systematically survey 
the structure of the Earth's crust beneath North America. The fiscal 
year 2005 request includes continued support for deployment of three 
components: a dense array of digital seismometers that will be deployed 
in stages across the country; a 4-km deep borehole through the San 
Andreas Fault, housing a variety of instruments that can continuously 
monitor the conditions within the fault zone; and a network of state-
of-the-art Global Positioning System (GPS) stations and sensitive 
strainmeters to measure the deformation of the constantly shifting 
boundary between the Pacific and North American tectonic plates. AGI 
supports development in conjunction with NASA of the fourth component, 
a satellite-based Synthetic Aperture Radar mission that can measure 
changes in the Earth's crust after earthquakes and volcanic eruptions.
    EarthScope has broad support from the earth science community with 
endorsements from a number of AGI's member societies, including the 
Association of American State Geologists, Geological Society of 
America, Seismological Society of America and Society of Exploration 
Geophysicists. EarthScope has received a very favorable review from the 
National Research Council, which released a report in 2001 entitled 
Review of EarthScope Integrated Science.
    All data from this project will be available in real time to both 
scientists and students, providing a tremendous opportunity for both 
research and learning about the Earth. Involving the public in earth 
science research will increase appreciation of how such research can 
lead to improvements in understanding the environment and a better 
quality of life. As noted by the National Research Council report: 
``EarthScope provides an excellent opportunity to excite and involve 
the general public, as well as K-12 and college students, to work 
together with the earth science community to understand the earth on 
which they live.'' EarthScope can also provide a mechanism to integrate 
a broad array of earth science research data in a unified system to 
promote cross-disciplinary research and avoid duplication of effort.

                NSF SUPPORT FOR EARTH SCIENCE EDUCATION

    Earth science plays a unique and essential role in today's rapidly 
changing world. Most human activities involve interactions with the 
planet Earth, and citizens need a basic understanding of our planet in 
order to make informed decisions about the delicate balance between 
resource use and environmental protection. NSF can improve the Nation's 
scientific literacy by supporting the full integration of earth science 
information into mainstream science education at the K-12 and college 
levels. The inclusion of earth science as a key component in the 
National Science Education Standards developed by the National Academy 
of Sciences presents a tremendous opportunity to achieve this goal.
    AGI strongly supports the Math and Science Partnership (MSP) 
program as it has existed at NSF. This is a competitive peer-reviewed 
grant program and funds are only awarded to the highest quality 
proposals. Shifting the MSP program entirely to the Department of 
Education would mean that all MSP funds would be distributed to States 
on a formula basis. This would provide no incentive for top researchers 
to continue to participate in this important program and would limit 
the flexibility of States to target areas of greatest need. The NSF's 
MSP program focuses on modeling, testing and identification of high-
quality math-science activities whereas the Department of Education 
program does not. Both the NSF and Department of Education MSP programs 
are complimentary to each other and are both necessary to continue to 
reach the common goal of providing world-class science and mathematics 
education to elementary and secondary school students. AGI opposes the 
transfer of the MSP from NSF to the Department of Education.
    We encourage the Education and Human Resources directorate to 
expand its interaction with the Geosciences directorate to further 
integrate research and education activities in the geosciences. 
Improving geoscience education to levels of recognition similar to 
other scientific disciplines is important because:
  --Geoscience offers students subject matter that has direct 
        application to their lives and the world around them. 
        Civilization depends on responsible use of Earth's natural 
        resources, including energy, minerals, and water. Moreover, 
        geoscience plays a key role in environmental protection.
  --Geoscience exposes students to a diverse range of interrelated 
        scientific disciplines. It is an excellent vehicle for 
        integrating the theories and methods of chemistry, physics, 
        biology, and mathematics.
  --Geoscience awareness is a key element in reducing the impact of 
        natural hazards on citizens--hazards that include earthquakes, 
        volcanic eruptions, hurricanes, tornadoes, and floods.
    We urge NSF to continue playing an active role in the major 
transformation that is taking place in geoscience education. For 
example, at the college level, geoscience curricula are changing to 
better incorporate environmental issues and changing employment 
opportunities. Improved teaching methods and new educational 
technology, combined with improvements in college and pre-college 
geoscience curricula, may help capture and hold the curiosity and 
enthusiasm of students and better prepare them for the workplace of the 
21st century. At the graduate and postdoctoral level, fellowships are 
increasingly critical in the geosciences because students, following 
the lead of industry and consumer needs, are conducting research that 
crosses traditional departmental, disciplinary, and funding boundaries.
    Yet some Americans, particularly those of lower income, are still 
significantly underrepresented in geoscience education. The problem is 
substantially worse at the graduate level. It is unlikely that any 
profession, including the geosciences, can flourish without greater 
participation by all Americans, including those from historically 
underrepresented groups such as ethnic minorities, women, and people 
with disabilities. Continued NSF leadership is needed to increase 
recruitment and retention of students from these groups through 
improved access to education and research experiences. We must all work 
together to address the underlying factors that prevent such 
participation.
    I appreciate this opportunity to provide testimony to the 
subcommittee and would be pleased to answer any questions or to provide 
additional information for the record.

                                 ______
                                 
  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 11 percent increase in 
funding for Section 106 State Pollution Control Grants. However, it is 
important to recognize that this $22 million increase would be 
dedicated entirely to two specific efforts--i.e., grants to enhance 
State monitoring and support for implementing confined animal and 
stormwater permitting. Special monitoring grants totaling $17 million 
would be targeted to critical information needs, including refined 
biological assessment methods, probability-based designs, landscape 
models and other predictive tools, remote sensing to determine where 
additional monitoring is needed, and targeted monitoring to support 
implementation of total maximum daily loads (TMDLs). Addressing these 
critical monitoring needs is at the foundation of the States' ability 
to successfully implement their Clean Water Act responsibilities. 
Elsewhere in its budget, EPA is also requesting an additional $3 
million for complementary information management efforts within EPA, 
including improvements to the Storage and Retrieval System (STORET) 
that the States and others use to archive, analyze, and exchange water 
quality data.
    The other $5 million in new Section 106 funding would help the 
States meet the increased permitting workload associated with new 
Federal requirements for concentrated animal feeding operations (CAFOs) 
and Phase II stormwater regulations. EPA estimates that the universe of 
regulated facilities has increased ten-fold, further stressing the 
States' already under-resourced permitting programs. This additional 
funding, while not sufficient to fully meet the increased demands, is 
absolutely essential to the States' ability to serve the regulated 
community.
    Under the President's budget, funds in the baseline Section 106 
program would remain static. This is the Federal money that is combined 
with the States' matching dollars to support the core State water 
quality programs, including water quality assessment and monitoring, 
water quality planning and standard setting, total maximum daily load 
development, point source permitting, and training and public 
information. Adequate funds are particularly critical to supporting the 
States' development and implementation of TMDLs. The tasks associated 
with developing TMDLs for impaired waters include watershed 
characterization, computer modeling and related analyses, allocation of 
permissible loads, development of TMDL reports and plans, and public 
outreach and stakeholder development. These responsibilities have the 
potential to overwhelm State agency resources that are in many cases 
already strained. Under the fiscal year 2004 budget of approximately 
$200 million, the five States in the Upper Mississippi River Basin 
received $21.5 million in Section 106 funding. Continuation of this 
funding is fundamentally important to the States' ability to carry out 
their responsibilities under the Clean Water Act.

                   CLEAN WATER STATE REVOLVING FUNDS

    The UMRBA is deeply concerned about the lack of support in the 
administration's fiscal year 2005 budget proposal for the Clean Water 
State Revolving Fund (CWSRF), which helps address wastewater 
infrastructure needs. The CWSRF is widely acknowledged as having been 
pivotal in improving the Nation's water quality. In fiscal year 2004, 
the five Upper Mississippi River Basin States received a total of 
approximately $177 million in CWSRF funding. However, the President is 
again proposing to cut the CWSRF by almost 37 percent in fiscal year 
2005. 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. EPA's own estimates show multi-
billion dollar annual funding gaps for clean water and drinking water 
infrastructure over the next 20 years. While the Upper Mississippi 
River States would agree with EPA's fiscal year 2005 budget 
justification that ``successfully closing this gap will require more 
than federal financial assistance,'' they most definitely do not agree 
that the appropriate response to this daunting challenge is to reduce 
the current level of Federal support still further. The high demand for 
these funds underscores the need to reauthorize CWSRF funding and 
increase annual Federal appropriations to at least $3 billion.

               STATE NONPOINT SOURCE GRANTS (SECTION 319)

    Citing increased resources for the USDA's agricultural conservation 
programs, the administration has requested $209.1 million for the 
Section 319 state nonpoint source grant program, a 12 percent cut from 
the $237.5 million appropriated in fiscal year 2004. Nonpoint sources 
are one of the major causes of water pollution in the Upper Mississippi 
River Basin, which drains the Nation's agricultural heartland. 
Consequently, the proposed reduction in Section 319 funding is 
particularly troubling to the UMRBA. For each of the past 4 years, the 
five States in the Upper Mississippi River Basin have been allocated a 
total of $34 million in nonpoint source grants. While the UMRBA 
welcomes and supports the expansion of USDA conservation programs, it 
continues to be essential to fund the Section 319 program as well. 
Without adequate funding, Section 319 cannot work in tandem with the 
USDA's conservation programs, and certainly cannot address other 
pressing nonpoint source needs 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 
2004 level of $237.1 million, recognizing that continued progress in 
addressing nonpoint pollution will require significantly increased 
resources.

            WATER QUALITY INDICATORS AND ASSESSMENT METHODS

    Developing sound, scientifically defensible water quality 
indicators and assessment methods is a nationwide challenge, but 
nowhere more so than on the country's big rivers. In order to make real 
progress in meeting this challenge, EPA must exhibit strong and 
consistent leadership. However, while the need for improvements in this 
area is broadly acknowledged, the President's fiscal year 2005 budget 
request represents a significant diminution in EPA's commitment to the 
very programs that fund this research. Specifically, under the 
administration's proposal, $22.7 million in ecosystems research under 
the Science to Achieve Results (STAR) program would be eliminated. This 
program of competitive, peer-reviewed grants funds cutting edge 
research on a variety of critical questions, including the development 
of biological indicators for use in assessing water quality on big 
rivers. Similarly, the Central Basin Integrated Assessment, part of 
EPA's Environmental Monitoring and Assessment Program (EMAP), has been 
significantly curtailed and EPA does not intend to provide any 
additional funding in fiscal year 2005. However, the Central Basin EMAP 
still offers promise in advancing monitoring and assessment for the 
large rivers of the Mississippi River Basin. It is critical to maintain 
funding for STAR grants and EMAP if we are to advance the science 
behind water quality indicators and assessment methods. Without such 
funding, the States' ultimate ability to implement their Clean Water 
Act responsibilities on the Upper Mississippi and other big rivers will 
be jeopardized.

                HYPOXIA ACTION PLAN AND WATERSHED GRANTS

    The UMRBA is disappointed that the administration's fiscal year 
2005 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.
    If anything, there is even less emphasis on Gulf hypoxia than in 
the administration's fiscal year 2004 budget proposal, which identified 
implementation of the Hypoxia Action Plan as a focus of its Targeted 
Watershed Grants. While the President is requesting an increase of $5 
million for the watershed grants, $10 million of the $25 million total 
would be set aside for efforts to reduce nutrients from wastewater 
treatment plants on the Chesapeake Bay. Another $4 million would be 
reserved for projects involving water quality trading, leaving only $11 
million for other priorities nationwide. This level of resources is 
simply not adequate to make progress on a problem with the complexity 
and spatial scope of Gulf hypoxia.
                                 ______
                                 
      Prepared Statement of the Santa Clara Valley Water District

               PERCHLORATE CLEANUP IN SANTA CLARA COUNTY

    Background.--The perchlorate originated from a former highway 
safety flare manufacturing plant owned by Olin Corporation, which was 
operated for 40 years. Operations ceased in 1996, and perchlorate 
contamination was discovered in 2000. The Central Coast Regional Water 
Quality Control Board (Regional Board) is providing regulatory 
oversight of the contamination case, which has affected several hundred 
drinking water supply wells. Groundwater is currently the only source 
of drinking water in this area and over 2,000 families are being 
provided with bottled water or treated groundwater. 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 request funding to facilitate a prompt and complete 
cleanup of groundwater resources in the Llagas Valley, Santa Clara 
County.
    Perchlorate Investigation and Cleanup Status.--To date, the 
District has sampled about 1,000 water supply wells in the Llagas 
Valley. In addition, Olin Corporation has sampled about 600 wells. 
Results to date show more than 450 wells with detectable perchlorate 
above 4 parts per billion. Bottled water is currently being delivered 
to over 1,200 families and businesses in the area. Olin Corporation has 
installed perchlorate removal systems on three wells for two small 
water systems in the San Martin area that serve a total of about 450 
customers.
    The full extent of perchlorate contamination has not yet been 
determined. Olin Corporation has installed a groundwater cleanup system 
at their former manufacturing facility. However, they have not yet 
presented a plan for cleaning up the 9\1/2\ mile long plume of 
contamination, controlling additional plume movement, or long-term 
solutions for well water users who currently rely on bottled water. 
Olin has advised State officials that they are not prepared to commit 
to cleanup of perchlorate impacts to private wells until a State or 
Federal Maximum Contaminant Level (MCL) for perchlorate is established. 
Adoption of an MCL at the State and Federal levels has been delayed.
    Additional funding is necessary to determine the best long-term 
solution for the entire groundwater basin and initiate cleanup efforts. 
Funding for District-led initiatives will help break a regulatory 
deadlock with Olin that is currently preventing meaningful action to 
protect well owners.
    Fiscal Year 2004 Funding.--One and three quarters of a million 
dollars was appropriated for Perchlorate activities ($1 million under 
State and Tribal Assistance Grants and $750,000 under Environmental 
Programs and Management account). The 2004 funding will be used to 
further the District efforts to restore clean water supplies to local 
families whose wells are affected by perchlorate. Project ideas include 
a point-of-use drinking water treatment system installation program, 
residential wellhead treatment pilot studies, and well installation to 
provide design criteria for a remediation system.
    Fiscal Year 2005 Funding Recommendation.--It is requested that the 
committee support an appropriation add-on of $4 million from the United 
States Environmental Protection Agency in fiscal year 2005 ($2 million 
under State and Tribal Assistance Grants and $2 million under 
Environmental Programs and Management account).
                                 ______
                                 
          Prepared Statement of the City of Avondale, Arizona

                 AVONDALE WASTE WATER EXPANSION PROJECT

    Chairman Bond, Ranking Member Mikulski, subcommittee members, thank 
you for allowing me to testify in support of $3.2 million in funding 
for the expansion of the City of Avondale's waste water treatment 
facility through the fiscal year 2005 VA, HUD and Independent Agencies 
Appropriations bill. We are grateful that the subcommittee funded this 
important project at $600,000 to begin designing this mandated 
expansion, and we look forward to your continued support of this 
important project.
    Mr. Chairman, let me state it bluntly--we are in a desperate 
situation. The City of Avondale has experienced exponential growth as 
the sixth fastest growing city in the second fastest growing State in 
the Nation. In 1990, the population was approximately 16,800. Today, 
the City has nearly tripled in size to more than 50,000 residents. It 
is estimated that the population will almost double to 80,000 by 2010. 
In 1995, it was estimated that the City's population growth would not 
reach 80,000 until 2020. This rapid and sudden expansion, in 
conjunction with the economic downturn, places City finances at a 
premium to meet its needs to provide water and wastewater capacity that 
serves the expected population growth. As you may know, Avondale has a 
majority of minority races (overwhelmingly Hispanic), and a population 
that is moderate- to low-income. Fourteen percent of Avondale's 
residents live at or below the poverty line.
    The City of Avondale has exhausted all State and local funding 
options prior to seeking Federal assistance. In fact, in 2000, the city 
passed a one-half of 1 cents sales tax to fund street, water and sewer 
projects. The City used this funding source for the first expansion of 
the Wastewater Treatment Plant, which was completed in January 2003. 
The previous 2 years' economic downturn, resulting in declining sales 
tax revenue, has left the city with limited local funds for the next 
expansion of the Treatment Plant, and the City does not have voter 
authorization to issue bonds required by the State Revolving Fund.
    As you know, the EPA mandates that current treatment facilities 
must be expanded once they reach 80 percent capacity. Even with the 
recently completed expansion of the facility, it is estimated that the 
Avondale facility will reach over 80 percent by 2008. Knowing that time 
and money is needed to design such a large project, the City has begun 
the necessary preliminary permitting, environmental and pre-design 
processes in anticipation of the master plan and construction, which 
will be aided by the $600,000 of Federal STAG funds received in fiscal 
year 2004, and the fiscal year 2005 request. With Federal funding, 
however, the city will increase the current 6.4 MGD capacity of the 
plant to 10 to 12 MGD, while also increasing the capacity of the plant 
to reuse treated water for irrigation or recharge purposes, and allow 
the plant to treat effluent to supplement the city's potable water 
supply.
    Furthermore, under the Clean Water Act's outdated formula Arizona 
ranks last in per-capita and per-need funding under the State Revolving 
Fund that is designed to help communities finance infrastructure 
projects. This funding inequity has created problems for communities 
like Avondale that have limited means but that must still meet Federal 
water quality standards. The only fair way to rectify this inequity 
would be for the Federal Government to provide the necessary funds to 
complete the mandated expansion of the facility.
    It is important to note that the City of Avondale's improved and 
expanded wastewater treatment facility will do more than provide 
wastewater services to the residents. It will also provide treated 
effluent that will dramatically reduce its need for potable water 
supplies. The expansion will also enable the City to better meet its 
State-mandated 100-year water supply by recharging the remaining 
effluent into the ground for future use, allowing nature to further 
purify the water in order for it to be used for future potable 
purposes.
    Not only will this expansion allow the City to remain in compliance 
with strict local, State and Federal regulatory requirements, it will 
also add treatment processes that will allow the City to reuse the 
treated wastewater for irrigation purposes, thereby recharging this 
valuable resource. Recharging treated wastewater will allow the City to 
reduce its dependence on imported water sources such as the Colorado 
River, which benefits all municipalities relying on the river.
    Finally, it is important to note that $600,000 included in the 
fiscal year 2004 VA, HUD and Independent Agencies Appropriations bill 
was a critical first step because the waste water plant is reaching 
full capacity. However, it is critically important to keep this project 
on an optimal funding schedule to ensure the project is completed 
before the treatment plant reaches maximum capacity. With that in mind, 
we can utilize $3.2 million in fiscal year 2005 toward completion of 
this $20 million project of which the City will provide 53 percent of 
the funding.
    This project serves a broad public purpose in three ways: (1) it 
will allow the City to continue to provide the necessary sewer service 
for our residents; (2) will benefit the rest of Arizona by helping to 
cut down on the amount of scarce water the City uses, because the plant 
also treats the water to allow it to be re-used for irrigation 
purposes; and (3) will allow the city to treat the effluent to bring it 
up to Class A standards and to recharge it into the ground to be 
withdrawn later as potable water.
    Again, I ask that you support the City's request for $3.2 million 
from the STAG account in the fiscal year 2005 VA, HUD and Independent 
Agencies Appropriations bill for the expansion of our waste water 
treatment plant. Thank you in advance for your consideration of this 
request.
                                 ______
                                 
   Prepared Statement of the K-12 Science, Technology, Engineering & 
                    Mathematics Education Coalition

    We encourage you to continue the Federal commitment to math and 
science education by maintaining the peer-reviewed Math and Science 
Partnerships (MSPs) at the National Science Foundation (NSF) and 
supporting robust funding for both the U.S. Department of Education 
(ED) and the NSF Math and Science Partnership programs.
    We urge you to oppose the administration's budget proposal that 
would phase-out the NSF MSP program and establish a new Federal grant 
administered by the Secretary of Education that would, in effect, limit 
individual States' discretion to target much-needed funds for local 
science and mathematics education reforms.
    We believe that the MSPs at both the Department of Education and at 
NSF are necessary and complementary. Without one, the other is 
significantly weakened.
    The competitive, peer-reviewed, NSF MSPs seek to develop 
scientifically sound, model, reform initiatives that will improve 
teacher quality, develop challenging curricula, and increase student 
achievement in mathematics and science. The funds appropriated under 
NCLB for the ED MSPs go directly to the States as formula grants, 
providing funds to all States to replicate and implement these 
initiatives throughout the country.
    While we support the administration's proposal to increase funding 
for the ED MSPs, we oppose the creation of a new $120 million ED grant 
program that runs counter to congressional intent by focusing only on 
math and reducing State flexibility to target funds to areas of 
greatest need. We encourage you to oppose new restrictions on the 
additional funding slotted for the State-based ED MSPs.
    In summary, we strongly urge Congress to: (1) reject the 
administration's proposed phase-out of the NSF MSP program; (2) oppose 
additional restrictions to the ED MSP program; and (3) provide robust 
funding for both MSP programs.
                                 ______
                                 
        Prepared Statement of the Village of Wellington, Florida

    Mr. Chairman and members of the subcommittee, on behalf of the 
Village of Wellington, we are pleased to submit this statement for the 
record in support of our request for funding in the amount of 
$3,000,000 for The Village's Water Cleanup and Phosphorus Removal 
Project. We respectfully request that this funding be provided through 
an appropriation to the Environmental Protection Agency and that the 
funding be included in the fiscal year 2005 Appropriation Bill for VA/
HUD and Independent Agencies.

                       PROJECT EXECUTIVE SUMMARY

    The 1994 Everglades Forever Act (EFA) established water quality 
goals for the restoration and preservation of the Everglades Protection 
Area. It also identified Basin B within the Village of Wellington as an 
area that will need to meet the new phosphorus standard by December 31, 
2006 for its stormwater discharges into the Arthur Marshall Loxahatchee 
National Wildlife Refuge (Conservation Area No. 1).
    The Acme Basin B Discharge project is one of 55 that comprise the 
Comprehensive Everglades Restoration Plan (CERP). The Basin B drainage 
area is part of the Acme Improvement District, which was created by the 
State of Florida in 1953 to provide drainage for agricultural land in 
central Palm Beach County. During the 50 years since its inception, 
land uses within the improvement district have changed dramatically. 
The Acme Improvement District now serves the Village of Wellington and 
over 50,000 residents. Basin B consists of 8,680 acres of low-density 
development located in the southern half of the Improvement District. 
The western boundary of Basin B abuts the Loxahatchee Refuge.
    The benefits created by the CERP Acme Basin B Discharge project are 
largely related to restoration of the natural environment. The health 
of the Loxahatchee Refuge and Everglades National Park will be enhanced 
with improved quality and quantity of water generated from within the 
basin. Specifically, the project will provide the equivalent of 28.5 
million gallons of water per day to the Everglades, which, without the 
project, would be needlessly sent to the ocean via the Lake Worth 
Lagoon.
    The Village has been working diligently to arrive at a solution to 
meet the EFA requirements in an economic and technically feasible 
manner. The actual phosphorus standard will be adopted by the Florida 
Department of Environmental Protection (FDEP) through the Environmental 
Regulatory Commission (ERC). Therefore, the Village has been evaluating 
numerous alternatives to be used, to arrive at a Basin B Water Quality 
Clean Up Solution.
    Some of these alternatives that have been, or are still being, 
evaluated, are:
  --A water quality improvement Pilot Program with CH2M Hill 
        Constructors, Inc.
  --Development of a Best Management Practices (BMP) Ordinance with 
        phosphorous fertilizer limitations and livestock waste handling 
        procedures among others.
  --Preparation of a Request for Proposals and obtaining responses for 
        a ``Multi-Purpose Stormwater Management Program'' as a design/
        build/operate (DBO) contract.
  --Development of Basin B Water Quality Clean Up alternatives for 
        further evaluation by the South Florida Water Management 
        District (SFWMD) through its study consultants, Burns & 
        McDonnell, and Brown & Caldwell.
  --Work with SFWMD and the U.S. Army Corps of Engineers through a 
        Cooperation Agreement with SFWMD to develop a Basin B Water 
        Quality Clean Up Plan as an already federally authorized Other 
        Project Element (OPE) of the Comprehensive Everglades 
        Restoration Plan (CERP).
  --Implementation of a detailed water quality monitoring program to 
        identify ``hot spots'' within Basin B for potential individual 
        site specific clean up.
    As part of its Basin B Water Quality Clean Up Initiative, the 
Village of Wellington assembled a ``Surface Water Action Team'' (SWAT) 
comprised of key personnel and expert consultants. The SWAT Team, while 
continuing to work on many of the above initiatives, is presently 
working on a Phase II BMP Ordinance, along with an updated Cooperative 
Agreement with SFWMD.
    The ongoing water quality monitoring program has indicated a fairly 
significant decrease in average phosphorus concentrations since 1999. 
In 1999, the average Basin B phosphorous concentration discharged to 
the Loxahatchee Refuge was 189 parts per billion (ppb). In 2002, the 
average concentration has dropped to 88 ppb, which is a 53.4 percent 
decrease in phosphorus levels. Although inconclusive, it is likely that 
the implementation of the BMP Ordinance played a part in this decrease 
in phosphorus concentrations.
    To date, the Village of Wellington has made a considerable 
financial investment of approximately $3.25 million, not including 
internal staff hours, in an effort to meet the standards set by the 
Everglades Forever Act requirements.

                               CONCLUSION

    The Village of Wellington would appreciate the subcommittee's 
favorable consideration of our request for $3 million for fiscal year 
2005 in the EPA portion of the subcommittee's bill to support the 
Village's Water Cleanup and Phosphorus Removal Project.
    Thank you for your consideration of our request.
                                 ______
                                 
 Prepared Statement of the People for the Ethical Treatment of Animals 
                                 (PETA)

    Chairman Bond, Ranking Member Mikulski, and Members of the 
subcommittee, People for the Ethical Treatment of Animals (PETA) is the 
world's largest animal rights organization, with 800,000 members and 
supporters. We greatly appreciate this opportunity to submit testimony 
regarding the fiscal year 2005 appropriations for the Environmental 
Protection Agency (EPA). Our testimony will focus non-animal chemical 
toxicity tests that are available to replace animal tests currently 
required by the EPA.
    As you 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, as of this 
writing, has still not 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 the following 
report language:

    ``The Administrator of the EPA is required to report to Congress no 
later than December 1, 2004, regarding the use of 
CorrositexTM and `human skin equivalent' tests such as 
EpiDermTM and EpiSkinTM for skin corrosion 
studies, in vitro methods using skin from a variety of sources (e.g. 
human cadavers) for skin absorption studies, and human volunteer 
clinical skin-patch tests (for chemicals first determined to be non-
corrosive and free of other harmful properties) for skin irritation 
studies. The Administrator should describe the reasons for which the 
agency has delayed accepting the aforementioned methods for regulatory 
use as total replacements for their animal-based counterparts, exactly 
what steps the agency is taking to overcome those delays, and a target 
date by which the agency intends to accept these methods for regulatory 
use.''

    PETA also supports the testimony submitted by the Doris Day Animal 
League requesting that targeted existing resources in the EPA's Science 
and Technology account for the Office of Research and Development be 
used to fund specific validation studies of non-animal test methods to 
speed their acceptance by the agency.

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 4 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
    Whereas animal testing can cost more than $1,800, 
EpiDermTM costs on average less than $800. Unlike animal 
testing that can take 2 to 4 weeks, CorrositexTM testing can 
provide a classification determination in as little as 3 minutes and no 
longer than 4 hours, and costs less than $200 per chemical tested.
    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 2005 VA, 
HUD and Independent Agencies Appropriations bill stating that:

    ``The Administrator of EPA is required to report to Congress no 
later than December 1, 2004, regarding the use of 
CorrositexTM and `human skin equivalent' tests such as 
EpiDermTM and EpiSkinTM for skin corrosion 
studies, in vitro methods using skin from a variety of sources (e.g. 
human cadavers) for skin absorption studies, and human volunteer 
clinical skin-patch tests (for chemicals first determined to be non-
corrosive and free of other harmful properties) for skin irritation 
studies. The Administrator should describe the reasons for which the 
agency has delayed accepting the aforementioned methods for regulatory 
use as total replacements for their animal-based counterparts, exactly 
what steps the agency is taking to overcome those delays, and a target 
date by which the agency intends to accept these methods for regulatory 
use.''

    PETA also supports the testimony submitted by the Doris Day Animal 
League requesting that targeted existing resources in the EPA's Science 
and Technology account for the Office of Research and Development be 
used to fund specific validation studies of non-animal test methods to 
speed their acceptance by the agency.
    Thank you for your consideration of our request.
                                 ______
                                 
 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 2005 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 53 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. These agencies must work to limit or 
prevent emissions of a variety of pollutants from many different 
sources. These include particulate matter, ground-level ozone, toxic 
air pollution, and acid rain, among others. In order to protect public 
health, State and local air pollution control agencies are responsible 
for implementing myriad activities and programs. These include, among 
others, developing State Implementation Plans, monitoring ambient air 
quality, developing inventories of emissions, formulating air pollution 
control strategies, providing compliance assistance to the regulated 
community, issuing permits to sources, inspecting facilities, carrying 
out enforcement actions, and providing public education and outreach. 
In addition to maintaining the fundamental and ongoing elements of 
their programs, State and local air agencies must, at the same time, 
address new and emerging problems.

                             RECOMMENDATION

    Section 105 of the Clean Air Act authorizes the Federal Government 
to provide grants up to 60 percent of the cost of State and local air 
quality programs, while State and local agencies must provide a 40 
percent match. The reality is that the Federal share represents only 
approximately 25 percent of the total State/local air budget, while 
State and local governments provide 75 percent (not including income 
from the Title V permit fee program).
    It is estimated that the total amount spent on State and local 
efforts to implement the Clean Air Act is approximately $900 million. A 
study that the U.S. Environmental Protection Agency (EPA) and STAPPA 
and ALAPCO conducted several years ago concluded that State and local 
programs faced a deficit of approximately $163 million, meaning that 
the total needed is over $1 billion. If EPA were to support 60 percent 
of that total, as the Clean Air Act envisioned, Federal grants would 
amount to $600 million annually.
    Unfortunately, the administration has recommended a total of $228.6 
million in fiscal year 2005 for grants to State and local air quality 
agencies under Sections 103 and 105 of the Clean Air Act, which is far 
short of the $600 million that is needed. To make matters worse, over 
the past decade, Federal grants for State and local air agencies to 
operate their programs have decreased by 25 percent in terms of 
purchasing power (when adjusted for inflation).
    In light of the need for a substantial increase, the budget request 
is insufficient to support State and local air agency efforts. However, 
we recognize that Congress must address many competing needs and cannot 
fund many activities and programs as fully as necessary. Therefore, 
although we believe that air pollution poses a significant threat to 
public health and should be among our highest priorities, we are 
recommending that Federal grants to State and local air quality 
agencies be increased by only $100 million above the President's 
request in fiscal year 2005, for a total of $328.6 million. While this 
will not fill the gap entirely, it will provide a much needed increase 
to State and local air quality efforts. Unless State and local air 
quality programs receive a substantially greater boost in funding, they 
will continue to face a serious financial shortfall, which will 
adversely affect their ability to protect and improve air quality. This 
shortfall will only become worse as greater demands are placed on their 
programs.

       AIR POLLUTION POSES SEVERE HEALTH AND ENVIRONMENTAL RISKS

    In spite of the best efforts of air quality regulators, air 
pollution poses a serious threat to public health and the environment. 
In fact, we know of no other environmental problem that presents a 
greater risk. It is a pervasive and universal danger--all of us 
breathe. We have no choice in the matter. While some of us can choose 
to eat certain foods or select what we drink, we have no option but to 
breathe the air that is in our midst.
    Unfortunately, the fact is that many, if not most, people in the 
United States are exposed to unhealthful levels of air pollution. In 
this country, over 170 million tons of pollution are emitted into the 
air each year. An astounding 133 million people live in areas of the 
country that violate at least one of the six health-based National 
Ambient Air Quality Standards (NAAQS). Many millions are exposed to 
toxic air pollutants that cause cancer and other health problems. When 
we consider our children, who are among our most sensitive and precious 
populations, the bad news mounts. In 1996, all children lived in 
counties in which the combined estimated concentrations of hazardous 
air pollutants exceeded a 1-in-100,000 cancer risk benchmark; 
approximately 95 percent lived in counties in which at least one 
hazardous air pollutant exceeded the benchmark for health effects other 
than cancer. 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. These figures are nothing less than shocking.
    The following is greater detail about just a few types of air 
pollution that we face.
    The first is fine particulate matter--or PM2.5. The U.S. 
Environmental Protection Agency has established a new standard for 
PM2.5. While the agency has not yet officially designated 
which areas of the country violate the standard, we know one thing: 
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. Based on preliminary data, it appears that PM2.5 
concentrations in over 120 counties throughout the United States exceed 
the health-based standard.
    We have faced an uphill battle against ground-level ozone, or 
``smog.'' In spite of our efforts, levels of ozone in some parts of the 
country actually increased during the past 10 years, and in 33 national 
parks, ozone has risen by more than 4 percent. A significant factor in 
this trend is the increase we have experienced in nitrogen oxide 
(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 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 8-hour ozone standard.
    Another concern is the serious public health threat posed 
nationwide by emissions of hazardous air pollutants (HAPs). According 
to EPA's most recent National-Scale Air Toxics Assessment, more than 
200 million people in the United States live in areas where the 
lifetime cancer risk from exposure to HAPs exceeds 1 in 100,000 and 
approximately 3 million face a lifetime cancer risk of 1 in 10,000. To 
put this in context, consider that EPA has established 1 in 1,000,000 
as the generally acceptable level of risk. These figures demonstrate 
that HAP emissions are a nationwide threat. It will require a 
significant level of effort to reduce the risk they pose to all of us.
    One HAP that is especially worrisome is mercury. Air emissions are 
responsible for much of the mercury that is found in fish. This is a 
significant problem, especially for those who rely on fish as an 
important part of their diets. In this country, in 1999-2000, 
approximately 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). Due to public health concerns about the 
consumption of mercury in contaminated fish, 45 States, territories and 
tribes have issued advisories to the public about elevated 
concentrations of mercury in the fish that is caught in their water 
bodies.
    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.

 SOURCES OF FUNDING FOR STATE AND LOCAL AIR POLLUTION CONTROL PROGRAMS

    State and local air pollution control programs are funded through a 
variety of sources. These include State and local appropriations; the 
Federal permit fee program under Title V of the Clean Air Act; State 
and local permit and emissions fee programs and Federal grants under 
Sections 103 and 105 of the Clean Air Act. Section 103 traditionally 
funds specific monitoring efforts (e.g., particulate matter or air 
toxics monitoring). Section 105 supports the fundamental elements of 
State and local air quality efforts, including, but not limited to, the 
personnel needed to run the programs.
    As discussed above, State and local contributions provide a 
disproportionate share of air budgets. Unfortunately, not only have 
Section 105 grants failed to equal the percentage of the total air 
budget that the Clean Air Act envisioned, they have actually declined 
by 25 percent in terms of purchasing power during the past decade, from 
$224 million to $168 million in 2003 dollars. This decrease has come at 
the same time that State and local responsibilities have steadily 
increased. We have attached to this testimony a chart that illustrates 
Section 105 grants from fiscal year 1993-fiscal year 2003, adjusted for 
inflation (based upon U.S. Department of Labor inflation statistics).
    Since Federal grants to State and local air agencies have not risen 
commensurately with their needs, and in fact have declined in terms of 
purchasing power, State and local air agencies have attempted to 
accommodate deficiencies in their budgets. They have tried to maximize 
efficiencies (i.e., working better and smarter), trim any ``fat'' from 
their budgets, disinvest programs that are not essential and raise 
revenues on the State and local levels. Unfortunately, even those 
measures are not enough to accommodate the shortfall.
    Many believe, mistakenly, that the permit fee program under Title V 
of the Clean Air Act Amendments of 1990 was the answer to the State and 
local air agencies' financial problems. Unfortunately, those revenues 
do not solve the funding problems for several reasons. First, the fees 
only support the operating permit program and must not be used for 
other activities. Second, fees only apply to major sources and do not 
cover the significant costs related to non-major sources, which include 
minor source permits, monitoring, enforcement, compliance assistance, 
etc. Third, the current fees already are substantial and there would be 
considerable resistance to any increases. Fourth, fee revenue is 
decreasing due to reductions in emissions, on which they are based. 
Finally, increases in costs for air quality programs (except for permit 
programs themselves) are not addressed by permit fee programs.
    The Title V fee program, while essential to State and local 
efforts, is not the solution to the funding shortfall. Federal grants 
must be expanded to meet the significant resource requirements.

 EPA/STATE/LOCAL STUDY RECOGNIZED NEED FOR FEDERAL AIR GRANT INCREASES

    Several years ago, EPA, in cooperation with STAPPA and ALAPCO, 
conducted an intensive effort to identify the activities that are 
necessary for State and local agencies to carry out and estimate the 
amount of Section 105 grants needed. The study concluded that a total 
increase of approximately $163 million over Federal grant levels would 
be needed for State and local air agencies to operate a good (not 
perfect) program in fiscal year 1999. In spite of the significant 
funding shortfall identified by the EPA needs assessment study, 
sufficient budget increases in operating programs have not been 
forthcoming. Furthermore, since that time, State and local 
responsibilities have continued to increase, only widening the funding 
gap.

                     HOW WOULD AN INCREASE BE USED?

    State and local air agencies have identified several high-priority 
activities on which they would spend increased grant funds. For 
example, they will be required to develop State Implementation Plans--
plans to implement the 8-hour ozone standard, which is an effort that 
will require significant resources. This will be especially onerous for 
smaller agencies, including local agencies, that have very limited 
resources. In addition, State and local air quality agencies are facing 
many other responsibilities for which additional funds are needed. 
These include 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.

                               CONCLUSION

    Federal grants to State and local air pollution control agencies 
are severely inadequate; accordingly, there are many critical 
activities that are not being carried out, or implemented as well as 
could be. Many of these activities are the foundation of the Nation's 
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. Accordingly, we recommend an 
increase of $100 million above the President's fiscal year 2005 request 
for grants to State and local air quality agencies.
    Thank you for this opportunity to provide our testimony. We will 
also supply you with a report entitled, ``The Critical Funding 
Shortfall of State and Local Air Quality Agencies'', which we have 
prepared to provide additional detail about State and local air 
agencies' funding difficulties. Please contact us if you have questions 
or require any additional information.



                                 ______
                                 
 Prepared Statement of the National Association of State Universities 
                        and Land-Grant Colleges

    On behalf of the National Association of State Universities and 
Land-Grant Colleges (NASULGC), thank you for your support of academic 
research. We appreciate the opportunity to provide recommendations for 
science and technology funding at NSF, EPA and NASA for fiscal year 
2005.

                      NATIONAL SCIENCE FOUNDATION

    As a member of the Coalition for National Science Funding, NASULGC 
supports a 15 percent increase for NSF over the fiscal year 2004 
enacted level, for a total of $6.415 billion. This increase is 
necessary to put NSF on the ``doubling'' track that Congress and the 
President endorsed less than 18 months ago by passing the National 
Science Foundation Authorization Act of 2002. We also oppose the 
proposed transfer of the Math-Science Partnership to the Department of 
Education, because it is well-run by NSF and should remain a 
competitive grant program rather than shifting to block grants. The 
current system, in which NSF's program focuses on the modeling, testing 
and identification of high-quality math and science activities whereas 
the Department of Education focuses on their dissemination, is the most 
desirable and effective approach to address our nation's math-science 
education needs.
    Within the Research and Related Activities (R&RA) account, we would 
like to call your attention to three Directorates of particular 
interest to the environmental science community: Geosciences, Polar 
Programs and Biological Sciences. We ask that you provide these 
accounts with increases equal to the overall R&RA increase. The 
President's budget proposal restricts them all to miniscule increases 
of approximately 1 or 2 percent. We support the President's requested 
$58.3 million increase for Major Research Equipment, Construction and 
Facilities, and urge you to fully fund EarthScope, the National 
Ecological Observatory Network, the Scientific Ocean Drilling Vessel, 
and the Rare Symmetry Violating Processes projects.

                    ENVIRONMENTAL PROTECTION AGENCY

    NASULGC recommends $790 million in fiscal year 2005 for the EPA 
Science and Technology account and $10 million for the Office of 
Environmental Education (OEE). This amount would restore the proposed 
12 percent cut in the President's budget and provide a small increase 
to maintain ongoing programs. Without sound science, EPA will be unable 
to correctly identify and develop sound management and mitigation 
strategies for critical environmental problems. Cuts to EPA S&T account 
would result in drastic reductions in essential extramural research 
funded by the Office of Research and Development (ORD) and education 
and outreach carried out by OEE.
    One of the most effective programs for improving the agency's 
science capabilities is the Science to Achieve Results (STAR) program. 
Despite the National Research Council's recent strong endorsement of 
STAR in its report, ``The Measure of STAR,'' the President's budget 
proposes a cut of approximately 35 percent. We urge you to restore STAR 
funding to $100 million for competitive grants and $10 million for 
graduate fellowships. The small investment EPA ORD makes in STAR is 
functionally one of its most important, because STAR is not a stand-
alone grants program. It is coordinated with EPA program and regional 
offices, and targeted at high-priority needs that support the agency's 
mission. The program is leveraged by the participation of other Federal 
agencies and the private sector, and involves thousands of research 
scholars in universities. These investigator-initiated research grants 
are significantly expanding the number of scientists conducting EPA-
related research and enhancing the overall quality of EPA S&T. STAR 
graduate fellowships are also an excellent investment in the next 
generation of scientists and engineers, and provide opportunities for 
some of the brightest minds to develop the skills to enhance and 
replenish this Nation's environmental science expertise. STAR funding 
is a very important tool in the effort to address the future workforce 
needs of EPA.

             NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

    NASULGC opposes the delays in planned scientific missions and the 
long-term cuts to the Earth Science Enterprise (ESE) proposed in the 
President's budget. While we appreciate the President establishing 
space exploration as a priority, the shifts in funding proposed would 
impact a number of missions that have been carefully planned for years, 
in both Space and Earth Science. This change in priorities was 
developed over a comparatively short time with little community input. 
Therefore, we recommend that NASA engage the National Academy of 
Sciences to set the science goals of the exploration initiative and 
examine the impact of deferred programs, including within ESE.
    The long-term decline in funding for ESE forecast in the fiscal 
year 2005 proposal is very distressing. ESE plays a key role in our 
understanding of the earth and its atmosphere, and sustainable funding 
for these programs should not be abandoned. The proposed cuts to Earth 
Science Application programs would adversely affect funding for 
partnerships that are turning important findings into practical 
applications--such as fire hazard prediction and water availability, 
farming and forestry, and urban and regional planning. Partnerships 
between NASA and the academic community provide the agency with 
flexibility to deal with an aging workforce and the wave of anticipated 
retirements. We urge you to provide, at a minimum, the fiscal year 2004 
appropriated level of $91 million for Earth Science Applications. We 
support the requested levels of $141 million for the NPOESS Preparatory 
Project and $99 million for the Climate Change Research Initiative.

                             ABOUT NASULGC

    NASULGC is the Nation's oldest higher education association. 
Currently the association has over 200 member institutions--including 
the historically black land-grant institutions--located in all 50 
States. The Association's overriding mission is to support high quality 
public education through efforts that enhance the capacity of member 
institutions to perform their traditional teaching, research, and 
public service roles.
    Thank you for the opportunity to share our views with the 
committee.
                                 ______
                                 
   Prepared Statement of the National Coalition for Homeless Veterans

    The National Coalition for Homeless Veterans appreciates the 
opportunity to submit recommendations on fiscal year 2005 
appropriations for and program management issues related to the U.S. 
Department of Veterans Affairs (VA), U.S. Department of Housing and 
Urban Development (HUD), and U.S. Interagency Council on Homelessness 
(ICH).
    The National Coalition for Homeless Veterans (NCHV), established in 
1990, is a nonprofit organization with the mission of ending 
homelessness among veterans by shaping public policy, promoting 
collaboration, and building the capacity of service providers. NCHV's 
nearly 250 member organizations in 42 States and the District of 
Columbia provide housing and supportive services to homeless veterans 
and their families, such as street outreach, drop-in centers, emergency 
shelter, transitional housing, permanent housing, recuperative care, 
hospice care, food and clothing, primary health care, addiction and 
mental health services, employment supports, educational assistance, 
legal aid and benefit advocacy.
    The VA estimates that more than 299,000 veterans are homeless on 
any given night; more than 500,000 experience homelessness over the 
course of a year. Conservatively, 1 of every 3 homeless adult males 
sleeping in a doorway, alley, box, car, barn or other location not fit 
for human habitation in our urban, suburban, and rural communities has 
served our Nation in the Armed Forces. Homeless veterans are mostly 
males (2 percent are females). Fifty-four percent are people of color. 
The vast majority are single, although service providers are reporting 
an increased number of veterans with children seeking their assistance. 
Forty-five percent have a mental illness. Fifty percent have an 
addiction.
    America's homeless veterans have served in World War II, Korea, the 
Cold War, Vietnam, Grenada, Panama, Lebanon, anti-drug cultivation 
efforts in South America, Afghanistan, and Iraq. Forty-seven percent of 
homeless veterans served during the Vietnam Era. More than 67 percent 
served our Nation for at least 3 years and 33 percent were stationed in 
a war zone.
    Male veterans are twice as likely to become homeless as their non-
veteran counterparts, and female veterans are about four times as 
likely to become homeless as their non-veteran counterparts. Like their 
non-veteran counterparts, veterans are at high risk of homelessness due 
to extremely low or no income, dismal living conditions in cheap hotels 
or in overcrowded or substandard housing, and lack of access to health 
care. In addition to these shared factors, a large number of at-risk 
veterans live with post traumatic stress disorders and addictions 
acquired during or exacerbated by their military service. In addition, 
their family and social networks are fractured due to lengthy periods 
away from their communities of origin. These problems are directly 
traceable to their experience in military service or to their return to 
civilian society without appropriate transitional supports.
    Contrary to the perceptions that our Nation's veterans are well-
supported, in fact many go without the services they require and are 
eligible to receive. One-and-a-half million veterans have incomes that 
fall below the Federal poverty level. Neither the VA, State or county 
departments of veteran affairs, nor community-based and faith-based 
service providers are adequately resourced to respond to these 
veterans' health, housing, and supportive services needs. For example, 
the VA reports that its homeless treatment and community-based 
assistance network serves 100,000 veterans annually. With an estimated 
500,000 veterans experiencing homelessness at some time during a year 
and the VA reaching only 20 percent of those in need, 400,000 veterans 
remain without services from the department responsible for supporting 
them. Likewise, other Federal, State, and local public agencies--
notably housing and health departments--are not adequately responding 
to the housing, health care and supportive services needs of veterans. 
Indeed, it appears that veterans fail to register as a target group for 
these agencies.
    We urge Congress to make a public commitment and take immediate 
action to ensure access to housing, income, and health security for 
those who have nobly served our Nation.

 VETERANS AFFAIRS APPROPRIATIONS AND PROGRAM MANAGEMENT RECOMMENDATIONS

    Appropriations for VA Homeless Programs.--The landmark Homeless 
Veterans Comprehensive Assistance Act of 2001 (Public Law 107-95) 
establishes new program authorities and reauthorizes long-standing 
homeless programs within the VA. While the authorization law set 
explicit funding levels for many of the VA homeless programs and 
authorities, actual annual spending levels are set by the VA Secretary 
via allocation of funds from the VA health care account, which are 
appropriated by Congress.
    We are extremely disappointed that the VA, in the three budget 
cycles since passage of Public Law 107-95, has neither implemented each 
of its provisions nor allocated funds from the VA health care account 
to the Department's homeless programs at the levels authorized in the 
statute.
    Accordingly, we request the subcommittee to ensure that sufficient 
funds are included in the fiscal year 2005 VA budget for the 
Department's homeless programs. Further we urge the subcommittee to 
include specific instructions in bill language or report language (as 
appropriate) directing the Secretary to allocate specific funding 
amounts from the VA appropriation to the following VA homeless 
programs:
  --$75 million for the Homeless Provider Grant and Per Diem program, 
        the fiscal year 2005 level authorized by Public Law 107-95. The 
        GPD program provides competitive grants to community-based, 
        faith-based, and public organizations to offer transitional 
        housing or service centers for homeless veterans.
  --$45 million for the Health Care for Homeless Veterans (HCHV) 
        program. This level of funding would enable VA to continue to 
        support 134 existing HCHV teams across the country that provide 
        targeted outreach, medical treatment, and referral services to 
        homeless veterans.
  --$51 million for the Domiciliary Care for Homeless Veterans (DCHV) 
        program. This level of funding would enable VA to continue to 
        support 35 existing DCHVs across the country that provide 
        residential rehabilitation supports to homeless veterans.
  --$10 million for the purpose of expanding domiciliary care capacity 
        (either directly or via contract with nonprofit homeless 
        veteran service providers), the total level authorized for DCHV 
        expansion in fiscal year 2003 and fiscal year 2004. VA did not 
        exercise this authority in either fiscal year.
  --$10 million for Compensated Work Therapy and CWT/Therapeutic 
        Residences. This level of funding would enable VA to continue 
        to support existing CWT and CWT/TR activities.
  --$6 million for the VA staffing component of the HUD-VASH program. 
        Under this program VA disburses Housing Choice Vouchers and 
        provides case management services to 1,780 chronically homeless 
        veterans.
  --$5 million for a demonstration grant program for homeless veterans 
        with special needs, the fiscal year 2005 level authorized by 
        Public Law 107-95.
  --$6 million to establish dental care services for certain homeless 
        veterans, as authorized by Public Law 107-95. The CBO estimate 
        that accompanied Public Law 107-95 estimated this provision to 
        cost $6 million annually. VA implementation of this authority 
        has been mixed.
  --$750,000 for technical assistance grants for nonprofit community-
        based groups, the fiscal year 2005 level authorized by Public 
        Law 107-95.
  --$500 million increase over the fiscal year 2004 level of VA 
        spending on mental health and substance abuse care, in part to 
        implement provisions of Public Law 107-95 requiring the VA to 
        ensure that each primary care facility of the Department 
        develops and carries out plans to provide mental health 
        services and substance abuse services.
  --$27 million for additional comprehensive homeless service centers, 
        as authorized in Public Law 107-95. The CBO estimate that 
        accompanied Public Law 107-95 estimated this provision to cost 
        $27 million annually.
    Of the programs and authorities above, we call special attention to 
our recommendations for the Homeless Provider Grant and Per Diem 
program and the Homeless Veteran Service Provider Technical Assistance 
program, as these are most germane to the community-based, faith-based, 
and local public organizations we represent.
    The Homeless Provider Grant and Per Diem Program provides 
competitive grants to community-based, faith-based, and public 
organizations to offer transitional housing or service centers for 
homeless veterans. The GPD program is an essential component of the 
VA's continuum of care for homeless veterans, assuring the availability 
of social services, employment supports, and direct treatment or 
referral to medical treatment. VA reports that in fiscal year 2002, GPD 
grantees provided 11,013 ``episodes of care'' at an average 85 days 
length of stay per episode--and at an average cost of only $1,674 per 
episode. Using this figure, an increase of the GPD allocation from its 
current $70 million to its full authorized level would enable VA to 
provide a bridge from homelessness to long-term rehabilitation or 
permanent housing for 3,345 more homeless veterans. We urge the 
subcommittee to include report language with the fiscal year 2005 VA-
HUD appropriations measure urging the Secretary to allocate VA 
appropriations to the GPD program at the $75 million authorized level.
    The Homeless Veteran Service Provider Technical Assistance Program 
makes competitive grants to organizations with expertise in preparing 
grant applications to provide technical assistance to nonprofit 
community-based and faith-based groups with experience in providing 
assistance to homeless veterans in order to assist such groups in 
applying for homeless veterans grants and other grants addressing 
problems of homeless veterans. Community-based and faith-based 
organizations serving homeless veterans rely on a complex set of 
funding and service delivery streams with multiple agencies in order to 
assemble comprehensive housing and supportive services. These providers 
face a capacity gap around managing this complexity. We are proud to 
have successfully competed for funding under this program. We believe 
we have been effective stewards of the TA funds and look forward to 
participating in future competitions. We urge the subcommittee to 
include report language with the fiscal year 2005 VA-HUD appropriations 
measure urging the Secretary to allocate VA appropriations to the 
homeless veteran service provider TA program at the $750,000 authorized 
level.
    Capital Asset Realignment (CARES).--We are committed to assisting 
the men and women who have served our Nation in the military in 
accessing adequate nutrition, decent shelter, safe, affordable, and 
permanent housing, health care, and employment assistance or income 
supports. With that goal in mind, we work to ensure that organizations, 
agencies, and groups desiring to assist veterans with these most 
fundamental human needs secure the public and private resources, 
including capital assets, necessary to provide opportunities and 
supports to them. Hence we were and remain quite active in 
participating in the VA's Capital Asset Realignment for Enhanced 
Services (CARES) process.
    With an estimated 500,000 veterans homeless at some time during a 
year and the VA reaching only 20 percent of those in need, 400,000 
veterans remain without services from the department responsible for 
supporting them. In the mean time, numerous VA properties sit vacant or 
underutilized. We had hoped that the CARES process would have been the 
moment when homeless veteran needs could be finally aligned with VA 
property availability, thus making a major stride toward ending 
homelessness for our Nation's veterans. In particular, we had hoped 
that the process would have elicited from the VA a commitment to fully 
implement the McKinney-Vento Title V (surplus property) program. Sadly, 
the Draft National CARES plan submitted by the Department to the CARES 
Commission failed to articulate a coherent national plan to deploy its 
capital assets to maximize housing and supportive services 
opportunities for homeless veterans, and further, neglected to even 
reference the McKinney-Vento Title V program.
    We are pleased that the Commission surfaced our concern in its 
final report to the Secretary. The Commission recommended that ``any 
study involving excess or surplus property should consider all options 
for divestiture, including outright sale, transfer to another public 
entity, and a reformed EUL process. VA should also consider using 
vacant space to provide supportive services to homeless veterans'' (p. 
3-33).
    While the Commission recommends a helpful first step, we are urging 
the Department to be even more vigorous in ensuring that vacant or 
underutilized VA properties are first made available to organizations 
serving those in greatest need rather than continuing to gather dust or 
being converted to commercial purposes. We urge the subcommittee to 
include report language with the fiscal year 2005 VA-HUD appropriations 
measure urging the Secretary to take the following actions with regard 
to management of capital assets:
  --issue a Department-wide directive that articulates that surplus, 
        excess, unutilized or underutilized VA properties shall first 
        be made available on a no-cost or lowest-cost basis to 
        nonprofit or public organizations responding to the human needs 
        of veterans (and low-income persons in general secondarily), 
        with a preference for organizations experienced in serving 
        homeless veterans;
  --establish as a Departmental goal the establishment of at least 
        50,000 additional supportive housing units for homeless 
        veterans on VA property and instruct VISNs to develop concrete 
        action plans for reaching this goal;
  --instruct VISNs to identify and advertise properties currently or 
        potentially suitable and available for disposition under the 
        McKinney-Vento Title V program;
  --instruct VISNs to use the Title V criteria for determining 
        suitability for homeless uses when conducting these property 
        assessments; and
  --take action to ensure the Department's full compliance with the 
        Title V program; prepare an analysis of VA property acquisition 
        and disposition statutes, regulations, and policy guidance and 
        their intersection with the Title V program; and recommend or 
        adopt any changes needed in order for the VA to fully 
        participate in the Title V program.
       hud appropriations and program management recommendations
    Appropriations for HUD-VASH.--The Housing and Urban Development-
Veterans Affairs Supportive Housing (HUD-VASH) program provides 
permanent housing subsidies and case management services to homeless 
veterans with mental and addictive disorders. VA screens homeless 
veterans for program eligibility and provides case management services 
to enrollees. HUD allocates rental subsidies from its Housing Choice 
Voucher program to the VA, which then distributes them to the 
enrollees. Rigorous evaluation of the program conducted by the VA's 
Northeast Program Evaluation Center (NEPEC) indicates that HUD-VASH 
significantly reduces days of homelessness for veterans plagued by 
mental and addictive disorders. HUD currently allocates 1,780 housing 
choice vouchers under this program.
    The Homeless Veterans Comprehensive Assistance Act of 2001 (Public 
Law 107-95) authorizes HUD to allocate 500 additional HUD-VASH vouchers 
to VA in each of fiscal year 2003 through fiscal year 2006. Congress 
authorized the additional vouchers because those currently in 
circulation have been fully utilized by formerly homeless veterans, and 
only a small number become available each year to veterans who are now 
ready to resume living in the community. Inexplicably, HUD has not 
requested funding for additional HUD-VASH vouchers in any of its past 
three budget submissions to Congress. This failure is particularly 
perplexing given that the administration, with Congressional support, 
has made a commitment to ending chronic homelessness. Yet, the HUD-VASH 
program, which addresses the very population addressed by the chronic 
homeless initiative, remains frozen.
    We urge the subcommittee to include in the fiscal year 2005 HUD 
appropriation at least $13.5 million explicitly for the HUD-VASH 
program. This level of funding assumes an average annual cost per 
voucher of $7,000 and would sustain the current 1,780 HUD-VASH vouchers 
in circulation, fill the backlog of 1000 additional authorized vouchers 
that were not put into circulation in fiscal year 2003 and fiscal year 
2004, and fund 500 additional HUD-VASH vouchers authorized for fiscal 
year 2005.
    Appropriations for HUD McKinney-Vento Programs.--HUD McKinney-Vento 
programs (Emergency Shelter Grant, Supportive Housing, Shelter Plus 
Care, and Section 8 Moderate Rehabilitation Single Room Occupancy for 
Homeless Individuals) provide access to emergency shelter, transitional 
and permanent housing, and support services for homeless people across 
the Nation. From a veteran perspective, HUD McKinney-Vento programs are 
especially important for financing housing and services that the VA 
itself is not authorized to offer (e.g., emergency shelter, permanent 
housing), services that VA is not authorized to delegate to nonprofit 
organizations (e.g., case management services), and health and 
supportive services to homeless veterans who live far from VA medical 
centers or outside the range of VA homeless outreach teams. We urge the 
subcommittee to include at least $1.8 billion for HUD McKinney-Vento 
programs in fiscal year 2005 VA-HUD appropriations legislation. In 
addition, we support the administration's request for the Samaritan 
Initiative, which includes a $50 million component for HUD and a $10 
million component for VA.
    HUD McKinney-Vento Program Management.--HUD McKinney-Vento programs 
are the largest source of Federal funding for emergency shelter, 
transitional and permanent housing, and support services for homeless 
people. Despite comprising between one-quarter and one-third of the 
homeless adult population overall, homeless veterans do not receive 
nearly that proportion of McKinney-Vento resources. Homeless veterans 
are inadequately served by many general homeless assistance 
organizations because such agencies fail to identify veterans as they 
enter their programs and thus do not know to refer them to VA programs 
for which they may eligible or to homeless veteran service providers 
with specialized expertise. In addition, some regional and local 
homeless assistance planning bodies are not permitting homeless veteran 
service providers or VA representatives to participate meaningfully in 
their planning and priority setting processes. Our efforts to persuade 
HUD to take action to ensure fairness in the allocation of resources 
for and focused attention to veterans experiencing homelessness have 
fallen on deaf ears. We urge the subcommittee to include report 
language with the fiscal year 2005 appropriations measure urging the 
Secretary to issue HUD McKinney-Vento application or program guidance 
as follows:
  --require applicants for HUD McKinney-Vento homeless assistance funds 
        to develop specific plans for housing and services to homeless 
        veterans. The veteran plans should inventory existing and 
        proposed targeted homeless veteran programs in the service 
        area; identify the unique housing and services needs of 
        homeless veterans in the service area; outline a strategy for 
        addressing services gaps; address how homeless assistance 
        providers will screen housing and services users for military 
        service experience; and describe processes for referring 
        homeless veterans to VA or nonprofit homeless veteran service 
        providers in the service area (if any exist).
  --require collaboration between continua of care established for the 
        purpose of competing for HUD McKinney-Vento homeless assistance 
        funds and Community Homelessness Assessment, Local Education, 
        and Networking Groups (CHALENGs) established by VA medical 
        centers for the purpose of identifying and addressing unique 
        needs of homeless veterans in their service areas.
  --require that continua of care established for the purpose of 
        competing for HUD McKinney-Vento homeless assistance funds 
        include at least one homeless veteran service provider, at 
        least one homeless veteran, and representatives of the VA 
        medical center(s) and Veterans Benefit Administration regional 
        offices within the service area of the continuum.
    Housing Assistance for Low-Income Veterans.--While the Federal 
Government makes a sizeable investment in homeownership opportunities 
for veterans, there is no parallel national rental housing assistance 
program targeted to low-income veterans. Veterans are not well-served 
through existing housing assistance programs due to their program 
designs. Low-income veterans in and of themselves are not a priority 
population for subsidized housing assistance. And HUD devotes minimal 
attention to the housing needs of low-income veterans, as exemplified 
by the long-standing vacancy in the position of special assistant for 
veterans programs within the Office of Community Planning and 
Development. It is imperative that Congress elevate national attention 
to the housing assistance needs of our Nation's low-income veterans. We 
urge the subcommittee to include report language with the fiscal year 
2005 VA-HUD appropriations measure instructing the Secretary to:
  --conduct a quantitative and qualitative study of a representative 
        sample of low-income veterans to determine the extent of 
        housing insecurity among this population, including their 
        barriers to rental housing assistance and homeownership and 
        their past or current homelessness or risk for future 
        homelessness.
  --amend the guidelines for public housing authority plans for public 
        housing and Section 8 and consolidated plans to include 
        veterans sections. The new sections should identify veteran 
        housing needs, priority veteran housing needs, and articulate a 
        veteran housing strategy. In addition, the guidelines should 
        instruct jurisdictions to include veterans, veterans service 
        organizations, homeless veteran service providers, and VA 
        representatives in the public participation processes used to 
        develop the plans.
  --develop a guide for assisting low-income veterans in accessing 
        Federal, State, and local housing assistance resources and 
        services.
  --develop a guide for assisting veterans service organizations and 
        homeless veteran service providers in accessing Federal, State, 
        and local housing assistance funds and housing and community 
        development planning processes.
  --fill the vacancy in the Special Assistant for Veterans Programs 
        position within the Office of Community Planning and 
        Development.

       ICH APPROPRIATIONS AND PROGRAM MANAGEMENT RECOMMENDATIONS

    We are pleased that the Secretary of Veterans Affairs will assume 
the position of Chair of the U.S. Interagency Council on Homelessness 
in April 2004. This occasion provides a tremendous opportunity for the 
Federal Government to focus on the needs of homeless veterans that are 
best met through agencies other than the VA itself. We have urged the 
VA Secretary to use his position as ICH Chair to focus on the following 
interagency efforts: prevent future homelessness of separating service 
members (DOD, DOL, VA), ensure the housing security of low-income 
veterans (HUD, Ag), ensure homeless veteran and veteran service 
provider access to mainstream programs and funding streams (DOL, HHS, 
HUD); and deploy excess and surplus Federal capital assets to best 
address the needs of homeless persons (DOD, VA, GSA, HUD, HHS). We urge 
the subcommittee to include report language with its fiscal year 2005 
appropriation measure urging ICH to declare its 2004-2005 operating 
cycle as the ``year for homeless veterans'' and charging ICH to address 
homelessness prevention among separating service members, housing 
security of low-income veterans, veteran and veteran service provider 
access to mainstream resources and services, and government-wide 
capital asset management. In addition, we urge the subcommittee to 
include $1.5 million for ICH as requested by the administration.

                               CONCLUSION

    The National Coalition for Homeless Veterans appreciates the 
opportunity to submit recommendations to Congress regarding the 
resources and activities of HUD, VA, and ICH. We look forward to 
continuing to work with the Appropriations Committee in ensuring that 
our Federal Government does everything within its grasp to prevent and 
end homelessness among our Nation's veterans. They have served our 
Nation well. It is beyond time for us to repay the debt.
                                 ______
                                 
          Prepared Statement of the Save AmeriCorps Coalition

    As members of the Save AmeriCorps Coalition, we are writing to urge 
you to support the President's fiscal year 2005 funding request of $452 
million for AmeriCorps grants and the National Service Trust. We very 
much appreciate the increase in funding that you provided last year. 
This year's request reflects a 2 percent increase over last year's 
funding level. These funds are critical if AmeriCorps is to continue to 
strengthen and renew our communities through service, and achieve the 
goal of having 75,000 AmeriCorps members this year.
    In his 2002 State of the Union address, President Bush called upon 
``every American to commit at least 2 years . . . to the service of 
your neighbors and your Nation.'' Community based organizations and 
national nonprofit organizations responded to the President's call. 
They reported large increases in the number of people wanting to serve 
their communities through AmeriCorps programs across the Nation.
    AmeriCorps members serve with more than 2,100 local and State 
nonprofit organizations, public agencies, and faith-based organizations 
funded through State commissions as well as with national nonprofit 
AmeriCorps programs including Teach for America, the National 
Association of Community Health Centers, the Red Cross, Habitat for 
Humanity, City Year, and Public Allies, the National Association of 
Service and Conservation Corps, and Jumpstart.
    AmeriCorps members teach in underserved schools, tutor and mentor 
youth, build affordable housing, provide public health services, 
prevent forest fires and do disaster relief, run after-school programs, 
and help communities respond to disasters. Hundreds of AmeriCorps State 
programs clean rivers and streams, enrich after school programs, 
support local law enforcement, deliver services to the elderly, and 
meet other needs defined by the communities they serve. Since September 
11, the AmeriCorps program has expanded its work in public safety, 
public health and disaster relief to assist in homeland security.
    During the funding debate last year, virtually every governor, more 
than 150 mayors, hundreds of university presidents, and corporate and 
civic leaders publicly recognized the good that AmeriCorps has 
accomplished since its creation 10 years ago. More than 100 editorials 
provided ample evidence of how AmeriCorps members improved their 
communities.
    This overwhelming bipartisan support reinforced support for the 
programs. Because of your efforts last year, local communities 
throughout the Nation will continue to be served by as many as 75,000 
AmeriCorps members. To sustain this level of service, we urge you to 
fund AmeriCorps at the level proposed by President Bush in his fiscal 
year 2005 budget.
    This year the Corporation for National and Community Service has 
embarked on a rulemaking process that could affect the future of 
AmeriCorps as much as any substantial reduction in funding. The 
Coalition has submitted a series of recommendations to the Corporation 
that we believe can make AmeriCorps stronger, more efficient, and more 
responsive. A summary of that statement follows. We have attached the 
entire submission for the Record.

 RECOMMENDATIONS FOR RENEWING AMERICORPS--AND DELIVERING ON PRESIDENT 
           BUSH'S NATIONAL CALL TO SERVICE THROUGH AMERICORPS

    In response to the questions raised in the Notice Inviting 
Preliminary Public Input in Advance of Rulemaking, which appeared in 
the Federal Register on March 4, 2004, the Save AmeriCorps Coalition 
has prepared recommendations based on the following principles:
  --Affirm the intentions of the National and Community Service Trust 
        Act of 1993 with regard to the purpose, quality and 
        sustainability of AmeriCorps programs;
  --Support the role of Governors and States to decide what is best for 
        their communities;
  --Promote competition and reward quality;
  --Encourage innovation, entrepreneurship and replication of 
        successful programs;
  --Protect and strengthen the public-private partnership that is the 
        hallmark of AmeriCorps; and
  --Build-up and improve the national service infrastructure based on 
        14 years of experience.
    New rules should support the intent of Congress as reflected in the 
National and Community Service Act of 1990, later amended in 1993, and 
should build on what we have learned over the last 14 years about what 
works. We believe that the law must serve as a point of reference in 
considering any reforms to AmeriCorps. We are concerned that some of 
the proposals, especially those related to sustainability, reflect 
neither the spirit nor the letter of the enacted legislation and are 
being considered without hearings or review by the authorizing 
committees in the Senate and the House.
    In the National and Community Service Trust Act of 1990, as amended 
in 1993, Congress set the following goals for AmeriCorps:
  --``To meet the unmet human, educational, environmental and public 
        safety needs of the United States;
  --``To renew the ethic of civic responsibility and the spirit of 
        community throughout the United States;
  --``To expand educational opportunity by rewarding individuals who 
        participate in national service with an increased ability to 
        pursue higher education or job training;
  --``To encourage citizens of the United States, regardless of age, 
        income, or disability, to engage in full-time or part-time 
        national service;
  --``To reinvent government to eliminate duplication, support locally 
        established initiatives, require measurable goals for 
        performance, and offer flexibility in meeting those goals;
  --``To expand and strengthen existing service programs with 
        demonstrated experience in providing structured service 
        opportunities with visible benefits to the participants and 
        community;
  --``To build on the existing organizational service infrastructure of 
        Federal, State and local programs and agencies to expand full-
        time and part-time service opportunities for all citizens; and
  --``To provide tangible benefits to the communities in which national 
        service is performed.'' Sec. 2. [42 U.S.C. 12501].
    We are confident that by working together we can succeed in 
strengthening, rather than weakening, the national service field 
through rulemaking. It is in this spirit that we offer the following 
recommendations:
  --We support a definition of sustainability that reflects the 
        language in the original law and includes strong and broad 
        based community support.--New rules should affirm the 
        definition of sustainability--which includes ``strong and broad 
        based community support'' as a criterion--in the 1993 amendment 
        to the National and Community Service Act of 1990. 
        Demonstration of such support may include but not be limited 
        to: partnerships at the local level; volunteers serving with, 
        and supported by, AmeriCorps members; endorsement from public 
        officials; funding diversification; etc. Several of the 
        rulemaking proposals being considered with regard to 
        sustainability including time limits and reducing the Federal 
        share of the cost per member are not consistent with current 
        law. The National and Community Service Trust Act of 1993 
        defines sustainability as ``evidence of the existence of (A) 
        strong and broad-based community support for the programs; and 
        (B) multiple funding sources or private funding for the 
        program.'' We strongly support this definition of 
        sustainability and oppose any definition that eliminates strong 
        and broad-based community support as a criterion or that 
        suggests that sustainability should mean operating AmeriCorps 
        programs with declining levels of Federal support. 
        Congressional authorizers wisely understood that sustainability 
        involves more than financial support and is critical to the 
        sustainability and success of AmeriCorps programs.
  --Time limits on program participation in AmeriCorps would decrease 
        sustainability, stifle competition, and discourage private 
        investment.--Time limits contradict the original legislative 
        intent to invest in quality programs that meet community needs.
    --(A) Time limits go against the fundamental, American idea of 
            competition.--CNCS should fund quality programs that offer 
            the best return on taxpayer dollars by ensuring that 
            competition for funding is in no way limited or restricted 
            by time or amount. Evidence indicates that competition is 
            bringing new programs into AmeriCorps. A recent survey 
            conducted by America's Service Commissions, reported that 
            90 percent of the AmeriCorps portfolio has turned over 
            since the first funding cycle. (Only 64 of over 800 current 
            AmeriCorps State grantees have been funded since 1994). Of 
            the 40+ national nonprofit grantees, only a handful 
            received their first funding in 1994. Competition has 
            ensured a dynamic ``marketplace'' for AmeriCorps funding.
    --(B) Time limits would lead to a decrease in sustainability.--The 
            presumption that in order to increase a grantee's 
            sustainability, the Corporation's support for a program or 
            project should decrease over time contradicts the original 
            legislation, which seeks to, ``expand and strengthen 
            existing service programs with demonstrated experience in 
            providing structured service opportunities with visible 
            benefits to participants and the community.'' Gradual 
            reductions in program funding would disinvest in programs 
            that are meeting the sustainability objectives as defined 
            in current law.
    --(C) When Federal funding is cut over time, private sector funding 
            disappears--killing AmeriCorps' hallmark of a public-
            private partnership that works.--Many private sector 
            funders contribute to AmeriCorps because they know their 
            funding is leveraged through public sector support. Some 
            private funders would withdraw support if CNCS funding was 
            no longer available, as demonstrated by a decrease in 
            private sector support for some AmeriCorps programs in 
            2003-2004, when Federal AmeriCorps funding was cut. Rather 
            than promoting sustainability, setting time limits decrease 
            sustainability and result in the closure of some programs.
  --States know best.--The Corporation should support the spirit and 
        practice of devolution and allow governors, State commissions, 
        and parent organizations--which best understand local need and 
        capacity--the maximum flexibility to manage for sustainability 
        and inform national guidelines set by the Corporation. Specific 
        calibrations should be managed by State commissions, as well as 
        national directs who should be held to the same standards as 
        these commissions. States must be given maximum flexibility to 
        ensure quality, accountability, and effectiveness, including 
        the ability to devise matching requirements with aggregate 
        percentages as a goal. State commissions are best able to 
        determine how to balance their State-wide portfolio between 
        programs struggling to meet match requirements with those that 
        can overmatch, thus effectively sharing resources throughout 
        their diverse regions.
      The Corporation should also devise rules that recognize that 
        certain regions of the country, including many low-income, 
        minority, and rural communities, lack private sector funders to 
        offset program costs. A ``one-size-fits-all'' match--
        particularly a large non-Federal match--would pose such a 
        hardship that the communities that most need AmeriCorps 
        services would almost certainly lose them. Community members 
        could no longer serve to improve their own communities.
  --AmeriCorps is a public-private partnership that works--but is 
        easily destroyed by abandoning Federal investment.--It is 
        imperative that the Corporation not abandon the public-private 
        partnership by dramatically scaling back Federal support over 
        time. Private sector partners insist that one of their primary 
        motivations for investing in specific AmeriCorps programs is 
        that the public-private partnership enables all parties to 
        leverage their investments. AmeriCorps program directors 
        continually stress that Federal funds attract private dollars. 
        There is no evidence that shows the private sector is either 
        willing or able to absorb the Federal Government's share in the 
        AmeriCorps partnership. Congress never intended that non-
        Federal sources would pick up the lion's share of AmeriCorps 
        costs. It is essential that CNCS accurately count all private 
        sector investment in AmeriCorps. Currently, the Corporation 
        only requires organizations to report on funding raised to meet 
        the required match, and additional leverage is not accounted 
        for. Only by full accounting of all contributions to AmeriCorps 
        can the Corporation have a true understanding of how Federal 
        investment is leveraged.
  --Use AmeriCorps members as tools to build capacity.--One way to 
        increase sustainability is to allow AmeriCorps members to 
        perform the same capacity building activities that VISTA 
        members do, including raising funds to support programs and 
        services. We propose that AmeriCorps members be permitted to 
        enhance their program's sustainability--and develop new 
        skills--by allowing them to participate in the same capacity-
        building activities as AmeriCorps*VISTA members. We support 
        extending these long-standing authorities to all AmeriCorps 
        members, without making them the exclusive focus of the 
        program.
  --AmeriCorps is highly cost-effective when compared to other 
        successful service providers.--The Corporation should revert to 
        the fiscal year 2003 cost per member of $12,800 and should 
        adjust for inflation thereafter. The Federal share of the cost 
        per member has already declined in real terms over the past 
        decade. In 7 years, the cost per FTE has increased only 9 
        percent (from a low of $11,250 in 1998 to $12,400 in 2004) 
        while the mandatory minimum living allowance has been cost-of-
        living-adjusted by 18 percent in the same time frame (from 
        $8,340 in 1998 to $10,200 in 2004). This means that increasing 
        percentages of program operating costs have been absorbed by 
        private and other public sector funders. In 2004, the minimum 
        living allowance has been increased while the cost per member 
        was decreased, resulting in a $700 per member cut to programs. 
        Furthermore, mandated health insurance costs have risen by over 
        100 percent while the average cost per member grew by only 3 
        percent. The net result is that programs are being starved of 
        operating dollars. Such changes are so destabilizing that some 
        programs have already closed.
  --To leverage non-Federal funds, the Coalition supports increasing 
        the match requirement for program costs from the statutory set 
        level of 25 percent to 33 percent.--Programs, especially those 
        in rural and poor urban areas, already find it difficult to 
        secure private sector support. The Coalition would nonetheless 
        support increasing the match requirement from the 25 percent 
        supported by the statute to 33 percent, provided governors, 
        States and parent organizations have maximum flexibility to 
        meet or exceed match requirements in the aggregate. Programs 
        have already exceeded the statutory requirement of 25 percent 
        by meeting a 33 percent match for program operating costs over 
        the last several years. Further increases to the match 
        requirement would penalize programs for success and limit the 
        number of new applicants who can afford to participate in 
        AmeriCorps, especially those in areas where resources are 
        scarce. Instead, the Corporation should create incentives to 
        capture the true extent to which AmeriCorps programs are 
        leveraging resources.
  --Challenge grants promote competition and leverage private funds.--
        We agree with the goal of trying to stimulate private sector 
        investment through incentives, such as challenge grants. The 
        Corporation's challenge grant fund should be increased to $50 
        million. The National and Community Service Trust Act allowed 
        for Federal challenge grants. We understand that the response 
        was an overwhelming. We suggest that the Corporation provide 
        incentives to programs by expanding the challenge grant 
        program.
  --More efficiency and less administrative burden from the Corporation 
        will make programs more sustainable.--The Corporation should 
        devise strategies for reducing the administrative burden on new 
        programs and give States more flexibility to manage match 
        requirements across portfolios. CNCS should disaggregate 
        planning grants from a State's costs per FTE, and/or ensuring 
        that States annually receive a fixed number of Education Award 
        Only slots that they may award after a local competitive 
        process. These two strategies will specifically benefit new 
        grantees and will prepare them for managing larger grants and 
        programs. New grantees require extensive training and 
        oversight. Their expense inflates the average cost per member, 
        and actually deters States from awarding planning grants and 
        discourages them from bringing new programs into the AmeriCorps 
        portfolio. State commissions report that a year of planning is 
        advisable prior to program implementation. States should be 
        offered a set number of EAO slots by formula allocation to 
        allow them to gradually start new programs, bring down their 
        average cost per member and use the remainder where it is most 
        needed.
  --Healthcare and childcare are essential to ensuring that all 
        Americans can serve their country.--The Corporation should 
        maintain the current statutory requirements for the Federal 
        share of health costs and childcare costs to preserve equal 
        access to AmeriCorps for all Americans. Healthcare and 
        childcare are critical to ensuring that all Americans, 
        regardless of income level, have the opportunity to participate 
        in AmeriCorps. Means testing would add a significant 
        administrative burden and expense to programs stretched thin by 
        complex requirements. In addition, AmeriCorps members that have 
        no other means of support would not be able to afford health 
        coverage on the subsistence level living allowance they receive 
        in exchange for a year of full-time service.
      If childcare benefits are reduced, it is likely that low-income 
        parents would not be able to participate in AmeriCorps. This 
        kind of rule change would have a dramatic impact on areas like 
        rural Mississippi, an economically depressed area where the 
        Delta Reading Corps is composed almost exclusively of young 
        single mothers. Members must already demonstrate that they are 
        income eligible and have children under 13 to receive the 
        childcare benefit and reimbursement rates are based on State 
        parameters.
      Participation in AmeriCorps should not be denied to citizens from 
        low-income communities. AmeriCorps programs offer many 
        disadvantaged young people the chance to develop employment and 
        leadership skills and further their education. Therefore, rules 
        should ensure that AmeriCorps programs allow the largest number 
        of individuals from diverse backgrounds to serve; in 
        particular, youth who are low-income and/or out of school. 
        Rules should be sensitive the fact that programs whose 
        enrollment focus is on low-income, out of school, and minority 
        young people are likely to have challenges in certain areas 
        including recruitment and retention of members.
  --Programs depend on the Federal contribution to member living 
        allowance.--The Corporation should maintain the current 
        statutory requirements for the Federal share of the living 
        allowance at 85 percent, which is already burdensome for many 
        programs. The match share of the living allowance must be 
        provided in cash and from non-Federal sources. Many programs, 
        particularly new programs, those in rural or poor areas, stand 
        alone national service programs and those operating within 
        small nonprofit organizations, rely on in-kind donations to 
        meet match obligations and raising a cash match is already a 
        struggle.
  --The Corporation should strengthen and simplify performance 
        measurement.--The current performance measurement system is 
        burdensome, confusing and time consuming and does not allow the 
        Corporation to make most effective use of the date it collects. 
        The Corporation should develop a standardized list of outcomes 
        and benchmarks for which they want to collect data, and require 
        grantees to report on those that are applicable to their 
        program's mission and model. Performance measures are critical 
        and grantees should be held accountable, but the process needs 
        a more realistic timeframe and simplified directions. The 
        Corporation should design aggregated performance measurement 
        tools for the field and provide grantees with relevant training 
        and technical assistance. It should design separate performance 
        measures for intermediary organizations to ensure that 
        appropriate outcomes are designated without additional 
        administrative burden. In addition, the Coalition urges the 
        Corporation to require end outcomes within a more realistic and 
        useful time frame instead of during the first year of a grant. 
        We recommend creating standard performance measures to 
        aggregate data in the areas of civic education and volunteer 
        generation to eliminate time-consuming guesswork for programs. 
        We also recommend that the Corporation allow more flexibility 
        in WBRS reporting.
  --The ``No-Refill'' Rule hurts communities and schools that depend on 
        AmeriCorps members.--The Corporation should allow States and 
        programs to refill AmeriCorps positions following attrition of 
        members or to re-budget between categories. In the current 
        system, programs cannot re-budget unused stipends and benefits 
        or recruit or enroll new members to fill the slots left open by 
        attrition. This rule undermines commitments to communities and 
        schools. Programs are faced with an even larger burden as they 
        must raise additional dollars to cover fixed costs, such as 
        staff and administration. Because attrition is a natural and 
        expected occurrence for every program, organizations are 
        guaranteed a revenue shortfall by the end of the year. 
        Administrative funds, capped at 5 percent, are also reduced 
        proportionately to what is recovered. True costs are never 
        captured. The inability to provide a contracted number of 
        members to a site may mean that match funding from the site 
        will dry up. This can put small programs out of business. 
        According to a recent GAO survey, 80 percent of programs 
        surveyed commented that the no-refill rule will have a 
        generally or very negative effect on their program (Management 
        of AmeriCorps and the National Service Trust, January 2004, pp. 
        25-26).
      This regulation devised in response to a crisis, has had clear, 
        unfortunate, and unintended consequences. Refilling slots has 
        been the practice in the past, with an historic usage rate of 
        75 percent. Flexibility to refill will therefore produce good 
        results for programs and communities and will not cause a 
        surplus to accumulate in the Trust.
  --Education Award Only slots should be a tool for State flexibility 
        and cost-effectiveness.--A maximum of 40 percent of the 
        AmeriCorps portfolio should be allocated to Education Award 
        Only programs, allowing States to reduce cost per member, and 
        be responsive to both local resources and local needs. The 
        Education Award Only Program was introduced in 1998 to engage 
        more citizens in service and to lower the average cost per 
        member. State commissions should have the flexibility to award 
        Education Award Only slots to ensure that the overall portfolio 
        cost per member is within the prescribed maximum and that 
        programs that need funding or provide more comprehensive 
        service have the funding they need. This allows for wide 
        variation in geographic location, market analysis and funding 
        capacity.
  --Properly trained corps members from all educational levels and 
        backgrounds can be successful tutors and mentors.--
        Paraprofessional requirements for tutoring programs will 
        unnecessarily reduce the number of opportunities to serve and 
        limit the number of citizens who can give back to their 
        communities. The Corporation should focus on the quality, 
        frequency and effectiveness of member training and performance 
        measurement rather than imposing paraprofessional requirements 
        on individual members. AmeriCorps members--senior citizens as 
        well as young people--make excellent and effective tutors for 
        children and youth. In addition to tutoring young people, these 
        members offer a consistent presence for children and often 
        serve as informal mentors to their tutees. An independent 
        evaluation of Experience Corps, a program that engages 
        Americans over the age of 55 in vital public and community 
        service, showed that 69 percent of students that were tutored 
        by Experience Corps members, who receive rigorous training but 
        are not required to be paraprofessionals, improved by at least 
        one grade level. The Corporation should not require that every 
        member be a high school graduate or have earned a GED because 
        this may disqualify people who have the capacity to be 
        successful tutors.
  --To improve efficiency and effectiveness, grant cycles should match 
        needs of programs and the Corporation.--To accommodate the 
        large number of programs that serve in schools, the Corporation 
        should adjust the timing of the grants cycle to a full year 
        between the date of the RFP and the date of the grant award, 
        from June to June. The Corporation should award grants no later 
        than June 1 so that members may be recruited on or very near 
        that date and enrolled. CNCS should clarify that members are 
        allowed to be enrolled as of the award notification date, not 
        the contract execution date. The current time frame does not 
        work for programs with a July 1 start date, who need to recruit 
        members to begin service at the start of the school year. 
        Currently the Corporation requires grantees to have a signed 
        contract in place prior to charging costs or earning hours, and 
        in some States, programs have waited as many as 8 months for 
        contracts to be in place because of the involvement of other 
        government agencies or fiscal agents.
  --The Corporation should simplify the grant process by offering 3-
        year grants with a simple renewal process.--A longer grant 
        cycle would increase efficiency, reduce administrative burdens 
        and costs, reduce paperwork, and ensure continuity in planning. 
        The Corporation can simplify the grants process and reduce the 
        administrative burden on programs by maximizing the use of 
        Progress Reports, developing 3-year budgets from the beginning 
        with new budgets annually, and allowing State commissions to 
        approve continuations and changes. For new grantees, the 
        Corporation should consider amending the initial grant term to 
        2 years to weed out underperforming programs. Those programs 
        that are successful after 2 years would be eligible to compete 
        for 3-year funding.
  --The Corporation should develop separate guidelines to foster the 
        development of both new and existing professional corps.--While 
        professional corps programs can and should meet many of the 
        criteria that other AmeriCorps programs meet, there are some 
        critical distinctions between professional corps and other 
        service corps that should be addressed, including the timing of 
        the grants cycle, which adversely affects teacher corps and 
        other programs operating in schools. In addition, some of the 
        guidelines designed for AmeriCorps programs do not fit 
        professional corps and should be modified.
  --The Corporation should build on the systems and efficiencies 
        offered by State commissions, not repeat them.--The Corporation 
        has a network of State commissions that act as grantmaking 
        entities in every State save one. These organizations have 
        boards that provide diverse views to policy and program 
        development and serve as stewards of the grant-making 
        processes, ensuring their integrity. The Corporation should 
        eliminate processes that repeat these activities at the Federal 
        level and focus some of those resources on the existing State 
        commission network. In addition to saving the resources spent 
        on the peer review process, it could include a reconstruction 
        of the recruitment, training and technical assistance systems 
        as well.
    We offer these suggestions in the spirit of strengthening 
AmeriCorps within the bounds of the current law. We appreciate the 
invitation to offer our comments, and look forward to continuing the 
conversation with the Corporation as the rulemaking process progresses. 
We would be happy to provide more detail or additional information 
about any of the above suggestions.
                                 ______
                                 
    Prepared Statement of the Federation of American Societies for 
                          Experimental Biology

    Mr. Chairman and distinguished members of the subcommittee, I am 
Robert D. Wells, Ph.D., President of the Federation of American 
Societies for Experimental Biology (FASEB) and the Director of the 
Center for Genome Research at the Institute of Biosciences and 
Technology, Texas A&M University, Texas Medical Center in Houston.
    Thank you for the opportunity to testify on behalf of FASEB, the 
largest coalition of biomedical research associations in the United 
States. FASEB, comprised of 22 scientific societies with more than 
65,000 scientists, serves as the voice of biomedical scientists 
nationwide. Our mission is to enhance the ability of biomedical and 
life scientists to improve, through their research, the health, well-
being and productivity of all people.
    Let me express thanks on behalf of FASEB for the support that this 
committee has made to the National Science Foundation (NSF) and the 
Department of Veterans Affairs (VA). We believe that it has been money 
well spent in the public interest and that sustained investment will 
continue to pay extraordinary dividends in the years to come.
    NSF has been the steward of America's science and engineering 
investments for more than 50 years and continues to support the 
fundamental research that leads to groundbreaking advances in science, 
engineering and mathematics. For this reason, we urge the subcommittee 
to sustain the vitality of NSF and set the Foundation's budget on the 
doubling path, which was authorized in 2002, with an increase of 15 
percent to $6.39 billion for fiscal year 2005.
    For the Department of Veterans Affairs (VA), I recommend that you 
support an fiscal year 2005 appropriation of $460 million for the 
direct costs of the Medical and Prosthetics Research Program. I also 
urge you to support an appropriation of $45 million for improvements, 
upgrades and renovation of the VA's increasingly outdated research 
facilities. With thousands of military personnel engaged in overseas 
combat, this is the optimum time to invest in research that could have 
a direct impact on their post-deployment quality of life.

 SUPPORT OF THE NATIONAL SCIENCE FOUNDATION IS CRITICAL FOR OUR NATION 
           TO REMAIN AT THE FOREFRONT OF SCIENTIFIC DISCOVERY

    The National Science Foundation is one of our Nation's most 
important agencies for promoting and funding scientific, mathematical, 
and engineering research and education. This support is across all 
fields of science, as well as for interdisciplinary partnerships and 
new frontiers of scientific inquiry, such as nanotechnology and 
biomedical research.
    Many new products, procedures, and methods have accrued from the 
NSF investment in basic research. Therefore, research of this kind is 
essential to breakthroughs relevant to our modern world even though at 
the time of discovery its relevance is not suspected.
    As an example, Magnetic Resonance Imaging--a technology that is 
highly valued in health care today--is the result of five decades of 
advances in mathematics, physics, chemistry, and biology. And not 
surprisingly, NSF supported much of the research that made MRI 
possible. We must continue to nurture the seed of scientific discovery 
from which today's technology flows.
    The recent budget request proposes a 0.6 percent increase in the 
overall Federal basic research budget of the U.S. Non-medical Federal 
basic research budget will decline by 2.5 percent in fiscal year 2005. 
NSF is an important agency for supporting basic research. In fact, 
although the NSF accounts for only 4.0 percent of Federal spending for 
research and development, it supports nearly 50.0 percent of the non-
medical basic research at our colleges and universities.
    Federal support, applied broadly across all disciplines, is 
critical for the U.S. scientific enterprise to remain healthy and be a 
contributor to innovation 20 to 30 years from now. Neglect of basic 
inquiry, over time, will inhibit the growth of innovation and affect 
the country's economic stability as well as our national security.
    Furthermore, the foundation's mission is imperative to ensuring the 
continuous stream of technological innovations that are essential to 
reinforcing and expanding one of America's main competitive advantages, 
technological leadership in the global economy.
    NSF programs not only provide the underpinnings for technological 
innovation, but also help prepare the next generation of scientists and 
engineers for the jobs of the future. In a recent Department of 
Commerce report, manufacturers have expressed serious concerns about 
whether the United States was adequately preparing the next generation 
of workers for an increasingly high-tech workplace that requires 
advanced labor skills. NSF's Education Directorate provides critical 
support for the education and training of scientists and researchers at 
all levels.
    NSF prides itself on investing in the best ideas from the most 
capable scientists and engineers, as determined by outside reviewers 
through a rigorous, merit-based competitive process. In 2003, it 
evaluated proposals based on both intellectual merit and broader 
society impacts and selected almost 11,000 new awards from more than 
40,000 proposals. This is the lowest funding rate in a decade. Greater 
support would allow NSF to pursue many unmet opportunities, including 
the funding of more highly-rated proposals that will provide the 
potential for the pioneering of dramatic scientific advances.
    We have all benefited from the investment in NSF, but we must not 
be complacent with our past successes. Increased support of basic 
research and the education of the next generation of scientists will be 
critical in expanding the United States' place at the forefront of 
scientific and technological innovation.

 THE VA MISSION IS CENTRAL TO THE HEALTH OPPORTUNITIES AND CHALLENGES 
                      FACING OUR NATION'S VETERANS

    A fundamental responsibility of the Department of Veterans Affairs 
(VA) is to ensure that the Nation's veterans receive the highest 
quality of medical care. The success of this mission is dependent upon 
the quality and dedication of the physicians and researchers who work 
at the VA Medical Centers (VAMCs). By providing a strong environment 
for medical research, the VA has been enormously successful in 
attracting outstanding physicians to serve our veteran population. 
Cooperation between medical schools and VAMCs has flourished because of 
the ongoing state-of-the-art scientific research at the VAMCs. 
Furthermore, the outstanding quality of patient care in VAMCs can be 
directly correlated with the availability of VA research funding and 
the close connection with affiliated medical schools.
    VA research has underwritten both the recruitment and the retention 
of talented physicians, including those hard-to-attract subspecialists 
needed to care for the aging and challenging VA patient population. VA 
subspecialists are predominantly bench researchers who have chosen to 
locate at VAMCs where they can develop and expand their research 
laboratories. The availability of research opportunities helps the VA 
to fulfill its tri-fold obligation to provide optimal care to patients, 
perform cutting edge research and train the next generation of 
clinician-scientists who are so needed to bring insight from the 
patient's bedside to the laboratory bench and back again to the 
patient.
    Federally funded advances in the biological sciences have created 
an unprecedented opportunity for progress against the diseases and 
disorders that plague the veteran population. The administration's 
fiscal year 2005 budget proposes a devastating $20 million (5 percent) 
cut in the R&D appropriation. If enacted by Congress, the VA would be 
unable to maintain its current level of effort in advancing treatments 
for conditions particularly prevalent in the veteran population, 
including prostate cancer, diabetes, heart diseases, Parkinson's 
disease, mental illnesses, spinal cord injury and aging related 
conditions. The VA would also have to suspend its major new initiative 
in military deployment health research as well as delay plans to expand 
efforts in areas such as rehabilitation from traumatic injury, quality 
improvement, chronic diseases and diseases of the brain.
    Three types of researchers, working together, are required for this 
state-of-the-art progress in clinical practice: (1) laboratory 
scientists, who have the knowledge and skills to unravel biological 
complexities and to translate their discoveries into drugs that 
ameliorate disease; (2) clinical researchers, who test whether new 
drugs and approaches are beneficial and safe; and (3) health services 
researchers, who evaluate the most effective and efficient ways to 
utilize new discoveries. No one researcher can function or translate 
new scientific findings without an integrative and collaborative 
approach to the pursuit of new medical knowledge.
    Few research environments attract all three of these types of 
researchers. If properly supported, the VA research enterprise can 
continue to provide the distinctive opportunity to facilitate and 
nurture the important collaborations of the three, while assuring the 
veteran population of the best medical care.
    The veterans, who have made extraordinary sacrifices for our 
Nation, so that we can live in freedom, have relied heavily on 
scientific advances for carrying out their missions, in fighting wars 
and defending threats to our homeland. They have also relied heavily on 
scientific advances for medical diagnoses and treatments they have 
received in the VA hospitals. The next generation of veterans will be 
no less reliant, and research supported by NSF today will surely 
provide significant benefits for them tomorrow.

              RESIST PRESSURES TO DEPART FROM MERIT REVIEW

    The last issue that I would like to discuss with the subcommittee 
does not emanate from the President's budget, but may continue to arise 
during congressional consideration. Congress should continue to resist 
pressures to depart from merit review at all Federal agencies that 
support scientific research, including the VA and NSF. Scientific merit 
review remains the best process for allocating research funds to 
research projects with the greatest promise. Merit review promotes an 
efficient and effective allocation of funds.
    A foundation of modern science is the principle that scientific 
merit is best evaluated by peer review. Whether judging the suitability 
of a manuscript for publication, the selection of grants to be funded, 
or programmatic allocation of research funds within an organization, 
decisions should be based on the advice of experts who are most 
familiar with the science. Recognition by Congress that peer review is 
the fairest and most efficient mechanism for allocation of public 
resources to support scientific research is a major reason why the 
United States leads the world in biomedical research.
    If departures from merit review are permitted, pressure will only 
intensify--and scientific opportunities will be lost. Investing scarce 
resources in anything other than the highest-quality science would be a 
disservice to the taxpayers who are funding this investment in future 
scientific and health improvements.
    We all know that this is an incredibly difficult year for Federal 
budgets and that this committee's task will not be very pleasant. But 
as you decide how to divide up the allocation among the various 
agencies and programs for which you have responsibility, I would ask 
you to consider how interrelated these activities truly are. The 
investments you make in NSF are investments made in the rest of the VA-
HUD bill. I cite just two examples.

                               CONCLUSION

    Mr. Chairman, I thank you and the subcommittee again for this 
opportunity to emphasize the need to adequately support the VA and NSF. 
While these agencies are different in purpose, I would like to again 
point out that scientific research is at the foundation of both of 
their missions. Furthermore, I encourage your support of the merit 
review process, which ensures the quality of work and helps maximize 
the public's investment in both agencies.
    Thank you.
                                 ______
                                 
   Prepared Statement of the American Society of Mechanical Engineers

                           AEROSPACE DIVISION

    Mr. Chairman and members of the subcommittee, the Aerospace 
Division of the American Society of Mechanical Engineers (ASME) is 
pleased to provide this testimony on the President's fiscal year 2005 
budget for the National Aeronautics and Space Administration.

            INTRODUCTION TO ASME AND THE AEROSPACE DIVISION

    ASME is a nonprofit, worldwide engineering Society serving a 
membership of 120,000. It conducts one of the world's largest technical 
publishing operations, holds more than 30 technical conferences and 200 
professional development courses each year, and sets many industrial 
and manufacturing standards. The work of the Society is performed by 
its member-elected Board of Governors through five Councils, 44 Boards, 
and hundreds of committees operating in 13 regions throughout the 
world.
    The ASME Aerospace Division has approximately 15,000 members from 
industry, academia and government. ASME members are involved in all 
aspects of aeronautical and aerospace engineering at all levels of 
responsibility. They have had a long-standing interest and expertise in 
the Nation's federally funded aerospace research and development 
activities at the National Aeronautics and Space Administration (NASA). 
In this statement, the ASME Aerospace Division's Executive Committee 
(herein referred to as ``the Committee'') will address programs that 
are critical to the long-term health of the Nation's aerospace 
enterprise.

                 NASA'S FISCAL YEAR 2005 BUDGET REQUEST

    The Committee applauds the administration for its new space 
exploration initiative. One of the greatest achievements of the United 
States is its position of leadership in space technology, and NASA 
guarantees the United States a competitive edge on the world's 
technological stage. However, while this is potentially a great 
endeavor, we must not neglect other aspects of NASA's responsibilities, 
especially aeronautics.
    While we are pleased with the administration's support for the 
space program, we remain concerned about the relative lack of support 
for the aeronautics research and technology (R&T) programs contained 
within NASA's Office of Aeronautics. This is the portion of the NASA 
budget that has the most immediate and practical benefit to the Nation, 
and yet the administration proposes to reduce those programs by $115 
million from the fiscal year 2004 appropriation of just over $1 billion 
(even with fiscal year 2004 earmarks removed, this still represents a 
reduction of $43 million or 4.5 percent).
    We appreciate that Congress faces a trying budgetary climate this 
year, but we urge you to not only fully fund NASA's fiscal year 2005 
budget request, but to ensure adequate funding for aeronautics R&T. It 
is the Committee's recommendation that the aeronautics portion of the 
NASA budget be increased to $2 billion over the next 8 years, with a 
long-term target of attaining a level of 10 percent of the total NASA 
budget. Achieving this target would re-establish aeronautics funding, 
as a percentage of the NASA budget, at its pre-1990 level. Strong 
investments are required in fundamental engineering research in 
aeronautics, so as to maintain core competency and produce the 
technological advances needed to maintain U.S. long-term leadership.
    There are also important and needed first steps being taken to 
focus our Nation's aeronautics research in government, as well as 
industry and academia, such as the formation of the Joint Planning and 
Development Office to develop a national plan to transform the U.S. air 
transportation system. Our concern is that these first steps come at a 
time of decreasing budgets in aeronautics and that without the 
investment to follow through on these first steps, nothing will happen.

                  AERONAUTICS RESEARCH AND TECHNOLOGY

    The U.S. aeronautics enterprise is confronted with several critical 
challenges--a sharp decrease in the number of new commercial and 
military aircraft programs, a decline in the quality of the research 
infrastructure, and erosion in the technologically literate workforce 
needed to ensure pre-eminence in an increasingly competitive 
marketplace. The issues are not unrelated, and all are driven by 
dramatic reductions in Federal funding for research in aeronautics over 
the past decade.
    Infrastructure.--There is a need to refocus on the infrastructure 
required to develop a new generation of advanced flight vehicles. In an 
era of budget cuts and fewer defense contracts, the Nation has embarked 
on a path where key wind tunnel and other ground test facilities are 
being retired. Our Committee recommends a team of experts from 
industry, government and academia be chartered to identify the 
infrastructure requirements for a robust national aeronautical R&D 
program aimed at developing a new generation of advanced aeronautical 
vehicles. In parallel, funded R&D adequate to sustain or build this 
infrastructure should be identified. The Nation should guard against a 
loss of technical expertise in the critical field of wind tunnel 
testing, a very real possibility in the current climate of attrition.
    Workforce.--Aeronautics faces the same pressures being felt by the 
space industries: fewer research dollars over time has resulted in 
fewer companies with skilled workers capable of designing and building 
complex aeronautical systems. An investment in aeronautics is a matter 
of national welfare and strategic importance. These investments lead to 
high paying jobs for American workers. For example, in the 
manufacturing sector aerospace workers earn 50 percent more than the 
sector average. Also, for every aerospace job created, two additional 
jobs are created in the supplier base.
    Aerospace companies have an aging workforce, a high percentage of 
which will reach retirement age in this decade. Aerospace suffers from 
a lack of available young workers with advanced technology degrees who 
can step in to replace retiring, experienced workers. The aerospace 
industry looks to NASA to create a demand for long-term R&T to 
encourage students to go to graduate school and on to companies who are 
doing aeronautical research.
    Aeronautical Technologies Critical to U.S. Leadership.--Contrary to 
perception, aeronautics is not a mature industry. Exciting new 
opportunities exist for major advances in many areas of aeronautical 
technology, including automated flight vehicles, ``fail-safe'' 
avionics, new platforms/configurations, efficient propulsion, ``quiet'' 
aircraft, enhanced safety, and ``zero'' emissions aircraft. The 
Committee identified numerous technologies that are critical to the 
long-term health of the Nation's civil and military aviation and 
aeronautics technology enterprise including:
  --Flight demonstrations (jointly funded by DOD and NASA) should be 
        sustained at an annual budget level sufficient to determine the 
        integrated performance of promising and dramatic new emerging 
        technology opportunities.
  --Research into avionics systems and their applications should be 
        aggressively pursued because their use is pervasive and is 
        often critical to the success of advanced aircraft 
        developments.
  --Research and development into Uninhabited Air Vehicles (UAVs) 
        should be given sustained support addressing issues of 
        reliability, maintainability and cost, so that the full 
        potential of these promising aircraft can be realized.
  --Quieter, more environmentally friendly aircraft engines are not 
        only possible, but highly desirable over the near- and longer-
        term. More distant, but intriguing, are the possibilities for 
        engines using alternative fuels, including hydrogen. A vigorous 
        pursuit of these technologies is likely to pay rich dividends 
        to the United States air transportation system and the national 
        economy.
  --Research on new and more effective prediction methodologies are 
        sorely needed to meet the challenge of addressing the increased 
        complexity of design decisions. Computational Fluid Dynamics 
        (CFD) methods, for example, have evolved to the point of 
        achieving good correlation with test results, but are so 
        computer-time intensive as to be currently impractical for the 
        multiplicity of calculations needed for design of optimum 
        configurations.
  --Methodologies that facilitate the development of cost-effective, 
        extraordinarily reliable software and systems for safety 
        critical operations should receive the strongest possible 
        support.
  --Composite-Structures research is a critical enabling technology for 
        advanced aeronautical development, and should be vigorously 
        supported. In particular, new advances in manufacturing 
        techniques for large-scale composite structures are required to 
        promote the development of a new generation of aeronautical 
        vehicles.
  --Significant new aerodynamics research is required in support of 
        innovative and promising applications ranging from micro UAVs, 
        to Vertical Takeoff and Landing (VTOL) regional transports to 
        Single Stage to Orbit (SSTO) launch vehicles and hypersonic 
        missiles.
  --Essential simulation, ground, and flight-testing capabilities must 
        be preserved and new, more productive capabilities should be 
        developed--including physical infrastructure and personnel--so 
        that new generations of advanced aircraft can be designed 
        safely to be competitive in the world market.
  --There is a continuing need for R&D into flight mechanics and 
        control for new, innovative configurations including un-piloted 
        aircraft. Research to minimize if not entirely eliminate the 
        impact of pilot and operator errors on flight safety should be 
        a primary focus.
    We urge you to read our more detailed report on ``Persistent and 
Critical Issues in the Nation's Aviation and Aeronautics Enterprise,'' 
prioritizing technologies critical to the long-term health of the 
Nation's civil and military aviation and aeronautics technology 
enterprise which is located on our website at http://www.asme.org/gric/
ps/2003/ASMEPolicyPaper.pdf

                               CONCLUSION

    In conclusion, we applaud the proposed fiscal year 2005 NASA budget 
request as the first step towards reinvigorating the Nation's space 
policy. We urge Congress to continue its support for NASA's long-range 
goals and to support real increases in the NASA Space and Aeronautics 
budget. NASA's fiscal year 2005 budget is the start of many 
opportunities and challenges and we hope that NASA's track record of 
meeting and exceeding the Nation's expectations will be continued into 
the 21st century.
                                 ______
                                 
   Prepared Statement of the American Society of Mechanical Engineers

                   ENVIRONMENTAL ENGINEERING DIVISION

    The Environmental Engineering Division (EED) of the Council of 
Engineering, ASME, is pleased to have this opportunity to provide 
written comments on the fiscal year 2005 budget request for the 
Environmental Protection Agency (EPA).

                              INTRODUCTION

    ASME is a 120,000-member professional organization focused on 
technical, educational, and research issues of the engineering and 
technology community. ASME conducts one of the world's largest 
technical publishing operations, holds numerous technical conferences 
worldwide, and offers hundreds of professional development courses each 
year. ASME sets internationally recognized industrial and manufacturing 
codes and standards that enhance public welfare and safety.
    This testimony represents the considered judgment of the ASME 
Environmental Engineering Division (EED), and does not represent a 
position of ASME as a whole. The ASME EED promotes the art, science, 
and practice of environmental engineering in all issues pertaining to 
the environment. Its members are engaged in a broad range of 
environmental engineering issues, including air, water, and waste 
management.

                               BACKGROUND

    Scientists and engineers have a long-standing professional interest 
in research and technology to protect the environment and human health. 
Mechanical engineers have a breadth of subspecialties, from combustion 
and fluid mechanics to machine and process design and increasingly 
collaborate with other professionals in the course of their work. The 
opinions of the ASME EED reflect a diversity of opinions from ASME 
members who represent many disciplines. Mechanical engineers working in 
various subspecialties form a significant proportion of the technical 
workforce tackling current environmental problems.
    The EPA plays an essential role in the Nation's efforts to protect 
human health and safeguard the natural environment. Protection of the 
environment is defined as action that directly or indirectly protects 
human health and the health of the larger ecosystem, and includes 
conservation and pollution prevention. Accordingly, research and 
development (R&D) in environmental protection includes studies 
pertinent to environmental health, ecology, environmental monitoring, 
environmental technology, pollution prevention, and related topics.
    Given the impact that EPA has on the residents of the United States 
it is encouraging to see that the administration has requested over 
$100 million more for the agency in fiscal year 2005 than it did in the 
previous fiscal year. We note, however, that within this larger budget, 
the request for Science and Technology (S&T) shows a reduction of over 
$42 million. That is a troubling decline, and incongruous with the 
agency's stated goal ``to further strengthen the role of science in 
decision-making by using sound scientific information and analysis to 
help direct policy and establish priorities.'' With this reduction, 
Science and Technology represents less than 9 percent of the requested 
EPA appropriation.
    The EPA fiscal year 2005 budget is organized to support five 
strategic goals supported by a dedicated budget line titled ``Enhance 
Science and Research.'' The resource request to support ``Enhance 
Science and Research'' for each goal and the differences in requests 
(in millions of dollars) between fiscal year 2004 and fiscal year 2005 
are:
  --Clean Air and Global Climate Change: $130.9; +2.8.
  --Clean and Safe Water: $121.0;+0.5.
  --Land Preservation and Restoration: $57.6;-2.3.
  --Healthy Communities and Ecosystems: $394.8;-25.2.
  --Compliance and Environmental Stewardship: $70.1;-7.1.
    Thus the total budget request to ``Enhance Science and Research'' 
for the five strategic EPA goals represents a reduction of over $30 
million when compared with funds allocated in the fiscal year 2004 
appropriation.
    The majority of the fiscal year 2005 S&T budget requested by EPA is 
allocated to the Office of Research and Development (ORD). In fiscal 
year 2005 this amounts to $572 million. Through research and technical 
assistance, ORD provides the scientific foundation for EPA's regulatory 
programs and decisions, assesses the state of the environment, 
identifies emerging issues of potential concern, and provides 
information and tools to support risk-based decisions. Hence the ORD 
administers programs addressing foundational research to improve the 
scientific tools used to understand and evaluate environmental health 
and problem-driven research designed to provide scientific solutions to 
high-priority environmental problems. It is a valuable national 
resource.
    The EPA budget documentation dwells more on attempts to ``prove'' 
the quality of ORD research than on describing the fruits of ORD work. 
While it is essential to insure that Federal funds are used wisely and 
efficiently, it is extremely difficult to demonstrate the worth of 
research and development relying solely on current metrics. Often the 
true value of such investments is only apparent years after the 
investment is made. We hope that ORD is not overly diverted from its 
true mission by constant calls to prove the unprovable. The Science 
Advisory Board (SAB), a collection of eminent scientists that EPA has 
assembled, should be relied upon to provide a quality metric.
    ASME EED notes that many of this administration's most 
controversial proposals (e.g., oil exploration in the Arctic, the 
reduction of allowable arsenic groundwater concentrations, the non-
endorsement of the Kyoto Accords) have environmental dimensions. It is 
critical to protect ORD from political forces so that its peer-reviewed 
research results can be beyond political dispute.

Goal 1--Clean Air and Global Climate Change
    The protection and rehabilitation of stratospheric ozone is one of 
the singularly most important global environmental issues over the long 
term. The budget for this aspect of the Clean Air and Global Climate 
Change strategic goal would increase 14.4 percent from this year to 
next. That is a very positive step in a year of flat overall funding. 
Nonetheless, proposed fiscal year 2005 funding for this program is only 
2.2 percent of the total budget for the Clean Air and Global Climate 
Change goal. The level of funding belies the gravity of the problem it 
addresses.

Goal 2--Clean and Safe Water
    The stated goal of the safe water aspect of this strategic goal is 
to ``restore and maintain oceans, watersheds, and their aquatic 
ecosystems to [1] protect human health, [2] support economic and 
recreational activities, and [3] provide healthy habitat for fish, 
plants, and wildlife.'' While compelling arguments can be made for 
making the protection of human health the agency's primary concern, it 
is disconcerting that economic and recreational activities may hold a 
higher priority than do those of native flora and fauna. Promotion of 
economic and recreational interests is best left with other departments 
within the government. The EPA should concentrate on its role as 
environment steward.

Goal 3--Land Preservation and Restoration
    An ounce of prevention is worth a pound of cure. Thirteen-point-two 
percent ($237 million) of the Land Preservation and Restoration 
strategic goal budget in fiscal year 2005 is devoted to preserving 
land. While this amount is minor compared to the $1.5 billion (83.6 
percent of the Land Preservation and Restoration budget) devoted to 
land restoration, it is positive to see that the land preservation 
portion of the budget has increased a healthy 12.4 percent from the 
fiscal year 2004 level of $211 million. The better land is preserved in 
the present, the lesser the land restoration bills will be in the 
future. It is reassuring to see the foresight of pollution prevention 
and land preservation becoming key aspects of EPA's approach to 
preserving the environment.

Goal 4--Healthy Communities and Ecosystems
    It appears in fiscal year 2005 a greater focus will be placed on 
the ecosystems portion of the Healthy Communities and Ecosystems 
strategic goal. The funding level for ecosystems increases by 25 
percent to $201 million, compared to an increase in funding for 
communities of only 0.2 percent. This level is still only 63 percent of 
the funding for communities, but is a big step towards more equitable 
funding between the two aspects of this strategic goal. The long-term 
benefits of environmental health enhance human communities as well as 
the natural world.
    As with the 3.8 percent decline in science and research under the 
Land Preservation and Restoration goal, the 6.0 percent decline in 
Science and Research for Healthy Communities and Ecosystems from fiscal 
year 2004 to fiscal year 2005 is a harbinger of future problems. 
Tomorrow's solutions are found in today's research and development. 
Delaying the discovery and implementation of new, novel approaches to 
environmental management only increase their cost and the environmental 
losses incurred in the interim.

Goal 5--Compliance and Environmental Stewardship
    The budget for Pollution Prevention and Innovation would grow by 
22.6 percent from fiscal year 2004 to fiscal year 2005. That budget 
shift indicates a commitment to the concept that ``pollution prevention 
has become a key element of initiatives to improve federal 
environmental management.'' Further, it supports EPA's stated plan to 
``work to improve environmental protection and enhance natural resource 
conservation on the part of the government, business, and the public 
through the adoption of pollution prevention and sustainable practices 
. . .''. The EED fully supports the pursuit of this philosophy in 
environmental stewardship. Resource and energy conservation, combined 
with resource recycling, are critical to reducing the future costs of 
environmental remediation and resource recovery.

                          CROSS-CUTTING ISSUES

Scientific Understanding and Risk Analysis
    The ASME EED notes that EPA continually refers to the need to base 
agency actions on ``sound science.'' We believe that the EPA's risk-
based approach, which engages all interested parties (i.e., 
``stakeholders''), provides a good framework for the formulation of 
environmental policies. The EED supports EPA's continuing effort to 
implement a research program that is aimed at expanding the role, and 
improving the state-of-the-art of environmental science as it pertains 
to decision-making and policy formulation.
    The ASME EED supports the goal of applying ``the best science'' to 
the Nation's environmental problems but we note that many of the 
Nation's problems involve potential risks to the public and the 
environment from low levels of hazardous materials. In these instances, 
the scientific basis for decision making is highly uncertain since the 
health impacts of exposure to low levels of hazardous substances is 
largely unknown. The EED supports increased research in this area and 
notes that EPA has requested a large increase in research funding in 
the area of computational toxicology (+$4 million), which should help 
increase the understanding of the impact of low dose exposures. In the 
absence of definitive knowledge of the biological responses to low 
doses of hazardous materials, the ASME EED feels it important that EPA 
acknowledge the uncertainty in its risk estimates whenever 
communicating risk to the public.

Interactions with Other Federal Agencies
    In the absence of definitive scientific data about the risks posed 
by small amounts of hazardous materials, EED believes that EPA must 
insure that corrective measures to eliminate exposure to small 
quantities of such materials do not themselves generate greater risks. 
We therefore recommend that EPA coordinate its activities with other 
Federal agencies to develop an integrated policy that minimizes the 
total risk to all parties, particularly workers. This policy must 
consider environmental risks to the public and to ecosystems, along 
with occupational risks and risks to the public due to remediation 
activities. It would be folly to expose workers and the public to real 
risks while attempting to reduce hypothetical risks to the public and 
the environment.

Oversight of DOE and WIPP
    One of EPA's major radiation-related responsibilities is to certify 
that all radioactive wastes shipped by the Department of Energy (DOE) 
to the Waste Isolation Pilot Plant (WIPP) are permanently and safely 
disposed of, consistent with EPA standards. EPA conducts inspections of 
waste generator facilities and biennially evaluates DOE's compliance 
with applicable environmental laws and regulations. Every 5 years EPA 
must re-certify that WIPP complies with EPA's radioactive waste 
disposal regulations.
    The budget for EPA's oversight of WIPP falls within the protection 
section of its radiation program. The President's request for fiscal 
year 2005 for radiation protection reflects a decrease of approximately 
$1.8 million. The reduction derives from higher priorities within EPA's 
budget. It is not possible to determine from the published documents 
what fraction of the budget reduction EPA's WIPP Program within the 
Office or Radiation and Indoor Air will absorb. However, several 
comments can be made regarding the budget proposal:
  --No mention is made of the ongoing compliance recertification 
        effort. The level of effort required to review the application 
        for recertification, accept public comment, obtain and review 
        additional documentation from DOE, and make a compliance 
        decision will be significant. As the Nation's only operational, 
        certified repository for permanent disposal of radioactive 
        waste, WIPP comprises a key to cleanup of DOE's weapons 
        complex.
  --Performance measures for EPA's involvement at WIPP pertain solely 
        to certification of a specified number of drums for disposal. 
        Certainly this measure represents an important role for EPA. 
        However, the EPA's decision to certify WIPP also included four 
        conditions requiring continued oversight from EPA, a long-term 
        groundwater-monitoring program, and ongoing review of changes 
        to WIPP's operations. One of the conditions imposed by EPA on 
        its certification of WIPP was construction of panel closure 
        systems. Review of documents by an independent oversight group 
        (the Environmental Evaluation Group) documents that DOE intends 
        to request a revision to the certified panel closure design. 
        This would represent a significant change to the EPA compliance 
        baseline for WIPP.
    These topics suggest that additional performance measures specific 
to conditions of the certification and the long-term monitoring program 
should be added to EPA's performance measures. These performance 
measures would serve to enhance public confidence in the facility. By 
contrast, the proposed performance measure reflects a desire to meet 
DOE's need to ship waste from its clean-up sites. Given how central a 
viable WIPP is to DOE's cleanup plans, EPA should carefully weigh the 
impact of budget reductions that support WIPP.

           ENVIRONMENTAL EDUCATION/STRENGTHENING THE S&T BASE

    Extramural research grants and graduate fellowships administered by 
the EPA would be severely cut under the President's proposed budget 
request for fiscal year 2005. EPA's Science to Achieve Results (STAR) 
graduate fellowship program would be cut by 33.5 percent relative to 
the fiscal year 2004 appropriation. EPA's larger STAR research grants 
program would be cut by approximately 30 percent, or $36 million. 
Approximately 93 fewer STAR research grants would be awarded, according 
to EPA's budget justification to Congress. Deep budget cuts in EPA's 
STAR programs have been proposed less than 1 year after the National 
Academy of Sciences (NAS) issued a laudatory report entitled The 
Measure of STAR.
    The STAR fellowship program is the only Federal fellowship program 
designed exclusively for students pursuing advanced degrees in the 
environmental sciences and engineering. It provides funding for 
graduate students interested in the solution of environmental problems 
and allows them to undertake research in areas directly relevant to 
EPA's mission and objectives. It is the opinion of the EED that the 
STAR fellowship program is an important investment in the future of 
both EPA and the Nation. The EED fully supports this program.
    In fiscal year 2005, EPA will also support Association of Schools 
of Public Health (ASPH) fellowships. This investment will help EPA to 
better design its programs for human health outcomes. Under a 
cooperative agreement with the ASPH, eligible fellows are placed in EPA 
labs, centers, and offices to conduct projects that contribute to EPA's 
public health mission. EED supports this program and suggests that it 
be a model for additional fellowships in ancillary areas, particularly 
in occupational health.
    The research portion of the Federal budget is the largest share of 
support for U.S. graduate students in fundamental science and 
engineering disciplines, through both fellowships and research grants 
to universities. In areas such as environmental science and national 
defense, a broad view across agencies, rather than a programmatic view, 
is necessary to ensure sufficient graduates and continuing quality in 
graduate programs. The EED encourages lawmakers to consider not only 
current programmatic needs, but also future national needs, when 
determining the number of graduate students to be funded by Federal 
programs, particularly in science and engineering disciplines. A highly 
trained workforce is vital to ensuring future success in resolving 
national science, security, and technology issues.

                              CONCLUSIONS

    EPA's budget decisions for fiscal year 2005 indicate a 
philosophical commitment to pollution prevention and ecosystem 
preservation that the EED supports. Conversely, the marked decrease in 
funding for science and technology in fiscal year 2005 is disturbing. 
Because of the complex, multidisciplinary nature of environmental 
issues, it is imperative that EPA base its actions on sound science. A 
strong R&D program is essential for the ongoing development of science-
based decision making. Reduced R&D funding will hurt the science and 
engineering community in the present and will, in the future, only 
cause larger, more expensive environmental problems for society at 
large.
                                 ______
                                 
   Prepared Statement of the National Utility Contractors Association

    Chairman Bond, and distinguished members of the subcommittee, thank 
you for the opportunity to provide testimony to your committee on 
issues involving water and sewer infrastructure funding.
    My name is Bill Bowman and I am the President of the National 
Utility Contractors Association (NUCA), which represents thousands of 
companies that provide the materials and workforce to build and 
maintain our Nation's network of water, sewer, gas, telecommunications, 
and other utility systems. I am also the Chairman of the Board of the 
Bowman Group, located in West Berlin, New Jersey, a company I founded 
more than 30 years ago with a handful of men, a backhoe, a dump truck, 
and a small loan. Today my company builds and maintains water, sewer, 
and other underground utility systems in and around Southern New Jersey 
and Southeastern Pennsylvania.
    Let me begin by thanking the committee for its consideration and 
insistence in maintaining level funding for the Clean Water and 
Drinking Water State Revolving Fund (SRF) programs despite what have 
become yearly cuts proposed by the White House budget. This 
subcommittee's efforts to support the SRF programs have benefited 
millions of Americans. I know this because I see it every day I go to 
work.
    I want to voice my industry's strong support for the U.S. 
Environmental Protection Agency's (EPA) Clean Water and Drinking Water 
SRF programs. Simply put, these essential financial programs clean up 
the environment, protect public health, promote economic development, 
and create thousands of jobs. Why then, does the administration 
continually propose to cut the Clean Water SRF by 40 percent when its 
own EPA reports that existing needs exceed $181 billion? We cannot help 
but notice the contradiction between the EPA's needs estimates and the 
President's proposed solution.
    Utility contractors have been called the ``true environmentalists'' 
because we are the ones getting our boots dirty installing and 
repairing the infrastructure that help make our lakes and rivers safe 
for public use. And while I understand that your committee is under 
tremendous pressure to keep Federal spending in check, I urge you to 
boost the Federal capitalization of these funds because not only do 
they enhance our Nation's quality of life, but they help create 
thousands of good paying jobs right in our own backyards. These are 
jobs that cannot be exported--this work must be performed in America.

                               THE NEEDS

    As the committee is well aware, last year the EPA released The 
Clean Watersheds Needs Survey (CWNS) 2000 Report to Congress, which 
painted a bleak picture of America's wastewater infrastructure. The 
CWNS documents State-by-State wastewater infrastructure needs and 
clearly demonstrates that the condition of our Nation's wastewater 
infrastructure is going from bad to worse. The CWNS presents the 
results of a survey of wastewater infrastructure needs conducted 
between April 2000 and January 2002, detailing a total need of $181.2 
billion for publicly-owned wastewater collections, treatment facilities 
and eligible activities to control pollution from storm water and 
nonpoint sources. This figure represents an increase of $26.6 billion 
from the amount reported in the 1996 CWNS. It is important to note that 
previous CWNS reported 20-year modeled needs but that the 2000 CWNS 
represents documented needs. In other words, the 2000 CWNS provides a 
snapshot of what is needed today, not projected over 20 years. This 
change in study methods ``hides'' the true increase because the results 
compare 20-year modeled needs from 1996 against 5-year current 
documented needs from 2000. If the CWNS projected out 20 years, the 
number would be exponentially higher.
    As the committee is well aware, in 2002, the EPA's Clean Water and 
Drinking Water Infrastructure Gap Analysis forecasted a $534 billion 
gap between current spending and projected needs over 20 years for 
water and wastewater infrastructure if Federal funding is not 
increased. To someone in our industry, this is a distressing report 
that in my experience, forecasts an environmental disaster. Even a 
modest 3 percent annual growth in water infrastructure spending will 
project to a $76 billion funding gap over the next 20 years. As a point 
of fact, funding for the Clean Water and Drinking Water SRF programs 
has remained stagnant since 1997. This analysis shows that we are not 
doing enough to tackle this problem.
    The SRF programs are not examples of throwing good money after bad. 
States are making progress in repairing their infrastructure. But the 
infrastructure is failing at a rate that exceeds what the SRFs can 
currently handle.
    As bad as the water infrastructure problems are across America, 
this committee is uniquely positioned to make a change for the better. 
The Gap Analysis clearly shows that a modest increase in Federal 
capitalization grants will limit the funding gap and assist States in 
addressing their water infrastructure problems.

                       PROBLEMS HIT CLOSE TO HOME

    As representatives of NUCA before me have testified, aging 
wastewater infrastructure is failing in every State. Each year, sewers 
back up in basements 400,000 times and municipal sanitary sewers 
overflow on 40,000 occasions, dumping potentially deadly pathogens into 
the Nation's streets, waterways, and beaches. Water and sewer systems 
built generations ago that had projected use periods of 30, 50, and 
even 100 years are all reaching their useful life concurrently. Scores 
of American cities are under consent decrees with the EPA to fix their 
combined sewer overflow problems or face millions of dollars in fines. 
You need not look any further than right here in Washington, DC, where 
we are witnessing a health crisis caused by aging drinking water 
infrastructure resulting in dangerously high lead levels.
    Sometimes it takes the intense media scrutiny during a crisis, like 
the lead problems in the District of Columbia, to get people to notice 
water infrastructure problems. In my business, I see firsthand these 
problems every day. What's out of sight and out of mind to most 
Americans is clearly visible to utility contractors. We regularly 
uncover pipes with gaping holes from which raw sewage escapes into the 
surrounding ground in residential neighborhoods. This leakage can go 
undetected for months, if not years. My colleagues can tell stories of 
finding infrastructure so old that the pipes are made out of hollowed 
tree trunks. To make matters worse, these systems are often within very 
close proximity to lakes and rivers where we swim, fish, and play.
    Conditions grow substantially worse every day. We are knowingly 
failing to refurbish and install vital wastewater infrastructure in a 
meaningful way that maintains public safety, even though we have the 
capability to fix the rotting pipes. It's time we do so before we 
irreversibly contaminate our water supply, before sewer moratoriums 
shut down our communities, and before your constituents' sewer rates go 
through the roof.
    The scenario is becoming increasingly clear: water and wastewater 
infrastructure needs are constantly on the rise while Federal capital 
investment is being sustained but is no longer sufficient. While 
inadequate Federal capitalization is provided every year, the existing 
infrastructure continues to age. Incidents of sewer overflows will 
continue to rise as the declining investment fails to keep up with the 
aging pipes. This financial gap will only get worse unless a firm 
commitment is made and increased Federal resources are provided to 
needy communities.
    Moreover, the current lack of adequate funding unintentionally 
widens the investment gap by sending the implicit message that our 
Nation's environmental infrastructure is not a national priority.

           EFFECTIVENESS OF THE STATE REVOLVING FUND PROGRAMS

    The EPA's SRF programs help ensure the quality of America's 
wastewater and drinking water facilities. Funding from the SRF programs 
provide urgently needed resources for communities across the country to 
address their water and wastewater infrastructure problems.
    Revolving fund programs work in perpetuity. The Clean Water SRF, 
for example, has leveraged approximately $22.4 billion in Federal 
grants into more than $43 billion in revolving loans to communities. 
These loans are then repaid at low interest and redistributed for other 
priority wastewater projects within the State. The Drinking Water SRF 
has provided more than $6.5 billion to communities for drinking water 
projects and State and local activities. These projects are needed to 
maintain compliance with health-based standards, such as installation 
and replacement of failing treatment and distribution systems. The SRF 
programs have been hailed as the most successful federally sponsored 
infrastructure financing program ever.
    As you know, the Clean Water SRF program originated in 1987, but 
authorization lapsed in 1994. Again, I want to commend this 
subcommittee for recognizing the effectiveness of the Clean Water SRF 
by continuing to appropriate funding to the program. When authorization 
expired in 1994, appropriations were just over $2 billion. That funding 
level dropped in 1998 to $1.35 billion, where it has remained. 
Unfortunately, this level is woefully inadequate. Immediate funding 
increases must be provided to begin to close the funding gap.
    The administration's budget request again proposes an appalling 
$850 million for each SRF program. While this would represent level 
funding for next year's drinking water projects, the proposal reflects 
what would be a $500 million cut to the Clean Water SRF.
    NUCA respectfully suggests there is a stark contradiction in the 
administration's estimation of what is needed and what should be 
provided to begin to address the problem. Six months after reporting 
needs that exceed $181 billion, this administration proposes what would 
reflect nearly a 40 percent reduction of an already inadequate funding 
level. These programs need immediate increases, not cuts.



    The Clean Water SRF provides a perpetual source of funding to build 
and improve wastewater treatment plants; control agricultural, rural, 
and urban runoff; improve estuaries; control wet weather overflows; and 
restore brownfield sites. Recognizing its remarkable success in turning 
Federal capitalization grants into revolving loans, the SRF program is 
by all accounts an efficient, fiscally sound, and environmentally 
successful partnership that enhances public health, creates thousands 
of jobs, and improves the quality of life for communities across 
America.
    Nearly a decade ago, our industry commissioned a report that found 
that for every $1 billion spent on water infrastructure, up to 55,000 
jobs are created across the country. As our economy struggles to grow, 
it is important to note how quick and easy it is to create good, long-
term construction jobs. In most States, due to advance planning and 
engineering work, a backlog of projects are ready to start once money 
arrives from the Federal Government.
    Our industry has worked to move legislation that will reauthorize 
the Clean Water SRF program at higher funding levels in order to better 
ensure the appropriation of these imperative Federal resources. Water 
Resources Subcommittee Chairman John Duncan and Transportation and 
Infrastructure Committee Chairman Don Young introduced the Water 
Quality Financing Act of 2003 (HR 1560) last year, which would 
authorize $20 billion for the Clean Water SRF over 5 years and 
additional resources for ``wet weather'' projects.
    NUCA fully supports HR 1560, and we look forward to advancing this 
legislation through the committee onto the House floor for a vote. 
However, while SRF reauthorization is a priority, we encourage the VA-
HUD Appropriations Subcommittee to take the necessary steps to provide 
immediate resources to refurbish our environmental infrastructure.
    Recently, the Senate passed an amendment during debate on the 
fiscal year 2005 Budget Resolution that increased fiscal year 2005 
funding for the Clean Water and Safe Drinking Water State Revolving 
Fund to $5.2 billion. NUCA is recommending that the subcommittee 
recognize the dramatic needs and the job creation that comes with 
infrastructure spending and match the amount set forth in this 
amendment--$3.2 billion for the Clean Water and $2 billion for the Safe 
Drinking Water State Revolving Funds.
    The House budget resolution did not include these necessary 
increases in funding for this vital infrastructure. NUCA encourages 
this subcommittee to enact the Senate's approved budget blueprint for 
fiscal year 2005 appropriations to the SRF programs. In fact, a diverse 
coalition of industry groups that includes administrators, labor 
unions, environmental groups, and manufacturers and NUCA has joined 
forces to support the Senate passed budget authorization in the final 
budget conference. These groups rarely work together but this issue 
trumps any differences they may have. Attached to this testimony is a 
copy of their letter sent to fiscal year 2005 budget conferees. Also 
attached is a letter from the Clean Water Council, a coalition of 
construction industry associations, in support of the Senate funding 
levels.
    The fate of America's water quality is in your hands. The 
successful SRF programs play a key role in enhancing public health and 
safety, protecting the environment, and maintaining a strong economic 
base. They increase labor productivity, create scores of jobs, 
rehabilitate local neighborhoods, and ensure the availability of 
recreational use of our waterways and shorelines. They help protect the 
overall quality of life, from preparing a meal, to taking a shower, to 
simply taking a drink of water on a hot day.
    People intuitively understand that their lives are directly linked 
to water quality and the collection and treatment of wastewater. The 
State revolving funds have been demonstrably efficient and effective, 
but clearly, more needs to be done. Sufficient Federal resources must 
be invested to ensure that human and environmental impacts of the 
multi-billion dollar funding gap are prevented. Providing $5.2 billion 
towards our environmental infrastructure would be a big step in the 
right direction.
    This year, Congress is reauthorizing Federal highway and transit 
programs. While important, NUCA hopes the focus on the highway bill 
will not undermine Congress' recognition of the need to address the 
imperative lifelines that exist underneath the roads. The underground 
environmental infrastructure is falling apart by the minute.
    Finally, NUCA members and utility construction industry as a whole 
make a tremendous and vital contribution to the American economy. In 
times of economic difficulty, funding construction projects provide 
effective ways to stimulate growth and development. Economic benefits 
ripple through local economies from manufactures to distributors to 
construction laborers, along with the induced economic benefits to our 
communities. Infrastructure spending is a sound Federal investment.
    We strongly encourage this subcommittee to increase funding of 
EPA's SRF programs to $5.2 billion in fiscal year 2005. Again, thank 
you Chairman Bond and Ranking Member Mikulski, for the opportunity to 
present testimony before your esteemed panel.

    ATTACHMENT.--AMERICAN FEDERATION OF STATE, COUNTY AND MUNICIPAL 
   EMPLOYEES; AMERICAN RIVERS; ASSOCIATION OF METROPOLITAN SEWERAGE 
 AGENCIES; ASSOCIATION OF STATE AND INTERSTATE WATER POLLUTION CONTROL 
ADMINISTRATORS; COALITION FOR ALTERNATIVE WASTEWATER TREATMENT; NATURAL 
 RESOURCES DEFENSE COUNCIL; NATIONAL UTILITY CONTRACTORS ASSOCIATION; 
    WATER AND WASTEWATER EQUIPMENT MANUFACTURERS ASSOCIATION; WATER 
                         ENVIRONMENT FEDERATION

    The diverse organizations above represent municipal authorities, 
operators of water and wastewater facilities, State water regulators 
and financial officers, labor organizations, contractors, 
manufacturers, and environmental groups dedicated to improving 
America's water and wastewater infrastructure. We write on behalf of 
our millions of members who urge you to protect human health and the 
environment and create hundreds of thousands of jobs by increasing the 
budget authority for the Environmental Protection Agency's (EPA) Clean 
Water and Drinking Water State Revolving Fund (SRF) programs to $5.2 
billion in fiscal year 2005, as provided in the Senate budget 
resolution. The SRF programs help local communities meet water quality 
standards, protect public health, repair and replace old and decaying 
pipelines and treatment plants, and ensure continued progress in 
restoring the health and safety of America's water bodies. Authorizing 
$3.2 billion for the Clean Water SRF and $2 billion for the Drinking 
Water SRF next year would provide a badly-needed down payment to 
improve America's water and wastewater infrastructure.
    Budget authority in the Senate budget resolution would create 
nearly 247,000 American jobs--three times the job creation that would 
come from the House budget resolution. This would aid the national 
economic recovery by keeping good paying jobs in local communities. 
Moreover, it is estimated that there are projects valued at between 
$3.2 billion and $4.1 billion that are ready to move forward in less 
than 90 days. This would create considerable jobs in the near future.
    In 2002, EPA's Clean Water and Drinking Water Infrastructure Gap 
Analysis found that there will be a $534 billion gap between current 
spending and projected needs for water and wastewater infrastructure if 
the Federal investment is not stepped up. Moreover, last year EPA 
issued its Clean Watersheds Needs Survey 2000 Report to Congress, which 
documented existing wastewater infrastructure needs at more than $181 
billion. There is no doubt of the need for increased resources toward 
this vital infrastructure.
    When the Clean Water Act was passed more than 30 years ago, the 
Federal Government made a commitment to the American people to clean up 
the Nation's waters. Since that time the Federal Government's funding 
to maintain clean water infrastructure in America has decreased by 70 
percent; today the Federal Government funds a mere 5 percent of 
national infrastructure costs. In 1996, the Safe Drinking Water Act 
expanded the Federal Government's role in assuring clean water for 
every citizen. Much has been accomplished but there is much left to be 
done. States, localities, and private sources addressing these problems 
cannot do it alone.
    We support this substantial increase in water infrastructure 
funding next year because it takes a step toward a longer-term solution 
for our Nation's water needs. We again urge you to support a $5.2 
billion allocation for the Clean Water and Drinking Water SRFs programs 
in the final Budget Resolution, and we thank you for your 
consideration.

                  ATTACHMENT.--THE CLEAN WATER COUNCIL

    The Clean Water Council (CWC) is a coalition of underground 
construction contractors, design professionals, manufacturers and 
suppliers, and other professionals committed to ensuring a high quality 
of life through sound environmental infrastructure. The CWC strongly 
urges you to increase budget authority for the Environmental Protection 
Agency's (EPA) Clean Water and Drinking Water State Revolving Fund 
(SRF) programs to $5.2 billion in fiscal year 2005, as provided in the 
Senate budget resolution. This funding level will provide a badly-
needed down payment to improve America's water and wastewater 
infrastructure.
    Unfortunately, the administration's budget has again proposed a 
$500 million cut in funding for the Clean Water SRF at a time when the 
Nation's wastewater infrastructure needs are skyrocketing. In 2002, 
EPA's Clean Water and Drinking Water Infrastructure Gap Analysis found 
that there will be a $534 billion gap between current spending and 
projected needs for water and wastewater infrastructure if the Federal 
investment is not stepped up. Moreover, last year EPA issued its Clean 
Watersheds Needs Survey 2000 Report to Congress, which documented 
existing wastewater infrastructure needs at more than $181 billion. The 
CWC believes it is contradictory for the administration to propose what 
would be close to a 40 percent reduction in funding for clean water 
projects when its own agency studies have shown an overwhelming gap 
between the needs and current spending and provided a snapshot of 
current needs that are approaching $200 billion. America's water and 
wastewater infrastructure needs immediate funding increases, not cuts.
    The SRF programs provide a perpetual source of funding to build and 
improve this vital infrastructure, but the SRFs do more than clean up 
our environment. Funding the SRF programs at this level would create at 
least 238,000 American jobs. It is estimated that there are projects 
valued at between $3.2 billion to $4.1 billion that are ready to move 
forward in less than 90 days that are stalled due to the lack of 
funding. Importantly, the ``revolving'' nature of the SRF makes the 
program a fiscally sound partnership. For example, since its inception 
in 1987, the Clean Water SRF has leveraged approximately $22 billion in 
Federal capitalization grants into more than $44 billion in revolving 
loans to local communities.
    The Senate budget resolution would provide $3.2 billion for the 
Clean Waster SRF and $2 billion for the Drinking Water SRF next year. 
The CWC understands that these are substantial funding increases but we 
believe they are justified and necessary. These funding levels will 
help secure our water and wastewater infrastructure while assisting the 
Nation's economic recovery by providing high paying jobs in local 
communities right here in America. The CWC requests that you support a 
$5.2 billion in budget authority for the Clean Water and Drinking Water 
SRF programs in the final budget resolution.

Members of the Clean Water Council
    American Council of Engineering Companies; American Concrete 
Pressure Pipe Association; American Rental Association; American Road & 
Transportation Builders Association; American Society of Civil 
Engineers; American Subcontractors Association; Associated Equipment 
Distributors; Associated General Contractors; Association of Equipment 
Manufacturers; Construction Management Association of America; National 
Precast Concrete Association; National Ready Mixed Concrete 
Association; National Society of Professional Engineers; National 
Stone, Sand and Gravel Association; National Utility Contractors 
Association; Portland Cement Association; The Vinyl Institute; Uni-Bell 
PVC Pipe Association; Water and Wastewater Equipment Manufacturers 
Association.
                                 ______
                                 
    Prepared Statement of the National Council for Science and the 
                              Environment

                                SUMMARY

    The National Council for Science and the Environment (NCSE) 
commends the Senate Appropriations Subcommittee on VA, HUD and 
Independent Agencies for its bipartisan leadership in support of 
science to improve environmental decision-making. We ask for your 
continued leadership by appropriating strong and growing funding for 
environmental research and education to address pressing national 
challenges.
    Environmental Protection Agency.--We urge Congress to reject 
drastic budget cuts proposed for competitive research grants and 
graduate fellowships administered by the Environmental Protection 
Agency's Science to Achieve Results (STAR) program. The fiscal year 
2005 budget request would cut the STAR research grants program by 
approximately 30 percent to $65 million in the fiscal year 2005 budget 
request. It would also cut the STAR graduate fellowship program by 33.5 
percent to $6.1 million in the fiscal year 2005 budget request. We ask 
Congress to appropriate at least $100 million for the STAR research 
grants program and at least $10 million for the STAR graduate 
fellowship program in fiscal year 2005.
    National Science Foundation.--NCSE recommends a 15 percent increase 
in funding for the National Science Foundation (NSF), bringing the 
agency's budget to $6.41 billion in fiscal year 2005. This is 
consistent with the National Science Foundation Authorization Act of 
2002 (Public Law 107-368), which authorizes a doubling of the NSF 
budget in 5 years. NCSE emphasizes the need for increased funding for 
NSF's Environmental Research and Education (ERE) portfolio. Although 
the National Science Board identified this area as one of NSF's 
``highest priorities,'' funding for the ERE research portfolio would 
decrease by 0.2 percent to $930.2 million under the fiscal year 2005 
budget request. Moreover, funding for the priority area on 
Biocomplexity in the Environment--the flagship program of the ERE 
portfolio--would be flat at $99.8 million in fiscal year 2005. NCSE 
urges Congress to increase funding for NSF's Environmental Research and 
Education portfolio by at least the same percentage as the agency's 
overall growth rate.
    National Science Board Report.--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, within the context of efforts to double the budget of 
the National Science Foundation. The lagging growth of the NSF 
Environmental Research and Education budget relative to the total NSF 
budget in recent years raises serious concerns about its status of one 
the agency's ``highest priorities.''

                FEDERAL INVESTMENTS IN ENVIRONMENTAL R&D

    The National Council for Science and the Environment thanks the 
Senate Appropriations Subcommittee on VA, HUD, and Independent Agencies 
for the opportunity to testify before the panel in support of 
appropriations for the Environmental Protection Agency and the National 
Science Foundation.
    NCSE is dedicated to improving the scientific basis for 
environmental decision-making. We are supported by over 500 
organizations, including universities, scientific societies, government 
associations, businesses and chambers of commerce, and environmental 
and other civic organizations. NCSE promotes science and its 
relationship with decision-making but does not take positions on 
environmental issues themselves.
    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 our quality of life are contingent upon a steady commitment of 
Federal resources to science and technology, and especially 
environmental R&D.
    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 approximately 45 
percent of Federal funding for environmental R&D. Federal investments 
in environmental R&D must keep pace with the growing need to improve 
the scientific basis for environmental decision-making. In recent 
years, Congress has played a crucial role by supporting strong and 
growing Federal investments in environmental R&D. We appreciate the 
subcommittee's leadership and encourage its continued support in this 
difficult fiscal environment.

                           EPA STAR PROGRAMS

    Extramural research grants and graduate fellowship programs 
administered by the U.S. Environmental Protection Agency would be 
severely cut under the President's budget request for fiscal year 2005. 
Funding for EPA's Science to Achieve Results (STAR) research grants 
program would be cut by approximately 30 percent, from an estimated $92 
million in the fiscal year 2004 enacted appropriations bill to $65 
million in the fiscal year 2005 budget request. As a result of these 
cuts, approximately 93 fewer competitive research grants would be 
awarded to scientists at universities and nonprofit institutions across 
the Nation, according to EPA's budget justification to Congress. 
Funding for EPA's STAR graduate fellowship program--the only Federal 
program aimed specifically at students pursuing advanced degrees in 
environmental sciences--would be cut by 33.5 percent, from $9.17 
million in the fiscal year 2004 enacted appropriations bill to $6.1 
million in the fiscal year 2005 budget request. The National Council 
for Science and the Environment urges Congress to restore full funding 
for EPA's Science to Achieve Results (STAR) research grants and 
graduate fellowship programs.
    Rep. Vernon Ehlers, Chairman of the House Science Subcommittee on 
Environment, Technology and Standards, convened a hearing on March 11, 
2004 that examined the proposed cuts in EPA's STAR programs. At the 
conclusion of the hearing, he said, ``I have not heard a convincing 
reason today for why the STAR program was cut so dramatically. By all 
accounts, it is a well-run, competitive, peer reviewed program that 
produces high quality research. These proposed reductions should not be 
allowed to take effect.''
    EPA STAR Research Grants.--NCSE urges Congress to appropriate at 
least $100 million for the STAR Research Grants program in fiscal year 
2005. This is the funding level proposed in the President's budget 
request for fiscal year 2004. Deep budget cuts in EPA's STAR program 
have been proposed less than 1 year after the National Academies issued 
a laudatory report, The Measure of STAR, which concludes that the 
program supports excellent science that is directly relevant to the 
agency's mission. According to the report, the STAR program has 
``yielded significant new findings and knowledge critical for 
regulatory decision making.'' The report says, ``The program has 
established and maintains a high degree of scientific excellence.'' It 
also concludes that the EPA STAR program complements research supported 
by other agencies and leverages its resources through partnerships, 
stating ``The STAR program funds important research that is not 
conducted or funded by other agencies. The STAR program has also made 
commendable efforts to leverage funds through establishment of research 
partnerships with other agencies and organizations.''
    The EPA STAR research program compares favorably with programs at 
other science agencies. According to the National Academies report, 
``The STAR program has developed a grant-award process that compares 
favorably with and in some ways exceeds that in place at other agencies 
that have extramural research programs, such as the National Science 
Foundation and the National Institute of Environmental Health 
Sciences.''
    The STAR research grants program expands the scientific expertise 
available to EPA by awarding competitive grants to universities and 
independent institutions, to investigate scientific questions of 
particular relevance to the agency's mission. The National Academies 
report says, ``The STAR program should continue to be an important part 
of EPA's research program.'' According to the fiscal year 2005 budget 
request, funding for the following STAR grants would be cut.
  --Ecosystems Protection (-$22.2 million).--Approximately 50 STAR 
        grants for research on ecosystem stressors and effects would be 
        eliminated. According to the agency's budget documents, ``As a 
        result of this reduction, STAR efforts designed to establish or 
        improve the connection between ecosystem stressors and effects, 
        serving as input to decisions at the regional, state, and local 
        levels, will be discontinued.''
  --Pollution Prevention (-$5 million).--Over 20 research grants would 
        not be funded under the Technology for the Sustainable 
        Environment (TSE) program, which is a collaborative effort with 
        the National Science Foundation.
  --Endocrine Disruptors (-$4.9 million).--Approximately 18 STAR 
        research grants for research on endocrine disrupting chemicals 
        would be eliminated.
  --Mercury Research (-$2 million).--The approximately 5 STAR grants 
        that support mercury research would be eliminated.
  --Hazardous Substance Research Centers (-$2.3 million).--A 5-year 
        program that awarded grants for hazardous substance research 
        would not be funded in fiscal year 2005. According to EPA, some 
        multi-year grants would not be funded in their final year due 
        to this cut.
  --Homeland Security Building Decontamination Research (-$8.3 
        million).--Research on building decontamination for homeland 
        security would be completely eliminated.
  --Environmental Technology Verification (-$1.0 million).--One or two 
        centers for testing the effectiveness of commercial 
        environmental technologies would be closed.
    EPA STAR Graduate Fellowships.--NCSE urges Congress to appropriate 
at least $10 million for the STAR graduate fellowship program in fiscal 
year 2005. This is the only Federal program aimed specifically at 
students pursuing advanced degrees in environmental sciences. According 
to the National Academies report, ``The STAR fellowship program is a 
valuable mechanism for enabling a continuing supply of graduate 
students in environmental sciences and engineering to help build a 
stronger scientific foundation for the nation's environmental research 
and management efforts.'' The STAR fellowship program is highly 
competitive, with only 7 percent of applicants being awarded 
fellowships.
    The President's budget request has proposed deep cuts in the STAR 
graduate fellowship program in the past 2 years. The budget request 
would have cut funding for the STAR graduate fellowship program by 50 
percent in fiscal year 2004 and by 100 percent in fiscal year 2003. 
Under the leadership of this subcommittee, Congress restored full 
funding for the EPA STAR graduate fellowship program in both years. 
NCSE encourages Congress to restore full funding for the program again 
in fiscal year 2005.
    Science, Technology and Education at EPA.--EPA's overall Science 
and Technology account faces serious reductions in the President's 
fiscal year 2005 budget request. This account would be cut by 11.8 
percent to $689.2 million in fiscal year 2005. We encourage Congress to 
provide at least $790 million to fund this important function at EPA.
    The fiscal year 2005 budget request proposes no funding for the EPA 
Office of Environmental Education. NCSE strongly encourages Congress to 
restore full funding of at least $10 million to support the 
congressionally mandated programs administered by this office. These 
programs provide national leadership for environmental education at the 
local, State, national and international levels, encourage careers 
related to the environment, and leverage non-Federal investment in 
environmental education and training programs.

                      NATIONAL SCIENCE FOUNDATION

    Implementing the NSF Doubling Act.--The National Council for 
Science and the Environment urges Congress to appropriate the funds 
necessary to implement the National Science Foundation Authorization 
Act of 2002, which was passed by Congress on November 15, 2002 and 
signed into law by the President on December 19, 2002 (Public Law 107-
368). A central goal of the Act is to double the budget of the National 
Science Foundation in 5 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. The NSF Authorization Act of 2002 is a 
major milestone for the NSF, the scientific community, and the Nation. 
It recognizes the critical connection between science and the long-term 
economic strength of the Nation. In order to achieve the outcomes 
envisioned by this bold legislation, Congress must appropriate the 
funding levels specified in the NSF Authorization Act.
    The National Council for Science and the Environment urges Congress 
to appropriate $6.41 billion for the National Science Foundation in 
fiscal year 2005, which would be a 15 percent increase over fiscal year 
2004. NCSE supports an increase of 15 percent in fiscal year 2005 in 
order to place NSF on the doubling track that Congress deemed 
necessary. Although the authorized funding level is $7.38 billion for 
fiscal year 2005, we understand that this may be beyond reach in the 
current fiscal environment.
    The President's budget request would increase funding for NSF by 
3.0 percent to $5.75 billion in fiscal year 2005. Of the $167 million 
in new funding, 45 percent would be devoted to a management initiative 
that would provide more staff for NSF and improve the security of its 
computer systems. Under the fiscal year 2005 budget request, funding 
for most of the disciplinary directorates, such as Biological Sciences 
and Geosciences, would increase by only 2.2 percent, only slightly more 
than the expected rate of inflation.
    Expanding NSF's Environmental Research and Education Portfolio.--
The National Science Foundation plays a crucial role in supporting 
environmental R&D. Environmental research often requires knowledge and 
discoveries that reach across disciplinary and institutional 
boundaries. The NSF recognizes this and encourages multidisciplinary 
environmental activities across the entire agency, as well as with 
other Federal agencies. The NSF has established a ``virtual 
directorate'' for Environmental Research and Education (ERE). Through 
this virtual directorate, NSF coordinates the environmental research 
and education activities supported by all the directorates and 
programs.
    Although the National Science Board said environmental research and 
education should be one of NSF's ``highest priorities'' (see below), 
funding for the ERE research portfolio would decrease by 0.2 percent, 
from $932.1 million in fiscal year 2004 to $930.2 million in the fiscal 
year 2005 budget request (Table 1). This is the first time that ERE 
funding would decline since the National Science Board identified it as 
one of NSF's highest priorities in 2000. NCSE encourages Congress to 
support more investment in this important area of research. Given that 
the National Science Board has been identified environmental research 
and education as one of the agency's highest priorities, funding for 
the ERE portfolio should grow at least as rapidly as the total NSF 
budget. In order to achieve the $1.6 billion funding level recommended 
by the National Science Board, NCSE supports rapid growth in NSF's 
Environmental Research and Education portfolio over the next several 
years.

                                    TABLE 1.--NATIONAL SCIENCE FOUNDATION: ENVIRONMENTAL RESEARCH AND EDUCATION (ERE)
                                                        [Budget Authority in Millions of Dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                         Environmental R&D                                         Change 2004 to 2005
                                    --------------------------------------------------------------------------------------------------------------------
                                                                                                                   Fiscal Year
                                     Fiscal Year  Fiscal Year  Fiscal Year  Fiscal Year  Fiscal Year  Fiscal Year      2005        Amount      Percent
                                     1999 Actual  2000 Actual  2001 Actual  2002 Actual  2003 Actual   2004 Plan     Request
--------------------------------------------------------------------------------------------------------------------------------------------------------
Research and Related Activities
 (R&RA):
    Biological Sciences............       $117.9       $125.3       $167.0       $174.5       $188.3       $214.1       $214.1  ...........  ...........
    Comp. & Info. Sci. & Eng.......          4.0          7.0         15.1         15.1         22.1         23.9         23.9  ...........  ...........
    Engineering....................         38.0         50.0         62.7         63.7         76.0         76.0         74.0        -$2.0         -2.6
    Geosciences....................        320.9        327.9        409.4        442.8        499.1        513.1        513.1  ...........  ...........
    Math. and Physical Sci.........         44.3         48.3         56.4         56.4         11.0         32.2         32.2  ...........  ...........
    Soc., Behav. & Econ. Sci.......         17.8         17.3         20.1         21.7          5.0         21.9         21.9  ...........  ...........
    Office of Polar Programs.......         45.3         45.3         47.5         49.8         50.9         50.9         50.9  ...........  ...........
    Integrative Activities\1\......          7.0         50.0  ...........  ...........  ...........  ...........  ...........  ...........  ...........
                                    --------------------------------------------------------------------------------------------------------------------
      Subtotal, R&RA...............        595.2        671.2        778.1        824.0        852.4        932.1        930.2         -2.0         -0.2
Edu. and Human Res.\2\.............  ...........  ...........  ...........  ...........          2.0          2.0          2.0  ...........  ...........
                                    --------------------------------------------------------------------------------------------------------------------
      TOTAL, ERE Budget............        595.2        671.2        778.1        824.0        854.4        934.1        932.2         -2.0         -0.2
                                    --------------------------------------------------------------------------------------------------------------------
      TOTAL, NSF Budget............      3,690.3      3,923.4      4,459.9      4,774.1      5,369.3      5,577.8      5,745.0        167.2          3.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ In fiscal year 1999 and fiscal year 2000, funding for the Biocomplexity and the Environment (BE) Priority Area was included in the Integrative
  Activities account. Beginning in fiscal year 2001, BE funds were distributed across the directorates. Funding for BE was $54.88 in fiscal year 2001;
  $58.10 million in fiscal year 2002; and $79.20 million in the President's Request for fiscal year 2003.
\2\ Figures for environmental funding in the Education and Human Resources account are not available prior to fiscal year 2003. Although education is
  not generally scored as R&D, $2.0 million for Environmental Education was included in the Education and Human Resources Directorate in the ERE budget
  from fiscal year 2003 to 2005 (request).

Source: NSF.

    Biocomplexity in the Environment.--NCSE is especially supportive of 
NSF's priority area on Biocomplexity in the Environment, which is the 
flagship of the ERE portfolio. This priority area 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. It includes 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 crucial to homeland security.
    The Biocomplexity in the Environment priority area was reviewed by 
a Committee of Visitors in February 2004. The committee reported:

    ``This program is highly responsive to a great need for integrative 
research to answer non-linear complex questions. The outcomes are 
helpful to establishing sound science evidence for use in policy 
decisions, in making science relevant to the community, in including 
the human dimension in consideration of environmental change, and in 
integrating these areas of science knowledge and discovery with the 
need for environmental literacy among our students in formal education 
an the education of the general public.''

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. After several years of rapid growth, the fiscal 
year 2005 budget request would provide flat funding of $99.8 million 
for Biocomplexity in the Environment.
 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 2000 
National Science Board (NSB) 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 National Science Board report sets out an ambitious set of 
recommendations that could dramatically improve the scientific basis 
for environmental decision-making. 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.''

    The report says that the National Science Board expects NSF to 
develop budget requests that are consistent with this recommendation. 
At first, growth in the Environmental Research and Education budget 
reflected its priority status: from fiscal year 1999 to 2001, the ERE 
account grew more rapidly than the overall NSF budget. However, the ERE 
growth rate has trailed the total NSF growth rate since that time. From 
fiscal year 2002 to fiscal year 2005 (request), the ERE budget grew by 
only 13.1 percent while the total NSF budget grew by 20.3 percent. The 
lagging growth of the Environmental Research and Education budget 
relative to the total NSF budget in recent years raises serious 
concerns about its status of one NSF's ``highest priorities.''
    The National Science Board envisioned a 167 percent increase in 
funding for the ERE portfolio, from approximately $600 million to $1.6 
billion, within the context of a doubling of the total NSF budget over 
5 years. The doubling has not materialized. Nevertheless, if the 
Environmental Research and Education portfolio is one of NSF's highest 
priorities, then the growth rate of the ERE budget should not lag 
behind the growth rate of the total NSF budget.
    The National Science Foundation has taken many steps to implement 
the recommendations of the NSB. 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.
    The National Council for Science and the Environment appreciates 
the subcommittee's sustained support for environmental research at the 
Environmental Protection Agency and the National Science Foundation. 
Investments in these agencies continue to pay enormous dividends to the 
Nation. Thank you very much for your interest in improving the 
scientific basis for environmental decision-making.
                                 ______
                                 
Prepared Statement of the National Association of University Fisheries 
                         and Wildlife Programs

    The National Association of University Fisheries and Wildlife 
Programs (NAUFWP) appreciates the opportunity to offer comments on the 
fiscal year 2005 budget for the National Science Foundation. NAUWFP is 
thankful for support that both the Congress and the administration 
demonstrated for the National Science Foundation (NSF) by enacting the 
National Science Foundation Authorization Act of 2002. The Act 
authorizes a 5-year period of 15 percent annual budget increases, 
placing NSF on a ``doubling track,'' which will enhance current and 
future U.S. scientific and technological advancements in science. The 
National Association of University Fisheries and Wildlife Programs 
urges Congress to act on its commitment by increasing fiscal year 2005 
funding for NSF 15 percent over the fiscal year 2004 enacted budget, 
for a total increase of $6.415 billion.
    Despite tough budget times, this kind of investment is critical. 
NSF is one of the Nation's best tools for promoting and advancing 
scientific research and education. Although NSF accounts for only 4 
percent of Federal Research and Development spending, it supports 
nearly 50 percent of the non-medical Biological Sciences research at 
our colleges and universities.

                          BIOLOGICAL SERVICES

    Within the Research and Related Activities (R&RA) account, the 
Biological Sciences Directorate is of particular interest to the 
wildlife conservation and research community. The Biological Sciences 
Activity (BIO) supports research, infrastructure, and education at U.S. 
academic institutions, including NAUFWP universities.
    BIO provides 65 percent of the support for basic research in non-
medical aspects of the biological sciences at academic institutions. 
Because the majority of Federal support for the life sciences--over 85 
percent--goes to health-related research funded by the National 
Institute of Health, NSF's contribution to the broad array of the 
biological sciences is highly significant and strategically focused, 
particularly in such areas as environmental biology and plant sciences. 
In nationally important issues related to wildlife and wildlife 
habitat, BIO-supported research enhances the understanding of how 
living organisms function and interact with non-living systems.
    Current research includes a project investigating elk-wolf 
interactions in Yellowstone National Park. Results of the project will 
enhance knowledge of large mammalian systems and facilitate design of 
sound endangered species programs. Another BIO-supported research 
project involves modeling population density and foraging behavior of 
Brazilian free-tailed bats. Data from this project have shown that bats 
from two Texas caves provide pest control service for agricultural 
crops such as corn and cotton. The estimated value of protection 
afforded the crops by the bats amounts to as much as $258 million 
annually; thus conserving bat diversity and habitat is both 
biologically and economically beneficial.
    The President's budget proposal restricts the BIO program to an 
increase of approximately 2 percent. We recommend you provide the 
Biological Sciences account with an increase equal to the overall R&RA 
increase, which is 4.7 percent over the fiscal year 2004 enacted level. 
This would equal an increase of $27.58 million for Biological Sciences, 
for a total budget of $614.47 million in fiscal year 2005.

                                 TOOLS

    One of the NSF's strategic goals is to support investment in 
Tools--state-of-the art science and engineering facilities, tools, and 
other infrastructure that enable discovery, learning, and innovation. 
Funds dedicated to this account allow NSF to revitalize and upgrade 
aging infrastructure, and enable progress in research and education. 
NAUFWP supports the President's requested $58.3 million increase for 
the Major Research Equipment and Facilities Construction (MREFC), 
within the Tools account. Increased funding for MREFC will support 
ongoing projects and provide funding necessary to launch proposed 
projects.
    We urge you to support the President's request of $12 million in 
fiscal year 2005 for the National Ecological Observatory Network 
(NEON). NEON will be a continental-scale research instrument consisting 
of geographically distributed observatories, networked via state-of-
the-art communications allowing scientists and engineers to conduct 
research spanning all levels of biological organization. NEON will 
provide researchers with important tools necessary to address 
ecological questions regarding habitat and wildlife conservation in the 
United States. Examples of research that could be addressed by NEON 
include: the spread of infectious diseases like West Nile Virus and the 
affect of western wildfires on water quality in the central or eastern 
United States.

  ABOUT THE NATIONAL ASSOCIATION OF UNIVERSITY FISHERIES AND WILDLIFE 
                                PROGRAMS

    The National Association of University Fisheries and Wildlife 
Programs represents approximately 55 university programs and their 440 
faculty members, scientists, and extension specialists, and over 9,200 
undergraduate and graduate students working to enhance the science and 
management of fisheries and wildlife resources. Our affiliates conduct 
research on a diversity of subjects, fulfilling the information needs 
of fish, wildlife, and natural resource management. Individual projects 
are used as building blocks in comprehensive research that provides 
applied science information for management.
    Please include this testimony in the official record. Thank you for 
the opportunity to share our views with the committee.
                                 ______
                                 
              Prepared Statement of The Nature Conservancy

                      INTRODUCTION AND BACKGROUND

    Mr. Chairman and members of the subcommittee, I appreciate the 
opportunity to submit written testimony on behalf of The Nature 
Conservancy for fiscal year 2005 appropriations for the U.S. 
Environmental Protection Agency (EPA).
    The Nature Conservancy is an international, non-profit organization 
dedicated to the conservation of biological diversity. Our mission is 
to preserve the plants, animals and natural communities that represent 
the diversity of life on Earth by protecting the lands and waters they 
need to survive. The Conservancy has more than 1,000,000 individual 
members and 1,900 corporate associates. We have programs in all 50 
States and in 27 foreign countries. We have protected more than 15 
million acres in the United States and nearly 102 million acres with 
local partner organization globally. The Conservancy owns and manages 
about 1,400 preserves throughout the United States--the largest private 
system of nature sanctuaries in the world. Sound science and strong 
partnerships with public and private landowners to achieve tangible and 
lasting results characterize our conservation programs.
    Biological diversity is important for a number of reasons. Species 
and natural communities harbor genetic and chemical resources that 
contribute to advances and products in medicine, agriculture and 
industry. The value of these goods is enormous. It represents, however, 
only a fraction of the value these ecosystems provide to humanity in 
terms of services, such as waste assimilation and treatment, climate 
regulation, drinking water, and flood control. One estimate of the 
value of these services for the entire biosphere is $33 trillion, which 
is nearly double the global gross national product (Costanza et al 
1997). In addition to these benefits, the environment serves as an 
instrument through which educational, cultural, aesthetic and spiritual 
values are often expressed.
    In 2000, The Nature Conservancy and the Association for 
Biodiversity Information released a study documenting America's 
astonishing natural abundance. For example, we now know the United 
States is home to more than 200,000 native species of plants and 
animals and ranks at the top in its variety of mammals and freshwater 
fish. Ecosystems in the United States are also among the most diverse. 
They range from tundra, to deserts, prairies, and various forest types. 
However, as many as one-third of the Nation's species are at risk and 
at least 500 species have already gone extinct or are missing. The 
single biggest threat to species survival is loss of habitat, which 
generally occurs as a result of human activities. Almost 60 percent of 
America's landscape is already severely altered.
    Reversing the trend will require working at larger scales and 
across State and other jurisdictional lines. The Nature Conservancy is 
committed to this effort. For example, we have invested $1 billion in 
private funds over the last several years to protect critical natural 
areas around the United States and abroad, and we are committed to 
making similar investments over the next several years. These 
investments alone, however, will not be enough. True conservation 
success will be achieved only through the work of partners, including 
the Federal Government. Funding is needed at the Federal level to 
support on-the-ground conservation projects and to ensure policies that 
promote a sustainable environment.

                       SUMMARY OF RECOMMENDATIONS

    EPA is responsible for administering a number of programs that 
protect public health and the environment. The Nature Conservancy 
recommends level or modest funding increases for seven programs with 
which we have had direct experience and that we believe help preserve 
biodiversity. The seven programs include the following:

  THE NATURE CONSERVANCY'S FISCAL YEAR 2005 FUNDING RECOMMENDATIONS FOR
                          SELECTED EPA PROGRAMS
------------------------------------------------------------------------
                                      Fiscal Year 2005 Recommendations
           Program Name            -------------------------------------
                                       EPM Account        STAG Account
------------------------------------------------------------------------
Clean Water Act State Revolving     .................     $1,350,000,000
 Fund (CWSRF).....................
Coastal Watersheds and National       \1\ $50,000,000  .................
 Estuaries Program................
Non-point Source Management                16,900,000        250,000,000
 Program (Section 319)............
Targeted Watershed Program........         25,000,000  .................
Wetlands Protection Program.......         18,000,000         18,000,000
Chesapeake Bay Program............         22,000,000  .................
Great Lakes National Program               17,000,000  .................
 Office...........................
------------------------------------------------------------------------
\1\ Includes $35 million for National Estuaries Programs as authorized
  under the Estuaries and Clean Waters Act of 2000 and $15 million for
  other coastal activities.

    Implementation of these programs produces benefits to public 
health, the environment and, by extension, biodiversity conservation. 
For example, loans made under the CWSRF to establish or restore 
riparian corridors along streams (to address non-point pollution) will 
improve water quality, while also improving or providing important 
aquatic and terrestrial habitat. Section 319 funds can be used to 
produce a similar range of benefits.
    In general, these programs satisfy niches filled by no other 
Federal programs. For example, the Section 319 program, unlike Farm 
Bill programs, can be used to address non-point pollution from diverse 
sources such as urban runoff and leaking septic systems, not just 
pollution from agricultural sources. Its broader focus reaches more 
vulnerable habitats such as grassed swales that are important to 
grassland birds, which as a group are the most threatened in the United 
States.
    In general, the above programs are holistic and non-regulatory in 
approach. The geographically focused programs, in particular, enable 
multiple pollution problems to be addressed in an integrated rather 
than singular fashion, which makes them incredibly important to 
biodiversity conservation. They also provide opportunities for public 
and private parties to collaborate to achieve mutually beneficial 
goals.
    My remaining comments focus on two of the above programs: Coastal 
Watersheds and National Estuaries Program; and the Great Lakes National 
Program Office. Should the subcommittee request it, the Conservancy 
would be happy to provide documentation of the importance of the other 
programs not highlighted in my comments below.

           COASTAL WATERSHEDS AND NATIONAL ESTUARIES PROGRAM

    Through this program, the EPA provides funding to the 29 National 
Estuary Programs (NEPs) for development and implementation of 
Comprehensive Conservation and Management Plans (CCMPs). In addition, 
this program funds other activities benefiting coastal watersheds 
including partnerships to abate threats to coastal habitats and 
recreational waters. Key management issues addressed by the NEPs and 
other local coastal partnerships include habitat loss and degradation, 
introductions of pathogens and toxins that threaten human and aquatic 
health, invasive species, and freshwater inflows. This program also 
funds monitoring and permitting activities, such as dredging, and is 
examining how to curtail point source discharges into coastal waters.
    Coastal watersheds contribute to the Nation's economic, 
environmental, and social well being. They provide habitat for various 
life stages of important plant and animal species, including threatened 
and endangered species and those having commercial or recreational 
value. They also harbor species that filter pollutants from water, 
control sedimentation, and protect against shoreline damage and floods.
    Over half of the United States population lives within areas that 
affect coastal watersheds. Additional resources are needed to enable 
the NEPs and other partnerships to address the complex threats to 
coastal health, such as invasive species and nutrient pollution.
    Increased resources for this program will enable NEPs to implement 
their conservation plans. Additional funding will strengthen the EPA's 
ability to provide seed monies to other important local coastal 
watershed projects that heretofore have had few funding opportunities 
available to them. Financing of these latter projects could perhaps be 
provided through a competitive grants program to State, local, and non-
governmental organizations. Additional funding could be used to expand 
coverage of the NEP to additional estuaries. Since 1991, 34 additional 
sites have either been nominated by a governor or have expressed 
interest in being designated as a NEP. EPA, however, has been able to 
select only seven nominees due to funding constraints. If the Nation is 
to make progress in addressing the significant management issues facing 
estuaries, additional funding is required for this program.
    The Nature Conservancy respectfully requests an appropriation of 
$50 million for Coastal Watersheds and National Estuaries Program, 
which includes the $35 million authorized level for the NEPs and an 
additional $15 million for other coastal activities. The 
administration's request for these two programs combined is $19.2 
million.

                            THE GREAT LAKES

    EPA's Great Lakes National Program Office (GLNPO) funds and 
conducts programs and projects to protect, maintain and restore the 
chemical, biological and physical integrity of the Great Lakes--the 
largest freshwater ecosystem on Earth. GLNPO serves an important role 
of bringing together Federal, State, tribal, non-governmental and 
industry partners in an integrated ecosystem approach.
    GLNPO collaborates with its multi-State and multi-agency partners 
to accomplish an agenda for ecosystem management which includes 
reducing toxic substances, protecting and restoring important habitats, 
and protecting human/ecosystem health. GLNPO combines research and 
monitoring with education and outreach, and it supports grants for 
specific activities to enhance and protect the Great Lakes environment. 
GLNPO advocates implementation of a community-based ecosystem approach 
to coordinate environmental efforts in the Great Lakes and has favored 
targeting the ecologically significant habitats identified in The 
Nature Conservancy-led Conservation Blueprint for the Great Lakes. Over 
the years, The Nature Conservancy's Great Lakes Program and Great Lakes 
State Chapters have been frequent and substantial partners with GLNPO.
    The Nature Conservancy recommends an appropriation of $17 million 
in base funding for EPA's Great Lakes National Program Office in fiscal 
year 2005. This request is $1.6 million higher than the 
administration's request of $15.4 million. The Conservancy also 
supports the $5.7 million included in the President's request for the 
Remedial Action Plans and Lakewide Management Plans.

                                CLOSING

    Thank you for the opportunity to provide these brief comments and 
for your attention to the important role EPA's programs play in 
protecting public health and the environment and in conserving 
biodiversity. While the charge to conserve biodiversity is a daunting 
one, public and private partnerships such as those afforded under EPA's 
programs offer a promise of success. The Conservancy would not be 
investing so heavily with its own resources if we did not believe this 
to be true. We look forward to continuing our work with Federal 
agencies, State and local governments, non-governmental organizations, 
and the private sector to ensure the long-term protection and 
sustainable use of the environment toward the ultimate goal of 
preserving the diversity of life on Earth. We appreciate the 
subcommittee's support for the EPA programs that help make this 
important work possible.
                                 ______
                                 
 Prepared Statement of the University of Medicine and Dentistry of New 
                                 Jersey

    The following is the testimony of the University of Medicine and 
Dentistry of New Jersey (UMDNJ), the largest freestanding public 
university of the health sciences in the Nation. The University is 
located on five State-wide campuses and contains three medical schools, 
and schools of dentistry, nursing, health related professions, public 
health and graduate biomedical sciences. UMDNJ also comprises a 
University-owned acute care hospital, three core teaching hospitals, an 
integrated behavioral health care delivery system, and affiliations 
with more than 200 health care and educational institutions State-wide.
    We appreciate the opportunity to bring to your attention two 
priority projects--the Child Health Institute and the Geriatric 
Research Center--which are consistent with the mission of this 
committee.
    Our first priority is the development of the Child Health Institute 
of New Jersey at the UMDNJ-Robert Wood Johnson Medical School (RWJMS) 
in New Brunswick. RWJMS is one of three schools of medicine at UMDNJ. 
It is nationally ranked among the top ten medical schools in the 
percentage of minority student enrollment, and the top one-third in 
terms of grant support per faculty member. RWJMS is home to major 
research institutes including The Cancer Institute of New Jersey, the 
Center for Advanced Biotechnology and Medicine, the Environmental and 
Occupational Health Sciences Institute, and the Child Health Institute 
of New Jersey.
    The Child Health Institute of New Jersey is a comprehensive 
biomedical research center. It will be the cornerstone institution of a 
major research and clinical effort to understand, prevent and treat 
environmental and genetic diseases of infants and children. Its 
development is integral to the enhancement of research at Robert Wood 
Johnson Medical School (RWJMS) in developmental genetics and biology, 
particularly as it relates to disorders that affect a child's 
development and growth, physically and functionally. The program will 
enable the medical school to expand and strengthen basic research 
efforts with clinical departments at the Robert Wood Johnson University 
Hospital (RWJUH) and, in particular, those involved with the new 
Bristol-Myers Squibb Children's Hospital at RWJUH, especially 
obstetrics, pediatrics, neurology, surgery and psychiatry.
    The Institute builds on existing significant strengths in genetic, 
environmental and neuroscience research within UMDNJ-RWJMS and 
associated joint programs with Rutgers University and other research 
institutes. For example, the Environmental and Occupational Health 
Sciences Institute (EOHSI) is a National Institute of Environmental 
Health Sciences (NIEHS) recognized center of excellence which 
investigates environmental influences on normal and disordered 
functions; the Cancer Institute of New Jersey (CINJ), a National Cancer 
Institute-designated Comprehensive Cancer Center, studies disordered 
cell growth; and the Center for Advanced Biotechnology and Medicine 
(CABM) characterizes gene structure and function.
    The best science requires creative scientists working in state of 
the art buildings using state of the art equipment. The construction of 
the Child Health Institute at RWJMS will fill a critical gap through 
recruitment of new faculty to build an intellectual atmosphere of basic 
molecular programs in child development and health.
    Research conducted by the Institute will focus on the molecular and 
genetic mechanisms that direct the development of human form, 
subsequent growth, and acquisition of function. The scientists and 
students will investigate disorders that occur during the process of 
development to determine how genes and the environment interact to 
cause childhood diseases. Ultimately, we hope to identify avenues of 
prevention, treatment, and even cures for these disorders.
    Investigations by the Institute will address basic and 
translational scientific issues at the molecular and mechanistic levels 
to advance biomedical science and improve health. For example, despite 
effective therapy, asthma-related health needs have risen by almost 50 
percent over the past decade with hospitalization rates 4 to 5 times 
higher for African Americans. Methods of prevention, with attention at 
both micro and macro-environmental conditions, have only been partially 
effective. Treatment regimens are relatively unchanged. Effective 
prevention and treatment will require more exacting understanding of 
the molecular mechanisms of the stimuli-receptor reactions that elicit 
asthmatic attacks as well as more detailed understanding of the 
molecular reactions effected by cells once stimulated by environmental 
factors. The molecular and cellular basis of injury reactions, 
including reactions of an allergic nature, will be a focus of the 
research at the Child Health Institute. Continued exploration of the 
basic molecular underpinnings of injury reactions will lead to more 
rational methods to prevent, minimize and treat asthmatic reactions and 
deaths. Urban academic medical centers such as the Robert Wood Johnson 
Medical School are at the epicenter of the current escalation in asthma 
and the Child Health Institute is well positioned, in conjunction with 
other institutes at the medical school to address this critical issue.
    The Child Health Institute will act as a magnet for additional 
growth in research and healthcare program development in New Jersey. 
The Institute will encompass 150,000 gross square feet and will house 
more than 40 research laboratories and associated support facilities. 
Fourteen senior faculty will direct teams of MDs and PhDs, visiting 
scientists, postdoctoral fellows, graduate students and technicians for 
a full complement of approximately 130 employees. The institutional 
goals of the Child Health Institute are to forge the scientific 
programs at the Institute with hospital based programs into a major 
center for children's health and to partner with pharmaceutical, 
chemical and information industries in growing opportunities in 
biotechnology and bioinformatics.
    Construction costs for the Institute are estimated to be 
approximately $72 million; approximately half of this figure is 
generally associated with local employment. At maturity, the Institute 
is expected to attract $7 to $9 million of new research funding 
annually. The Institute's total annual operating budget is projected to 
be $10 to $12 million, with total economic impact on the New Brunswick 
area projected to be many times this amount.
    The Child Health Institute has assembled over $40 million to fund 
its building and programs through a strong partnership among private, 
corporate and government entities. This support includes more than $6 
million in congressionally directed appropriations for the CHI over the 
past 4 years, including an appropriation from this committee in fiscal 
year 2003; and a $1.9 million facility grant awarded by the National 
Center for Research Resources of the National Institutes of Health. We 
respectfully seek $2 million to complement support already received in 
Federal participation to further advance the development of the Child 
Health Institute of New Jersey. A critical component of the research 
infrastructure being developed within the Child Health Institute is an 
Imaging Core Facility. Through this facility, researchers will be able 
to better visualize the dynamics of structures within cells and cells 
within developing tissues. Understanding these dynamics is crucial to 
expanding knowledge of the processes involved in basic molecular 
underpinnings of normal and abnormal growth and injury reactions. 
Requested funding will be utilized for the purchase of analytical 
equipment, including laser scanning and multi-photon microscopes to 
fit-out this shared facility.
    Our second priority is the development of a Geriatric Research 
Center within the Center for Aging, which is part of the UMDNJ-School 
of Osteopathic Medicine (SOM) in Stratford in southern New Jersey. As 
an osteopathic medical school, SOM places great emphasis on primary 
care, wellness, health promotion and disease prevention in all areas of 
its Mission. Enrolled students receive comprehensive instruction in the 
basic and clinical sciences, emphasizing the primary care of the 
patient. SOM also sponsors the largest graduate medical education 
program of all osteopathic medical schools in the Nation. An active 
continuing medical education program targets primary care physicians in 
the southern region of New Jersey. SOM's longstanding affiliation with 
the Area Health Education Centers provides links to hundreds of 
community-based agencies and health care providers, with whom the 
school works in partnership to address community health care needs and 
policy issues. For more than a decade the school has finished among the 
top three osteopathic schools in the Nation for research funds received 
from the National Institutes of Health.
    In response to the growing number of elderly in New Jersey, 
including nearly 300,000 veterans living in the State over age 65, SOM 
has taken a leadership role in the development of programs and services 
specifically for older individuals. These activities are coordinated 
through the SOM Center for Aging, which was established in 1987 and 
designated as a center of excellence in clinical services, education 
and research in 1989.
    The Center, whose staff represents multiple disciplines, is 
nationally recognized as a leader in quality care for older 
individuals, providing an array of services, varied educational 
experiences for health care professionals and research in the field of 
aging.
    Through a comprehensive continuum of care which includes ambulatory 
sites, acute care, nursing homes, assisted living facilities, hospice 
programs, home care, adult medical day care, and senior citizen 
subsidized housing, the Center for Aging provides health care to both 
well community-residing elderly as well as those who are frail, 
multiply compromised and homebound.
    Recognized for its strength in education and training, the Center 
for Aging and SOM has attained both State-wide and national prominence. 
In 1989 UMDNJ-SOM was the first osteopathic medical school to receive 
Federal funding for a 2-year geriatric medicine and dentistry 
fellowship program. Currently in its 14th year of Federal support, the 
fellowship program has been expanded to include psychiatry and 
psychology. The UMDNJ-School of Osteopathic Medicine, through the 
Center of Aging, was ranked in the top ten best graduate schools in 
geriatric medicine for 2004 in U.S. News and World Report. It was also 
recognized as ``Best Medicine'' in geriatrics for 2004 by Philadelphia 
Magazine. The Center for Aging also serves as the administering agency 
for the State-wide New Jersey Geriatric Education Center (NJGEC), which 
has been federally funded since 1990 and has received Federal 
recognition for its health promotion initiatives. NJGEC has provided 
training to more than 15,000 healthcare professionals of multiple 
disciplines throughout New Jersey.
    As a center of excellence, the Center for Aging continues to build 
its research component. The Center is involved in many clinical drug 
trials and has several clinical and behavioral research projects 
underway. It is in a position to build an extensive patient database 
across its service continuum, and to collaborate with the other schools 
within the UMDNJ system in aging-related research.
    Attracting more researchers to the Center is critical to achieving 
national prominence as a center for excellence in geriatrics. A major 
drawback to that goal is the lack of dedicated space to expand the 
Center's research laboratories.
    The UMDNJ-School of Osteopathic Medicine is seeking $5 million in 
capital and program funds to support dedicated space and faculty for a 
Geriatric Research Center within the Center for Aging. Total project 
costs are estimated at $30 million for capital and program needs. 
External public and private sources, including the U.S. Department of 
Health and Human Services, Health Resources and Service Administration; 
the Administration on Aging; and the State of New Jersey; have 
contributed over $6 million toward activities associated with this 
project.
    Requested fiscal year 2005 funding would provide support for the 
construction of the physical space to house research programs focusing 
on the cellular, biochemical and psychological aspects of aging. Basic 
science research will build on existing programs in nutrition, protein 
loss, free radical injury, genetic determinants of aging and disease, 
the cellular aging process and Alzheimer's disease. Space would also be 
allocated to support behavioral research, where researchers in the 
biopsychosocial aspects of aging will study such areas as caregiver 
stress, mental health problems in the elderly, end of life issues, 
palliative care, and behavioral management intervention strategies.
    The Center's clinical and educational programs will provide the 
synergy needed for the development of a full range of basic science and 
behavioral research in the field of aging. The strength of this dual 
approach underscores the close relationship between the physiological 
and psychological aspects of growing old and will broaden opportunities 
to seek extramural funding for research in a variety of areas. Of key 
importance will be the role of the Center in translating research 
findings into patient care practices, thereby enhancing the health and 
quality of life of older Americans, including those most vulnerable and 
at greatest risk for poor health across our State and Nation. We 
respectfully seek $5 million in capital and program funds to support 
dedicated space for a Geriatric Research Center.
    We want to thank this committee for supporting the critical needs 
of research and economic development throughout the Nation, and for 
recognizing the role that medicine and its associated technologies 
contribute as engines for economic growth. Thank you for your 
consideration of UMDNJ's priority projects--the Child Health Institute 
of New Jersey, and the Geriatric Research Center.
                                 ______
                                 
           Prepared Statement of the Alliance to Save Energy

    My name is Kateri Callahan and I serve as the President of the 
Alliance to Save Energy, a bipartisan, nonprofit coalition of more than 
80 business, government, environmental, and consumer leaders. The 
Alliance's mission is to promote energy efficiency worldwide to achieve 
a healthier economy, a cleaner environment, and greater energy 
security. The Alliance, founded by then-Senators Charles Percy and 
Hubert Humphrey, currently enjoys the leadership of Senator Byron 
Dorgan as Chairman; former CEO of Osram Sylvania Dean Langford as Co-
Chairman; and Representative Ed Markey and Senators Susan Collins, Jeff 
Bingaman, and Jim Jeffords as its Vice-Chairs. Attached are lists of 
the Alliance's Board of Directors and its Associate members, which I 
respectfully request be included in the record as part of this 
testimony.
    I thank the subcommittee for the opportunity to testify on behalf 
of the members and Board of the Alliance to voice our strong support 
for increased Federal funding to the Environmental Protection Agency's 
Energy Star program in fiscal year 2005. The Energy Star program is, in 
our opinion, one of the government's most successful efforts to promote 
marketplace solutions to greater energy efficiency. The Energy Star 
program is an entirely voluntary program that is yielding significant 
economic returns to our Nation's consumers and significant 
environmental benefits to our Nation as a whole. Increased investment 
in the Energy Star program will translate to increased energy savings 
by taxpayers across the country. Studies estimate that every Federal 
dollar spent on the Energy Star program results in an average savings 
of $75 or more in consumer energy bills; the reduction of about 3.7 
tons of carbon dioxide emissions; and an investment of $15 in private 
sector capital in development of energy-efficient technologies and 
products.
    The Alliance has a long history of advocacy, as well as research 
and evaluation, of Federal efforts to promote energy efficiency. 
Congress has enacted important measures, and the administration has 
adopted meaningful regulations and standards that are yielding energy 
savings through energy efficiency; the Energy Star program is of 
particular note, however, as it testifies to the important achievements 
that can be made through cooperative partnerships between government 
and businesses. The Climate Protection Division at EPA, which operates 
the Energy Star program, works closely with manufacturers, retailers, 
building owners, and energy service providers, as well as State and 
local governments, nonprofits, and other organizations to promote 
energy-efficient products and buildings. As you may know, through the 
Energy Star program a set of rigorous guidelines that represent high 
energy efficiency goals are established for the products or services of 
the participants in order to qualify for the Energy Star label. The 
label is, quite simply, the ``good housekeeping seal of approval.'' 
Through this important and impressive program, business and 
government--working in lockstep--are achieving national environmental, 
energy security, and economic goals.
    Energy efficiency is an investment. By purchasing more efficient, 
smarter technologies, there is often a modest additional cost, but that 
additional cost is paid back many times to the consumer through lower 
energy bills. Energy Star helps consumers understand and realize these 
benefits. Last year alone, Americans, with the help of Energy Star, 
saved $9 billion on their energy bills. Consumers can use these 
significant savings to invest in the economy, their families, and their 
future.

        ENERGY EFFICIENCY IS AMERICA'S GREATEST ENERGY RESOURCE

    Mr. Chairman, energy efficiency is America's greatest energy 
resource. It makes a larger contribution to meeting our energy needs 
than petroleum, natural gas, or even coal. The Alliance to Save Energy 
estimates that energy efficiency gains since 1973 are now saving at 
least 39 quadrillion BTUs of energy each year, or about 40 percent of 
our actual energy use.\1\ The energy savings we are enjoying from 
energy efficiency far exceed consumption of natural gas or coal, and 
far outpace energy produced using oil, nuclear, and other sources.
---------------------------------------------------------------------------
    \1\ Energy efficiency savings estimated by Alliance to Save Energy. 
Production quantities from Energy Information Administration, Monthly 
Energy Review, January 2004.



    Every BTU we save is one less BTU that needs to be generated. 
What's more, increasing America's energy efficiency is the quickest, 
cleanest, and cheapest way of increasing our energy supply. Without 
these enormous savings, our difficulties in meeting energy demand would 
be far, far worse than they are today.
    For example, in 2003, Energy Star helped Americans save enough 
energy to power 20 million homes and avoid greenhouse gas emissions 
equivalent to removing 18 million cars from the road. Getting more for 
less is the American way, and Energy Star meets this goal by helping 
millions of Americans get the energy they need, while saving money and 
pollution.
    Despite the introduction of new technologies and the integration of 
energy efficiency into the Nation's energy policies and economy, we 
barely have scratched the surface of energy efficiency's potential. It 
seems that every year technological developments bring more and better 
measures for reducing electricity demand and for making homes, 
buildings, and the devices we use, from washing machines to computers, 
more energy-efficient. Mr. Chairman, Energy Star is an important tool 
for educating American consumers about these emerging, efficient 
products. Consumers are learning to ``look for the Energy Star label'' 
as they comparison shop for appliances, homes, electronic devices, and 
other products.

              HOW ENERGY STAR CAPITALIZES 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. 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; by 
providing information on technology opportunities; by generating 
awareness of energy-efficient products and services; and by educating 
consumers about life-cycle energy savings. Consumers know that a 
product with the Energy Star label is among the most energy-efficient 
in the market.
    Last year, the Alliance to Save Energy undertook an extensive 
public opinion survey and found that the name recognition of the Energy 
Star program is very high--86 percent among U.S. homeowners. 
Approximately one-third of U.S. consumers report using the Energy Star 
label as an information tool for making purchase decisions; and an even 
higher number report using Energy Star as an information tool to help 
them save energy. Most consumers who are aware of the Energy Star label 
correctly understand that products bearing the Energy Star label use 
less energy and can save them money on energy bills.
    Mr. Chairman, as you may be aware, your State of New York has a 
program to promote, actively, the Energy Star label with consumers. 
This effort has yielded very positive results. Our research indicates 
that New York residents are significantly more likely to have purchased 
an Energy Star labeled product than consumers outside the State. New 
York's efforts are an impressive example of how, by using the Energy 
Star label, government can reduce overall energy use while at the same 
time assuring lower utility bills for constituents.

                   ABOUT THE ENERGY STAR PARTNERSHIPS

    Energy Star is composed entirely of voluntary partnerships, and 
these have grown since the early 1990's to include thousands of product 
manufacturers, private and public building owners and operators, 
homebuilders, small businesses, utilities, and retailers. The sheer 
number of these partnerships demonstrates clearly that energy 
efficiency delivers ``pollution prevention at a profit.''
    Energy Star serves broad constituencies in every State in the 
country. Energy Star includes over 1,250 manufacturing partners who 
make and market over 18,000 different models of Energy Star qualifying 
products. Energy Star assists over 8,000 small businesses with their 
efforts to maximize the energy efficiency of their facilities. Energy 
Star counts more than 3,000 builder partners and partners who supply 
products and services for energy-efficient home construction. To date, 
more than 100,000 Energy Star Homes have been built--locking in 
financial savings for homeowners of more than $26 million annually. 
Energy Star includes more than 12,000 commercial and industrial 
participants representing more than 15 percent of the Nation's total 
commercial, public, and industrial markets and estimated savings of 
more than 47 billion kilowatt hours of energy.
    As you may know, for the last 4 years, the Alliance has asked many 
of Energy Star's supporters to join us in our request for a significant 
increase in funding for the program. The response has been remarkable. 
Joining us in our request are 575 companies and partners of the Energy 
Star program as well as 2,850 individuals from around the country. 
Attached please find a copy of this letter with the names and addresses 
of the supporters for the record.

    MUCH HAS BEEN ACCOMPLISHED, BUT HUGE POTENTIAL REMAINS UNTAPPED

    The Energy Star program has made a significant contribution to 
reducing consumer energy use, but a wide array of important, additional 
opportunities to use the program to promote energy remain untapped. 
Energy Star is a success, poised to provide more savings and enhanced 
environmental protection as soon as the government is ready and able to 
invest more.
    In 2001, the President's National Energy Plan recommended that the 
Energy Star program be expanded and that the Energy Star labeling 
program be extended to cover more products. For the past 3 years, the 
energy bills that have passed the House and Senate have authorized or 
expanded the Energy Star program. And, time and again, the President 
and the Administrator of the EPA have noted that voluntary measures are 
vital to addressing climate change and have held up Energy Star as an 
exemplary program. Notwithstanding these pronouncements of support, for 
the fourth year in a row, the administration has recommended virtually 
level funding for the Energy Star program in fiscal year 2005. In 
addition, over the past several years, the program has been subjected 
to funding rescissions and internal cuts. Yet, even in the face of 
these tight Federal budgets, 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 has 
soared.
    Mr. Chairman, considering the growing energy prices around the 
country and the concerns about electricity reliability and pollution 
abatement, the Alliance believes that the Energy Star program should 
not only be significantly increased for fiscal year 2005, but that the 
subcommittee also should commit to doubling funding for the program 
over the next 5 years. This would enable the Energy Star program to 
look not only at additional products, but also to address whole-home 
retrofits, including insulation, duct sealing, and home envelope 
sealing. Energy Star has additional market barriers to break through, 
including building homeowner trust in energy-efficient home 
improvements and audit programs. By building on the Energy Star name, 
we can save much more energy.
    In addition to labeling products and buildings, Energy Star has 
begun a successful effort working with State and local organizations to 
help homeowners audit and upgrade the efficiency of their homes. Home 
Performance with Energy Star has been successful in New York, 
Wisconsin, and California. For example, in New York, as of January of 
this year, 4,000 energy upgrades had been completed at a pace of some 
300 homes/month. On average these upgrades save each homeowner some 600 
kWh per year. But much more needs to be done to implement similar 
programs across the country. With additional funding, the Energy Star 
program could develop a supportive infrastructure for contractors 
around the country, share information with interested State 
organizations, and develop marketing efforts in up to 10 metropolitan 
areas per year.

                            RECOMMENDATIONS

    Mr. Chairman, EPA's Energy Star program has clearly demonstrated 
its importance to allowing the United States to capitalize on its 
greatest energy ``resource''--energy efficiency. The program is 
delivering real progress toward meeting our country's environmental and 
energy security goals, while at the same time putting more money in 
consumers' pockets through reduced energy bills. That's a win-win-win-
win--on four important national fronts. More investment by the Federal 
Government, we believe, would simply expand and increase the benefits 
now being enjoyed by the country and its citizens through this 
important, voluntary partnership between the government and industry.
    The Alliance to Save Energy respectfully recommends the 
subcommittee take the following actions to best leverage the proven 
results that stem from EPA's Energy Star program:
  --First, we ask that the Congress, as it did in fiscal year 2004, 
        specify the exact level of Federal funding that is appropriated 
        for the Energy Star program. Such direction to EPA will help to 
        assure that funding intended by Congress for the program is 
        used by the agency for that purpose.
  --Second, we recommend that the Congress increase funding of the 
        Energy Star program by $10 million over the administration's 
        proposal to expand the number of products, programs, and 
        partners involved in the current program. As mentioned earlier 
        in the testimony, we believe Congress should double the budget 
        for the Energy Star program within 5 years; this can be 
        accomplished by adding $10 million per annum over the next 5 
        fiscal years.
  --Third, we ask Congress to consider an expansion of the Energy Star 
        program to include a ``Home Performance'' component. This new 
        component that would bring together the Federal Government 
        (EPA, along with the Departments of Energy and Housing and 
        Urban Development), the private sector, and State-level 
        organizations to extend the Energy Star brand into whole-house 
        improvements. Home Performance pilot projects in this area have 
        been undertaken successfully in New York, Illinois, and 
        Wisconsin. The Alliance believes that the Federal Government 
        needs to take leadership in this area to assure that the energy 
        efficiency benefits being realized in pilot projects today can 
        be translated into a nationwide, whole-home energy savings 
        program.

                               CONCLUSION

    The Energy Star program proves that environmental protection can be 
achieved while simultaneously saving consumers money on their energy 
bills and enhancing the economy. 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.
    While there are many demands on the country's financial resources, 
Energy Star has proven tremendously cost-effective and, more 
importantly, it returns important benefits to the Nation. Every Federal 
dollar invested in Energy Star in fiscal year 2005 will return a 
significant yield in cost-effective pollution reduction; economic 
stimulation through investment in new technology; energy security 
through reduced demand; and consumer savings through lower energy 
bills. It is a program deserving of both expansion and greater Federal 
investment.
    Mr. Chairman and members of the subcommittee, on behalf of the 
Alliance to Save Energy, its Board and its Associates, I appreciate 
this opportunity to appear before you today.
                                 ______
                                 
     Prepared Statement of the U.S. Conference of Mayors, National 
Association of Counties, National Association of Local Housing Finance 
        Agencies, and National Community Development Association

    Mr. Chairman and members of the subcommittee, this testimony is 
presented on behalf of the U.S. Conference of Mayors, the National 
Association of Counties, 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 2005 appropriations for the Department of Housing and Urban 
Development, and in particular, the two priority programs for local 
governments--the Community Development Block Grant (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. 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 30th year, having been signed into law by President 
Gerald Ford in 1974, CDBG is working in communities across the country. 
The key to its success is the inherent flexibility for it to adapt to 
affordable housing and neighborhood revitalization needs in our 
Nation's urban, suburban and rural areas.
    In fiscal year 2003 alone, 94.8 percent of the CDBG funds allocated 
to entitlement cities and counties went to activities principally 
benefitting low- and moderate-income persons and 96.7 percent of the 
CDBG funds allocated to States went to activities principally 
benefitting low- and moderate-income persons. A total of 184,611 
households were assisted through the program in fiscal year 2003. The 
program created or retained an astounding 108,700 jobs. For every $1 of 
CDBG funding another $2.79 in private funding and $0.77 in public 
funding was leveraged in fiscal year 2003. The program has a good track 
record in business retention, with over 80 percent of the businesses 
assisted through the program still in operation after 3 years. Even 
though the program has performed well the annual formula allocation for 
CDBG has remained relatively static over the last decade, even 
decreasing slightly in the past 2 years. The program has never been 
adjusted for inflation, since its enactment in 1974. With the existing 
cuts to the program, continued project-specific set-asides in the 
program, inflation, and more entitlement communities receiving funds, 
the formula allocation is decreasing nationwide for cities and counties 
that administer the program. In the last 2 years, an across-the-board 
reduction in Federal programs has reduced the program even further.
    We, therefore, urge you to fund the CDBG program in fiscal year 
2005 at a level of at least $5 billion in formula grants.
    Mr. Chairman, we are concerned and take strong exception to the 
Office of Management and Budget's characterization of the Community 
Development Block Grant (CDBG) Program as ``ineffective'', as stated in 
the administration's fiscal year 2005 budget request. OMB reached this 
conclusion through application of its Performance Assessment Rating 
Tool (PART). In the PART review of the CDBG program, it appears that 
OMB chooses to interpret the statute and facts in order to support a 
dogmatic agenda and avoids acknowledgment of any positive achievements 
from the more than $105 billion in CDBG funds spent by cities, counties 
and States since 1975 on their most pressing affordable housing, 
community and economic development needs over the 30 years of the 
program. We urge you to reject it out of hand.

              HOME INVESTMENT PARTNERSHIPS (HOME) PROGRAM

    The HOME Investment Partnerships (HOME) Program is also an 
effective block grant program with a very impressive track record of 
providing rental housing and homeownership opportunities to low- and 
moderate-income households. According to cumulative HUD data, the 
program has helped to develop or rehabilitate over 785,553 affordable 
housing units. 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 2004, more than 81 percent 
of HOME assisted rental housing was benefitting families at or below 50 
percent of area median income. And more than 56 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. As of February 2004, the program has assisted 296,197 
families in becoming first-time homebuyers. HOME fund also allows 
existing low- and moderate-income persons to stay in their homes by 
providing rehabilitation assistance. Since 1992, HOME funds have been 
used to rehabilitate 151,920 existing homeowner units.
    Moreover, HOME is cost effective and provides the gap financing 
necessary to attract private loans and investments to projects. For 
each HOME dollar, $3.01 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, therefore, urge you to fund the HOME program in fiscal year 
2005 at a level of at least $2.25 billion in formula grants. In 
addition, we support $200 million in funding for the American Dream 
Downpayment Initiative, which was enacted by Congress last session and 
which is administered by HOME participating jurisdictions. 
Unfortunately, Congress did not provide an administrative fee for 
jurisdictions to operate the program. We urge Congress to provide an 
administrative fee of 10 percent for the program in fiscal year 2005.

                             HOMEOWNERSHIP

    We applaud the administration's efforts to promote homeownership 
for low-income families. Homeownership provides citizens with a stake 
in their communities, and increases the stability and vitality of 
neighborhoods. As representatives of local elected officials and 
practitioners, we support the concepts of providing housing counseling 
for new and prospective homeowners, as well as a homeownership tax 
credit that would help offset the costs of developing more affordable 
housing. These same concepts may also provide opportunities to 
revitalize distressed communities and increase our members' ability to 
leverage public dollars with private resources.

                      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 2005 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. We 
are seeking at least $7.325 million in credit subsidy funding for 
Section 108, the same level approved for the program in fiscal year 
2004. We are seeking $50 million for BEDI in fiscal year 2005 and ask 
Congress to de-couple the BEDI program from Section 108 so that 
communities can compete for BEDI funds without having to first secure a 
Section 108 loan guarantee.

                        HOMELESS HOUSING FUNDING

    Mr. Chairman, we support a funding level of $1.27 billion for 
homeless housing programs as proposed by the Bush Administration. We 
support legislation that would convert 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 close to $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 the 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--and is to be a coordinated effort 
with the Department of Health and Human Services and the Veterans 
Affairs and the Interagency Council on Homelessness.

                               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 2004. We urge Congress 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 oppose the administration's cut in the Section 8 voucher 
program. The budget request falls short by $1.6 billion needed to fully 
fund all vouchers now in use. Approximately 250,000 low-income families 
could lose their vouchers. An analysis by the Low Income Housing 
Coalition of the American Housing Survey revealed that 31 percent of 
all households had housing problems in 2001. A reduced voucher program 
would surely add to the critical need for low-income housing 
assistance.
    We are also concerned about the administration's proposed Flexible 
Voucher Program. While we agree that revisions are needed to the 
Section 8 program so as to reduce and contain program costs that could 
threaten other housing and community development programs, we are 
opposed to the elimination of long-standing rules that benefit low 
income families. Moreover, it is difficult to believe that a lump sum 
of funds to PHAs would be adequate to serve all vouchers holders.

                                HOPE VI

    Once again the President's budget proposes to zero out the HOPE VI 
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. This 10-year-old grant program has 
generated billions of dollars in community investment and revitalized 
neighborhoods over the Nation. Since 1993, $5.6 billion has been 
awarded to revitalize 193 public housing developments which have 
leveraged an additional $9 billion in investments.

                         LEAD HAZARD REDUCTION

    We thank Congress for continuing to provide funding for lead hazard 
reduction. We ask that the Lead Hazard Reduction Demonstration Program 
be funded in fiscal year 2005 at $50 million, the approximate level as 
fiscal year 2004. This small program provides needed assistance to 
local governments in eradicating lead hazards from low-income housing 
units.

                               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 2005.
    Thank you.
                                 ______
                                 
      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 1 of every 
7 electric consumers (approximately 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 2005 funding priorities within the VA-HUD 
Subcommittee's jurisdiction.

         ENVIRONMENTAL PROTECTION AGENCY: ENERGY STAR PROGRAMS

    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.
    According to the EPA, Energy Star is saving businesses, 
organizations, and consumers more than $9 billion a year, and has been 
instrumental in the more widespread use technological innovations like 
LED traffic lights, efficient fluorescent lighting, power management 
systems for office equipment, and low standby energy use.
    Because this program has such broad benefits, APPA urges the 
subcommittee to consider a substantial increase above the 
administration's request of $16.1 million for fiscal year 2005.

   ENVIRONMENTAL PROTECTION AGENCY: LANDFILL METHANE OUTREACH PROGRAM

    The Landfill Methane Outreach Program (LMOP) 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. According to the EPA, LMOP has more 
than 345 organizations that have signed voluntary agreements to work 
with EPA to develop cost-effective landfill gas (LFG) projects, 
including every major LFG project development company. The program has 
also developed detailed profiles for over 1,300 candidate landfills in 
31 States, and has data for more landfills in all States.
    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.
    APPA appreciates the administration's request of $2.6 million for 
fiscal year 2005 as it reflects a small increase from the fiscal year 
2004 budget request and mirrors the fiscal year 2004 allocation by 
Congress. We would urge the subcommittee to again consider an 
allocation for this program over and above the administration's request 
given the ``bang for the buck'' that LMOP initiatives have facilitated.

                    COUNCIL ON ENVIRONMENTAL QUALITY

    APPA supports the administration's request of $3.284 million for 
fiscal year 2005 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 2005 appropriations.
                                 ______
                                 
     Prepared Statement of the American Society of Plant Biologists

    Thank you, Mr. Chairman for this opportunity to submit testimony on 
behalf of the American Society of Plant Biologists (ASPB). My name is 
Mary Lou Guerinot. I am President of ASPB and professor at Dartmouth 
College, Biological Science Department.
    Founded in 1924, 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.
    The National Science Foundation (NSF) funds research in new 
frontiers of scientific inquiry and contributes to creating a highly 
skilled workforce. The fundamental breakthroughs that have led to new 
technologies including biotechnology, nanotechnology and information 
technology led to new industries for America's economy and workers.
    Support by the subcommittee for fundamental research supported by 
the National Science Foundation and its Directorate for Biological 
Sciences leads to discoveries that benefit society, the economy and the 
environment. Fundamental plant biology research contributes to 
introduction of new technologies. New technologies, such as plant 
biotechnology, have lead to enhanced plant production and new methods 
of protecting and preserving limited environmental resources, such as 
fresh water supplies.
    The Nation's capabilities in fundamental biology research in 
plants, systematics, physiology, water relations, environmental stress 
and other areas is dependent upon support from NSF and the NSF 
Directorate for Biological Sciences.
    The NSF Directorate for Biological Sciences has sponsored research 
that NSF has identified as being among the 50 breakthroughs that have 
had the most impact or influence on every American's life over the past 
50 years. Five of these breakthroughs cited by NSF in plant biology 
are:
  --NSF-sponsored genomic research on the model plant Arabidopsis 
        thaliana. The entire genome sequence was completed well ahead 
        of schedule. Now that the sequence has been completed, NSF is 
        proceeding with the 2010 Project to determine the function of 
        every gene in this model plant.
  --NSF-supported basic research provided a base of knowledge that will 
        lead to plants genetically modified to produce lifesaving 
        pharmaceuticals.
  --Novel approaches were discovered that could be used to alleviate 
        allergic reactions to wheat products and other food-related 
        ailments. Hypo-allergenic foods are expected to result from 
        NSF-sponsored basic plant research.
  --Up to 12 percent of soils under cultivation around the world 
        contain metals that stunt plant growth and development and 
        result in poor harvests. NSF-funded researchers are using 
        genetic engineering to engineer plants that flourish in metal-
        rich soils.
  --Almost one-third of the irrigated land on earth is not suitable for 
        growing crops because it is contaminated with high levels of 
        salt. More farmable land is lost annually through high salt 
        levels in soil than is gained through the clearing of forest 
        resources. Basic research supported by NSF will lead to more 
        salt-tolerant crops.
    We mark the 51st anniversary this year of the discovery of the 
structure of DNA by Watson and Crick. This discovery changed the course 
of biology forever, leading to the age of molecular biology, genetic 
engineering and now genomics.
    Today, just as human genome research has advanced medical science, 
the NSF-sponsored Plant Genome Research Program and biotechnology have 
revolutionized the way scientists can improve plants. NSF-sponsored 
genomic research on Arabidopsis, rice, corn and other plants is 
providing valuable fundamental knowledge of plant structure and 
functions. Resulting enhanced plants will be used to better provide 
needed food supplies, renewable energy sources, industrial feed stocks, 
clothing and building materials, and lifesaving medicines.
    ``Plant biology has been transformed completely over the last 50 
years. It is now squarely in the age of genomics, and is constantly 
changing as new concepts emerge and novel technologies develop,'' the 
National Science and Technology Council, Committee on Science, 
Interagency Working Group on Plant Genomes (IWG) noted in the January 
2004 Progress Report on the National Plant Genome Initiative. 
Recognizing the enormous scientific opportunities, the National Plant 
Genome Initiative (NPGI) was established in 1997 under the National 
Science and Technology Council and the Office of Science Technology and 
Policy (OSTP).
    Support led by Chairman Bond together with Ranking Member Mikulski 
and this subcommittee for the Plant Genome Research Program has helped 
place the United States in the forefront of plant genomics in the 
world. Examples of research results from the Plant Genome Research 
Program that the IWG noted were reported the past year include:
  --Construction of a high resolution maize map that integrates genetic 
        and physical maps: a culmination of 5 years of hard work that 
        will benefit both basic researchers and breeders.
  --Identification of the full encyclopedia of genes necessary for 
        mineral nutrition in plants, that forms the foundation for 
        understanding the mechanism of plant uptake of both beneficial 
        and toxic minerals.
  --Development of the marker-assisted breeding strategies for wheat.
  --Establishment of a comparative cereal genomics database, Gramene, 
        which uses the complete rice genome sequence as a reference and 
        serves as the information resource for the entire cereal 
        research community including maize, wheat, barley and sorghum.
  --Active involvement of plant genome researchers in education and 
        training of undergraduates, high school students and K-12 
        teachers.
  --Research collaboration between U.S. scientists and scientists in 
        developing countries in plant genomics and related fields of 
        science.
    Examples of new projects that the IWG noted should further advance 
the field in coming years include:
  --Building of resources and tools for plant genome research.
  --Advances in nutritional genomics that will lead to higher quality 
        food products.
  --Identification of networks of genes involved in disease resistance.
  --A new comprehensive database for the entire plant genome research 
        community to provide seamless access to relevant information 
        resources that are distributed all over the world.
    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, renewable energy sources, 
industrial feed stocks, clothing and building materials, and lifesaving 
medicines.
    Plant genome research sponsored by NSF that I am conducting in my 
lab is addressing the area of metal transport and regulation of gene 
expression by metals. I have focused on iron because increasing the 
ability of plants to take up iron could have a dramatic impact on both 
plant nutrition and human health. Iron deficiency afflicts an 
astounding number of people with estimates that 3 billion people 
worldwide suffer from iron deficiencies. Plants are the principal 
source of iron in most diets. Fundamental research made possible by the 
NSF Plant Genome Research Program is providing knowledge that could 
lead to new varieties of food crops that would supply more iron needed 
in diets of people throughout the world.
    We commend the tireless efforts of Chairman Bond in traveling to 
developing nations of the world to see first-hand the plight of human 
nutritional deficiencies. The continued leadership of Chairman Bond, 
Ranking Member Mikulski and the subcommittee for plant genome and 
related research will help to alleviate ravages of nutritional 
deficiencies here and abroad.
    The leadership of this subcommittee has put NSF on the path of 
substantial budget increases over recent years! We recognize that the 
realities of this year's budget may make an increase of as much as 15 
percent very difficult to attain. However, the continued strong support 
by the subcommittee of NSF, including the NSF Directorate for 
Biological Sciences and the Plant Genome Research Program is deeply 
appreciated by our science community. Investment in world-leading, 
competitively awarded basic research sponsored by NSF will continue to 
help benefit the future of the Nation's security, economy, and workers.
    Thank you again for the honor of addressing the subcommittee today.
                                 ______
                                 
        Prepared Statement of the Ecological Society of America

    As President of the Ecological Society of America, I am pleased to 
provide written testimony for the Environmental Protection Agency 
(EPA). The Ecological Society of America has been the Nation's premier 
professional society of ecological scientists for nearly 90 years, with 
a current membership of 8,000 researchers, educators, and managers. We 
appreciate the opportunity to offer written testimony on behalf of the 
Environmental Protection Agency.
    EPA's dual mission to safeguard human health and the environment 
depends upon the agency's intramural and extramural research programs, 
both of which would suffer significant cuts under the President's 
proposed budget for fiscal year 2005. As the Nation continues to face a 
host of environmental challenges, we believe shortchanging EPA's 
science and technology programs will compromise the agency's ability to 
perform its mission.
    In particular, the Ecological Society of America is concerned about 
proposed cuts to the agency's STAR Grants Program. Managed by the 
agency's Office of Research and Development, this competitive, peer-
reviewed, extramural grants program generates scientific information 
that supplements the agency's intramural research programs and better 
equips EPA to respond to emerging issues. The proposed fiscal year 2005 
budget would slash this valuable program by $35 million, in spite of 
its excellent track record and recent laudatory review by the National 
Academy of Sciences. ``The Measure of STAR: Review of the U.S. 
Environmental Protection Agency's Science to Achieve Results (STAR) 
Research Grants Program,'' points out that STAR grants fill a critical 
gap in the agency's in-house scientific expertise and enhance EPA's 
ability to respond to new issues. The Ecological Society of America 
encourages Congress to fund the STAR Grants Program at its fiscal year 
2004 level of $100 million.
    Another area of concern is the EPA's STAR Fellowship Program, which 
would decline by 40 percent ($4 million) under the agency's proposed 
budget for the coming fiscal year. This program, which is the only one 
of its kind, funding graduate students conducting applied environmental 
research, has also had an excellent track record since its inception in 
1995. An extremely competitive program--only 7 percent of applicants 
are awarded fellowships--the program has produced high quality research 
and is helping to train the next generation of environmental 
scientists. The Ecological Society of America appreciates the past 
support of this committee in restoring previous cuts to the STAR 
Fellowship Program and we hope committee members will do so again for 
fiscal year 2005, funding the Program at its current level of $10 
million.
    In addition to these extramural programs, we are also concerned 
about the proposed cuts to the agency's intramural Science and 
Technology account and urge the committee to bring this account to the 
fiscal year 2004 level.
    We appreciate the committee's past support of EPA's research 
programs and the opportunity to provide our comments on its proposed 
budget. Thank you for considering our testimony.
                                 ______
                                 
           Prepared Statement of the Doris Day Animal League

    Chairman Bond, Ranking Member Mikulski, and members of the 
subcommittee, the Doris Day Animal League represents 350,000 members 
and supporters nationwide who support a strong commitment by the 
Federal Government to research, development, standardization, 
validation and acceptance of non-animal and other alternative test 
methods. Thank you for the opportunity to present testimony relevant to 
the fiscal year 2005 budget request for the U.S. Environmental 
Protection Agency's (EPA) Science and Technology budget for the Office 
of Research and Development (ORD).
    In 2000, the passage of the ICCVAM Authorization Act into Public 
Law 106-545, created a new paradigm for the field of toxicology. It 
requires Federal regulatory agencies to ensure that new and revised 
animal and alternative test methods be scientifically validated prior 
to recommending or requiring use by industry. An internationally agreed 
upon definition of validation is supported by the 15 Federal regulatory 
and research agencies that compose the Interagency Coordinating 
Committee for the Validation of Alternative Methods (ICCVAM), including 
the EPA. The definition is: ``the process by which the reliability and 
relevance of a procedure are established for a specific use.''
    In recent years, thanks to the leadership of Chairman James Walsh 
and Representative David Price, efforts to provide specific funding for 
and prioritization of research, development and validation of non-
animal and other alternative test methods has helped to guide EPA's 
approach to this necessary thrust for sound science that replaces, 
reduces or refines the use of animals in toxicity testing. However, 
recent dialogue with the EPA has demonstrated a lack of prioritization 
for funding actual validation studies of non-animal and other 
alternative methods. This is the equivalent of developing a new car 
that is intended to provide reduced emissions without assessing the 
validity of the reduced emissions claim, ensuring the car will never be 
marketed.
    For several years, the enacted budget for the Office of Research 
and Development has hovered at approximately $500 million, comprising 
just 9 percent of EPA's total budget. Animal protection organizations 
have consistently supported a mere 1-2 percent of this budget 
specifically for research, development and validation of non-animal, 
alternative test methods. Chairman Walsh secured a $4 million 
appropriation first-ever directive for research, development and 
validation of non-animal test methods in the fiscal year 2002 budget 
for EPA. And while the animal protection community is greatly 
appreciative of this first-ever directive, we have yet to receive a 
detailed accounting of the expenditure of funds. The agency has stated 
that funding has been provided for bench science that may have future 
relevant applications. EPA contends it has used monies from the Science 
and Technology Account for the Office of Research and Development to 
fund research and development of non-animal and other alternative test 
methods; but the funding stops at the stage when a test method must be 
scientifically validated in order to be considered for incorporation 
into recommendations or requirements. Unfortunately this approach does 
little to support the final development or necessary validation studies 
for non-animal test methods with potential current application in 
existing EPA programs.
    We request that the subcommittee support the inclusion of $1 
million specifically for validation studies for non-animal and other 
alternative test methods; with non-animal methods prioritized. In 
addition, we request the following report language be included in bill:

    ``The Committee encourages the agency to prioritize research, 
development, standardization and validation of non-animal and other 
alternative screening and testing methods which have potential to 
reduce, refine or replace animal studies. The Committee also directs 
the agency to provide $1 million from within the existing Science and 
Technology Account specifically for validation of non-animal and other 
alternative test methods, including prioritizing those that replace 
animal-based eye irritation methods, embryotoxicity, carcinogenicity 
and acute toxicity for mammals and fish, for which the scientific 
review of the validation status will be conducted under the auspices of 
the Interagency Coordinating Committee on the Validation of Alternative 
Methods. Any such activities should be designed in consultation with 
EPA's Office of Pollution Prevention and Toxic Substances to ensure 
integration of scientifically valid non-animal and other alternative 
test methods into existing and future programs. The Committee directs 
the agency to provide a report to the Committee by March 30, 2005 
regarding expenditures of fiscal year 2005 funds for research, 
development and validation of non-animal and other alternative 
methods.''

 SKIN CORROSION, SKIN ABSORPTION AND SKIN IRRITATION--NON-ANIMAL TEST 
                                METHODS

    ``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, as of this 
writing, has still not 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. In order to assess the progress of the EPA in implementing the 
non-animal replacements for these three endpoints, we concur with our 
colleagues at People for the Ethical Treatment of Animals and 
respectfully request that the subcommittee include the following report 
language:

    ``The Administrator of the EPA is required to report to Congress no 
later than December 1, 2004, regarding the use of 
CorrositexTM and `human skin equivalent' tests such as 
EpiDermTM and EpiSkinTM for skin corrosion 
studies, in vitro methods using skin from a variety of sources (e.g. 
human cadavers) for skin absorption studies, and human volunteer 
clinical skin-patch tests (for chemicals first determined to be non-
corrosive and free of other harmful properties) for skin irritation 
studies. The Administrator should describe the reasons for which the 
agency has delayed accepting the aforementioned methods for regulatory 
use as total replacements for their animal-based counterparts, exactly 
what steps the agency is taking to overcome those delays, and a target 
date by which the agency intends to accept these methods for regulatory 
use.''

                                SUMMARY

    While significant progress has been made in nearly every other 
scientific discipline, the field of toxicology has remained wedded to 
antiquated methods dating from the mid-20th century. The United States 
must provide a marked investment in sound science that reflects the 
humane ethic espoused by the majority of Americans. Only by ensuring 
that Federal regulatory agencies fund research, development and 
validation of non-animal and other alternative test methods can the 
number of methods accepted on the basis of scientific merit 
exponentially increase. And in cases where scientific validity is 
demonstrated and non-animal and other alternative methods are 
incorporated into European Union, Canadian or OECD guidelines, the 
United States should expedite its own acceptance of the methods.
                                 ______
                                 
 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 compose the American Indian Higher Education Consortium (AIHEC), 
thank you for the opportunity to express our views and requests for 
fiscal year 2005.

                          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 enables tribal colleges to build, expand, renovate, and equip 
their facilities available to and used by the larger community. 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 
2005 budget request.

National Science Foundation (NSF) Programs
    Tribal Colleges and Universities Program (TCUP).--Since fiscal year 
2001, 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. As of fiscal year 2003, 13 of the 32 eligible TCUs 
have been awarded implementation grants, along with four Alaska Native 
and Native Hawaiian serving institutions, and five new awardees are 
expected in fiscal year 2004. As more than half of the eligible TCUs 
have yet to receive grant awards, we request that Congress expand this 
vital program to $15 million, a $5 million increase over fiscal year 
2004 to help increase the number of TCUs able to participate and to 
support funding of Alaska Native and Native Hawaiian serving 
institutions, which NSF includes in the TCU program and funds to a 
significant extent. Additionally, we seek report language clarifying 
that for any provision of technical assistance under this program, 
eligible organizations are defined as national and regional non-profit 
organizations comprised of TCUs; and further language requiring Science 
and Technology Centers and EPSCoR Institutions to develop and implement 
plans to effectively collaborate with Tribal Colleges and Universities 
in education and research activities.
    Advanced Networking with Minority Serving Institutions (AN-MSI).--
In fiscal year 1999, NSF funded a project to help MSIs develop campus 
infrastructures and national connections necessary to participate in 
the 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 
support and technical assistance and is working with tribal colleges on 
collaborative education and research projects. AN-MSI's funding expires 
in fiscal year 2004, 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 $15 million over the next 5 years.

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 science, technology, engineering, and mathematics programs. The 
agreement includes a TCU liaison between AIHEC and NASA to oversee 
implementation of the project and modest program enrichment grants to 
the colleges. We request that Congress include report language 
encouraging NASA to continue and expand its successful $1.2 million 
cooperative agreement on behalf of TCUs; clarifying that for any 
provision of technical assistance under this program, eligible 
organizations are defined as national and regional non-profit 
organizations comprised of TCUs; and encouraging NASA faculty exchange 
programs and IPA contracts with TCUs to provide needed on-site 
expertise and partnerships. Additionally, we seek further report 
language encouraging the development of new initiatives to address the 
technology infrastructure needs at the TCUs, and further language to 
require Space Grant and EPSCoR Institutions to develop and implement 
plans to effectively collaborate with Tribal Colleges and Universities 
in education and research activities.

                               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. Annually, these institutions serve approximately 
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 community programs and to moving American 
Indians toward self-sufficiency.
    TCUs provide access to higher education for American Indians and 
others living in some of the 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 institutions have come to 
represent the most significant development in the history of American 
Indian education, providing access to underrepresented students and 
promoting achievement among students who may otherwise never have known 
postsecondary education success.
    Despite their remarkable accomplishments, TCUs remain the most 
poorly funded institutions of higher education in the country. 
Chronically inadequate operations funding continues to be the most 
significant barrier to their success. Funding for the basic 
institutional operations of 26 reservation-based TCUs is provided 
through Title I of the Tribally Controlled College or University 
Assistance Act (Public Law 95-471), which was first funded in 1981. 
Today, 23 years later these colleges are operating at $4,230 per full-
time Indian student count (ISC), just 70 percent of the authorized 
level of $6,000 per ISC. Additionally, TCUs are located on Federal 
trust territories, and therefore 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 2005 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 projects 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 Michigan and 
Tohono O'odham Community College in Arizona. 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 2005 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 
for 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 3 years, 
13 of the 32 eligible TCUs have received implementation grants, along 
with four Alaska Native and Native Hawaiian serving institutions, with 
five additional grants expected to be awarded in fiscal year 2004. 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. Additionally, we seek 
report language clarifying that for any provision of technical 
assistance under this program, eligible organizations are defined as 
national and regional non-profit organizations comprised of TCUs; and 
further language requiring Science and Technology Centers and EPSCoR 
Institutions to develop and implement plans to effectively collaborate 
with Tribal Colleges and Universities in education and research 
activities.
    Advanced Networking with Minority Serving Institutions (AN-MSI).--
Five 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 in fiscal year 2004, 
and if new funding is not secured, the project's work will cease. We 
request that Congress allocate $15 million for this initiative over the 
next 5 years.

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 modest program enrichment grants to 
the colleges. We request that Congress include report language 
encouraging NASA to continue and expand its successful $1.2 million 
cooperative agreement on behalf of TCUs; clarifying that for any 
provision of technical assistance under this program, eligible 
organizations are defined as national and regional non-profit 
organizations comprised of TCUs; encouraging NASA faculty exchange 
programs and IPA contracts with TCUs to provide needed on-site 
expertise and partnerships. Additionally, we seek further report 
language encouraging the development of new initiatives to address the 
technology infrastructure needs at the TCUs; and further language 
requiring Space Grant and EPSCoR Institutions to develop and implement 
plans to effectively collaborate with Tribal Colleges and Universities 
in education and research activities.

                               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 2005 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 
2005 appropriations requests.
                                 ______
                                 
Prepared Statement of the Integrated Petroleum Environmental Consortium

    It is proposed that the U.S. Environmental Protection Agency 
continue to support a focused, university-based program, the Integrated 
Petroleum Environmental Consortium (IPEC), with the goal of increasing 
the competitiveness of the domestic petroleum industry through a 
reduction in the cost of compliance with U.S. environmental 
regulations. Continued Federal support of $2 million is specifically 
requested as part of the fiscal year 2005 appropriation for the 
Environmental Protection Agency through the Science and Technology 
account or other source the subcommittee may determine to be 
appropriate.
    Mr. Chairman, on behalf of the Integrated Petroleum Environmental 
Consortium (IPEC), I would like to take this opportunity to thank the 
subcommittee for providing $8.2 million in funding for IPEC in the 
fiscal year 1998-2004 appropriations bills for the Environmental 
Protection Agency (EPA). Specifically this funding was provided for the 
development of cost-effective environmental technology and technology 
transfer for the domestic petroleum industry. With funding under the 
Science and Technology account of EPA, IPEC is implementing a 
comprehensive mechanism (EPA Research Center) to advance the 
consortium's research expertise in environmental technology. IPEC's 
operating practices and linkages to the independent sector are ensuring 
that real problems in the domestic petroleum industry are addressed 
with real, workable solutions. The consortium includes the University 
of Tulsa, the University of Oklahoma, Oklahoma State University, and 
the University of Arkansas.
    We are pleased to report that, as envisioned and proposed by the 
Consortium, State-level matching funds have been obtained to support 
IPEC, creating a true Federal-State partnership in this critical area. 
Since fiscal year 1998 the Oklahoma State Regents for Higher Education 
have provided over $800,000 in matching funds for IPEC. Significant 
matching funds have also been obtained from industry resulting in a 
total match of $0.84 for every Federal dollar expended or encumbered to 
date.
    Mr. Chairman, IPEC's mission has never been more important than 
today. As the United States imports more oil from politically unstable 
regions of the world our Nation's domestic reserves and production 
become ever more vital to the Nation's economy and our national 
security. However, domestic production and our domestic infrastructure 
are in decline as the major producers and refiners seek greater returns 
for their stockholders overseas. The mature reservoirs that they found 
to be no longer profitable have been taken over by the independent 
producers. To their credit these independent producers together are 
accounting for 85 percent of domestic wells drilled, 40 percent of 
domestic oil production, and 65 percent of domestic natural gas 
production. Although the price of oil is currently up, the instability 
of world crude oil prices takes its toll on these entrepreneurs who 
have only one source of income--the sale of oil and gas. They are 
constantly caught in the squeeze between the cost of production and the 
price they receive for their product. For example, when prices fell to 
historic lows in 1998 and early 1999 the effect on the independent 
producers was markedly worse than on the large integrated oil 
companies. Capital expenditures fell 30 percent, rig counts dropped 50 
percent, employment in exploration and production fell by 65,000, and 
150,000 wells were shut-in (IPAA). As prices have recovered new capital 
has been invested in exploration and production but now there is a 
serious shortage of skilled employees. Once again the cycling of world 
oil prices threatens the development of new resources and further 
weakens our domestic infrastructure. The strategic value of this 
industry demands that action be taken to preserve and expand this 
critical component of our energy supply and reduce our dependence on 
foreign oil. As Vice-President Cheney has said (May, 2001) ``to meet 
our energy challenge we must put to good use the resources around us 
and the talent within us''.

                            NEW TECHNOLOGIES

    With the help and support of Congress IPEC has and will continue to 
answer this call. IPEC works diligently to help independent producers 
reduce their production costs and increase profitability in this 
turbulent market. IPEC responds to the needs of the independents in two 
ways. First, IPEC funds a vigorous research program to develop cost-
effective environmental technologies. Critical to the effectiveness of 
IPEC is the process by which projects are chosen for funding. IPEC has 
an Industrial Advisory Board (IAB) which is dominated by independent 
producers. The IAB identifies the research needs of the domestic 
industry which form the basis of Calls for Proposals issued to the IPEC 
institutions. But their influence on the selection process does not 
stop there. Investigators respond to the Call for Proposals with what 
is termed a pre-proposal which contains enough information to identify 
the problem to be addressed and the expected advantages of the proposed 
research to the domestic industry. It is the IAB that evaluates these 
pre-proposals for relevance to IPEC's mission. If the IAB believes that 
the research proposed helps to solve a problem that makes a serious 
dent in the independent's profitability it is approved. The Board has 
established a benchmark of 80 percent of voting members for a pre-
proposal to be selected. Investigators whose pre-proposals are approved 
by the IAB are invited to write a full, detailed technical proposal for 
evaluation by a Science Advisory Committee (SAC) which will assess the 
scientific quality of the proposal. The SAC is composed of nationally 
recognized scientists and engineers from academia and government 
laboratories. An investigator whose proposal passes this second hurdle 
is funded by IPEC to do the research. By the way, any pre-proposal that 
does not pass the IAB is dead in the water!
    In addition to ensuring that project funding is industry driven and 
on target this selection process has had the additional advantage of 
creating a dialog between producers and the regulatory community that 
serves the interest of both groups. The second largest group on the IAB 
is composed of State regulatory agency personnel who serve on the Board 
at the invitation of the independent producers. The discussion of 
industry needs fostered by the review process has resulted in a more 
collegial relationship between the regulators and those who are 
regulated.
    Mr. Chairman, I invite you to visit the IPEC website at http://
ipec.utulsa.edu to learn more about IPEC's funded research projects. On 
the website you will learn how IPEC has significantly advanced the 
scientific basis for risk-based decision making in the management of 
hydrocarbon spills which allows precious remediation resources to be 
directed to where they will do the most good. You will also find a 
project which, while investigating the natural attenuation of complex 
hydrocarbons mixtures, has actually pointed the way to how we may some 
day convert unrecoverable oil to natural gas using microorganisms. You 
will also see projects that are pioneering the use of plants to 
remediate oil-impacted soil and reduce the costs of remediation of 
brine spills on soil and restoring the productivity of damaged land. 
Thanks to the IPEC Industrial Advisory Board all of these projects are 
expected to reduce the cost of environmental compliance and the cost of 
production and at the same time increase compliance.

                     EFFECTIVE TECHNOLOGY TRANSFER

    IPEC also has an active technology transfer program which makes an 
important contribution to the consortium's mission. Guided by the 
Industrial Advisory Board IPEC has and will continue to develop tools 
for independent producers to empower them to take control of resolving 
their own environmental problems and reducing their cost of doing 
business. One of the first tools produced by IPEC was a training video 
entitled ``Cost Effective Environmental Strategies for Improving 
Production Economics''. This video shows the producer how to do an 
audit of their oil or gas production facilities to help them keep more 
product in the sales line and more money in their pocket. Producers are 
shown that by being proactive they can minimize remediation costs, stay 
out of trouble with the regulatory agencies, reduce future liability, 
and increase the value of their lease. Over 3,000 of these videos have 
been distributed free of charge and the reviews are outstanding. 
Environmental Health and Safety officers of some of the larger 
independent oil companies have remarked that it is the best training 
video of its kind available. IPEC has also produced a training video on 
the bioremediation of oil spills and a video on remediation of brine 
spills will be released this year. Production will start soon on 
additional training videos on the remediation of joint spills of oil 
and brine, emergency response procedures, and on money-saving how-to 
tips from the IPEC Industrial Advisory Board.
    Other tools include a self-assessment checklist to help producers 
identify problems that are going to cause them problems and cost them 
money if not fixed. Again the goal is to help them be proactive and 
take control of their production costs. IPEC also seeks to empower 
independent producers to be able to remediate small spills of oil and 
brine when they occur without spending a lot of money on soil analysis 
or high-priced consultants. Of course the training videos help in this 
regard but we don't stop there. IPEC works with industry organizations 
and State agencies like the Oklahoma Marginal Well Commission to offer 
1-day training workshops on remediation of oil and brine spills. For 
oil spills IPEC shows the producers how to be effective at 
bioremediation of oil spills without having to do TPH analysis and at a 
minimal cost. IPEC also produces a laminated card for producers to 
carry around in their trucks that provides easy to follow, step-by-step 
instructions with photos on how to carry out the bioremediation 
process. IPEC has also developed a staged response to brine spills that 
reduces costs while effectively remediating these spills and at the 
same time more effectively restores the productivity of the impacted 
land. To assist the producer in brine remediation IPEC has developed a 
Soil Salt Analysis Kit and a Water Analysis Kit which are distributed 
free of charge to independent producers. The kits come with laminated 
cards with photo instructions on how to use the kits and how to 
interpret the results. With this field kit producers can follow the 
progress of the remediation and restoration process and identify ``hot 
spots'' which need extra attention without the expense of a lot of 
analytical costs. With these kits producers can determine soil chloride 
concentrations and relate the results of analyses to plant salt 
tolerances. This allows the producer to effectively communicate with 
the regulatory field inspectors and determine what plants could be 
grown on the site at various stages of restoration. IPEC has also 
recently contracted with the Railroad Commission of Texas to bring 
their popular workshop on Waste Minimization in E&P Operations to 
Oklahoma and Arkansas.
    In a program unique in the oil industry IPEC uses the field agents 
of State regulatory agencies to deliver these tools into the hands of 
the producers. Although IPEC tries as much as possible to bring 
training to the producers by offering the soil remediation and waste 
minimization workshops in their back yard, many of the smallest 
producers cannot afford to be away from their business for a training 
workshop. However, these producers see their field inspectors on a 
regular basis. In order to take advantage of this relationship IPEC 
holds training workshops for these field inspectors introducing them to 
all of the latest IPEC tools and establishes with them a tracking 
mechanism to determine where the tools are going and allowing us to 
follow up to assess the effectiveness of these tools. This has proven 
to be an effective mechanism for distribution of IPEC tools to these 
small producers. As a bonus the producers see the field inspectors in a 
helpful role. One of the goals of IPEC's technology transfer program is 
to foster the feeling among small producers that field inspectors 
should be seen as a member of their team and a valuable source of 
information.
    IPEC's technology transfer program also includes some of the more 
traditional elements such as a website, newsletter and annual 
conference. On the website producers can follow the progress of IPEC 
sponsored projects, learn about upcoming training events and tools, 
read the proceedings of IPEC's annual conference, and access other 
useful information. The newsletter is called ``The Connector'' and is 
published quarterly. Each issue features a cover story on new 
technology for petroleum environmental problems. Other articles cover 
new regulations, anticipated regulatory changes, and announcements for 
upcoming events of interest to the domestic industry. Anyone can 
subscribe to ``The Connector'' free of charge or look for the latest 
issue on the IPEC website.
    IPEC's annual conference, the International Petroleum Environmental 
Conference, is fast becoming the premier event of its kind and focuses 
on environmental issues and solutions in oil and gas production and 
refining. Cosponsored by the U.S. Department of Energy National 
Petroleum Technology Office, the conference annually attracts about 350 
participants, 60 percent of who come from industry, 20 percent from 
State and Federal regulatory agencies, and 20 percent from academia. 
The next IPEC conference, the eleventh, will be held in Albuquerque, 
NM, October 12-15, 2004. Check out the proceedings of previous 
conferences on the consortium website and look at the conference 
website at http://ipec.ens.utulsa.edu for the current Call for Papers 
and the program for the eleventh conference.

                        IPEC MAKES A DIFFERENCE

    With the help and support of the industry and Congress IPEC is 
making a real difference in the domestic petroleum industry. We have 
kept faith with our supporters and Congress and are delivering on all 
of the promises and pledges we made during our campaign for funding. We 
are especially proud of the fact that as noted above to date IPEC has 
obtained matching funds from the industry and State governments of 
$0.84 for every Federal dollar expended or encumbered. IPEC is truly a 
Federal-State-industry partnership that works!
    IPEC underwent a site review in May, 2002 by an EPA review panel. 
IPEC passed the review with flying colors. IPEC was especially 
commended for the Center's enthusiasm for its mission, the relevancy of 
the Center's research projects to that mission, the Center's management 
practices, the diversity of constituencies from whom we seek input, and 
the aggressiveness of the Center's technology transfer program. In fact 
IPEC's technology transfer program was termed by the review panel as 
``tech transfer par excellence''. The chair of the review panel told us 
informally ``I give most EPA Research Centers a 5, I give IPEC an 8''.

                            FUNDING OF IPEC

    Mr. Chairman, the EPA site review panel was so enthusiastic about 
IPEC they suggested that we make an effort to expand to other oil and 
gas producing States, bring in other academic institution as partners 
and consortium members, and expand the range of research projects we 
are working on to further benefit the domestic industry. We could not 
agree more with these goals but this will require additional resources. 
Therefore, IPEC is seeking appropriations of $2 million for fiscal year 
2005 through the Environmental Protection Agency. The consortium will 
be responsible for at least a 50 percent match of Federal 
appropriations with private sector and State support over any 5-year 
period. The Consortium will be subject to annual review to ensure the 
effective production of data, regulatory assessments, and technology 
development meeting the stated goals of the Consortium.
    Thank you for your continued support.
                                 ______
                                 
  Prepared Statement of the California Government and Private Sector 
                   Coalition for Operation Clean Air

    Mr. Chairman and members of the subcommittee, on behalf of the 
California Government and Private Sector Coalition for Operation Clean 
Air's (OCA) Sustainable Incentive Program, we are pleased to submit 
this statement for the record in support of our fiscal year 2005 
funding request of $1,000,000 for OCA as part of a Federal match for 
the $180 million already contributed by California State and local 
agencies and the private sector for incentive programs. This request 
consists of $500,000 from the Environmental Protection Agency (EPA) for 
a public education program related to the Clean Air Act and $500,000 
from the Department of Housing and Urban Development related to 
reduction of emissions from individual residential activities.
    California's great San Joaquin Valley is in crisis. Home to over 
3.3 million people, its 25,000 square miles now has the unhealthiest 
air in the country. Even Los Angeles, long known as the smog capital of 
the Nation, can boast better air quality by certain standards. While 
peak concentrations of air pollutants are still greater in Los Angeles, 
for the past 4 years, the San Joaquin Valley has exceeded Los Angeles 
in violations of the ozone 8-hour Federal health standard.
    A combination of geography, topography, meteorology, tremendous 
population growth, urban sprawl and a NAFTA corridor of two major 
highways with over 5 million diesel truck miles per day, have collided 
to produce an air basin in which over 300,000 people, nearly 10 percent 
of the population, suffer from chronic breathing disorders. In Fresno 
County, at the heart of the San Joaquin Valley, more than 16 percent of 
all children suffer from asthma, a rate substantially higher than any 
other place in California. The extreme summertime heat creates smog 
even though smog-forming gases are less than half the amount in the Los 
Angeles basin. There is no prevailing wind to flush the natural 
geologic bathtub and, as a result, pollutants and particulates 
stagnate, accumulate, and create unhealthy air.
    Degradation of human health is not the only consequence of poor 
quality air. In December 2003, the San Joaquin Valley Air Pollution 
Control District Board decided to become the first Air District in the 
Nation to voluntarily declare itself an ``extreme'' non-attainment 
area. This designation, if approved by USEPA, will defer until 2010 the 
date for attainment of Federal standards of air quality, but comes at a 
cost of imposing permitting on thousands of more businesses and even 
further discouraging business expansion or relocation. More Valley's 
businesses will be required to obtain permits and comply with 
increasingly burdensome regulations imposed by Federal and State law 
and the Air Pollution Control District, resulting in added cost in 
compliance, reporting and record keeping. At the same time, the area is 
burdened by chronic unemployment rates of nearly 20 percent. 
Encouraging business expansion in or relocation to the San Joaquin 
Valley to combat unemployment will be extremely difficult in the face 
of such regulatory burdens.
    The San Joaquin Valley is home to the most productive agricultural 
land in the world. Over 350 crops are produced commercially on 28,000 
farms encompassing more than 5 million irrigated acres. While the 
agricultural industry has made great strides at considerable expense to 
replace old diesel engines and manage fugitive dust and other 
emissions, farming does contribute to the problem. However, it is a $14 
billion industry that forms the backbone of the Valley's economy, and 
its vitality is crucial.
    Industry alone is not the source of the Valley's poor air quality. 
Population growth rates exceeding those in the rest of the State and 
most of the Nation, in an area without effective mass transit, where 
cheap land has led to a landscape of suburbia and sprawl, results in 
excessive over-reliance on the automobile. Trucking has increased 
dramatically with the increase in population, and Federal free trade 
policies. Other factors such as fireplace burning in the winter, open 
field agricultural burning because of lack of sufficient alternatives, 
and wild fires resulting from lack of controlled burning in the nearby 
foothills and mountains all contribute to the problem.
    Despite the challenges listed above, much progress has been made. 
The State has spent nearly $80 million on improvement and compliance 
programs. Local government and private industry have spent over $100 
million on technology and compliance. As specific examples, over one 
half of the diesel operated irrigation pumps used by agriculture have 
been replaced with cleaner engines. The City of Tulare has converted 
its entire fleet of vehicles to natural gas as have several other 
private fleet operators. A $45 million federally financed comprehensive 
study of ozone and particulate matter is nearing completion. As a 
result, the number of 1-hour EPA health standard exceedences has been 
reduced by 40 percent since 1989.
    But much more needs to be done. The District estimates that daily 
emissions must be reduced by 300 tons to achieve attainment. There is 
no single or short-term quick fix. The entire Valley (an area the size 
of the State of Connecticut) is part of the problem and the entire 
Valley will need to be part of the solution.
    Operation Clean Air is a coalition of business, government, health 
care, and environmental groups throughout the eight county San Joaquin 
Valley Air Pollution Control District. Its goal is to clean the 
Valley's air and increase its economic prosperity. The coalition seeks 
to catalogue efforts that have produced positive effects and identify 
those strategies that could produce even greater effects if supported 
by sufficient resources. At the heart of its efforts will be an array 
of sustainable, voluntary practices and activities that can and will be 
undertaken by all of the residents of the San Joaquin Valley, both 
public and private, to improve air quality.
    This unique public-private partnership has invested considerable 
resources in this project to date, and will continue to do so, but 
Federal funding is both imperative and justified to help address what 
is essentially an unfounded Federal mandate.
    For fiscal year 2004, our Coalition is seeking funding of $500,000 
from the Environmental Protection Agency (EPA) related to public 
education regarding the Clean Air Act and $500,000 from the Department 
of Housing and Urban Development for the implementation of individual 
residential emission reduction programs.
    First from EPA, the coalition is seeking $500,000 for a public 
education and awareness campaign. The purposes of the campaign are to 
provide information to the public regarding the impact of air quality 
on health and engage the public in voluntary air quality improvement 
efforts. The health-care sector, comprised of many medical 
professionals committed to Operation Clean Air is uniquely positioned 
to both educate the public about the impact of air quality on health 
and collect data on the health effects of air pollution on the 
population.
    The public education and awareness campaign will include a valley-
wide media campaign to raise awareness of the health effects of poor 
air quality including television, radio, print, Internet, brochures, 
flyers, posters and billboards in English, Spanish and Hmong; school-
based curriculum including materials to reach new teen drivers with 
information on vehicle maintenance and cost-effective driving habits. 
Fact sheets and videos will be developed on steps that individuals and 
institutions can take to reduce their individual contribution of air 
pollutants. A special effort will be made to collaborate with county 
public health officers to make sure that they have adequate information 
for their education programs.
    From HUD, the coalition is seeking $500,000 to reduce the emissions 
from individual residential activities including heating with non-EPA 
certified wood heaters, use of gasoline lawn and gardening equipment, 
and low efficiency lighting. The co-funding will be made available to 
low-income residents to fund the removal and replacement of non-EPA 
certified wood heaters with new EPA certified unit, and for repair or 
upgrade of sub-standard heating systems to reduce the reliance on wood 
for heat. Co-funding will also be used for programs providing 
incentives to residents and hospitals for battery operated leaf 
blowers, electric lawn mowers, and other replacement equipment to 
displace gasoline or diesel operated landscaping equipment throughout 
the valley. During the winter months 15 percent of the particulate 
matter pollution in the San Joaquin Valley is attributable to 
residential wood smoke. By providing grant funds to low-income 
residents that currently rely on wood for heat we will be able to 
provide them with a more efficient heating source and reduce 
disproportionate impact of wood smoke in low-income neighborhoods.
    Thank you very much your consideration of our requests.
                                 ______
                                 
 Prepared Statement of the California Industry and Government Central 
                California Ozone Study (CCOS) Coalition

    Mr. Chairman and members of the subcommittee, on behalf of the 
California Industry and Government Central California Ozone Study 
(CCOS) Coalition, we are pleased to submit this statement for the 
record in support of our fiscal year 2005 funding request of $1.0 
million from the Environmental Protection Agency (EPA) for CCOS as part 
of a Federal match for the $9.4 million already contributed by 
California State and local agencies and the private sector. We greatly 
appreciate your past support for this study ($1,000,000 in fiscal year 
2002, $900,000 in fiscal year 2003, and $500,000 in fiscal year 2004) 
as it is necessary in order for the State of California to address the 
very significant challenges it faces to comply with the air pollution 
requirements of the Federal Clean Air Act.
    Most of central California does not attain Federal health-based 
standards for ozone and particulate matter. The San Joaquin Valley has 
recently requested redesignation to extreme and is committed to 
updating their 1-hour ozone State Implementation Plan (SIP) in 2004, 
based on new technical data. In addition, the San Joaquin Valley, 
Sacramento Valley, and San Francisco Bay Area exceed the new Federal 8-
hour ozone standard. SIPs for the 8-hour standard will be due in the 
2007 timeframe--and must include an evaluation of the impact of 
transported air pollution on downwind areas such as the Mountain 
Counties. Photochemical air quality modeling will be necessary to 
prepare SIPs that are approvable by the U.S. Environmental Protection 
Agency.
    The Central California Ozone Study (CCOS) is designed to enable 
central California to meet Clean Air Act requirements for ozone SIPs as 
well as advance fundamental science for use Nation-wide. The CCOS field 
measurement program was conducted during the summer of 2000 in 
conjunction with the California Regional PM10/
PM2.5 Air Quality Study (CRPAQS), a major study of the 
origin, nature, and extent of excessive levels of fine particles in 
central California. This enabled leveraging of the efforts of the 
particulate matter study in that some equipment and personnel served 
dual functions to reduce the net cost. From a technical standpoint, 
carrying out both studies concurrently was a unique opportunity to 
address the integration of particulate matter and ozone control 
efforts. CCOS was also cost-effective since it builds on other 
successful efforts including the 1990 San Joaquin Valley Ozone Study.
    CCOS includes an ozone field study, data analysis, modeling 
performance evaluations, and a retrospective look at previous SIP 
modeling. The CCOS study area extends over central and most of northern 
California. The goal of the CCOS is to better understand the nature of 
the ozone problem across the region, providing a strong scientific 
foundation for preparing the next round of State and Federal attainment 
plans. The study includes five main components:
  --Designing the field study;
  --Conducting an intensive field monitoring study from June 1 to 
        September 30, 2000;
  --Developing an emission inventory to support modeling;
  --Developing and evaluating a photochemical model for the region; and
  --Evaluating emission control strategies for upcoming ozone 
        attainment plans.
    The CCOS is directed by Policy and Technical Committees consisting 
of representatives from Federal, State, and local governments, as well 
as private industry. These committees, which managed the San Joaquin 
Valley Ozone Study and are currently managing the California Regional 
PM10/PM2.5 Air Quality Study, are landmark 
examples of collaborative environmental management. The proven methods 
and established teamwork provide a solid foundation for CCOS. The 
sponsors of CCOS, representing State, local government, and industry, 
have contributed approximately $9.4 million for the field study. The 
Federal Government has contributed $4,874,000 to support some data 
analysis and modeling. In addition, CCOS sponsors are providing $2 
million of in-kind support. The Policy Committee is seeking Federal co-
funding of an additional $2.5 million to complete the remaining data 
analysis and modeling. California is an ideal natural laboratory for 
studies that address these issues, given the scale and diversity of the 
various ground surfaces in the region (crops, woodlands, forests, urban 
and suburban areas).
    There is a national need to address national data gaps and 
California should not bear the entire cost of addressing these gaps. 
National data gaps include issues relating to the integration of 
particulate matter and ozone control strategies as well as the need to 
address air quality modeling of long-term, multi-pollutant scenarios. 
Current air quality modeling practice is to represent an entire ozone 
season by one episode, or in rare cases, a few episodes, which has been 
a limitation of modeling used for the 1-hour ozone standard. However, 
to ensure that air pollution control decisions are based on sound and 
thorough assessments of the available data, improvement in the 
scientific methods that would be used for 8-hour ozone, 
PM2.5, and regional haze standards is imperative. It is 
particularly important that there is an expansion of the number of 
episodes evaluated. The duration, quality, and completeness of the 
combined database of CCOS and CRPAQS offers a unique opportunity to 
assess and improve air quality models and the ability to perform long-
term air quality simulations that address both ozone and particulate 
matter. This is necessary to comprehensively assess emission control 
strategies for both pollutants and regional haze.
    For fiscal year 2005, our Coalition is seeking funding of $1.0 
million from the Environmental Protection Agency (EPA). The CCOS would 
use the $1.0 million requested for fiscal year 2005, in conjunction 
with other funding, to help address modeling needs for the 8-hour ozone 
and PM2.5 standards. It is particularly important that there 
is an expansion of the number of episodes evaluated. The requested 
funding will allow for significant improvements in computer programming 
and computer processing, both of which are necessary to handle the vast 
amount of data required to be analyzed for evaluating multiple 
episodes. The requested funding will also allow for air quality model 
validation assessments. These assessments are necessary to ensure that 
models are representing the results for the right reasons. The U.S. EPA 
has a direct stake in, and will benefit from, the CCOS program. This 
program will further the fundamental science of air quality modeling 
and advance the use of models for future SIPs Nation-wide.
    Thank you very much for your consideration of our request.

Current CCOS Study Sponsors
            Private Sector
    Western States Petroleum Association; Pacific Gas and Electric 
Company; Electric Power Research Institute; Nisei Farmers League and 
Agriculture; Independent Oil Producers' Agency; California Cotton 
Ginners and Growers Associations.
            Local Government
    San Joaquin Valley Unified Air Pollution Control District (on 
behalf of local cities and counties); Bay Area Air Quality Management 
District; Sacramento Metro Air Quality Management District; San Luis 
Obispo County Air Pollution Control District; Mendocino County Air 
Pollution Control District.
            State Government
    California Air Resources Board; California Energy Commission.
            Federal Government
    National Oceanic and Atmospheric Administration; Environmental 
Protection Agency; Department of Agriculture; Department of 
Transportation.
                                 ______
                                 
        Prepared Statement of the Ecological Society of America

    As the Vice President for Science for the Ecological Society of 
America, I am pleased to provide written testimony for the National 
Science Foundation. The Ecological Society of America has been the 
Nation's premier professional society of ecological scientists for 
nearly 90 years, with a current membership of 8,000 researchers, 
educators, and managers. We appreciate the opportunity to offer written 
testimony on behalf of the National Science Foundation.
    We thank the committee for its strong commitment to the NSF over 
the last several years. Investment in this agency is very much in the 
public interest and your vision will pay extraordinary dividends in the 
years to come. We are also grateful to the 107th Congress for passing 
the NSF Authorization Act, which laid out a plan to boost the Nation's 
investment in this agency.
    We believe that NSF's fiscal health is critical to maintaining the 
Nation's international scientific leadership. Dividends from past 
investments in the NSF are manifested in the individual scientific 
disciplines, as well as in the groundwork that has been laid for 
interdisciplinary research needed to meet present and future scientific 
challenges. Research supported through the NSF has led not only to 
major advancements in all of the sciences, mathematics, and 
engineering, but has repeatedly underpinned new technologies such as 
the use of bar codes for inventory control and bioengineering microbes 
to clean up toxic waste, as well as new techniques, for example 
improving a building's resistance to damage during an earthquake.
    I wish to particularly note that the NSF is responsible for the 
majority of all non-medical biological research, ranging from the 
molecular level to the study of entire ecosystems. Approximately 65 
percent of all academic, non-medical, biological research is supported 
through the National Science Foundation.
    Important accomplishments have resulted through NSF-funded research 
and the potential for future opportunities is immense. Biological 
research will improve our ability to assess and predict the status of 
ecosystems, which provide the United States with goods such as fish, 
and services, such as water purification. Research efforts in the 
social sciences will enhance our understanding of large-scale 
transformations such as globalization and democratization, while work 
in the ocean sciences holds the potential to reveal previously 
unimaginable images of even the deepest oceans. Advances in NSF-
supported chemistry may lead to cleaner industrial technology and 
address problems of carbon sequestration. Research in the mathematical 
sciences has led to advances in cryptography and improved internet 
security.
    In a time where we find more and more federally funded research 
directed by a particular agency mission, I want to highlight that one 
of NSF's greatest strengths is its support of the best research, 
regardless of its potential use. The NSF peer review system has an 
excellent track record of choosing the best science and the best 
investigators to perform the research, as the significant number of 
Nobel Prize winners who received support from NSF demonstrates.
    As a Professor of Biology and Director of Graduate Studies for Duke 
University's Program in Ecology I have first-hand knowledge of the 
positive impact NSF has on a scientific discipline. Our own NSF-funded 
research on the Central Plains has shown us that historic experience, 
including the 1930's Dust Bowl, is unremarkable in light of climate 
swings of the last few centuries. We've learned many species cannot 
migrate fast enough to track a shifting 21st Century climate and will 
be left behind, with large consequences for biodiversity. This has 
significant implications for agriculture in the Great Plains region.
    Continued advancement in ecological science depends upon healthy 
NSF budgets. Many ecologists whose grant proposals are deemed of very 
high quality are either not funded or go under-funded due to inadequate 
NSF grant funds. Eventually this funding situation is likely to affect 
the choices of U.S. students as to whether or not they choose to enter 
the field of ecology, a science that is crucial to meeting emerging 
environmental challenges ranging from the ecology of disease to the 
likely consequences of human alteration of the nitrogen cycle.
    Other science, mathematics, and engineering fields experience many 
of the same tensions exhibited in the ecological sciences. These 
disciplines share our concern that not enough U.S. students are 
interested in science and engineering-related careers. Many of us in 
the scientific community are worried that the United States may loose 
its preeminent position in science. All science, math, and engineering 
disciplines depend upon a strong National Science Foundation.
    As the only Federal agency to support science and education across 
all disciplines, and as the principal supporter of environmental 
biology, NSF's contributions have been extremely valuable to the U.S. 
research enterprise. We hope that the committee will do its best to 
ensure that the agency continues on this path. Thank you for 
consideration of our testimony and for your concern for the National 
Science Foundation.
                                 ______
                                 
     Prepared Statement of the Association of American Universities

    I appreciate the opportunity to submit testimony on behalf of the 
Association of American Universities (AAU). The AAU is an organization 
of 62 leading public and private research universities in the United 
States and Canada.
    I would first like to thank the subcommittee for its strong support 
of the National Science Foundation (NSF) and the National Aeronautics 
and Space Administration (NASA). Universities play a substantial role 
in the research activities of these two agencies, and your efforts to 
increase funding for them is very much appreciated.
    For the National Science Foundation, AAU supports an fiscal year 
2005 budget of $6.415 billion, an $837 million increase over the fiscal 
year 2004 enacted level of $5.578 billion. This would represent a 15 
percent increase over the level appropriated for NSF in fiscal year 
2004, the same growth rate authorized by Congress and the President in 
the NSF Authorization Act of 2002 (Public Law 107-368). AAU realizes, 
however, that such growth in the current fiscal environment would be 
extremely difficult. We hope that the subcommittee will provide as 
large an increase as possible in recognition that the investment is 
both needed and of critical importance to the Nation. The President has 
requested $5.745 billion for NSF in fiscal year 2005, an increase of 3 
percent, an increase which for reasons discussed below we view as being 
somewhat spurious.
    For NASA's Exploration, Science, and Aeronautics (ESA) account, AAU 
supports $8.0 billion, $240 million above the fiscal year 2004 level. 
AAU supports the space exploration vision announced by President Bush 
on January 14, 2004, but feels strongly that NASA's science offices can 
and must play a central role in both the early and long-term stages of 
the initiative. Developed over a relatively short period of time with 
limited input from the community, the space exploration initiative 
substantially delayed a number of opportunities on which the science 
community and NASA had agreed. While NASA has the authority to reset 
priorities, the cuts were made with no review or consultation with the 
community most affected. We urge that the subcommittee encourage NASA 
to engage with the National Academy of Sciences both to set the science 
goals of the exploration initiative and to examine the impact of 
deferred programs and to recommend ways by which the scientific returns 
from the new institutive can be maximized.

                      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 5 percent 
is spent on administration and management.
    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. From pioneering medical tools to robotics, from 
the invention of the Internet to fiber optics, from discovering how 
children learn to expanding our computing capacity, NSF has had an 
extraordinary impact on scientific discovery that has driven the 
Nation's economy and improved the quality of life.
    AAU recognizes that the VA-HUD and Independent Agencies 
Subcommittees on both the House and Senate side have been 
extraordinarily supportive of the NSF. 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. Substantial increases were also provided in fiscal year 2002, 
fiscal year 2003 and fiscal year 2004. 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.
    AAU has real concerns about the President's proposed budget for 
NSF. Of the proposed $167 million funding increase requested, 
approximately $75 million is directed to the salaries and expense 
account for internal operations and staffing, making the real increase 
for NSF programs $92 million, an increase of only 1.6 percent. In 
addition, Research and Related Activities (R&RA) would increase to $4.5 
billion, a 4.7 percent increase over the fiscal year 2004 level of 4.3 
billion. Eighty million dollars of this funding comes from a transfer 
of funds to support previous obligations made under the Math Science 
Partnerships program which was previously funded as a part of the 
Education and Human Resources (EHR) account. If this transfer of MSP 
funds is discounted, the RR&A funding increase is only 2.8 percent over 
the fiscal year 2004 level.

Restoration of the Math Science Partnerships
    AAU is deeply concerned about the administration's proposal to 
transfer NSF's Math Science Partnership (MSP) program to the Department 
of Education. In its current form within the Education and Human 
Resources account, this program links top scientific researchers at 
colleges and universities to elementary and secondary schools in an 
effort to improve the quality of math-science education. As a 
competitive grant program administered by the NSF, money is only 
awarded to the highest quality proposals based upon technical merit and 
a comprehensive peer review process.
    We are concerned that transferring the MSP program entirely to the 
Department of Education will fundamentally change the manner in which 
funds are distributed. The MSP program at the Department of Education 
is primarily a block grant program where funds are distributed to 
States on a formula basis. This would be a significant disincentive for 
the best researchers at our universities to continue to participate in 
this important program. Moreover, as currently constructed, NSF's MSP 
program focuses on the modeling, testing and identification of high-
quality math-science activities whereas the Department of Education 
focuses on their dissemination.
    Because the MSP program at NSF is a unique program of proven 
effectiveness, we strongly encourage Congress to restore the $80 
million requested for the MSP program to the Education and Human 
Resources account and increase funding for the program to $140 
million--an amount slightly above what Congress provided in fiscal year 
2004.

Fulfilling the Intent of the NSF Reauthorization Act of 2002 (Public 
        Law 107-368)
    In a report to Congress required by the NSF Reauthorization Act of 
2002 (Public Law 107-368), the National Science Board (NSB) notes, 
``There has never been a more critical or opportune time to invest in 
research and education.'' AAU concurs with this statement and urges 
Congress to fulfill the intent of Public Law 107-368 by increasing NSF 
funding in fiscal year 2005 at the rate suggested by this important 
legislation. 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 NSB report proposes several areas for additional investment 
including: improving the productivity of researchers and expanding 
opportunities for students; opening new frontiers in research and 
education; building a diverse competitive and globally engaged U.S. 
science and engineering workforce; increasing the number and diversity 
of institutions that participate in NSF-funded activities; and 
providing researchers with advanced tools, facilities, and 
cyberinfrastructure. AAU supports the proportional funding that the NSB 
designates for these activities and urges that NSF funding increases be 
distributed accordingly.

             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.

A New Vision for Solar System Exploration
    A new vision for space exploration was announced by the 
administration in January. AAU supports NASA's new exploration goals 
and believes that the goals can and should be pursued in the context of 
fulfilling NASA's vision and mission statement. In doing so, science 
must play a key role and be nurtured, both in parallel to and as an 
integral part of exploration. The science programs should remain robust 
and exploration should be aided by the same kind of scientific guidance 
and community support that has consistently served our Nation over the 
years.
    AAU supports a robust human exploration program, guided by science 
and scientific goals. NASA has not had a mandate for its manned 
programs for 30 years, even though it has needed a clear goal to define 
the mission and purpose of that program. Moreover, the new vision for 
exploration is consistent with a recent report by the National Academy 
of Sciences that calls for a clear goal for human spaceflight, the 
exploration of the Moon and Mars as possible goals for human 
spaceflight, and the expectation that exploration will be a long-term 
endeavor accomplished through a series of small steps.

Seek the Advice of the National Academy of Science
    While the Moon-Mars initiative has many positive aspects, it will 
be years before it yields any payoff in manned missions; all of the 
preparation will be done robotically. Moreover, human exploration is 
more than simply putting astronauts in space. These individuals become 
not only the subjects of studies that advance our knowledge in human 
biology, but also the operators of scientific experiments in a number 
of disciplines, not the least of which are the biological and physical 
sciences. Therefore, as the initiative proceeds, science must be a full 
partner. Scientific milestones--not just technological ones--should 
identified in the implementation plan.
    In addition, the space exploration initiative will have a major 
impact on many planned scientific missions that have been carefully 
developed over a period of years by advisory committees at NASA and the 
national academies. Relying heavily on community input and group 
consensus, the committees have laid out 10-year plans for specific 
scientific disciplines in decadal surveys. The prior advice includes 
explicit sets of consensus priorities for meeting goals that support 
the NASA mission. These efforts include hard choices on priorities and 
are not simply wish lists.
    Developed over a relatively short period of time with limited input 
from the community, the space exploration initiative substantially 
delays a number of opportunities on which the science community and 
NASA have agreed. For example, in the Beyond Einstein program, LISA is 
delayed to 2013, Constellation-X is delayed to 2016, and the Einstein 
Probes, including the Dark Energy Probe or Joint Dark Energy Mission, 
are deferred beyond the current budget 5-year horizon. The Sun-Earth-
Connections strategic plan has also been affected, particularly the 
Solar-Terrestrial Probe line, the sub-orbital program, and the Guest 
Investigator and Supporting Research & Technology (SR&T) programs. 
Similar delays would also take place in the Earth Sciences.
    Certainly the administration has the authority to redirect NASA's 
priorities. However, funding reductions and delays in existing programs 
have been proposed with little consultation with the communities most 
affected. Therefore it is unlikely that the proposed program would 
realize an optimal science strategy. NASA should engage with the 
National Academy of Sciences to set the science goals of the 
exploration initiative, examine the impact of deferred programs, and 
recommend ways in which the scientific returns from the new initiative 
can be maximized. This review should include science performed under 
all three NASA science offices. The NAS already has underway a review 
of the final Hubble servicing mission at the subcommittee's request, 
but we suggest the National Academy be asked to review all the science 
programs as they relate to the space exploration initiative.

Restore the Explorer Cut
    Although many of the cuts to existing NASA programs are in the 
outyears, some impacts will be felt immediately. The President proposes 
a reduced budget for the Explorer program resulting in a reduced flight 
rate for future Explorer missions. AAU urges that NASA proceed with the 
number of missions originally planned and that future Explorer 
Announcements of Opportunity (AO) not be slowed from the previously 
planned pace. We ask that $240 million be added for this purpose.
    The Explorer program has been extraordinarily successful, in part, 
because consistent funding and regular flights have provided frequent 
opportunities for scientific investigations from space. This in turn 
has driven NASA technology development with great efficiency. Heavily 
utilized by universities, the Explorer program is small in terms of 
size and budget. Total definition, development, launch service, and 
mission operations and data analysis costs may not exceed $240 million. 
Since the first mission, more than 70 U.S. and cooperative 
international scientific space missions have been flown on Explorer 
satellites, making impressive discoveries about the solar system and 
the universe beyond. Science magazine recently selected the results 
from the WMAP Explorer mission as the scientific breakthrough of the 
year in all areas of science.
    A similar program exists in the Earth Science Enterprise. While the 
Earth Pathfinders do not have as long a heritage as the Explorer 
program, they too have made remarkable advances. The TRMM mission has 
provided unprecedented information on rainfall over the tropics, which 
is leading to significant new scientific discoveries and improvements 
in weather prediction. The Explorer program and its Earth Science 
counterpart show how NASA has applied the concept of ``faster-cheaper-
better'' most successfully. NASA should seek to maintain and enhance 
these valuable programs.
    I appreciate the opportunity to submit testimony on behalf of the 
AAU, and I hope the subcommittee will continue to provide strong 
funding for NSF and NASA science programs. It is in the best interest 
of the Nation and its scientific and technological strength.
                                 ______
                                 
               Prepared Statement of The Wildlife Society

    The Wildlife Society appreciates the support that both the Congress 
and the administration have demonstrated for the National Science 
Foundation (NSF) through the enactment of the National Science 
Foundation Authorization Act of 2002. The Act authorizes a 5-year 
period of 15 percent annual budget increases and places the NSF on the 
``doubling track'' in order to protect ongoing and future U.S. 
scientific and technological advancements in science.
    The Wildlife Society urges Congress and the administration to act 
upon their commitment to the NSF by increasing the fiscal year 2005 
funding level for this agency by 15 percent over the fiscal year 2004 
enacted budget, for a total of $6.415 billion.
    The Wildlife Society encourages you to consider our funding 
recommendation for the National Science Foundation's fiscal year 2005 
budget. Despite tough budget times, this kind of investment is 
critical. NSF is one of the Nation's greatest tools for the promotion 
and advancement of scientific research and education. Although NSF 
accounts for only 4 percent of Federal Research and Development 
spending, it supports nearly 50 percent of the non-medical Biological 
Sciences research at our colleges and universities.

                          BIOLOGICAL SERVICES

    Within the Research and Related Activities (R&RA) account, the 
Biological Sciences Directorate is of particular interest to the 
wildlife conservation and management community. The Biological Sciences 
Activity (BIO) supports research, infrastructure, and education at U.S. 
academic institutions.
    BIO provides 65 percent of the support for basic research in non-
medical aspects of the biological sciences at academic institutions. 
Because the majority of Federal support for the life sciences--over 85 
percent--goes to health-related research funded by the National 
Institute of Health, NSF's contribution to the broad array of the 
biological sciences is highly significant and strategically focused--
particularly in such areas as environmental biology and plant sciences. 
In nationally important issues related to wildlife and wildlife 
habitat, BIO-supported research enhances the understanding of how 
living organisms function and interact with non-living systems.
    Current research includes a project funded by the Division of 
Environmental Biology that is investigating the elk-wolf interactions 
in Yellowstone National Park. Results of the project will enhance 
fundamental knowledge of large mammalian systems and facilitate design 
of sound endangered species programs. BIO-supported researchers have 
modeled the population density and foraging behavior of Brazilian free-
tailed bats and determined that bats from two Texas caves provide pest 
control service for crops including corn and cotton. The estimated 
value of the protection afforded the cotton crop by bats from the two 
caves amounts to as much as $258.0 million annually; thus conserving 
bat diversity and habitat is both biologically and economically 
beneficial.
    The President's budget proposal restricts the BIO program to an 
increase of approximately 2 percent. We recommend you provide the 
Biological Sciences account with an increase equal to the overall R&RA 
increase, which is 4.7 percent over the fiscal year 2004 enacted level. 
This would equal an increase of $27.58 million for Biological Sciences, 
for a total budget of $614.47 million in fiscal year 2005.

                                 TOOLS

    Tools, the NSF strategic goal to revitalize and upgrade aging 
infrastructure, enables progress in research and education by providing 
the cutting edge tools necessary for working with today's complex and 
highly variable research tasks. The Wildlife Society supports the 
President's requested $58.3 million increase for the Tools account, 
Major Research Equipment and Construction Facilities (MREFC). Increased 
funding for MREFC will support ongoing projects and provide funding 
necessary to launch proposed projects.
    We urge you to support the President's request of $12 million in 
fiscal year 2005 for the proposed National Ecological Observatory 
Network (NEON) project under the MREFC account. NEON will be a 
continental-scale research instrument consisting of geographically 
distributed observatories, networked via state-of-the-art 
communications allowing scientists and engineers to conduct research 
spanning all levels of biological organization. NEON will provide 
researchers with important tools necessary to address ecological 
questions regarding habitat and wildlife conservation in the U.S. 
Examples of research questions that could be addressed by NEON include: 
the spread of infectious agents like West Nile Hanta virus, and the 
affect of western wildfires on water quality.

                       ABOUT THE WILDLIFE SOCIETY

    The Wildlife Society is the association of nearly 9,000 
professional wildlife biologists and managers dedicated to excellence 
in wildlife stewardship through science and education. Our mission is 
to enhance the ability of wildlife professionals to conserve diversity, 
sustain productivity, and ensure responsible use of wildlife resources 
for the benefit of society. The Wildlife Society supports all aspects 
of Federal programs that benefit wildlife and wildlife habitat through 
research and education.
    Please include this testimony in the official record. Thank you for 
the opportunity to share our views with the committee.
                                 ______
                                 
    Prepared Statement of the Great Lakes Indian Fish and Wildlife 
                               Commission

    EPA--Environmental Programs and Management Account.--$300,000 (same 
as fiscal year 2004 enacted) as a stable funding base so that GLIFWC 
can: (1) Bring a tribal perspective to the mix of Great Lakes managers; 
and (2) Use its scientific expertise to study issues that directly bear 
upon the health of tribal members and the ecosystems that sustain 
treaty harvests of fish, wildlife and wild rice. Specifically:
    Lake Superior Binational Program and Lake Superior LaMP.--$80,000 
for continued participation in the Binational Program, in implementing 
the Lake Superior LaMP, and in IJC, SOLEC, and other Great Lakes 
forums.
    Habitat and Human Health Research Projects.--$220,000 for research 
projects in three areas of GLIFWC's particular expertise and 
experience:
  --Lake Superior Habitat and Human Health Research.--$90,000 for 
        ongoing research projects on contaminant levels in Lake 
        Superior fish and on potentially contaminated whitefish and 
        lake trout spawning reefs in Lake Superior.
  --Mercury/Heavy Metals in Biota Research.--$90,000 for a 3-year 
        project to assess the risks posed to fish and wild rice by 
        habitat disturbances within watersheds.
  --Sulfide Mining Evaluation and Monitoring.--$40,000 to assess the 
        impacts of contaminants leaking from the closed Flambeau Mine 
        in Wisconsin, to develop a groundwater flow scoping model for 
        the proposed Yellow Dog mine in the Michigan Upper Peninsula, 
        and generally to continue to gather data regarding other 
        identified potential mining sites in northern Wisconsin and the 
        Upper Peninsula of Michigan.
    Federal Responsibilities and Funding Authority.--Over the past 10 
years, Congress and EPA have funded GLIFWC's treaty rights 
environmental protection program to meet specific Federal 
responsibilities including: (1) Treaty obligations under the U.S./
Chippewa treaties of 1836, 1837, 1842, and 1854; (2) Federal trust 
responsibility toward Indian Tribes; (3) Court decisions affirming the 
treaty rights, including a 1999 U.S. Supreme Court decision; and (4) 
Federal statutes requiring integration of Tribes into Federal 
environmental programs, such as the Clean Water Act (33 U.S.C.  1268) 
[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].
    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 nearly 20 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.
    As directed by its member tribes, GLIFWC operates a comprehensive 
ceded territory natural resources conservation and protection program 
through its staff of biologists, scientists, technicians, conservation 
enforcement officers, and public information specialists.
    GLIFWC's program includes: natural resource population assessments; 
biological and scientific research; development of natural resource 
management plans and tribal harvest regulations; invasive species 
eradication and control projects; harvest monitoring and reporting; 
enforcement of tribal conservation codes into tribal courts; funding 
for tribal courts and tribal registration/permit stations; negotiation 
and implementation of agreements with State, Federal and local 
agencies; 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.
  --Participation in the Lake Superior Binational Program.--Since 
        fiscal year 1996, EPA has provided CEM funds of about $80,000 
        per year for a 1 FTE position to facilitate GLIFWC's 
        participation in the Binational Program to Restore and Protect 
        Lake Superior, including preparation and implementation of the 
        Lake Superior LaMP and participation in various International 
        Joint Commission (IJC) and State of the Lake Ecosystem 
        Conference (SOLEC) forums.
  --Study of Proposed Sulfide Mining in Wisconsin.--Since fiscal year 
        2001, EPA funding of over $210,000 has allowed GLIFWC to 
        conduct a number of technical studies and assessments (such as 
        hydrological modeling, contaminant transport analysis, and 
        baseline biomonitoring studies) of a proposed mine in 
        Wisconsin, to participate as a ``cooperating agency'' in the 
        preparation of the Federal EIS, and to maintain hydrological 
        and contaminant transport expertise.
  --Ceded Territory Fish Consumption Mercury Advisory Program.--In 
        fiscal year 2004, Congress appropriated $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.
  --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, including the 
        testing of several Lake Superior fish species for dioxin and 
        persistent organic pollutants, resulting in data relevant to 
        the Binational Program/Lake Superior LaMP and to human health. 
        In fiscal year 2004, Congress appropriated about $90,000 for 
        GLIFWC to study the potential impacts of mine waste (stamp 
        sands) on a lake trout and whitefish spawning reef near 
        Michigan's Keweenaw Peninsula in Lake Superior.
    Fiscal Year 2005 Funding Needs/Rationale.--GLIFWC would use fiscal 
year 2005 funds for:
  --Participation in the Lake Superior Binational Program.--$80,000 for 
        continued funding of GLIFWC staff (1 FTE equivalent, and 
        related travel and other expenses) who will participate in the 
        Binational 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.--The purpose of this funding is to help provide basic 
        infrastructure for tribal participation consistent with Federal 
        treaty obligations and the trust responsibility.
      GLIFWC has been actively involved in the Binational Program since 
        1993. GLIFWC currently serves on the Binational 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. 
        Within the last 3 years, GLIFWC staff: (i) addressed the 2000 
        plenary session at SOLEC on the topic of wild rice and 
        organized a breakout session on wild rice; (ii) participated in 
        SOLEC sessions on human health issues related to environmental 
        contaminants, Great Lakes bio-monitoring indexes, and 
        Traditional Ecological Knowledge (TEK) techniques; (iii) 
        participated in the U.S. EPA/American Fisheries Society Fish 
        Contaminant Forum; (iv) presented a platform entitled ``PCB 
        Aroclors, Methylmercury and Selenium in Lake Superior Fish'' at 
        Midwest SETAC's 11th Annual Meeting; (v) participated in the 
        FDA and EPA Development of a Joint Advisory for Methylmercury-
        containing Fish Consumption for Women of Childbearing Age and 
        Children; and (vi) participated in the Great Lakes Radio 
        Consortium ``Native Americans Weigh Contaminated Fish Risks'' 
        program.
  --Habitat and Human Health-Related Research/Special Projects.--
        $220,000 for Lake Superior habitat and human health research 
        projects.
      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 2005, research would be in three areas:
    --Lake Superior Research Projects ($90,000).--Two projects for the 
            upcoming year:
      --Keweenaw Peninsula Mining Waste Assessment.--Assess impacts 
            from mining waste (stamp sands) dumped into Lake Superior 
            near Upper Michigan's Keweenaw Peninsula during the late 
            1800's, map important whitefish and lake trout spawning 
            reefs, and determine the distribution of stamp sands in 
            relation to the spawning reefs. This study specifically 
            addresses objectives of the Binational Program's Aquatic 
            Communities Committee 2004-2006 work plan to identify and 
            quantify critical habitat for key fish species and to 
            develop linkages between habitat supply and fish community 
            production.
      --Lake Superior Herring Contaminant Assessment.--Assess mercury, 
            PCB and organochlorine pesticide levels in lake herring 
            harvested by tribes in west-central Lake Superior, and 
            evaluate the new data in relation to current fish 
            consumption advisories. The Lake Superior LaMP 2000 
            identifies the need to improve the effectiveness of fish 
            consumption advisories and to test contaminants in 
            commercially-sold Lake Superior fish. There is a dearth of 
            data on lake herring, yet it accounted for a total harvest 
            of almost 1.4 million pounds lakewide in 2000 and was the 
            second most harvested fish in the U.S. waters of Lake 
            Superior.
    --Mercury/Heavy Metals in Biota Research ($90,000).--Assess whether 
            habitat disturbance within a watershed increases the risk 
            that contaminants pose to walleye and wild rice. Previous 
            GLIFWC research suggests that fluctuating water levels in 
            riparian wetland habitat appeared to mobilize methylmercury 
            in a number of FERC-regulated reservoirs in northern 
            Wisconsin. The fiscal year 2005 funding would allow GLIFWC 
            to expand upon previous studies of watershed 
            characteristics and heavy metals in biota. This project 
            would involve 2 years of baseline data collection and one 
            year of analysis and statistical modeling.
    --Sulfide Mining Evaluation and Monitoring ($40,000).--Using the 
            expertise and experience it gained in assessing the 
            proposed Crandon Mine in northern Wisconsin, GLIFWC would:
      --Flambeau Mine in Northern Wisconsin.--Assess the impact of 
            contaminants leaking into the adjacent Flambeau River from 
            the re-filled Flambeau Mine pit near Ladysmith, Wisconsin, 
            by testing mussels for 1 year and crayfish for 3 years in 
            the river above and below the location of the refilled pit. 
            Analysis of mussel shells and soft tissue should provide 
            both a measure of recent metals exposure and of metals 
            exposure over the life of the individuals.
      --Yellow Dog Mine in the Upper Peninsula of Michigan.--Develop a 
            groundwater flow scoping model to assess the potential 
            impact of a proposed sulfide copper mine on two Lake 
            Superior Tributaries--the Salmon-Trout River and Yellow Dog 
            River. GLIFWC would explore the impacts of both open pit 
            and deep mining activities by identifying which feeder 
            streams should be monitored and the geological information 
            needed to refine future models to ensure protection of 
            aquatic habitats, including water quality and quantity.
      --Sulfide Mining Evaluation and Monitoring.--Continue to gather 
            data regarding other identified potential mining sites in 
            northern Wisconsin and the Upper Peninsula of Michigan. In 
            1997 and 1998, GLIFWC evaluated the likelihood that sulfide 
            deposits located in the ceded territories would be 
            developed for mineral extraction. Since then, there has 
            been new exploration in the western Upper Peninsula of 
            Michigan and continued exploration in north-central 
            Wisconsin. GLIFWC would collect available records of 
            mineral leasing, as well as drilling and land purchases by 
            mining/exploration companies, to continue monitoring the 
            potential for mining in the 1842 and 1837 Ceded 
            Territories. With this information GLIFWC would identify 
            watersheds and tribal communities most likely to be 
            impacted by mine development.
                                 ______
                                 
  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 testimony for the record on fiscal year 
2005 appropriations for the National Science Foundation. I request that 
my testimony be made part of the record of the hearings on the fiscal 
year 2005 NSF budget. I want to begin by thanking the Chairman 
Christopher Bond and Ranking Minority Member Barbara Mikulski and all 
the other members of this subcommittee for their strong and continuing 
support for a strong budget for the National Science Foundation and for 
supporting the doubling of the NSF budget over 5 years. 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 Nation as a whole.
    The Engineering Deans Council thanks the Congress and the 
administration for recognizing the importance of the National Science 
Foundation by enacting the NSF Authorization Act of 2002, which 
provides for doubling the budget of the National Science Foundation 
over a 5-year period. This Act represents a major milestone for the NSF 
and for the scientific community, because it authorizes raising 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 fiscal year 2005 the EDC advocates raising the NSF budget by 15 
percent above the fiscal year 2004 enacted level of $5.6 billion, to 
$6.1 billion. Even in tough budget years, this kind of investment is 
critical to developing the human and technical infrastructure that will 
continue to be the basis of economic growth and security for the 
country.
    The EDC strongly opposes the administration's proposal to phase out 
the NSF Math and Science Partnership (MSP) Program in favor of a 
similar program in the Department of Education, and instead urges 
Congress to fully fund the NSF MSP. The Engineering Deans Council also 
strongly supports the 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 EDC supports the $20 million requested 
by the administration for this program.
    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 communication 
equipment, and contribute to creating better civilian and military 
security systems. In the current climate of 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. 
Research sponsored by the NSF is vital to the Nation's investment 
across the scientific disciplines, and yields short term benefits and 
future advances for our national and homeland security, economic 
prosperity, quality of life, and educational growth. 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 before the House Education Committee in March 
2004, ``Technological advance is continually altering the shape, 
nature, and complexity of our economic processes. To effectively manage 
this ever-increasing complexity, our labor force has had to become more 
and more technically oriented.'' To become more technically oriented as 
a society, 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 
improving bomb detection to preventing an attack on our water supply 
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 regularly attracts additional funding 
from outside sources. 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, as seen 
by winning two ``greens'' on the President's Management Agenda 
scorecard and receiving the President's 2003 Award for Management 
Excellence. Former 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,'' last year. The meeting 
catalyzed the formation of many partnerships between engineering and 
education deans to improve K-12 science and mathematics education. Top 
science teachers, such as those who have won Presidential Awards, have 
singled out the NSF's Math and Science Partnership Program for their 
success. ``I am not an extraordinary teacher, but I have been given 
extraordinary focus and opportunities by NSF,'' said 2003 Presidential 
Awardee Jonathan Roland, a physics teacher at Perry Hall High School in 
Baltimore, Maryland, at a recent House Science Committee hearing.
    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.
    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 15 percent 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 present this testimony to the 
subcommittee. The Engineering Deans Council would be pleased to respond 
to any questions from you and your staff.
    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. Founded in 1893, 
ASEE in a non-profit association dedicated to the improvement of 
engineering and engineering technology education.
   addendum.--examples of nsf-funded programs at engineering schools
    Voice-Actuated Computers in Police Cars.--Electrical engineering 
professors are helping to create voice-actuated computers for patrol 
cars, to allow officers to quickly access computerized databases, such 
as motor vehicle license records and criminal records, while freeing up 
their hands. The goal of the University of New Hampshire project, which 
is funded in part by the NSF and the U.S. Department of Justice, is to 
improve the protection of officers and augment homeland security 
efforts by allowing safer and quicker access to important security 
databases.
    Improved Bomb Detection.--A Pennsylvania State University 
researcher, through a NSF grant, has developed a bomb detection portal 
capable of ``sniffing'' the air around a person and operates much like 
a conventional airport metal detector. The machine can detect trace 
amounts of explosives from anyone who has handled any explosive 
substance. The machine has been patented and is set to be used in 
airports.
    Preventing Attacks on U.S. Water Supplies.--Some parts of the 
Nation's water supply infrastructure are inherently vulnerable to 
terrorist attack. For example, working from the privacy of a secluded 
basement, a determined terrorist could surreptitiously inject pathogens 
or poisons into a municipal drinking water distribution system. To help 
water utilities anticipate and control this potential threat, 
researchers in Civil and Environmental Engineering at the University of 
Cincinnati are developing a new computer model to simulate contaminant 
movement through a water distribution system. The research, funded in 
part by the NSF, will help both large and small utilities across the 
Nation recognize and minimize the vulnerability of drinking water 
distribution systems to surreptitious terrorist attacks.
    Quickly Identifying Deadly Viruses.--A portable pathogen detector 
is currently being developed by scientists at the Center for 
Biophotonics at the University of California-Davis, through an NSF 
grant, to identify potentially deadly viruses and other biological 
agents in an unknown sample within 15 minutes. Originally developed at 
Lawrence Livermore National Laboratory with industry partners, the unit 
aims to help paramedics, emergency room specialists, police, and other 
first-responders who may unknowingly be exposed to bioterrorism or 
other infectious agents.
    Underwater Monitoring.--A professor of electrical engineering and 
materials science and engineering at Pennsylvania State University has 
developed a network sensor technology that can operate in liquid, 
thanks to a grant from the NSF. The new system allows for underwater 
monitoring that could prove useful for environmentalists, 
manufacturers, and homeland security personnel. Using a node-to-node 
multi-hop information transfer system, the research team was able to 
overcome the problem of water's interference with the radio transfer of 
information.
    Creating Artificial Vision.--A researcher at the University at 
Buffalo has created a silicon chip that mimics the structure and 
functionality of an octopus retina. The ``o-retina'' chip can process 
images just like an octopus eye does, allowing rescue or research 
robots to see more clearly than human eyes can in dark or murky 
conditions. The research, funded in part by the NSF, will help 
researchers build a complete artificial system, including a brain that 
mimics the visual systems of various animals, allowing humans to look 
at the world from different perspectives.
    Increasing Electrical Efficiencies.--In contrast to a large central 
generator that can supply a small city, researchers in Carnegie Mellon 
University's Electricity Industry Center have shown that there are many 
advantages to small generators to supply a neighborhood or even a large 
building. This distributed generation offers greater efficiency since 
it uses the ``waste heat'' from generation to heat water, buildings, 
and even cool buildings. Perhaps of greater importance, it offers lower 
electricity costs and greater reliability in the face of natural 
hazards and terror attacks. The work is funded in part by the NSF and 
the U.S. Office of Naval Research.
    Finding the Shortest Route Among a Set of Points.--The Traveling 
Salesman Problem, finding the shortest route among a set of points, is 
among the most studied in Computer Science. It is of high computational 
complexity, and has applications in logistics, manufacturing, 
transportation, and telecommunications, including airline routing, 
circuit board layout, and job shop scheduling. The Applied 
Computational Intelligence Lab at the University of Missouri-Rolla has 
developed an approximate solution algorithm that solves large instances 
much faster than competing approaches. It uses neural networks to 
divide the problem into subproblems that can then be solved and 
rejoined by more conventional algorithms. For the 10 million city case, 
the algorithm is four times faster than the nearest other known 
approach on a fast personal computer. The advantage rapidly grows even 
more significant with problem size. This work was funded by the 
National Science Foundation and Sandia National Laboratories.
    Improving One's Memory.--The Nation, and indeed, the world are 
undergoing an unprecedented shift in demographics, with the proportion 
of older adults increasing dramatically. To help meet the needs of this 
aging population, researchers from the University of Michigan, through 
an NSF grant, have developed intelligent computer-based technology that 
can assist people with memory impairment, by monitoring their 
performance of daily activities and providing them with flexible, 
adaptive reminders when needed. This technology will enable people to 
maintain their autonomy and remain in their homes longer, thus 
simultaneously increasing quality-of-life and decreasing the costs 
associated with institutionalization.
    Improving Technological Literacy.--As technology becomes integral 
to all aspects of society, the need for a technologically literate 
population becomes apparent. The Tufts (University) Engineering the 
Next Steps (TENS) GK-12 program, funded by the National Science 
Foundation, works from the Center for Engineering Educational Outreach 
to do just that. By pairing graduate and undergraduate Fellows from 
Tufts University's School of Engineering with teachers in K-12 
classrooms, content knowledge and methodologies of engineering and 
computer science are integrated into existing science and mathematics 
curricula. TENS works to increase teachers' knowledge of, comfort with, 
and ability to teach engineering and algorithm design to ultimately 
increase students' engineering knowledge and skills.
    Creating the World's Smallest Engine.--A group of Washington State 
University researchers has developed the world's smallest engine. 
Thinner than a piece of paper and fitting inside the hole of a 
Lifesaver, the engine is radically different in design, fabrication, 
and operation from any existing engine. The researchers hope to use 
their micro-engine as a viable power source for commonly used military 
devices, such as miniaturized radar or mobile robotic sensors, and to 
eliminate the need for problematic batteries, which weigh a lot for the 
power they produce and are difficult to recharge in the field. The work 
was funded in part by the NSF and the DOD.
    Devices for People with Disabilities.--What do a shoulder-steered 
tricycle for a boy born without arms, a foot-operated guitar strummer 
for a boy paralyzed on his right side, and an automatic swing for a 
girl with cerebral palsy have in common? All were built by Duke 
University students, as part of the Biomedical Engineering class 
``Devices for People with Disabilities,'' funded in part by a grant 
from the NSF. In the past 7 years, small teams of students have 
designed, constructed, and delivered over 40 projects such as these to 
adults and children in the community. Students gain real-world 
engineering experience, and clients benefit by receiving devices that 
meet their needs free of charge.
    Environmental Cleanup of Mines.--Highly acidic drainage from an 
abandoned sulfide mine in Rowe, Massachusetts, is slowly cleaning 
itself over time, and an interdisciplinary research team from the 
University of Massachusetts at Amherst is studying why. The group 
brings together experts from the fields of microbiology, geology, 
engineering, and science education, to determine the extent and rate of 
bioremediation. Researchers say their findings may enable quicker 
natural cleanups not just at this mine, but at others throughout the 
country and the world. The interdisciplinary project is funded by the 
``Biocomplexity in the Environment'' program of the National Science 
Foundation.
                                 ______
                                 
      Prepared Statement of the American Museum of Natural History

              ABOUT THE AMERICAN MUSEUM OF NATURAL HISTORY

    The American Museum of Natural History (AMNH) is one of the 
Nation's preeminent institutions for scientific research and public 
education. Since its founding in 1869, the Museum has pursued its 
mission to ``discover, interpret, and disseminate--through scientific 
research and education--knowledge about human cultures, the natural 
world, and the universe.'' It is renowned for its exhibitions and 
collections of more than 32 million natural specimens and cultural 
artifacts. With nearly 4 million annual visitors--approximately half of 
them children--its audience is one of the largest, fastest growing, and 
most diverse of any museum in the country. Museum scientists conduct 
groundbreaking research in fields ranging from all branches of zoology, 
comparative genomics, and informatics to earth, space, and 
environmental sciences and biodiversity conservation. Their work forms 
the basis for all the Museum's activities that seek to explain complex 
issues and help people to understand the events and processes that 
created and continue to shape the Earth, life and civilization on this 
planet, and the universe beyond.
    Today more than 200 Museum scientists, in five science divisions 
(Anthropology; Earth, Planetary, and Space Sciences; Invertebrate 
Zoology; Paleontology; and Vertebrate Zoology) as well as the Center 
for Biodiversity and Conservation conduct groundbreaking lab and field 
research. This research includes 100 expeditions each year and field 
station investigations at the Museum's Southwestern Research Station in 
Arizona. The Museum also conducts graduate training programs in 
conjunction with a host of distinguished universities, supports 
doctoral and postdoctoral scientists with highly competitive research 
fellowships, and offers talented undergraduates an opportunity to work 
with Museum scientists.
    The Museum's Center for Biodiversity and Conservation, founded in 
1993, is dedicated to enhancing the use of rigorous scientific data to 
mitigate critical threats to global biodiversity. The CBC draws on the 
strengths of the Museum's scientific, education, and exhibition 
departments to integrate this information into the conservation process 
and to disseminate it widely. It forges key partnerships to conduct 
conservation-related field projects around the world, train scientists, 
organize scientific symposia, present public programs, and produce 
publications geared toward scientists, policy makers, and the lay 
public. Each spring, the CBC hosts a symposium that focuses on 
conservation issues. In 2002, the symposium, ``Sustaining Seascapes: 
the Science and Policy of Marine Resource Management,'' examined the 
large-scale conservation of marine and coastal ecosystems, giving 
special consideration to novel approaches to the sustainable management 
of biodiversity and fisheries. The focus of 2003's symposium was on 
conservation issues related to increased ecotourism in Southeast Asia, 
and 2004's symposium examines the role of invertebrates in 
environmental systems.
    The Museum's vast collections are a major scientific resource, 
providing the foundation for the Museum's interrelated research, 
education, and exhibition missions. They often include endangered and 
extinct species as well as many of the only known ``type specimens''--
examples of species by which all other finds are compared. Collections 
such as these are historical libraries of expertly identified and 
documented examples of species and artifacts, providing an 
irreplaceable record of life on earth. They provide vital data for 
Museum scientists as well for more than 250 national and international 
visiting scientists each year.
    The Museum interprets the work of its scientists, highlights its 
collections, addresses current scientific and cultural issues, and 
promotes public understanding of science through its renowned permanent 
and temporary exhibits as well as its comprehensive education programs. 
These programs attract more than 400,000 students and teachers and more 
than 5,000 teachers for professional development opportunities. The 
Museum also takes its resources beyond its walls through the National 
Center for Science Literacy, Education, and Technology, launched in 
1997 in partnership with NASA.
    An exciting chapter in the Museum's history occurred last spring 
when one of the flagship and most popular halls--the Hall of Ocean 
Life--reopened after an extensive renovation. Drawing on the Museum's 
world-renowned expertise in Ichthyology as well as other areas of 
vertebrate and invertebrate zoology, the Hall is pivotal in educating 
visitors about the oceans' key role in sustaining life on our planet. 
The renovated Hall of Ocean Life, together with the new Halls of 
Biodiversity, Planet Earth, and the Universe and the rebuilt Hayden 
Planetarium (part of the new Rose Center for Earth and Space), provides 
visitors with a seamless educational journey from the universe's 
beginnings, to the formation and processes of Earth, to the 
extraordinary diversity of life on our planet.

              COMMON GOALS OF EPA AND THE AMERICAN MUSEUM

    The Environmental Protection Agency (EPA) is dedicated to 
protecting and safeguarding human health and the environment. With a 
focus on environmental results--making the air cleaner, water purer, 
and better protecting our land through the application of sound science 
and the conduct of leading-edge research--the Agency seeks to ensure 
that environmental protection contributes to making our communities and 
ecosystems diverse, sustainable, and economically productive. Its 
fundamental purposes include ensuring that all parts of society have 
access to accurate information sufficient to effectively participate in 
managing human health and environmental risks.
    The American Museum shares EPA's commitment to these environmental 
goals and to the scientific research, technologies, and public 
education that underlie them. Indeed, informed environmental 
stewardship and preservation of our planet's biodiversity and 
resources--in aquatic, wetland, and other natural environments and 
ecosystems--are integral to the Museum's most fundamental purposes. 
Museum scientists conduct research worldwide on conservation biology 
and habitat protection. Their investigations advance scientific 
understanding and public awareness of these vital issues.
    New research tools--including Geographical Information Systems 
(GIS) and remote sensing, molecular technologies, new collection types, 
innovations in computation--are revolutionizing the way research can be 
conducted and data analyzed, as well as the way museum collections can 
be used and accessed by scientists, educators, policy makers, and the 
general public. The Museum has also long been at the forefront of 
developing new research tools and methods, and today the CBC and the 
science divisions are carrying out leading research programs using the 
Museum's unmatched resources and technologies. Museum research 
resources include the following:
    Remote Sensing and Geographical Information Systems Technologies.--
The CBC houses a Remote Sensing/Geographical Information Systems (RS/
GIS) lab that has had noted success since it was launched in the fall 
of 1998. Wise conservation policy requires effective knowledge of the 
distribution of species and ecological communities at local, regional, 
and global scales. Without this information, it is difficult to decide 
where to allocate scarce conservation resources. Remote sensing 
technologies can provide essential data on such things as land-cover 
and land-use, as well as sea surface temperatures and chlorophyll 
content. GIS makes it possible for scientists to compare and visualize 
the relationships among satellite and legacy data, raw standardized 
samples, and data obtained through ground truthing. Because it provides 
the database backbone that can connect fieldwork to analysis, GIS is 
becoming an indispensable component in environmental data analysis and 
is thus revolutionizing work in conservation.
    The CBC uses its RS/GIS technologies in biodiversity, ecosystem, 
and environmental research in ways aligned with EPA goals. Its uses of 
RS/GIS include identifying sites suitable for biological inventory; 
providing supplementary quantitative and qualitative data in and around 
study sites (e.g. extent of habitat fragmentation); and developing 
persuasive visual depictions and digital presentations for reports, 
publications, and conferences.
    Molecular Research Program.--The Museum is also home to a 
distinguished molecular systematics program that is at the leading edge 
of comparative genomics and the analysis of DNA sequences for 
biological research. It includes two Molecular Systematics 
Laboratories, with sophisticated technologies for sequencing and 
advancing genomics research. In these laboratories, more than 40 
researchers in molecular systematics, conservation genetics, and 
developmental biology conduct their research on a variety of study 
organisms. Their work is supported by the Museum's new frozen tissue 
collection of biological tissues and isolated DNA stored in a super-
cold storage facility. This collection is an invaluable resource for 
research in many fields, including conservation biology, genetics, and 
comparative genomics, because it preserves genetic material and gene 
products from rare and endangered organisms that may become extinct 
before science fully exploits their potential. These researchers also 
have onsite access to a 700-processor supercomputing cluster--the 
fastest parallel computing cluster in an evolutionary biology 
laboratory and one of the fastest installed in a non-defense 
environment.
    Southwestern Research Station.--Since 1955, the Museum's 
Southwestern Research Station (SWRS) has served biologists, geologists, 
and anthropologists interested in studying the diverse environments and 
biotas of the Chiricahua Mountains in southeastern Arizona. Today, 
under the direction of the CBC, the Station welcomes scientists and 
advanced students from all parts of the country and from around the 
world to carry out their research projects in such varied fields as 
entomology, herpetology, botany, geology, and population, behavioral, 
and physiological ecology. Projects focus in particular on wetland and 
stream management and on riparian ecosystems.
    Building on the scientific strengths and resources outlined above, 
the Museum now proposes to launch, in partnership with EPA, a multi-
faceted research, training, and education initiative focused on the 
role of water in healthy communities, ecosystems, and the environment 
as a whole. AMNH scientists will integrate remote sensing, GIS, and 
computational tools in basic and applied research in aquatic ecosystems 
and wetlands assessment, watershed restoration, and habitat loss. These 
activities support EPA's efforts to further strengthen the role of 
science in decision-making by using sound scientific information and 
analysis to help direct policy and establish priorities.
    The proposed initiative involves a variety of projects closely 
aligned with EPA's fundamental goals and whose results will be 
presented to stakeholders as well as the public through conferences, 
through development of technical guidance and information tools to 
support decision-making, and through education and outreach programs. 
Potential projects include:
  --Riparian Ecosystems Research.--Riparian ecosystems research will 
        focus on questions of restoration, management, and monitoring, 
        drawing on resources of the Museum and facilities of the 
        Southwestern Research Station, including work on ephemeral and 
        permanent ponds and streams. The research station offers unique 
        advantages: Located in an area of high biodiversity, ecosystems 
        range from desert to high elevation montane forests and 
        riparian habitats that cross five life zone boundaries.
  --Research and Education on Biodiversity in Urbanizing Landscapes.--
        Research will target indicator taxa for particular projects, 
        advancing knowledge of development's effects on biodiversity in 
        sprawling environments. This is critical to EPA's ongoing work 
        on smart growth, anti-sprawl initiatives, development of 
        sustainable urban environments, and concern over the loss and 
        destruction of habitat due to sprawl and exploitation of 
        natural resources, invasive species, and non-point source 
        pollution. Expansion of this project to make it applicable to a 
        wider constituency would also match directly with EPA's smart 
        growth educational offerings.
  --Regional Invertebrate Information Clearinghouse.--With links to 
        resources, references, and ongoing research about invertebrates 
        in the New York metropolitan region, a Clearinghouse would 
        serve as an important source of information for those 
        developing projects related to EPA priority research areas such 
        as: effects of climate change; restoration monitoring protocols 
        (e.g., related to wetlands, riparian corridors or brownfields); 
        pollution and pesticide impacts; and water quality monitoring.
  --Freshwater Ecosystems Symposium.--Bringing together researchers, 
        practitioners, and policy makers from a broad range of 
        academic, government, and private sector entities, the 
        symposium will provide an opportunity for diverse stakeholders 
        to address current understanding of and approaches to managing 
        and conserving freshwater systems. Sessions will address both 
        ecological principles (hydrology, biogeochemistry, 
        connectivity, etc.) and the resources in the manager's toolbox 
        (such as reserves, flow management, riparian buffers, 
        headwaters protection, restoration, integrated basin 
        management, education and outreach on invasive species, and 
        more). Proceedings will be disseminated widely and made 
        available on the web.
    The Museum requests $1 million for this research, training, and 
public education initiative on the role of water in sustaining healthy 
communities, ecosystems, and the environment in which we live. In 
partnership with EPA, and with the Museum supporting its participatory 
share with funds from non-Federal as well as Federal sources, we will 
use cutting-edge technologies to advance basic and applied research, 
integrated with public education and outreach, to promote shared goals 
for safeguarding the natural environment.
                                 ______
                                 
          Prepared Statement of the Points of Light Foundation

    The Points of Light Foundation and Volunteer Center National 
Network request an appropriation increase from $10 million to $35 
million. $10 million would maintain the allocation to the Points of 
Light Foundation for its work at the national level. $25 million would 
be distributed to Volunteer Center members of the Points of Light 
Foundation for three purposes:
  --to expand the number of people engaged in traditional voluntary 
        service;
  --to build the capacity for effective engagement of volunteers by 
        training nonprofit agencies in volunteer management;
  --to expand operations so Volunteer Center services, which are 
        currently available to approximately 50 percent of the 
        population, are available to closer to 100 percent of the 
        population of the United States.

                               BACKGROUND

    Our American ideal is one of democracy, of civic engagement, and of 
individual participation in collective goals. To be successful as a 
form of government and as a society, democracy demands that people take 
responsibility for their communities, that they play an active role, 
that they be informed, and that they weigh and consider options before 
deciding on a course of action. The traditions upon which our country 
was founded and built have influenced the development of our spirit of 
volunteerism. Whether Native Americans, early immigrants, pioneers or 
more recent immigrants, Americans have always placed value and emphasis 
on hard work and self-reliance, on taking responsibility for our own 
life and actions.\1\
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    \1\ Lautenschlager, Janet, Department of Canadian Heritage, 1992.
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    Traditional community volunteering, in which individuals serve 
willingly and without expectation of financial remuneration, is perhaps 
the purest expression of both civic responsibility and civic 
engagement. The altruistic inclinations of individuals and groups are 
both strengthened and fulfilled through voluntary participation in 
activities that meet important needs in local communities. When people 
volunteer, they are indicating that they are part of the solution, not 
part of the problem. The benefits that inure to the traditional 
volunteer are significant and include a sense of fulfillment, of giving 
back to the community, and of inclusion in the broader world. People 
who volunteer feel connected to their society and, as such, have a 
deeper and broader sense of civic responsibility.
    Volunteer Centers in local communities provide the pivotal link 
between this human ideal of connectedness and its expression in the 
real world. They strengthen communities by connecting people with 
important local needs, and they strengthen organizations by building 
their capacity to effectively engage traditional volunteers.
    The work of Volunteer Centers is focused in four areas:
  --connecting people with opportunities to serve by maintaining 
        knowledge through database reservoirs of volunteer 
        opportunities in local communities; Volunteer Centers presently 
        aggregate approximately 1.5 million valid, vetted opportunities 
        for traditional volunteer service at public and private 
        agencies.
  --building capacity for effective local volunteering by providing 
        training for nonprofit agencies in volunteer program 
        management. The Points of Light Foundation & Volunteer Center 
        National Network have developed an outstanding six-session 
        Volunteer Management Training Series that can be delivered by 
        skilled Volunteer Center leaders to agencies.
  --promoting volunteering through recognition and awards programs and 
        by extensive outreach through traditional and electronic media 
        to people in local communities where they live, work, go to 
        school, and worship.
  --participating in strategic initiatives that mobilize volunteers to 
        meet important needs in local communities; utilizing their vast 
        knowledge of communities and problems, the Volunteer Center 
        National Network can serve as conveners, bringing relevant 
        players to the table to address local issues. For example, 
        Volunteer Centers are an integral part of Earned Income Tax 
        Credit education and filing, and that they help communities 
        prepare for, respond to and recover from disaster. They are 
        also collaborators, working closely with stipended service 
        programs to ensure integrated services to those engaged in both 
        stipended and non-stipended service.

                              THE PROBLEM

    The current budget includes nearly $1 billion to support domestic 
volunteer programs. However, there is virtually no support at the 
Federal level for the important work of engaging traditional volunteers 
in community service activities.
    The request of the Points of Light Foundation & Volunteer Center 
National Network is that an additional $25 million be allocated to 
support the efforts of Volunteer Centers to reach the 99 percent of 
Americans who will likely never participate in stipended service, but 
who may, if connected to volunteer opportunities and managed 
effectively, participate in traditional volunteer activities.

            THE SOLUTION--A RATIONALE FOR REQUESTED FUNDING

    Several recent studies provide the rationale for this request.
    Connecting people with opportunities to serve.--The Pew Partnership 
\2\ found that not only are many citizens are unaware of whom to turn 
to for information about community needs, but that ``the challenge for 
community problem solving efforts lies in knowing how to connect 
community issues with a public willing to work to solve them.'' 
Furthermore, ``almost 40 percent of people who do not volunteer say 
that their lack of knowledge about which organizations needed their 
help or who to call contributed to their inaction.''
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    \2\ http://www.pew-partnership.org/programs/civicengagement.
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    Building capacity for effective volunteering.--The findings of a 
1998 study by UPS \3\ substantiate a crisis in volunteer management 
because volunteers expect the time they donate to be well managed, but 
too many are turned off by what they regard as inefficient use of their 
time by the agencies where people volunteer.
---------------------------------------------------------------------------
    \3\ United Parcel Service, 1998.
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    Another study,\4\ prompted by questions raised following President 
Bush's call to service in his January 2002 State of the Union address, 
found that the call for thousands of new volunteers will not, by 
itself, create effective engagement of those volunteers. There must be 
a companion effort to ensure that volunteers are trained effectively, 
deployed in meaningful ways, supervised and recognized appropriately so 
that the volunteers can, in turn, deliver quality services to their 
communities. The study concludes that it will be necessary to increase 
the community capacity to accommodate the gifts of time and service 
provided by volunteers.
---------------------------------------------------------------------------
    \4\ The Cost of a Volunteer, Grantmaker Forum on National and 
Community Service, 2003.
---------------------------------------------------------------------------
    The Urban Institute \5\ reports that the problems that charities 
face in training and supervising volunteers could be alleviated if 
their staff received training on how to work with volunteers.
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    \5\ The Urban Institute, 2004.
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                  CAPACITY TO CARRY OUT INTENDED WORK

    At the present time, the more than 350 Volunteer Center members of 
the Points of Light Foundation focus on traditional volunteering across 
the country. They vary tremendously in size and structure, but all 
operate within four core areas of competency outlined above: they 
connect people with opportunities to serve, build capacity for 
effective volunteering, promote volunteering, and participate in 
strategic partnerships that mobilize volunteers to meet community 
needs.
    Their budgets vary from $25,000 to $7 million per year, and the 
size of their service areas ranges from small rural communities to 
large metropolitan areas. All Volunteer Centers raise a significant 
amount of local and State funds and Federal resources will be used to 
build upon this foundation. Volunteer Centers provide essential 
infrastructure to support traditional volunteering. Every year 
Volunteer Centers:
  --connect 2 million people with opportunities to volunteer in their 
        communities;
  --train more than 200,000 leaders from the public and private sector, 
        including many corporate leaders, increasing their ability to 
        mobilize more traditional volunteers;
  --build capacity of more than 72,000 community and faith-based 
        organizations to productively engage volunteers.
    The first Volunteer Center was founded in Minneapolis in 1919. With 
the formation of the Points of Light Foundation in 1990, Volunteer 
Centers across the country began the process of forming an integrated 
network, beginning with adoption of a common vision and values 
statement:
    Vision.--Volunteer Centers mobilize people and resources to deliver 
creative solutions to community problems.
    Values.--We value:
  --PEOPLE and believe that through volunteer service people have the 
        capacity to enrich their own lives and improve the quality of 
        life in their communities;
  --DIVERSITY and recognize that all people have time and talents to 
        share, and that communities are strengthened when people 
        connect across their differences through volunteer service;
  --COLLABORATION and realize that we are at our best when we 
        collaborate;
  --EXCELLENCE and commit to implementing innovative and effective 
        strategies, holding ourselves accountable for results, and 
        sharing our knowledge and best practices with others.
    Building on the vision and values, the Volunteer Center National 
Network developed and now requires that every Volunteer Center meet 
Standards of Excellence in order to be a member of the Points of Light 
Foundation & Volunteer Center National Network.

                                SUMMARY

    Communities suffer when there is not a strong Volunteer Center to 
serve them. At the present time, some Volunteer Centers--typically the 
larger, more established independent centers with broad-based funding 
from a variety of sources--are able to provide multiple services, are 
often quite entrepreneurial in their approach to programming, and 
operate with a business model. Other Volunteer Centers experience 
difficulty providing optimal levels of service because of their 
continual challenge to raise operating funds. The result is that 
traditional volunteering suffers because fewer individuals and groups 
are aware of the opportunities that exist, and fewer organizations are 
trained in effective volunteer management.
    With increased investment, Volunteer Centers across the country, 
regardless of their age, size or structure, will play a crucial role in 
strengthening communities. Volunteer Centers will enhance and expand 
their activities to engage more people in volunteer service and to 
build the capacity of more organizations in effective volunteer 
management. Where appropriate, Volunteer Centers will also expand 
operations to establish satellite offices providing access where there 
currently is none. In small communities with small Volunteer Centers, 
financial support from the Federal Government can leverage significant 
local donations that result in increases in both volunteering and 
effective volunteer management by enabling the Volunteer Center to 
provide these important services. Finally, where there presently is 
demand, but no Volunteer Center, new Volunteer Centers can be 
established.
    The Points of Light Foundation provides significant program 
support, a decade of experience in regranting funds, and the 
demonstrated ability to effectively establish and monitor performance 
standards. The organization's unique qualifications are also predicated 
on its ability to provide cost-effective regranting and ensure 
compliance with all Federal guidelines.
    Our country is built on the willingness of people to get involved 
and stay involved in their communities. Now, more than ever, we need 
the civic participation of every American to keep our communities and 
our Nation strong. The investment of $10 million in the Points of Light 
Foundation and $25 million in the Volunteer Center National Network 
will reap significant rewards for our country that will resonate--with 
great cost-effectiveness--well into our future.
    We are well poised to strengthen traditional volunteering by 
delivering expanded services to communities across the country.
    We know volunteer services work and we want and need your help to 
make sure all Americans have access to a Volunteer Center that meets 
stringent standards of excellence, can help them connect to meaningful 
volunteer opportunities, and can help local agencies manage their 
volunteers effectively. On behalf of all of those who work in the field 
of volunteer service we want to thank the committee for their strong 
interest and investment in making volunteering a part of every 
American's life. Because of your work on this issue, millions of 
Americans who need help receive aid and assistance from millions of 
local volunteers.
