    [Senate Hearing 108-158]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 108-158

    DEPARTMENTS OF COMMERCE, JUSTICE, AND STATE, THE JUDICIARY, AND RELATED
                  AGENCIES APPROPRIATIONS FOR FISCAL YEAR 2004
    =======================================================================

                                    HEARINGS

                                    before a

                              SUBCOMMITTEE OF THE

                COMMITTEE ON APPROPRIATIONS UNITED STATES SENATE

                          ONE HUNDRED EIGHTH CONGRESS

                                 FIRST SESSION

                                       on

                               H.R. 2799/S. 1585

    AN ACT MAKING APPROPRIATIONS FOR THE DEPARTMENTS OF COMMERCE, JUSTICE,
      AND STATE, THE JUDICIARY, AND RELATED AGENCIES FOR THE FISCAL YEAR
               ENDING SEPTEMBER 30, 2004, AND FOR OTHER PURPOSES

                                   __________

                             Department of Commerce
                             Department of Justice
                              Department of State
                           Nondepartmental Witnesses
                       Securities and Exchange Commission
                                 The Judiciary

                                   __________

             Printed for the use of the Committee on Appropriations

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

                                     ______

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                          COMMITTEE ON APPROPRIATIONS

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

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

                      JUDD GREGG, New Hampshire, Chairman
    TED STEVENS, Alaska                  ERNEST F. HOLLINGS, South Carolina
    PETE V. DOMENICI, New Mexico         DANIEL K. INOUYE, Hawaii
    MITCH McCONNELL, Kentucky            BARBARA A. MIKULSKI, Maryland
    KAY BAILEY HUTCHISON, Texas          PATRICK J. LEAHY, Vermont
    BEN NIGHTHORSE CAMPBELL, Colorado    HERB KOHL, Wisconsin
    SAM BROWNBACK, Kansas                PATTY MURRAY, Washington
                                         ROBERT C. BYRD, West Virginia
                                           (ex officio)
                               Professional Staff
                                 Kevin Linskey
                              Katherine Hennessey
                                 Dennis Balkham
                               Jill Shapiro Long
                             Lila Helms (Minority)
                            Kate Eltrich (Minority)
                            Chad Schulken (Minority)

                             Administrative Support

                                Jessica Roberts

                                C O N T E N T S

                                  ----------

                            Thursday, March 6, 2003

                                                                       Page
    Department of State: Office of the Secretary.....................     1

                            Thursday, March 20, 2003

    Department of Commerce: Office of the Secretary..................    49

                             Tuesday, April 1, 2003

    Department of Justice: Office of the Attorney General............   103

                             Tuesday, April 8, 2003

    Securities and Exchange Commission...............................   205

                            Thursday, April 10, 2003

    Department of Justice: Federal Bureau of Investigation...........   223
    Departmental Witnesses: The Judiciary............................   251
    Nondepartmental Witnesses........................................   279

    DEPARTMENTS OF COMMERCE, JUSTICE, AND STATE, THE JUDICIARY, AND RELATED
                  AGENCIES APPROPRIATIONS FOR FISCAL YEAR 2004

                                  ----------

                            THURSDAY, MARCH 6, 2003

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 9:58 a.m., in room SD-192, Dirksen
    Senate Office Building, Hon. Judd Gregg (chairman) presiding.
        Present: Senators Gregg, Stevens, Hollings, Leahy, and
    Kohl.

                              DEPARTMENT OF STATE

                            Office of the Secretary

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

                    opening statement of senator judd gregg

        Senator Gregg. Let me begin by thanking Secretary Powell
    for taking the time to appear before the Subcommittee on
    Commerce, State, Justice of the Appropriations Committee, which
    has the jurisdiction over the State Department appropriations.
    I offered the Secretary the opportunity of taking a pass on
    this hearing, given the situation in which we find ourselves
    right now relative to diplomatic activity. But he was still
    generous enough to be willing to take some time to come up
    here, which I do greatly appreciate. And I know Senator
    Hollings also appreciates his commitment to the process, the
    appropriations process.
        We have said to the Secretary that we will get him out of
    here on a prompt time frame, certainly no later than 11:30,
    hopefully even earlier. So we are going to forego opening
    statements on our part, turn to the Secretary and have his
    opening statement. And we do have a vote at 10:30. So we may
    stagger the questioning here. But then we will go to questions.
        Mr. Secretary.

                     OPENING STATEMENT OF SECRETARY POWELL

        Secretary Powell. Well, thank you very much, Mr. Chairman.
    It is a great pleasure to be back before the committee. I do
    thank you, also, for giving me a hall pass, if I had needed one
    today. It is a busy time for us in the diplomatic community. I
    will be heading up to New York this afternoon to work with my
    colleagues at the United Nations. But I really did want to be
    here because it is also an important part of my job to make
    sure that I present to the Congress our budget request and then
    appear to testify for that budget request, because the quality
    of our diplomacy depends on whether or not we get the support
    we need for the wonderful men and women of the State Department
    and for the facilities and other items that we need to make
    sure we can do our job in the most effective way.
        I do have a prepared statement for the record, which I
    would offer, Mr. Chairman. And I would summarize that very
    briefly.
        Senator Gregg. That will be put in the record.
        Secretary Powell. I am pleased to appear before you to
    testify in support of the President's International Affairs
    Budget for fiscal year 2004. The funding request for 2004 for
    the Department of State, USAID, and other foreign affairs
    agencies is, overall, $28.5 billion. I have given you a great
    deal of detail on this request in my written statement. And I
    hope you will find it useful, as you go through your
    deliberations.
        The President's budget will allow the United States to
    target security and economic assistance to sustain key
    countries supporting us in the war on terrorism and helping us
    to stem the proliferation of weapons of mass destruction. The
    budget will help us launch the Millennium Challenge Account, a
    new partnership generating support that will go to countries
    that rule justly, invest in their people, and encourage
    economic freedom.
        It will also strengthen the United States and global
    commitment to fighting HIV/AIDS and alleviating human
    hardships. It will allow us to combat illegal drugs in the
    Andean Region of South America, as well as bolster democracy in
    one of that region's most important countries, Colombia.
        Finally, it will reinforce America's world-class diplomatic
    force, focusing on the people, places, and tools needed to
    promote our foreign policies around the world.
        I am particularly proud of that last goal, Mr. Chairman,
    because, as you know, for the past 2 years I have concentrated
    on each aspect of my responsibilities, as foreign policy
    advisor to the President and Chairman and CEO of the Department
    of State. What you need in a large organization is to have the
    very best people come in and, once they are in, to take care of
    them.
        So we are asking for your full support of our Diplomatic
    Readiness Initiative. For 2 years, we have been hiring for the
    first time in years. We will hire, with this budget request,
    399 more professionals to help the President carry out the
    Nation's foreign policy. This hiring will bring us to the
    1,100-plus new Foreign and Civil Service officers we set out to
    hire when I first came into the job 2-plus years ago.
        I thank this committee and I thank the Congress for the
    support that it has provided, not only for our Diplomatic
    Readiness Initiative, but also for our overall operating
    accounts over the last several years.
        Second, I promised to bring state-of-the-art communications
    capability to the Department, because people who cannot
    communicate rapidly and effectively in today's globalizing
    world cannot carry out our foreign policy. We are doing very
    well in that regard in both unclassified and classified
    communications capability, including desktop access to the
    Internet for every man and woman in the Department. We are
    moving rapidly. We are almost there. The $157 million budget
    request before you will put us there.
        Finally, with respect to my CEO role, I wanted to sweep the
    slate clean and completely revamp the way we construct our
    Embassies and other overseas buildings, as well as improve on
    the manner in which we secure our men and women who occupy
    those facilities. That last task is a long-term, almost never-
    ending one, particularly in this time of heightened terrorist
    activities. But we are well on the way to implementing both the
    construction and security tasks in a better way, in a less
    expensive way, and in a way that subsequent CEOs of the
    Department can continue and improve upon.
        I am very happy at the work we have done in Embassy
    construction and security over the past few years under the
    leadership of General Williams, who you all have come to know.
    I need your continued support for the $1.5 billion for Embassy
    security and construction and the $646 million in D&CP funding
    for worldwide security upgrades.
        Mr. Chairman, as the principal foreign policy advisor to
    the President, I have budget priorities on that side of my
    portfolio, as well. So let me highlight a few of our key
    foreign policy priorities before I stop and take your
    questions.
        I might note that one of the successes of our foreign
    policy was the Moscow Treaty, which reduced significantly the
    number of strategic offensive weapons held by the United States
    and the Russian Federation. That treaty is now on the Senate
    floor. I hope that it will be acted on promptly. I encourage
    your support for this treaty. With a little bit of luck and
    with my fingers crossed, it might even be voted on today, when
    remaining amendments, proposed amendments, have been dealt
    with.
        The fiscal year 2004 budget proposes several initiatives to
    advance U.S. national security interests and preserve American
    leadership. The fiscal year 2004 Foreign Operations budget that
    funds programs for the Department of State, USAID, and other
    foreign agencies is $18.8 billion. Today, our number one
    priority is to fight and win the global war on terrorism. The
    budget furthers this goal by providing economic, military, and
    democracy assistance to key foreign partners and allies,
    including $4.7 billion to those countries that have joined us
    in the war on terrorism.
        Of this amount, the President's budget provides $657
    million for Afghanistan, $460 million for Jordan, $395 million
    for Pakistan, $255 million for Turkey, $136 million for
    Indonesia, and $87 million for the Philippines. In Afghanistan,
    the funding will be used to fulfill our commitment to rebuild
    Afghanistan's road network. In addition, it will help establish
    security in the country through the creation of a national
    military, as well as a national police force. Our assistance
    will establish broad-based and accountable governance
    throughout democratic institutions in Afghanistan by fostering
    an active civil society.
        I am very pleased at what we have been able to do in
    Afghanistan over the last 1\1/2\ years. Some ask whether the
    glass is half empty or half full. Well, there is still a long
    way to go in Afghanistan. But, we should be very proud of what
    we have been able to accomplish. President Karzai was here
    earlier this week, and we had good discussions with him.
        When you consider we came from nothing, from zero, from
    nothing, from a ruined country to a country that now has a
    representative form of government--they have spoken out for the
    leader that they want to have as their president. They are
    getting ready for an election next year. A constitution is well
    underway. Roads are under construction. Two million refugees
    have returned. Two million people that have been living in
    other lands, in Iran, in Pakistan, have voted with their feet
    for this new country and for the leadership that it is under.
    They are also counting on our full support to rebuild that
    country. I think we should be very proud of what we have done.
        I also want to emphasize our efforts to decrease threats
    posed by terrorist groups, rogue states, and other nonstate
    actors with regards to weapons of mass destruction and related
    technology. To achieve this goal, we must strengthen
    partnerships with countries that share our views in dealing
    with the threat of terrorism and in resolving regional
    conflicts. The fiscal year 2004 budget requests support for the
    Nonproliferation and Disarmament Fund. The budget also
    increases funding for overseas Export Controls and Border
    Security and supports additional funding for Science Centers
    and Bio-Chem Redirection Programs.
        Funding increases requested for these programs will help us
    prevent weapons of mass destruction from falling into the hands
    of terrorist groups or states by preventing their movement
    across borders and destroying or safeguarding known quantities
    of weapons or source material.
        The fiscal year 2004 budget also promotes international
    peace and prosperity by launching the most innovative approach
    to foreign assistance in more than 40 years. The new Millennium
    Challenge Account, an independent Government corporation funded
    at $1.3 billion, will redefine development aid. As President
    Bush told African leaders meeting in Mauritius earlier this
    year, this aid will go to those nations that encourage economic
    freedom, root out corruption, put in place the rule of law,
    respect the rights of their people, and have made a firm
    commitment to democracy.
        Moreover, the President's budget request offers hope and a
    helping hand to countries facing health catastrophes, poverty
    and despair, and humanitarian disasters. The budget includes
    more than $1 billion to meet the needs of refugees and
    internally displaced peoples.
        The fiscal year 2004 budget also provides more than $1.3
    billion to combat the global HIV/AIDS epidemic, the worst
    crisis facing this world. The President's total budget for HIV/
    AIDS is over $2 billion, which includes the first year's
    funding for the new emergency plan for HIV/AIDS relief
    announced by the President in his State of the Union address.
    This funding will target 14 of the hardest hit countries,
    especially in Africa and the Caribbean.
        The budget also includes almost $500 million for Colombia.
    This funding will support Colombian President Uribe's unified
    campaign against terrorists and the drug trade that fuels their
    activities. The aim is to secure democracy, extend security,
    and restore economic prosperity to Colombia, and prevent the
    narco-terrorists from spreading instability to the broader
    Andean Region.
        Accomplishing these goals requires more than simply funding
    for Colombia. Therefore, our total Andean Counterdrug
    Initiative is $731 million. Critical components of this effort
    include resumption of the Airbridge Denial Program to stop
    internal and cross-border aerial trafficking in illicit drugs,
    stepped up eradication and alternative development efforts, and
    technical assistance to strengthen Colombia's police and
    judicial institutions.
        Mr. Chairman, members of the committee, to advance
    America's interests around the world, we need the dollars in
    the President's budget for fiscal year 2004. We need the
    dollars under both of my hats, as principal foreign policy
    advisor to the President, as well as CEO of the Department of
    State.

                               PREPARED STATEMENT

        With that, Mr. Chairman, I will stop and be as responsive
    as I can to your questions.
        [The statement follows:]

                     Prepared Statement of Colin L. Powell

        Mr. Chairman, members of the subcommittee, I am pleased to appear
    before you to testify in support of the President's International
    Affairs Budget for fiscal year 2004. Funding requested for fiscal year
    2004 for the Department of State, USAID, and other foreign affairs
    agencies is $28.5 billion.
        The President's Budget will allow the United States to:
      --Target security and economic assistance to sustain key countries
            supporting us in the war on terrorism and helping us to stem
            the proliferation of weapons of mass destruction;
      --Launch the Millennium Challenge Account--a new partnership
            generating support to countries that rule justly, invest in
            their people, and encourage economic freedom;
      --Strengthen the U.S. and global commitment to fighting HIV/AIDS and
            alleviating humanitarian hardships;
      --Combat illegal drugs in the Andean Region of South America, as well
            as bolster democracy in one of that region's most important
            countries, Colombia; and
      --Reinforce America's world-class diplomatic force, focusing on the
            people, places, and tools needed to promote our foreign
            policies around the world.
        I am particularly proud of the last bullet, Mr. Chairman, because
    for the past two years I have concentrated on each of my jobs--primary
    foreign policy advisor to the President and Chief Executive Officer of
    the State Department.
        Under my CEO hat, we have been reinforcing our diplomatic force for
    two years and we will continue in fiscal year 2004. We will hire 399
    more professionals to help the President carry out the nation's foreign
    policy. This hiring will bring us to the 1,100-plus new foreign and
    civil service officers we set out to hire over the first three years to
    bring the Department's personnel back in line with its diplomatic
    workload. Moreover, completion of these hires will allow us the
    flexibility to train and educate all of our officers as they should be
    trained and educated. So I am proud of that accomplishment and want to
    thank you for helping me bring it about.
        In addition, I promised to bring state-of-the-art communications
    capability to the Department--because people who can't communicate
    rapidly and effectively in today's globalizing world can't carry out
    our foreign policy. We are approaching our goal in that regard as well.
        In both unclassified and classified communications capability,
    including desk-top access to the Internet for every man and woman at
    State, we are there by the end of 2003. The budget before you will
    sustain these gains and continue our information technology
    modernization effort. Finally, with respect to my CEO role, I wanted to
    sweep the slate clean and completely revamp the way we construct our
    embassies and other overseas buildings, as well as improve the way we
    secure our men and women who occupy them. As you well know, that last
    task is a long-term, almost never-ending one, particularly in this time
    of heightened terrorist activities. But we are well on the way to
    implementing both the construction and the security tasks in a better
    way, in a less expensive way, and in a way that subsequent CEOs can
    continue and improve on.
        Mr. Chairman, since this subcommittee's oversight responsibilities
    are primarily concerned with my CEO hat, let me give you key details
    with respect to these three main priorities, as well as tell you about
    other initiatives under my CEO hat:
        the ceo responsibilities: state department and related agencies
        The President's fiscal year 2004 discretionary request for the
    Department of State and Related Agencies is $8.497 billion. The
    requested funding will allow us to:
      --Continue initiatives to recruit, hire, train, and deploy the right
            work force. The budget request includes $97 million to complete
            the Diplomatic Readiness Initiative by hiring 399 additional
            foreign affairs professionals. Foreign policy is carried out
            through our people, and rebuilding America's diplomatic
            readiness in staffing will ensure that the Department can
            respond to crises and emerging foreign policy priorities. This
            is the third year of funding for this initiative, which will
            provide a total of 1,158 new staff for the Department of State.
      --Continue to put information technology in the service of diplomacy.
            The budget request includes $157 million to sustain the
            investments made over the last two years to provide classified
            connectivity to every post that requires it and to expand
            desktop access to the Internet for State Department employees.
            Combined with $114 million in estimated Expedited Passport
            Fees, a total of $271 million will be available for information
            technology investments, including beginning a major
            initiative--SMART--that will overhaul the outdated systems for
            cables, messaging, information sharing, and document archiving.
      --Continue to upgrade and enhance our security worldwide. The budget
            request includes $646.7 million for programs to enhance the
            security of our diplomatic facilities and personnel serving
            abroad and for hiring 85 additional security and support
            professionals to sustain the Department's Worldwide Security
            Upgrades program.
      --Continue to upgrade the security of our overseas facilities. The
            budget request includes $1.514 billion to fund major security-
            related construction projects and address the major physical
            security and rehabilitation needs of embassies and consulates
            around the world. The request includes $761.4 million for
            construction of secure embassy compounds in seven countries and
            $128.3 million for construction of a new embassy building in
            Berlin.
      --The budget also supports management improvements to the overseas
            buildings program and the Overseas Building Operations (OBO)
            long-range plan. The budget proposes a Capital Security Cost
            Sharing Program that allocates the capital costs of new
            overseas facilities to all U.S. Government agencies on the
            basis of the number of their authorized overseas positions.
            This program will serve two vital purposes: (1) to accelerate
            construction of new embassy compounds and (2) to encourage
            Federal agencies to evaluate their overseas positions more
            carefully. In doing so, it will further the President's
            Management Agenda initiative to rightsize the official American
            presence abroad. The modest surcharge to the cost of stationing
            an American employee overseas will not undermine vital overseas
            work, but it will encourage more efficient management of
            personnel and taxpayer funds.
      --Continue to enhance the Border Security Program. The budget request
            includes $736 million in Machine Readable Visa (MRV) fee
            revenues for continuous improvements in consular systems,
            processes, and programs in order to protect U.S. borders
            against the illegal entry of individuals who would do us harm.
      --Meet our obligations to international organizations. Fulfilling
            U.S. commitments is vital to building coalitions and gaining
            support for U.S. interests and policies in the war against
            terrorism and the spread of weapons of mass destruction. The
            budget request includes $1 billion to fund U.S. assessments to
            44 international organizations, including $71.4 million to
            support renewed U.S. membership in the United Nations
            Educational, Scientific, and Cultural Organization (UNESCO).
      --Support obligations to international peacekeeping activities. The
            budget request includes $550.2 million to pay projected U.N.
            peacekeeping assessments. These peacekeeping activities ensure
            continued American leadership in shaping the international
            community's response to developments that threaten
            international peace and stability.
        Continue to eliminate support for terrorists and thus deny them
    safe haven through our ongoing public diplomacy activities, our
    educational and cultural exchange programs, and international
    broadcasting. The budget request includes $296.9 million for public
    diplomacy, including information and cultural programs carried out by
    overseas missions and supported by public diplomacy personnel in our
    regional and functional bureaus. These resources are used to engage,
    inform, and influence foreign publics and broaden dialogue between
    American citizens and institutions and their counterparts abroad.
        The budget request also includes $345.3 million for educational and
    cultural exchange programs that build mutual understanding and develop
    friendly relations between America and the peoples of the world. These
    activities establish the trust, confidence, and international
    cooperation with other countries that sustain and advance the full
    range of American national interests.
        The budget request includes $100 million for education and cultural
    exchanges for States of the Former Soviet Union and Central and Eastern
    Europe, which were previously funded under the FREEDOM Support Act and
    Support for East European Democracy (SEED) accounts.
        As a member of the Broadcasting Board of Governors, I want to take
    this opportunity to highlight to you the BBG's pending budget request
    for $563.5 million. Funding will advance international broadcasting
    efforts to support the war on terrorism, including initiation of the
    Middle East Television Network.
        Mr. Chairman, I know that your committee staff will go over this
    statement with a fine-tooth comb and I know too that they prefer an
    account-by-account laydown. So here it is:
    Diplomatic and Consular Programs (D&CP)
        The fiscal year 2004 request for D&CP, the State Department's chief
    operating account, totals $4.164 billion.
        D&CP supports the diplomatic activities and programs that
    constitute the first line of offense against threats to the security
    and prosperity of the American people. Together with Machine Readable
    Visa and other fees, the account funds the operating expenses and
    infrastructure necessary for carrying out U.S. foreign policy in more
    than 260 locations around the world.
        The fiscal year 2004 D&CP request provides $3.517 billion for
    ongoing operations--a net increase of $269 million over the fiscal year
    2003 level. Increased funding will enable the State Department to
    advance national interests effectively through improved diplomatic
    readiness, particularly in human resources.
        The request completes the Department's three-year Diplomatic
    Readiness Initiative to put the right people with the right skills in
    the right place at the right time. New D&CP funding in fiscal year 2004
    of $97 million will allow the addition of 399 professionals, providing
    a total of 1,158 new staff from fiscal year 2002 through fiscal year
    2004.
        The fiscal year 2004 D&CP request also provides $646.7 million for
    Worldwide Security Upgrades--an increase of $97.3 million over last
    year. This total includes $504.6 million to continue worldwide security
    programs for guard protection, physical security equipment and
    technical support, information and system security, and security
    personnel and training. It also includes $43.4 million to expand the
    perimeter security enhancement program for 232 posts and $98.7 million
    for improvements in domestic and overseas protection programs,
    including 85 additional agents and other security professionals.
    Capital Investment Fund (CIF)
        The fiscal year 2004 request provides $157 million for the CIF to
    assure that the investments made in fiscal year 2002 and fiscal year
    2003 keep pace with increased demand from users for functionality and
    speed.
        Requested funding includes $15 million for the State Messaging and
    Archive Retrieval Toolset (SMART). The SMART initiative will replace
    outdated systems for cables and messages with a unified system that
    adds information sharing and document archiving.
    Embassy Security, Construction, and Maintenance (ESCM)
        The fiscal year 2004 request for ESCM is $1.514 billion. This
    total--an increase of $259.1 million over the fiscal year 2003 level--
    reflects the Administration's continuing commitment to protect U.S.
    Government personnel serving abroad, improve the security posture of
    facilities overseas, and address serious deficiencies in the State
    Department's overseas infrastructure.
        For the ongoing ESCM budget, the Administration is requesting
    $524.7 million. This budget includes maintenance and repairs at
    overseas posts, facility rehabilitation projects, construction
    security, renovation of the Harry S Truman Building, all activities
    associated with leasing overseas properties, and management of the
    overseas buildings program.
        For Worldwide Security Construction, the Administration is
    requesting $761.4 million for the next tranche of security-driven
    construction projects to replace high-risk facilities. Funding will
    support the construction of secure embassies in seven countries--
    Algeria, Burma, Ghana, Indonesia, Panama, Serbia, and Togo. In
    addition, the requested funding will provide new on-compound buildings
    for USAID in Ghana, Jamaica, and Nigeria.
        The ESCM request includes $100 million to strengthen compound
    security at vulnerable posts.
        The request also includes $128.3 million to construct the new U.S.
    embassy building in Berlin.
    Educational and Cultural Exchange Programs (ECE)
        The fiscal year 2004 request of $345.3 million for ECE maintains
    funding for exchanges at the fiscal year 2003 level of $244 million and
    adds $100 million for projects for Eastern Europe and the States of the
    Former Soviet Union previously funded from Foreign Operations
    appropriations.
        Authorized by the Mutual Educational and Cultural Exchange Act of
    1961 (Fulbright-Hays Act), as amended, exchanges are strategic
    activities that build mutual understanding and develop friendly
    relations between the United States and other countries. They establish
    the trust, confidence, and international cooperation necessary to
    sustain and advance the full range of U.S. national interests.
        The request provides $141 million for Academic Programs. These
    include the J. William Fulbright Educational Exchange Program for
    exchange of students, scholars, and teachers and the Hubert H. Humphrey
    Fellowship Program for academic study and internships in the United
    States for mid-career professionals from developing countries.
        The request also provides $73 million for Professional and Cultural
    Exchanges. These include the International Visitor Program, which
    supports travel to the United States by current and emerging leaders to
    obtain firsthand knowledge of American politics and values, and the
    Citizen Exchange Program, which partners with U.S. non-profit
    organizations to support professional, cultural, and grassroots
    community exchanges.
        This request provides $100 million for exchanges funded in the past
    from the FREEDOM Support Act (FSA) and Support for East European
    Democracy (SEED) accounts.
        This request also provides $31 million for exchanges support. This
    is a straight-line projection of the fiscal year 2003 level.
    Contributions to International Organizations (CIO)
        The fiscal year 2004 request for CIO of $1.010 billion provides
    funding for U.S. assessed contributions, consistent with U.S. statutory
    restrictions, to 44 international organizations to further U.S.
    economic, political, social, and cultural interests.
        The request recognizes U.S. international obligations and reflects
    the President's commitment to maintain the financial stability of the
    United Nations and other international organizations that include the
    World Health Organization, the North Atlantic Treaty Organization, the
    International Atomic Energy Agency, and the Organization for Economic
    Cooperation and Development.
        The budget request provides $71.4 million to support renewed U.S.
    membership in the United Nations Educational, Scientific, and Cultural
    Organization (UNESCO). UNESCO contributes to peace and security in the
    world by promoting collaboration among nations through education,
    science, culture and communication and by furthering intercultural
    understanding and universal respect for justice, rule of law, human
    rights, and fundamental freedoms, notably a free press.
        Membership in international organizations benefits the United
    States by building coalitions and pursuing multilateral programs that
    advance U.S. interests. These include promoting economic growth through
    market economies; settling disputes peacefully; encouraging non-
    proliferation, nuclear safeguards, arms control, and disarmament;
    adopting international standards to facilitate international trade,
    telecommunications, transportation, environmental protection, and
    scientific exchange; and strengthening international cooperation in
    agriculture and health.
    Contributions for International Peacekeeping Activities (CIPA)
        The administration is requesting $550.2 million for CIPA in fiscal
    year 2004. This funding level will allow the United States to pay its
    share of assessed U.N. peacekeeping budgets, fulfilling U.S.
    commitments and avoiding increased U.N. arrears.
        The U.N. peacekeeping appropriation serves U.S. interests in
    Europe, Africa and the Middle East, where U.N. peacekeeping missions
    assist in ending conflicts, restoring peace and strengthening regional
    stability.
        U.N. peacekeeping missions leverage U.S. political, military and
    financial assets through the authority of the U.N. Security Council and
    the participation of other states that provide funds and peacekeepers
    for conflicts around the world.
    Broadcasting Board of Governors (BBG)
        The fiscal year 2004 budget request for the BBG totals $563.5
    million.
        The overall request provides $525.2 million for U.S. Government
    non-military international broadcasting operations through the
    International Broadcasting Operations (IBO) account. This account funds
    operations of the Voice of America (VOA), Radio Free Europe/Radio
    Liberty (RFE/RL), Radio Free Asia (RFA), and all related program
    delivery and support activities.
        The IBO request includes funding to advance broadcasting efforts
    related to the war on terrorism. The request includes $30 million to
    initiate the Middle East Television Network--a new Arabic-language
    satellite TV network that, once operational, will have the potential to
    reach vast audiences in the Middle East. The request also includes
    funding to double VOA Indonesian radio programming, significantly
    increase television programming in Indonesia, and expand BBG audience
    development efforts.
        The IBO request reflects the shifting of priorities away from the
    predominantly Cold War focus on Central and Eastern Europe to
    broadcasting in the Middle East and Central Asia. Funds are being
    redirected to programs in these regions through the elimination of
    broadcasting to countries in the former Eastern Bloc that have
    demonstrated significant advances in democracy and press freedoms and
    are new or soon-to-be NATO and European Union Members.
        The IBO request also reflects anticipated efficiencies that achieve
    a five-percent reduction in funding for administration and management
    in fiscal year 2004.
        The fiscal year 2004 request also provides $26.9 million through
    Broadcasting to Cuba (OCB) for continuing Radio Marti and TV Marti
    operations, including salary and inflation increases, to support
    current schedules.
        The fiscal year 2004 request further provides $11.4 million for
    Broadcasting Capital Improvements to maintain the BBG's worldwide
    transmission network. The request includes $2.9 million to maintain and
    improve security of U.S. broadcasting transmission facilities overseas.

        That finishes the State and Related Agencies part of the
    President's Budget. But before I stop and take your questions, let me
    give you an overview of the rest of our budget for fiscal year 2004,
    the Foreign Affairs part. You are all members of the larger
    Appropriations Committee and, in that capacity, I hope that you will
    strongly support this part of our budget also.

     FOREIGN POLICY ADVISOR RESPONSIBILITIES: FUNDING AMERICA'S DIPLOMACY
                                AROUND THE WORLD

        The fiscal year 2004 budget proposes several initiatives to advance
    U.S. national security interests and preserve American leadership. The
    fiscal year 2004 Foreign Operations budget that funds programs for the
    Department of State, USAID and other foreign affairs agencies is $18.8
    billion. Today, our number one priority is to fight and win the global
    war on terrorism. The budget furthers this goal by providing economic,
    military, and democracy assistance to key foreign partners and allies,
    including $4.7 billion to countries that have joined us in the war on
    terrorism.
        The budget also promotes international peace and prosperity by
    launching the most innovative approach to U.S. foreign assistance in
    more than forty years. The new Millennium Challenge Account (MCA), an
    independent government corporation funded at $1.3 billion will redefine
    ``aid''. As President Bush told African leaders meeting in Mauritius
    recently, this aid will go to ``nations that encourage economic
    freedom, root out corruption, and respect the rights of their people.''
        Moreover, this budget offers hope and a helping hand to countries
    facing health catastrophes, poverty and despair, and humanitarian
    disasters. It provides $1.345 billion to combat the global HIV/AIDS
    epidemic, more than $1 billion to meet the needs of refugees and
    internally displaced peoples, $200 million in emergency food assistance
    to support dire famine needs, and $100 million for an emerging crises
    fund to allow swift responses to complex foreign crises. Mr. Chairman,
    let me give you some details.
        The United States is successfully prosecuting the global war on
    terrorism on a number of fronts. We are providing extensive assistance
    to states on the front lines of the anti-terror struggle. Working with
    our international partners bilaterally and through multilateral
    organizations, we have frozen more than $110 million in terrorist
    assets, launched new initiatives to secure global networks of commerce
    and communication, and significantly increased the cooperation of our
    law enforcement and intelligence communities. Afghanistan is no longer
    a haven for al-Qaeda. We are now working with the Afghan Authority,
    other governments, international organizations, and NGOs to rebuild
    Afghanistan. Around the world we are combating the unholy alliance of
    drug traffickers and terrorists who threaten the internal stability of
    countries. We are leading the international effort to prevent weapons
    of mass destruction from falling into the hands of those who would do
    harm to us and others. At the same time, we are rejuvenating and
    expanding our public diplomacy efforts worldwide.

    Assistance to Frontline States
        The fiscal year 2004 International Affairs budget provides
    approximately $4.7 billion in assistance to the Frontline States, which
    have joined with us in the war on terrorism. This funding will provide
    crucial assistance to enable these countries to strengthen their
    economies, internal counter-terrorism capabilities and border controls.
        Of this amount, the President's Budget provides $657 million for
    Afghanistan, $460 million for Jordan, $395 million for Pakistan, $255
    million for Turkey, $136 million for Indonesia, and $87 million for the
    Philippines. In Afghanistan, the funding will be used to fulfill our
    commitment to rebuild Afghanistan's road network; establish security
    through a national military and national police force, including
    counter-terrorism and counter-narcotics components; establish broad-
    based and accountable governance through democratic institutions and an
    active civil society; ensure a peace dividend for the Afghan people
    through economic reconstruction; and provide humanitarian assistance to
    sustain returning refugees and displaced persons. United States
    assistance will continue to be coordinated with the Afghan government,
    the United Nations, and other international donors.
        The State Department's Anti-Terrorism Assistance (ATA) program will
    continue to provide frontline states a full complement of training
    courses, such as a course on how to conduct a post-terrorist attack
    investigation or how to respond to a WMD event. The budget will also
    fund additional equipment grants to sustain the skills and capabilities
    acquired in the ATA courses. It will support as well in-country
    training programs in Afghanistan, Pakistan, and Indonesia.

    Central Asia and Freedom Support Act Nations
        In fiscal year 2004, over $157 million in Freedom Support Act (FSA)
    funding will go to assistance programs in the Central Asian states. The
    fiscal year 2004 budget continues to focus FSA funds to programs in
    Uzbekistan, Kyrgyzstan and Tajikistan, recognizing that Central Asia is
    of strategic importance to U.S. foreign policy objectives. The fiscal
    year 2004 assistance level for Uzbekistan, Kyrgyzstan and Tajikistan is
    30 percent above 2003. Assistance to these countries has almost doubled
    from pre-September 11th levels. These funds will support civil society
    development, small business promotion, conflict reduction, and economic
    reform in the region. These efforts are designed to promote economic
    development and strengthen the rule of law in order to reduce the
    appeal of extremist movements and stem the flow of illegal drugs that
    finance terrorist activities.
        Funding levels and country distributions for the FSA nations
    reflect shifting priorities in the region. For example, after more than
    10 years of high levels of assistance, it is time to begin the process
    of graduating countries in this region from economic assistance, as we
    have done with countries in Eastern Europe that have made sufficient
    progress in the transition to market-based democracies. U.S. economic
    assistance to Russia and Ukraine will begin phasing down in fiscal year
    2004, a decrease of 32 percent from 2003, moving these countries
    towards graduation.

    Combating Illegal Drugs and Stemming Narco-terrorism
        The President's request for $731 million for the Andean Counterdrug
    Initiative includes $463 million for Colombia. An additional $110
    million in military assistance to Colombia will support Colombian
    President Uribe's unified campaign against terrorists and the drug
    trade that fuels their activities. The aim is to secure democracy,
    extend security, and restore economic prosperity to Colombia and
    prevent the narco-terrorists from spreading instability to the broader
    Andean region. Critical components of this effort include resumption of
    the Airbridge Denial program to stop internal and cross-border aerial
    trafficking in illicit drugs, stepped up eradication and alternative
    development efforts, and technical assistance to strengthen Colombia's
    police and judicial institutions.

    Halting Access of Rogue States and Terrorists to Weapons of Mass
            Destruction
        Decreasing the threats posed by terrorist groups, rogue states, and
    other non-state actors requires halting the spread of weapons of mass
    destruction (WMD) and related technology. To achieve this goal, we must
    strengthen partnerships with countries that share our views in dealing
    with the threat of terrorism and resolving regional conflicts.
        The fiscal year 2004 budget requests $35 million for the
    Nonproliferation and Disarmament Fund (NDF), more than double the
    fiscal year 2003 request, increases funding for overseas Export
    Controls and Border Security (EXBS) to $40 million, and supports
    additional funding for Science Centers and Bio-Chem Redirection
    Programs.
        Funding increases requested for the NDF and EXBS programs seek to
    prevent weapons of mass destruction from falling into the hands of
    terrorist groups or states by preventing their movement across borders
    and destroying or safeguarding known quantities of weapons or source
    material. The Science Centers and Bio-Chem Redirection programs support
    the same goals by engaging former Soviet weapons scientists and
    engineers in peaceful scientific activities, providing them an
    alternative to marketing their skills to states or groups of concern.

    Millennium Challenge Account
        The fiscal year 2004 Budget request of $1.3 billion for the new
    Millennium Challenge Account (MCA) as a government corporation fulfills
    the President's March 2002 pledge to create a new bilateral assistance
    program, markedly different from existing models. This budget is a huge
    step towards the President's commitment of $5 billion in annual funding
    for the MCA by 2006, a 50 percent increase in core development
    assistance.
        The MCA supplement U.S. commitments to humanitarian assistance and
    existing development aid programs funded and implemented by USAID. It
    will assist developing countries that make sound policy decisions and
    demonstrate solid performance on economic growth and reducing poverty.
      --MCA funds will go only to selected developing countries that
            demonstrate a commitment to sound policies--based on clear,
            concrete and objective criteria. To become eligible for MCA
            resources, countries must demonstrate their commitment to
            economic opportunity, investing in people, and good governance.
      --Resources will be available through agreements with recipient
            countries that specify a limited number of clear measurable
            goals, activities, and benchmarks, and financial accountability
            standards.
        The MCA will be administered by a new government corporation
    designed to support innovative strategies and to ensure accountability
    for measurable results. The corporation will be supervised by a Board
    of Directors composed of Cabinet level officials and chaired by the
    Secretary of State. Personnel will be drawn from a variety of
    government agencies and non-government institutions and serve limited-
    term appointments.
        In fiscal year 2004, countries eligible to borrow from the
    International Development Association (IDA), and which have per capita
    incomes below $1,435, (the historical IDA cutoff) will be considered.
    In 2005, all countries with incomes below $1,435 will be considered. In
    2006, all countries with incomes up to $2,975 (the current World Bank
    cutoff for lower middle income countries) will be eligible.
        The selection process will use 16 indicators to assess national
    performance--these indicators being relative to governing justly,
    investing in people, and encouraging economic freedom. These indicators
    were chosen because of the quality and objectivity of their data,
    country coverage, public availability, and correlation with growth and
    poverty reduction. The results of a review of the indicators will be
    used by the MCA Board of Directors to make a final recommendation to
    the President on a list of MCA countries.

    The U.S.-Middle East Partnership Initiative
        The President's Budget includes $145 million for the Middle East
    Partnership Initiative (MEPI). This initiative gives us a framework and
    funding for working with the Arab world to expand educational and
    economic opportunities, empower women, and strengthen civil society and
    the rule of law. The peoples and governments of the Middle East face
    daunting human challenges. Their economies are stagnant and unable to
    provide jobs for millions of young people entering the workplace each
    year. Too many of their governments appear closed and unresponsive to
    the needs of their citizens. And their schools are not equipping
    students to succeed in today's globalizing world. With the programs of
    the MEPI, we will work with Arab governments, groups, and individuals
    to bridge the jobs gap with economic reform, business investment, and
    private sector development; close the freedom gap with projects to
    strengthen civil society, expand political participation, and lift the
    voices of women; and bridge the knowledge gap with better schools and
    more opportunities for higher education. The U.S.-Middle East
    Partnership Initiative is an investment in a more stable, peaceful,
    prosperous, and democratic Arab world.

    Fighting the Global AIDS Pandemic
        The fiscal year 2004 budget continues the Administration's
    commitment to combat HIV/AIDS and to help bring care and treatment to
    infected people overseas. The HIV/AIDS pandemic has killed 23 million
    of the 63 million people it has infected to date, and left 14 million
    orphans worldwide. President Bush has made fighting this pandemic a
    priority of U.S. foreign policy.
        The President believes the global community can--and must--do more
    to halt the advance of the pandemic, and that the United States should
    lead by example. Thus, the President's fiscal year 2004 budget request
    signals a further, massive increase in resources to combat the HIV/AIDs
    pandemic. As described in the State of the Union, the President is
    committing to provide a total of $15 billion over the next five years
    to turn the tide in the war on HIV/AIDs, beginning with $2.0 billion in
    the fiscal year 2004 budget request and rising thereafter. These funds
    will be targeted on the hardest hit countries, especially Africa and
    the Caribbean with the objective of achieving dramatic on-the-ground
    results. This new dramatic commitment is reflected in the
    Administration's $2.0 billion fiscal year 2004 budget request, which
    includes:
      --State Department--$450 million;
      --USAID--$895 million, including $100 million for the Global Fund and
            $150 million for the International Mother & Child HIV
            Prevention; and
      --HHS/CDC/NIH--$690 million, including $100 million for the Global
            Fund and $150 million for the International Mother & Child HIV
            Prevention.
        In order to ensure accountability for results, the President has
    asked me to establish at State a new Special Coordinator for
    International HIV/AIDS Assistance. The Special Coordinator will work
    for me and be responsible for coordinating all international HIV/AIDS
    programs and efforts of the agencies that implement them.

    Hunger, Famine, and Other Emergencies
        Food Aid.--Historically the United States has been the largest
    donor of assistance for victims of protracted and emergency food
    crises. In 2003, discretionary funding for food aid increased from $864
    million to $1.19 billion. That level will be enhanced significantly in
    2004 with two new initiatives: a Famine Fund and an emerging crises
    fund to address complex emergencies.
      --Famine Fund.--The fiscal year 2004 budget includes a new $200
            million fund with flexible authorities to provide emergency
            food, grants or support to meet dire needs on a case-by-case
            basis. This commitment reflects more than a 15 percent increase
            in U.S. food assistance.
      --Emerging Crises Fund.--The budget also requests $100 million for a
            new account that will allow the Administration to respond
            swiftly and effectively to prevent or resolve unforeseen
            complex foreign crises. This account will provide a mechanism
            for the President to support actions to advance American
            interests, including to prevent or respond to foreign
            territorial disputes, armed ethnic and civil conflicts that
            pose threats to regional and international peace and acts of
            ethnic cleansing, mass killing and genocide.

                                    SUMMARY

        Mr. Chairman, members of the committee, to advance America's
    interests around the world we need the dollars in the President's
    Budget for fiscal year 2004. We need the dollars under both of my
    hats--CEO and principal foreign policy advisor. The times we live in
    are troubled to be sure, but I believe there is every bit as much
    opportunity in the days ahead as there is danger. American leadership
    is essential to dealing with both the danger and the opportunity. With
    regard to the Department of State, the President's fiscal year 2004
    budget is crucial to the exercise of that leadership.
        Thank you and I will be pleased to answer your questions.

                            REMARKS OF SENATOR GREGG

        Senator Gregg. Thank you, Mr. Secretary, for that
    statement.
        Let me begin by saying that we have enjoyed working with
    you and your Department. I know that Senator Hollings, who I
    succeeded as chair here, has aggressively pursued many of the
    initiatives which you have outlined in his original remarks.
    And I intend to continue Senator Hollings' processes there,
    initiatives in the area, for example, of gearing up the
    Diplomatic Corps. We will certainly be funding that.
        One of my other concerns is the Consular Affairs area. We
    have to not only gear up and give the Consular Affairs folks
    status, but we also have to give them decent working places, so
    that when people come into our Embassies, they feel comfortable
    and not as though they are being treated as second class
    individuals. They should have a nice atmosphere. And I think
    that this will help the visa process, also.
        And I also am concerned about protecting our people
    overseas, not only the Foreign Service Officers and Consular
    Affairs folks, but their families, especially at places where
    they naturally congregate, such as American schools. As you
    know, we put $15 million into the budget to address that. And
    we are looking for other ideas that the Department may have in
    that area specifically.
        I want to congratulate General Williams for his efforts. I
    believe that after a number of years of out-of-control costs,
    driven in large part by a need to respond to very serious
    security issues at our Embassies, the issue is being
    aggressively and effectively addressed by General Williams.
        I would say this, however: I am concerned that we are
    building fortresses that have no architectural identity with
    the communities that they are in. And I hope that in obtaining
    security that we will not leave behind the importance of having
    American presence that does not look like a fortress, that our
    buildings start to take on some architectural identity with the
    countries that they are in. I think I would like to get into
    that issue, but not at this time.
        What I would like to address now is a couple more larger
    issues which are current to the period. Let me read you a
    couple quotes from Osama bin Laden. In a Time magazine article
    on the issue of weapons of mass destruction, Osama bin Laden
    stated, ``Acquiring weapons for the defense of Muslims is a
    religious duty. If I have indeed acquired these weapons, then I
    thank God for enabling me to do so. And if I seek to acquire
    these weapons, I am carrying out a duty. It would be a sin for
    Muslims not to try to possess weapons that would prevent
    infidels from inflicting harm on Muslims.''
        He went on to say in another quote, ``We, with Allah's
    help, call on every Muslim who believes in Allah and wishes to
    be rewarded to comply with Allah's orders to kill the Americans
    and to plunder their money wherever and whenever they find it.
    The ruling to kill the Americans and their allies, civilians
    and military, is an individual duty of every Muslim who can do
    it in any country which it is possible to do it in.''
        What, today, is to stop Saddam Hussein from delivering to
    this criminal individual, who has already participated in the
    murder of thousands of Americans, those weapons of mass
    destruction?

                           SADDAM HUSSEIN AND WEAPONS

        Secretary Powell. Nothing is prepared to stop him today, if
    he chooses to do so. We want to take away his option of doing
    so by disarming the Iraqi regime and Saddam Hussein. The
    chilling words you just read, Mr. Chairman, are from somebody
    who is committed to strike us again and again and again; let
    there be no doubt about it, he will use airplanes filled with
    fuel. He will use car bombs. As he said in those quotations, if
    he had weapons of mass destruction, he would use them.
        Should there be a doubt in anyone's mind that if Osama bin
    Laden or other terrorists like Osama bin Laden had access to
    chemical or biological or nuclear weapons, they would use them?
    If there was a doubt in anyone's mind, that doubt should have
    been erased on 9/11. That is why after 9/11 we realized the
    nature of the conflict we were now in. We had to deal with the
    Taliban in Afghanistan. We had to break up al-Qaeda. You saw
    the recent arrest over the weekend of the gentleman who was the
    brains of the organization that struck us on 9/11. We have to
    go after not only these individuals, but also the potential
    sources of their weaponry.
        That is why we redoubled our effort in making it clear to
    the United Nations that we could no longer allow its
    resolutions to be ignored with respect to Iraq, a known
    developer of weapons of mass destruction. That is why the
    moment we find ourselves in now is a critical moment, where we
    are being tested and where the Security Council, the United
    Nations, and the international community are being tested. Are
    we going to allow an individual, such as Saddam Hussein, to
    continue to develop these weapons of mass destruction or
    deceive us into believing that he is not, when we know he is,
    because it is too hard to face the consequences of dealing with
    the truth, and face a situation some years from now when Osama
    bin Laden has accomplished the goal he laid out in those
    statements, and he has such a weapon, and he got it from Iraq?
        We must go after these countries, these rogue nations, that
    proliferate and are led by leaders who would strike us and who
    have shown in the past they will strike their own neighbors,
    strike their own people, do anything to stay in power and
    pursue their own agenda. That is the argument I will be taking
    to the United Nations this afternoon. This is the time to deal
    with this kind of threat, not after we have seen thousands of
    people die as a result of the use of one of these horrible
    weapons. We cannot allow ourselves to be deterred by false
    claims that ``It is all okay. He is complying,'' when he is not
    complying but merely deceiving the international community and
    trying to keep us from doing what we said we would be prepared
    to do last October--excuse me--November, when we passed
    Resolution 1441.
        Senator Gregg. Thank you. And I want to congratulate you
    and the President for pursuing that policy, because I think it
    should be obvious to all people, whether we wish to admit it or
    not, that we are dealing with a fundamentally evil individual,
    not only in Saddam Hussein, but in Osama bin Laden, obviously,
    and that the coalescence or the convergence of those two forces
    represents a clear, present, and immediate threat to the United
    States.
        My time is up, and I yield to the ranking member.

                                VICTORY IN IRAQ

        Senator Hollings. Mr. Secretary, I support you, support
    your budget. I have some questions about Colombia and General
    Williams, the Embassy there at Berlin.
        This cost sharing proposal and the funding request for
    USAID buildings--the Foreign Operations Subcommittee ranking
    member Senator Leahy will be back momentarily--but I cannot get
    any money back from him. So we have opposed our State
    Department budget funding buildings under another
    subcommittees' jurisdiction.
        Having said that, I am reading here, I am listening to our
    President before the American Enterprise Institute, of a regime
    change. I am hearing you yesterday afternoon. And then I am
    reading yesterday morning, and I quote, ``General Meyers also
    said disarming Iraq would define victory, not capturing or
    killing President Saddam Hussein.'' Is General Meyers correct?
        Secretary Powell. All of the statements that you made
    reference to and the positions you made reference to are
    correct.
        Senator Hollings. Well, that means then you believe we have
    to remove Saddam Hussein, is that not right?
        Secretary Powell. Well, in 1998, the previous
    administration and the Congress believed that the only way----
        Senator Hollings. I am not questioning that.
        Secretary Powell. No, no. I just need----
        Senator Hollings. I have read----
        Secretary Powell. Yes, I am going to come to our position.
    But the Congress and the administration at that time, in the
    face of the intransigence of Saddam Hussein, his unwillingness
    to disarm as a result of previous U.N. resolutions, made a
    judgment that we could not solve this problem with that regime
    in place. So regime change in 1998 became the policy of
    President Clinton's administration. It was to some extent, I
    think to a large extent, endorsed by the Congress in laws that
    were passed at that time.
        When we came into office, we worked to see if there was
    some other way of disarming Saddam Hussein. We modified and
    strengthened the sanctions policies, so that it was not hurting
    the Iraqi people. We worked with our friends and allies to see
    if there was some way to disarm him. We finally got to the
    point where Resolution 1441 was passed. Resolution 1441 passed
    unanimously. It has as its goal the disarmament of Iraq.
        However, what we have seen since 1441 was passed is that
    Saddam Hussein has still not made that strategic choice to
    disarm and allow the inspectors to verify that he is disarming.
    So we are reaching the point that was reached by others in
    1998, such that it appears the only way perhaps to get him to
    disarm is to remove the regime and disarm that nation of its
    weapons of mass destruction.
        But even at this late date, it is possible to find a
    peaceful solution, if Saddam Hussein and the Iraqi regime would
    do what it has been asked to do by the international community
    for all these many years. But we do not take off the table, of
    course, the option of forcible removal of the regime. We have a
    large number of American troops that are assembled there to do
    that.
        But it is the disarmament that is the principal objective.
    I think that is the point that General Meyers was trying to
    make, when he said the regime will be removed. But whatever
    happens to Saddam Hussein, whether he goes into exile or into
    irrelevance, we will have a better situation in Iraq when those
    weapons of mass destruction are gone.

                            REMOVING SADDAM HUSSEIN

        Senator Hollings. Well, you and I would agree in a second
    that if you removed all the weapons of mass destruction in the
    next hour, you would still have to remove Saddam. You could not
    just pick up and then leave with General Meyers and say, ``The
    job is done.'' I mean, that fellow would start building bombs
    all over again. So I guess you and I agree that removing Saddam
    Hussein is the mission.
        You used the expression ``better way, less expensive way,''
    in order to remove him. I was never worried for the last 10, 12
    years about any imminent threat from Saddam. We have what you
    and I know as the AMLR, the best force, Israel, right there.
    They do not have the luxury of calling up and getting a meeting
    with the United Nations or asking for monitors. They have to
    act in self-defense. And so if there is any imminent threat
    really, they would knock it out by 10:30 or 11:00 o'clock this
    morning, I can tell you that.
        Knowing that, and you used the expression in your major
    testimony there about ``a better way, a less expensive way.''
    Rather than starting a war and all of these other things to
    remove him, Mossad would know where he is. Why not get a hit
    team and get rid of him? Why start a war in order to do it?
        Secretary Powell. Because I am not sure anybody really
    knows where he is. It is easy to say. It is much more difficult
    to do. I cannot tell you what Mossad or any other intelligence
    agency knows or does not know. This is a man who has spent the
    last 30 years putting in place a security system that has as
    its sole purpose to keep him in place. The suggestion that if
    there was imminent danger, everybody would know where it is and
    could hit it by 10:30 this morning, I think, is not quite the
    case.
        His capabilities are well dispersed. They are hidden. They
    are not easy to find. He has had decades of experience in
    hiding his activities and diverting the attention of those who
    are looking for his prohibited activities.
        Senator Hollings. Well, the 3,000 missiles in this same
    story that are precision guided, are they guided against
    Saddam?
        Secretary Powell. I do not know of any way to guide against
    a particular individual.
        Senator Hollings. Are those military targets alone? Is that
    your answer, just the 3,000 missiles?
        Secretary Powell. No. My answer is that I do not discuss
    targeting that might be conducted by our military authorities.
    In the old days, I used to.
        Senator Hollings. You were the chairman.
        Secretary Powell. But now I do not. I think it is unwise to
    do.
        Senator Hollings. But you know where they are guided. You
    can discuss them. I mean, we have to get the guy. You have to
    hit the palaces, as well as the command and control. You know
    what I mean. Hit a few Scud sites. In fact, if you have any
    good precision guided ones, why not tell the inspectors and let
    them take them up?
        Secretary Powell. The inspectors do not view as their role
    to be part of the U.S. targeting system. If we keep saying all
    we have to do is hit the palaces, I can assure you that the
    place Saddam Hussein will not be in is one of his palaces.
        Senator Hollings. And you do not think----
        Secretary Powell. I do not think he is as targetable as it
    is often suggested. He is a survivor. He is aware of our
    capability. I am sure he is doing everything he can to assure
    his personal survival.
        Senator Hollings. Being a survivor, there would be nothing
    wrong, if we knew to hit him. In other words, when we hit that
    automobile full of terrorists down in Yemen, we announced
    publicly--I would not have announced it, but they did, and said
    terrorists. In a terrorism war, terrorist open season, they are
    combatants. And we can hit them anywhere we can find them.
        So I take it there would be nothing wrong with trying to
    hit Saddam with one of those missiles; would there be?
        Secretary Powell. If we were in armed conflict, which we
    may well find ourselves in, then----
        Senator Hollings. As I understand it, excuse me, but we are
    in armed conflict. The President announced, said, ``We are in a
    terrorism war.'' And in a terrorism war, terrorists are
    combatants. And therefore, you can kill them. That is how he
    justified killing those people down there in Yemen.
        So we have described Saddam in every way possible,
    including as a terrorist. So you could go ahead and hit him,
    could you not?
        Secretary Powell. I, frankly, do not want to talk about
    targeting, who might be targeted, or who might not be targeted
    at an open hearing like this, Senator.
        Senator Hollings. Well, you can see what I am getting at.
    You do not want to level Baghdad to get him. I mean, how do we
    get to victory, according to General Meyers----
        Secretary Powell. We have no intention of--we are not going
    to level Baghdad.

                            DEFINING VICTORY IN IRAQ

        Senator Hollings. I agree; we are not going to level
    Baghdad. So what is going to define victory, other than getting
    him?
        Secretary Powell. Defining victory will be a disarmed Iraq.
    If it is done peacefully, with no invasion and no military
    action required, it would be an Iraqi regime that has foresworn
    these weapons of mass destruction and done so in a way that
    there is reason to believe them. It is hard to imagine
    believing them right now. If there is a military conflict, it
    will require a change in that regime, because they have
    demonstrated they will not change otherwise, and the disarming
    of the country's weapons of mass destruction, putting in place
    a better government for the people of Iraq.
        This has been a terrible government for 30 years. It has
    squandered the wealth of the nation on weapons of mass
    destruction. It is all about the survival of one individual and
    his cohorts in this one regime. The people of Iraq will be a
    lot better off when their weapons of mass destruction are no
    longer cause for the rest of the world to be concerned about.
    If it takes the removal of the regime to do it, because we
    cannot find a peaceful way, then that is what we are prepared
    to do.
        Senator Hollings. Senator Kohl, I recognize you. And I am
    going to leave to vote, too. And the chairman is coming back,
    and----
        Senator Leahy. I believe that I was really here first.
        Senator Hollings. You were here first? Excuse me then. Very
    good. Excuse me, Senator Leahy. But the distinguished Secretary
    has to leave no later than 11:30.
        Senator Leahy. Thank you, Senator Hollings. I understand we
    were doing the early bird rule.

                           CURRENT SITUATION IN IRAQ

        And I am sorry that I had to step out earlier, Mr.
    Secretary. We have one of these judicial confirmation matters
    that come up periodically on the floor of the Senate. And I was
    involved in that. So I had to drop by.
        I understand you are going to the United Nations. I am glad
    you could take the time to come here. I appreciate that all the
    years I have known you, both in the military and now in this,
    you have always been responsive to consulting with the
    Congress. I think it has helped your cause, but it has
    certainly helped our understanding. And I do appreciate that.
        I also appreciate the money that you have helped get in the
    bill for food aid to starving people in Sub-Saharan Africa. For
    that, some of us have been fighting for this for years.
        Now having said that, let me ask you this: A question I get
    in hundreds of letters, sometimes thousands of e-mails from my
    little State of Vermont, is ``How has it come to this?'' They
    are speaking of Iraq, of course.
        When my wife and I go home on weekends, I go in the grocery
    store. I get asked this question from everybody from the people
    stocking the shelves to customers. I get to my house in
    Vermont. People are calling, asking me the same question.
        In the immediate aftermath of September 11, we had hundreds
    of thousands of Germans in Berlin marching in support of the
    United States. We had Le Monde in France declaring ``We're all
    Americans.'' We had unprecedented international cooperation in
    our war against al-Qaeda, including the use of force in
    Afghanistan. Now we have deep divisions within the Security
    Council. Some of our closest allies raise serious questions
    about our effort to launch a war immediately.
        Saddam Hussein is one of the world's worst tyrants. He is a
    war criminal. He is a despicable, dangerous despot. There is no
    question that in a war crimes tribunal he could be convicted of
    heinous crimes. The United States is a country that stands for
    freedom, democracy, and human rights. We stand for making the
    world a safer place.
        But if that case is so clear, why are Russia, China,
    Germany, France, and a dozen other nations saying we are making
    a grave mistake by not giving the U.N. inspectors more time?
    Turkey, which is swimming in debt, turns down our offer of
    billions of dollars. We are threatening to go to war without a
    Security Council resolution. We are causing deep divisions
    among ourselves and within NATO. I have visited with NATO
    leaders, and the United Nations. How did it come to this?
        Secretary Powell. One of the reasons we are here is
    because----
        Senator Leahy. What do I say to Vermonters? What do I say
    to Vermonters who ask me that question?

                    HISTORY REGARDING REGIME CHANGE IN IRAQ

        Secretary Powell. We are here because the international
    community has refused to deal with this tyrant, who has all the
    traits and attributes that you mentioned earlier. He is a
    dictator. He has more than oppressed his own people; he has
    allowed rape and murder and all kinds of terrible crimes to
    occur within his country.
        He is not the only one in the world like that. What makes
    him different is he also has been developing weapons of mass
    destruction; there is no question about it. He has had the
    intent to do so, and he has developed them. He has used them in
    a way that no other modern leader has used such weapons,
    against his neighbors and against his people.
        The international community made a judgment, beginning back
    in 1991, that this was unacceptable and that he had to be
    disarmed. He had to give up these weapons. For 11 years, the
    international community kept passing resolutions and did
    nothing about it.
        This administration came into office determined to do
    something about it, to see whether that behavior could be
    changed. We came into office with a strong position from the
    previous administration that this regime had to be changed, if
    it would not change itself. We worked with the United Nations
    to get them to realize the simple reality that this was a
    dangerous regime and that something had to be done.
        What really brought it into focus was 9/11, when it became
    clear, as you heard from Senator Gregg earlier, that we have
    people out there who would do anything to get their hands on
    the kinds of weapons that Saddam Hussein is developing. Now
    some argue back, ``Yes, but you cannot prove that kind of a
    nexus between al-Qaeda and Saddam Hussein. Yes, you have some
    evidence, but it is not good enough proof.''
        Well, we do not want to wait around until the proof is
    ready for a court of law, to say, ``But we have already seen
    chemical or biological weapons made in Iraq show up somewhere
    in New York or in Vermont.'' So we believe this was the time to
    deal with this. We got the United Nations to agree with a 15-0
    vote in the Security Council in early November. All members
    agreed that Saddam Hussein was guilty. He was in material
    breach, stayed in material breach. This is the time for the
    Iraqi regime to change, immediately, unconditionally, right
    now. Inspectors will help verify the disarmament. If Saddam
    Hussein did not disarm this time, there would be serious
    consequences. Everybody who voted for that knew what that
    meant. It meant that if the Iraqi regime did not comply, there
    would be a war.
        There were some at that time who were already beginning to
    say, ``Well, good. We have bought some time and then we will
    buy some more time and some more time. Then this whole thing
    will go away.''

                             STATUS OF ALLY SUPPORT

        Senator Leahy. Is that what our allies are doing? Is that
    what Germany is doing? Is that what France is doing? Is that
    what China is doing? Is that what----
        Secretary Powell. Yes. It is what some of our allies are
    doing. But some of our allies, like the United Kingdom, Spain,
    Italy, Portugal, the newly emerging nations of Eastern Europe,
    and Australia, are standing up with us and standing up
    strongly.
        We have most of these European nations standing up
    strongly, even in the face of public opinion that is in the
    other direction. The new Turkish government, not fully
    installed yet, went to their parliament and asked and lost just
    by a couple of votes. As you heard yesterday, Mr. Erdogan and
    Turkish general staff leaders said, ``We have to go back to our
    parliament, because it is the right thing to do to support
    America.''
        Senator Leahy. I do not want to make any problem there,
    but, as the administration tells us, they have not yet come to
    the appropriators. We are going to have to come up with that
    $10 billion to back up your bet.
        Secretary Powell. Which $10 billion is that, sir?

                                 AID TO TURKEY

        Senator Leahy. Well, you are not offering $10 billion or $5
    billion or some number of billions of dollars in aid extra aid
    to Turkey?
        Secretary Powell. The Turkish aid package was $6 billion in
    grant aid, which could be leveraged up through loans to a
    higher amount. But it was $6 billion. And----
        Senator Leahy. No direct----
        Secretary Powell [continuing]. We were quite aware----
        Senator Leahy. No direct amounts?
        Secretary Powell. Yes.
        Senator Leahy. There will be no direct amounts?
        Secretary Powell. No. I am not sure. It is a $6 billion
    amount, some of which is direct, but some of it could be used
    to leverage loans in order to have more impact on the economy.
        Senator Leahy. I do not want to make your negotiations more
    difficult, but I would suggest that the administration come up
    here and talk to both Republicans and Democrats on the
    Appropriations Committee and make sure that the votes are there
    to support the package that is being promised, and that you are
    not taking this money from other prior, equally critical needs
    that both you and I support in the foreign aid bill; because so
    far, we have not been told where that money is going to come
    from or how it is going to be used.
        There is North Korea, which we all agree poses a major
    threat. I have heard statements made, I happen to agree with
    them, that the last thing in the world we want them doing is
    exporting their rockets or their missiles.
        We spent a fortune to track the shipment of missiles from
    North Korea to Yemen. We show our ability to stop the ship
    carrying it on the open seas. And then we say, ``Oops. Sorry
    about that. Go ahead and take the missiles anyway.''
        And I am wondering if, when people see that, when they see
    officials of the administration referring to our allies as
    ``old Europe,'' as though they have not faced war and as though
    they do not have a lot of people who are still alive who have
    lived through war on their soil. Those same officials suggest
    the United Nations could be irrelevant, at the same time the
    President's fiscal year budget says the United Nations serves
    U.S. interests by helping end conflicts, restoring peace, and
    strengthen regional stability.
        I mean, which is it? If the United Nations does not go
    along with everything we ask, do they become irrelevant? Are we
    helped by calling countries in Europe ``old Europe'' in a
    dismissive fashion?

                        RELEVANCE OF THE UNITED NATIONS

        Secretary Powell. Well, first of all, with respect to the
    United Nations, if we thought it was irrelevant, the President
    would not have gone there on the 12th of September. But at the
    same time, the United Nations is in danger of becoming
    irrelevant if it passes resolution after resolution that are
    totally ignored by a country in a situation where that country
    continues to develop weapons of mass destruction.
        If the United Nations Security Council fails to deal with
    this issue, certainly there is a degree of irrelevance then in
    the Council's actions on this particular issue. The United
    Nations is a body that we support. We have done a lot of work
    in the last several years, in the previous administration and
    this administration, to clear up our arrears, to rejoin UNESCO,
    and take a number of other actions that show we understand the
    purpose of international organizations. We want to be
    multilateral with respect to our efforts.
        Europe is not of a single mind on the issue of Iraq. I can
    list more countries that are supportive of our position than
    those that are against our position. The fact of the matter is
    that European public opinion is not supportive of our position.
    But I think the anxiety that exists within the international
    community would be gone in a heartbeat if Saddam Hussein would
    do what he is supposed to do; or, in the aftermath of a
    successful military operation, people will see that we are
    doing the correct thing in removing this dangerous threat from
    the region and from the world.
        With respect to Yemen and North Korea, we are deeply
    concerned about North Korean proliferation and have been for a
    long time. In the case of those particular Scuds, when we
    determined that they were not heading to a terrorist
    organization or a rogue state, but a nation that we have close
    relations with, and the Scuds were part of a contract that had
    previously been entered into, and we had assurances from the
    Government of Yemen that the contract was now concluded with
    this last shipment and we would not have to be worried about
    any further sales from North Korea, it seemed the prudent thing
    to do. I think it was the prudent thing to do, to let the
    shipment continue to its owner, a friend of ours, with
    assurances that that was the end of it and that they were
    discharging any further contractual arrangements they might
    have had or entered into with North Korea.
        Senator Leahy. Other Senators are back now. And I will go
    and vote. But two things: One, I hope their new assurances are
    more accurate than their old assurances.
        Secretary Powell. We did not have old assurances that they
    would not purchase. We have new ones.
        Senator Leahy. And secondly, if we are going to continue to
    be offering money and aid to other countries, come on up here
    and make sure that the Congress will actually back up that
    money.
        Thank you.
        Senator Gregg. Senator Kohl.

                          STATUS OF OTHER ARAB NATIONS

        Senator Kohl. I thank you, Mr. Chairman.
        Mr. Secretary, President Bush has said that ``a new regime
    in Iraq would serve as a dramatic and inspiring example of
    freedom for other nations in the region.'' My question to you
    is: How are other Arab states reacting to our aspirations for
    Iraq to be a model democracy, given that our Arab partners in
    the region are currently not ruled by democratic regimes? What
    sort of message are we sending to the current governments,
    particularly at a time when we are relying on some of them for
    support in our war effort? Are we not implicitly saying, ``You
    are next, and, if necessary, by force''?
        Secretary Powell. No. Our friends and I stay in very close
    touch with them and spoke to several of them this morning, they
    know that we have no intention of forcing the overthrow of
    their regime or leadership, either overtly or covertly. But
    they also know, because the President has said this on a number
    of occasions, and I have said it on a number of occasions, that
    we think that democracy is not something that is just
    exclusively for Western nations. Democracy should be able to
    thrive in Arab nations, as well.
        I think what we will be seeing in the years ahead is that,
    as each Arab nation moves further into the 21st Century, they
    will see the benefits of opening their society up to great
    opportunity for women, educating their children for the kinds
    of jobs that will be needed to be performed in those societies
    in the 21st Century, removing state controls on the economy,
    diversifying their economy, and having more representative
    forms of government.
        We do not shy away from making this case to our friends in
    the region. Now, they press back. They have their own culture,
    their own history, and their own traditions. They have been
    nations far longer than the United States of America. So we
    enter into a spirit of dialogue with them. We think each of
    them will have to find their own way into the future, of
    course. We hope that we can be of assistance to them. We are.
        The Middle East Partnership Initiative that I launched not
    too long ago will try to help them with their education of
    young people for the 21st Century by helping to build up a
    civil society. We have fascinating debates and discussions with
    our Arab friends. We believe that we should say to them what we
    believe with respect to the power of a democracy to help
    transform and better their societies.

                                POST-SADDAM IRAQ

        Senator Kohl. Would it not follow that we then go in and
    disarm Iraq so that they are no longer a threat to us and let
    them set up their own society and do it in a way that most fits
    their own needs and aspirations, much as it is true in Saudi
    Arabia and so on?
        Secretary Powell. I think we would have an opportunity
    here, however, to shape this in a way that we can convince them
    that the best way to set up their new society is on the basis
    of openness, on the basis of representative government, and on
    the basis of pulling the diverse elements of the Iraqi
    population into a form of government that respects each of
    those diverse elements and yet keeps it together as a nation.
    So I think we have an important role to play.
        We will not ignore their history, traditions, and culture.
    We could not, even if we wanted to. It's 24 million people. But
    at the same time, we have some experience over the last 50 to
    60 years of going into countries that have not experienced that
    kind of representative government before and getting them to
    see the benefit of it and leaving them far better off than when
    we went in.
        Senator Kohl. So this might be something akin, not exactly
    like, but akin to what we did in Japan after the war?
        Secretary Powell. I do not think it is going to be akin to
    any of the models of the past. I do not think it is like Japan
    or--we are not going to have a MacArthur there for 7 years or 8
    years or a four power arrangement, as we had in Germany. I
    think each one of these is unique.
        Afghanistan was unique, where we were able to put in place
    an Afghan government rather quickly. There were people standing
    there, leaders ready to lead and lead in the right direction.
    We were able to support them.
        There are other models--East Timor, Cambodia, Bosnia, and
    Kosovo. We are studying all of these models to see what would
    fit best in Iraq. But our overall principle is: If a military
    operation is required, obviously then a military commander has
    to be in charge and would be in charge in the immediate
    aftermath of the conflict for some period of time. We want that
    period of time to be as short as possible.
        As we transition to a civilian administration, we will
    bring in international organizations to help with the
    rebuilding and to help with the funding of the whole exercise,
    bring in responsible Iraqi leaders to create their own
    government, work with both people who have been outside and
    inside of Iraq, and work with the traditional leaders within
    Iraq to put in place a government that does not commit itself
    to weapons of mass destruction and threaten its neighbors, as
    the current government has for the last 30 years.

                        SAUDI ARABIA AND 9/11 TERRORISTS

        Senator Kohl. Last question: Fifteen out of the nineteen
    terrorists on 9/11 were Saudi Arabian in their origins. If we
    are going after countries and obviously not willing to abide
    terrorists or those who sponsor them, where does Saudi Arabia
    fit it?
        Secretary Powell. Saudi Arabia has been a friend of the
    United States for many years and still remains one. We are
    troubled that so many came from Saudi Arabia, and they are
    troubled that so many came from their country. We are working
    with them to put in place a better visa system so we know
    exactly who is coming into the United States. We are also
    working with them on searching out sources of financing for
    terrorist organizations. They have been very cooperative in
    that regard. They realize they have a problem within Saudi
    Arabia if they are serving as a place of gestation for these
    kinds of individuals.
        It is not only a threat to the United States. I think we
    are persuading them that it is a threat to Saudi Arabia as
    well.

                                    MADRASAS

        Senator Kohl. But do they not have schools that educate the
    young that----
        Secretary Powell. They have schools that I do not think
    have been organized and are being run in a way that is
    consistent with what their educational needs are for the 21st
    Century. Too often, these schools have been educating
    youngsters in a way that would lead some of these youngsters
    into this kind of activity. That is also a subject of
    discussion with the Saudis.
        They have also been funding those kinds of schools in other
    parts of the world. We are now seeing some of the consequences
    of that and taking it up with the Saudis. In fact, as part of
    our effort with Pakistan, Pakistan is trying to redo its
    educational system, so that the schools exist not as a hotbed
    of extremism, but as a place where youngsters get an education
    so that they can contribute to Pakistan and not become a
    problem for Pakistan or for the world.
        Senator Kohl. Thank you, Mr. Secretary.

                            ISLAMIC CENTER IN TURKEY

        Senator Gregg. Mr. Secretary, I just wanted to follow up on
    Senator Kohl's comments a little bit. First, I would note that
    this committee, under the leadership of Senator Hollings, set
    up the Center for Muslim Western Dialogue in Turkey, the basic
    purpose of which is to try to educate folks in the Muslim world
    about advantages of democracy. And we are continuing to fund
    that aggressively.
        And if the Department has other ideas in this area, we
    would be interested in them. These are the types of initiatives
    we would like to pursue. I think Senator Hollings has set out a
    good course here for us to follow in this committee. We would
    like to increase the effort in that area. So I guess we are
    asking for ideas.

                          ROLE FOR FRANCE AND GERMANY

        Secondly, is the issue of post-Saddam Iraq. France has had
    a very significant commercial relationship with Iraq, which
    they have continued during the period of Saddam Hussein's
    leadership and have taken advantage of that criminal regime
    through commercial activity. I am just wondering: What is the
    proper role for France, and even Germany, in a post-Saddam
    Iraq?
        Secretary Powell. Well, I think it remains to be seen. I
    think that once a new government is in place, it will be up to
    that government to determine how they will use their economic
    resources, their oil, their principal source of revenue, and
    who they will enter into various economic arrangements with. It
    is not for the United States to dictate the future of Iraq. It
    is for us, if we have to have a military operation, to hold in
    trust for the people of Iraq their wealth in the form of their
    oil. It will all be used for the benefit of the people of Iraq.
        But it would seem to me that the people of Iraq, now having
    been liberated, might glance around and see who helped and
    participated in that liberation, and who did not.

                            FRENCH ROLE IN THE CONGO

        Senator Gregg. On a tangential issue, we have spent
    approximately $800 million of American taxpayer money in the
    Democratic Republic of the Congo relative to the U.N.
    peacekeeping mission there, which is primarily being pursued
    under the auspices of France as the lead country and as the
    designer of the policy to some degree. And one has to wonder:
    With the lack of cooperation France is giving us on what we
    consider to be a major national strategic issue, our national
    defense and our right to protect ourselves from weapons of mass
    destruction, to what extent is it appropriate for taxpayers to
    continue to support the French position in the Congo?
        Secretary Powell. I think we have to be very careful if we
    are having a particular problem with one of our friends in one
    area, not to see if we can ``get even'' in another area, where
    it does not serve our interest to get even. In the case of the
    Congo, I think the money that we are using and the efforts of
    the French have started to have a result and pay off.
        For example, Germany, even though we have a major dispute
    with them over the issue of Iraq, Germany has troops in
    Afghanistan standing alongside of ours. They have troops in the
    Balkans. We are cooperating with the Germans in a number of
    areas. They are working with us in the global war on terrorism.
        So we can have strong and serious disagreements. I can
    assure you that these disagreements are fought out with emotion
    and heat in the various conference rooms that I spend a lot of
    my time in, but that does not mean that they are suddenly no
    longer our friends or that the place is a hotbed of anti-
    Americanism. We are having a dispute over policy. That dispute
    over policy should not necessarily result in the end of
    friendships that have served us well for long, long periods of
    time.
        Now there may be areas where we have to question whether or
    not we ought to be cooperating with them, because if they took
    this attitude here and that same attitude translates somewhere
    else, then they could affect our equity there. So I do not say
    that we should not look at all we are doing. But, I think any
    suggestion of ``Let us get even with them somewhere else'' in a
    way that hurts us is not necessarily the right policy.

                    RENOVATION OF U.N. BUILDING IN NEW YORK

        Senator Gregg. On one item which is coming at us, which is
    a big issue financially, is the request by the United Nations
    to build a new building in New York. I mentioned this to you
    earlier, $1.6 billion for a new building. Now, the
    reconstruction of the World Trade Center, which envisions the
    largest building in the world on that site, along with a
    variety of other memorials, is estimated to be less than $400
    million. The building of the Beijing Embassy, which is going to
    be the most expensive undertaking we have ever pursued as a
    foreign construction project, is projected to cost less than
    $500 million.
        The United Nations is asking for something that exceeds the
    cost of the World Trade Center reconstruction by over $1
    billion. This, on the face of it, seems to be excessive. Now
    maybe it is not. But we would like to get some ideas about
    this, since the taxpayers of America are likely to bear the
    biggest burden of this cost.
        Secretary Powell. Yes. The number I have been hearing is $1
    billion. But it is nevertheless a significant number. There are
    other buildings besides just the U.N. building itself that are
    involved. There are various partnerships that have been entered
    into with the City of New York. This is a very complex project,
    made more complex by the fact that the intent is to rebuild and
    renovate, not just start from a piece of ground. I think that
    very prospect adds a lot to the cost of this project.
        It is a historic place. It is a landmark in New York. The
    rebuilding of that landmark is expensive, but I cannot sit here
    and justify the cost. I am not saying the costs are wrong. It
    is just that I am not in a position to tell you I know enough
    about the costing of that project to defend it.
        Senator Gregg. Well, before we get assessed with an
    arrearage from the United Nations for not participating fully
    in that, I think we are going to have to have some real----
        Secretary Powell. I think the request is for----
        Senator Gregg. Maybe we should ask General Williams to be
    in charge of that.
        Secretary Powell. Well, General Williams and I have spoken
    about it. He is looking at the project, just as a matter of
    interest for me, because sooner or later we will be asked to
    come up with an interest-free loan to help pay for the
    building.
        Senator Gregg. Senator Hollings.

                       COMPENSATION FOR IRANIAN HOSTAGES

        Senator Hollings. I appreciate your answer, Mr. Secretary,
    about the French, because I fought with them in World War II.
    They are outstanding fighters. We have the French and the
    Germans and the Turks with us in Afghanistan. And I hope this
    afternoon you can convince them to rejoin us.
        I have always been concerned about Iranian hostages. On May
    22, 2002 you said a plan for compensation would soon be
    submitted. Can we count on getting that plan from you?
        Secretary Powell. I will have to research with my staff,
    sir, and give you an answer for the record.
        Senator Hollings. Yes. Because we have your letter, and you
    stated that on May 22, 2002 that a comprehensive plan for
    compensation would be forthcoming.
        Secretary Powell. Yes. I will try to find out. Obviously,
    it has not been forthcoming. So I will try to find out the
    status of it and get an answer for you.
        Senator Hollings. Very good.
        Secretary Powell. I may have it now. I do not know.
        Senator Gregg. Maybe it just arrived.
        Senator Hollings. It just arrived.
        Secretary Powell. Yes. It is out of my office.
        I know where it is. I will go ask the Director of this
    Office of Management and Budget why it is still there.
        Senator Hollings. Yes. Well, you have quite a task. And we
    appreciate it very much.
        Thank you, Mr. Chairman.
        And thank you, Mr. Secretary.
        Secretary Powell. Thank you, Senator.
        Senator Gregg. Senator Kohl, do you have any additional
    questions?

                            SITUATION IN NORTH KOREA

        Senator Kohl. Just one.
        Mr. Secretary, I and others have been very concerned about
    reports that the United States is prepared to live with a
    nuclear North Korea and that we intend to shift our focus on
    preventing the North Koreans from exporting nuclear weapons to
    other countries. I agree that we need to do all we can to
    prevent North Korea from exporting weapons of mass destruction;
    but I believe that we should not back down from our efforts to
    forestall North Korea from developing nuclear weapons in the
    first place.
        So in that area, why have we decided, or have we decided,
    not to talk to them directly? Is this not the best way to get
    to the bottom of it while at the same time encouraging other
    countries to be a part of the effort?
        Secretary Powell. Well, first of all, I read that report. I
    do not know of any basis for the report, that we have decided
    to live with a nuclearized North Korea.
        The position of the United States is: We do not want to see
    nuclear weapons in the Korean Peninsula. It is also the
    position of China. It is also the position of Japan and South
    Korea. In fact, South Korea entered into an agreement with
    North Korea a little over 10 years ago that guaranteed a non-
    nuclear Korean Peninsula, yet another agreement that North
    Korea has violated.
        We are working with all of our friends in the region to see
    that North Korea does not become nuclearized or even more
    nuclearized than it may be, because our intelligence suggests
    they may have one or two nuclear weapons. Some say they do have
    one or two nuclear weapons. We will not know until we actually
    find a way to confirm that.
        So we are working hard to see that they do not move any
    further. Our concern right now would be if they started up the
    reprocessing facility. They have been acting in provocative
    ways. They have been trying to get our attention. We are not
    unmindful of these efforts on their part to get our attention.
        But we are making it clear to the North Koreans that we do
    want to talk, but we want to talk in a multilateral forum. Why
    do we want to do that? Because it is not just a problem between
    the United States and the DPRK. That is the way they want to
    see it. It is a problem with the DPRK and the international
    community and with the DPRK and the International Atomic Energy
    Agency, which has condemned them for breaking the seals and
    moving in the direction to restart the reactor. It is a problem
    between the DPRK and South Korea for violating their agreement
    with South Korea. It is a problem between the DPRK and Japan,
    China, Russia, and many other nations.
        Therefore, we are looking for a multilateral way to deal
    with this problem. Now, every time I pick up the paper in the
    morning, it says a quick solution is, ``Why do you not just
    call them up and go talk to them?'' Well, that is what happened
    some years ago when we came up with the Agreed Framework. The
    Agreed Framework served a useful purpose in capping the
    Yongbyon facility so that it was not producing any more
    fissionable material. I give credit to the Agreed Framework for
    having done that for eight years.
        But at the same time, the potential for developing
    fissionable material was left in place at Yongbyon by the
    Agreed Framework. As the ink was drying on the Agreed Framework
    and a number of other assurances that the North Koreans gave
    us, they had started work on another form of enrichment,
    enriched uranium, to produce the material needed for nuclear
    weapons.
        While we thought we had them, you know, in one jug with a
    cork in the jug, even though the jug was left there to be
    uncorked, they were working on another jug. We found out about
    it last year. We did the right thing; we called them to
    account.
        We said, ``We know you are doing this. This is in violation
    of all the commitments you have made over the years to the
    South Koreans and to the international community. It is in
    violation of the Agreed Framework, the basic intent of the
    Agreed Framework.''
        Their response was, ``Yes, we did it. Now come talk to us,
    and we will see what kind of framework we can come up with this
    time.''
        Well, what we are saying is: This time it has to be solved
    for good. It will only be solved for good if it involves all of
    the nations who are in the region. North Korea has tried to,
    through its provocative steps over the last several months, get
    the attention of the world on this issue and get the attention
    directed toward us. The attention should be directed toward the
    North Koreans. They are the ones who have people who are
    starving. Not one person will be saved by enriched uranium or
    by more plutonium coming out. They have blown the opportunity
    they had to get enormous assistance from Japan by their
    actions.
        We have a number of diplomatic initiatives underway, some
    of them very, very quietly underway, to see if we cannot get a
    multilateral dialogue started. We are looking for a peaceful
    solution to this problem. We are committed to a non-nuclear
    Korean Peninsula.
        Senator Kohl. Thank you, Mr. Chairman.
        Senator Gregg. Thank you, Mr. Secretary. I appreciate you
    taking the time.
        Well, we have been joined by the chairman of the full
    committee. So obviously we defer to the chairman of the full
    committee for any questions he may have.

                            SENATOR STEVENS' REMARKS

        Senator Stevens. No questions for my good friend. I am
    happy to have a chance to be here and to tell the world what a
    great job I think you are doing, Mr. Secretary.
        Secretary Powell. Thank you, Mr. Chairman.
        Senator Stevens. I look forward to working with you in any
    way possible.
        Secretary Powell. Thank you, sir. I was up at Elmendorf the
    other day. It looked great up there.
        Senator Stevens. Well, the next time we will arrange a site
    trip around the State, maybe do a little marine research.
        Secretary Powell. Yes, sir. I know the kind you have in
    mind. I look forward to it.

                         ADDITIONAL COMMITTEE QUESTIONS

        Senator Gregg. Mr. Secretary, we will let you get up to the
    United Nations. And thank you again for what you are doing for
    the country.
        Secretary Powell. Thank you for your courtesy, Mr.
    Chairman.
        [The following questions were not asked at the hearing, but
    were submitted to the Department for response subsequent to the
    hearing:]
                   Questions Submitted by Senator Judd Gregg

                        DIPLOMATIC READINESS INITIATIVE

        Question. Could you walk us through the methodology State used to
    arrive at the numbers for the Diplomatic Readiness Initiative? What
    internal review process took place to determine where additional
    personnel were needed? Why, during this internal review process, wasn't
    the Department also able to identify posts that were overstaffed for
    right-sizing? If such a review took place, why has the Department been
    unable to tell the Committee where exactly the new FSOs will be placed?
        Answer. The Diplomatic Readiness Initiative (DRI) addresses many of
    our core needs, some of which are determined by our Overseas Staffing
    Model (OSM) and training requirements. The Overseas Staffing Model is
    the primary tool for determining baseline overseas staffing needs. It
    provides an objective, flexible tool to measure what resources are
    needed to meet the President's and the Secretary's foreign policy
    priorities and objectives. The OSM quantifies what we need to achieve
    the International Affairs Strategic Goals, to meet legislative
    mandates, and to fulfill our responsibilities to support the full USG
    presence overseas. This model, made up of seven components (``core
    program,'' consular, public diplomacy, etc.), identifies the staffing
    requirements at overseas posts based on specific categories and
    criteria and provides a comparative assessment of posts. It evaluates
    each post using workload indicators and host country factors. The OSM
    serves as a baseline and specific staffing decisions are made through
    the budget and planning process. The OSM showed in 2001 that we had
    needs expressed as 386 positions overseas that were not being met. The
    DRI request for 1,158 positions covered this shortfall.
        In addition, we determined we needed to be able to meet other needs
    without straining our workforce. In order to have people in training
    and to avoid staffing gaps when transfers and crises occur we need
    enough people in the system. The remaining DRI positions are to cover
    establishment of long-term training positions (such as for languages)
    or detailee positions--to which employees are assigned--as well as to
    increase our base level of employees. While we need more people to meet
    crisis response and emerging priority needs, we do not have people in
    positions designated as ``waiting'' for that crisis to occur; rather,
    we planned to use new DRI positions to meet those policy, program, or
    infrastructure support needs identified by the Department during our
    budget and financial plan cycle. The increases to overall staffing
    would reduce the strain when employees were sent to short term training
    (such as under our new mandatory leadership and management training
    initiative) or when they needed to be reassigned to higher priorities.
    The DRI therefore is about flexibility and preparedness rather than
    specific position-by-position detailed needs. This is also partly due
    to the nature of the Foreign Service system of ``people in motion''
    rotating between positions as well as the inherent unpredictability of
    foreign affairs.
        The Department's senior leadership makes final decisions on the
    Department's staffing requirements, hiring plans, and position
    allocation based on emerging priorities, funding potential, Overseas
    Staffing Model projections as well as the Senior reviews led by the
    Deputy Secretary. This ensures that staffing decisions are made in
    support of mission requirements. The strong linkage between strategic
    priorities and resource decisions--with senior management involvement--
    ensures the Department's ability to meet our mission. The exact
    allocation of the new positions created in fiscal year 2004 will depend
    on the results of those decisions.
        While the OSM identified that overseas staffing was below what is
    required, this does not mean that we have not identified places where
    staff can be reallocated. ``Rightsizing'' is an ongoing process. The
    Department continually reviews changing priorities and emerging issues
    and reallocates positions among regions or between functions so that
    higher priority needs are met. During the 1990's, as the Department
    downsized its employment, the necessity to reallocate scarce resources
    in line with priorities became paramount. Oftentimes, people were
    pulled to address new issues while old ones still existed. In our
    strategic planning and budgeting process we require missions to assess
    how they could meet their new needs within existing resources.
        Now, thanks to increased hiring, posts and regional bureaus have
    been able to move resources to meet the priority counterterrorism
    mission while still continuing to staff other critical requirements. As
    we have added positions overseas in the last few years, we have
    increased infrastructure across the board so that posts are not as thin
    as they had been, but more positions have gone to posts in the Middle
    East and South Asia.

                         PERSONNEL PLACEMENT DECISIONS

        Question. Have the events of September 11, 2001 impacted personnel
    placement decisions? In other words, has the list of posts slated to
    receive personnel increases changed in light of September 11?
        Answer. Post September 11 the Department immediately reprioritized
    and moved people and resources to meet the emerging counter terrorism
    mission. New positions were established based on the new needs being
    identified, particularly in the consular area. These needs are likely
    to become permanent needs that will have to be regularized and will
    need to be treated as a baseline requirement.
        We have had to use some of the Diplomatic Readiness Initiative
    (DRI) positions to cover new consular needs in the wake of 9/11 when
    the workload went up even as MRV fee revenues--which have funded many
    consular position increases--went down. We have also had increased visa
    processing requirements that have increased workload while we have also
    worked to ensure that we have fully trained commissioned Foreign
    Service Officers in all positions. In the short run we have had to meet
    these new requirements within our current workforce. These requirements
    will need to be met continuously, but the original DRI did not envision
    these changes.
        Baghdad is being staffed now by TDY employees from other embassies
    and the Department. The staffing gaps left behind may be acceptable in
    the short run, but for the longer term they must be filled. In
    addition, we must account for the Washington backup of these new
    programs, such as the new office supporting the reconstruction of
    Afghanistan.
        Even though we had to use some DRI positions for these unexpected
    contingencies, we still need the personnel complement foreseen by DRI
    to make training and future crisis response possible.

                               CONSULAR OFFICERS

        Question. Mr. Secretary, your budget request includes an increase
    of $28 million to hire an additional 68 Consular Officers. Why was this
    not included as part of the Diplomatic Hiring Initiative request?
        Answer. The Diplomatic Readiness Initiative (DRI) request was
    introduced as a three-year plan by Secretary of State Powell in 2001 to
    fill gaps created by underhiring in relation to workload in the 1990's.
    The DRI addresses many of our core needs, some of which are determined
    by our Overseas Staffing Model and training requirements. However, some
    personnel requirements are assessed and resources requested separately
    such as security, IT, and consular, which tend to have specific needs
    due to outside events. The DRI request did not take into account the
    additional requirements that would follow from the events of September
    11th. Currently, the Department is assessing future personnel needs
    taking into account the long-term needs of the Department, to include
    the implications following the events of September 11th.
        The 68 CA positions that are referenced in the question represent
    new positions not originally contemplated in the DRI. These positions
    will be used to replace temporary consular associates with full-time
    consular officers. This is a critical element in the Department's'
    efforts to support homeland security initiatives.
        Additionally, Consular positions have traditionally been funded
    through the MRV fees collected by the Department. Post September 11,
    travel has decreased and therefore so has MRV income. This means that
    we need to request appropriated funds for these additional personnel
    requirements.

                                  RIGHT-SIZING

        Question. What progress has the Department made towards right-
    sizing? Can you tell me where, for example, the Department has actually
    decreased the number of U.S. personnel stationed at a post? Could you
    have your staff transmit a list of the Department's right-sizing
    ``success stories?''
        How do you reconcile the DRI with the concept of rightsizing? How
    does the Department justify bringing on 1,158 new FSOs when it has yet
    to maximize its existing human capital by carrying out its commitment
    to right-size overseas posts?
        Answer. The Department of State and the Office of Management and
    Budget (OMB) agree with the General Accounting Office's definition of
    rightsizing:

        ``Rightsizing [is] aligning the number and location of staff
    assigned overseas with foreign policy priorities and security and other
    constraints. Rightsizing may result in the addition or reduction of
    staff, or a change in the mix of staff at a given embassy or
    consulate.''

        The Department uses a variety of tools to rightsize its overseas
    presence, as described below. Our rightsizing is one component of the
    broader President's Management Agenda (PMA) rightsizing initiative, led
    by OMB, which looks at all agencies with overseas staffing. We are
    working closely with OMB to ensure the success of the overall PMA
    initiative.
        Diplomatic Readiness Initiative.--The DRI is an integral part of
    State's rightsizing, i.e., it addresses fundamental staffing needs to
    reverse the trend of the early 1990s when we hired under attrition. We
    need these positions to fill unmet needs overseas and to provide for
    enough personnel to respond to crises and go to training without
    leaving staffing gaps.
        Overseas Staffing Model.--The OSM is our workforce planning tool
    that assists management in allocation of resources, including those
    needed to support the USG diplomatic platform. The OSM provides an
    objective, flexible tool to measure what resources are needed to meet
    the President's and the Secretary's foreign policy priorities and
    objectives.
        Strategic Planning and Human Resource Allocation Processes.--The
    Mission Performance Planning (MPP) process integrates strategic human
    capital planning elements into the planning process with the
    categorization of staffing and funding resources by strategic goals, as
    required by the Government Performance and Results Act (GPRA). This
    enables each mission's senior management to assess the commitment of
    human resources across the strategic goals, and also assists State
    regional bureaus to better distribute State Operations and Foreign
    Operations funding across the strategic goals.
        Regionalization.--The Department of State has long made extensive
    use of regional offices to help us meet the needs of difficult or
    dangerous posts. Regional centers exist in the United States (e.g.,
    Charleston, South Carolina; Fort Lauderdale, Florida; Portsmouth, New
    Hampshire), at major overseas hubs (e.g., Frankfurt, Bangkok), and at
    smaller sub-hubs on an ad hoc basis (e.g., Dakar, Hong Kong). Regional
    support provided from these centers allows the Department to accomplish
    a variety of complementary goals, including improving the overall
    efficiency of our global operations, supporting specific posts which
    could not otherwise operate effectively, and reducing the burden of
    workload, and thus staffing, at many of our most dangerous or difficult
    overseas posts. The Department is constantly reassessing the specific
    needs of particular posts and adjusting regional support accordingly.
        In addition, the Department has underway a number of initiatives
    designed to apply the benefits of continuing technological improvements
    to rightsizing. One prominent example: By the end of this fiscal year,
    the Department will complete the transfer of significant financial
    management support operations from Paris, France to Charleston, South
    Carolina, as a result reducing 109 positions in Paris.
        This action was made possible by improvements in our financial
    management systems software. We now have one overseas accounting system
    that replaces the two former legacy systems that complies with Federal
    Managers' Financial Integrity Act (FMFIA) requirements and facilitates
    the compilation and reporting of data for the Department's financial
    statements. With further enhancements, posts in Europe, Africa, the
    Near East and South Asia will be able to communicate and conduct
    certain financial operations electronically, with ``real time'' access
    to financial systems. These management actions reduced the need to
    maintain overseas staff at the Financial Service Center in Paris to
    support these posts and reinforced the decision to consolidate many
    financial operations in Charleston.
        Post Openings and Closings.--Rightsizing affects not merely the
    size of U.S. posts but also their distribution. Perhaps the best
    illustration of the Department's ongoing rightsizing efforts is the
    near-constant activity to open, close and relocate overseas diplomatic
    posts. Since 1990, we have opened 52 new posts (29 embassies, 23
    consulates, consulates general, branch offices, etc.) and closed 43 (11
    embassies, 32 consulates, etc.).

                              EMBASSY CONSTRUCTION

        Question. Mr. Secretary, what impact has 9/11 had on the way the
    Office of Overseas Buildings Operations approaches designing and
    building embassies abroad? Do you think the lessons of 9/11 were that
    we need to build more heavily fortified embassies? Or, do you believe
    that 9/11 demonstrated that we simply cannot build buildings that are
    100 percent secure and must therefore look to mitigate the threat in
    other ways (such as better deterrence and prevention)?
        Answer. The watershed event that reshaped the mission of the Bureau
    of Overseas Buildings Operations was the August 1998 bombings of our
    embassies in Dar Es Salaam, Tanzania, and Nairobi, Kenya. The events of
    9/11 served to reinforce the continuing threat and therefore the urgent
    need to accelerate the construction of new facilities that can satisfy
    the Department's stringent security requirements and protect our
    diplomatic personnel by providing secure, safe, and functional office
    and residential environments. We appreciate the support the Congress
    and this Committee have given to our efforts.

                                  SOFT TARGETS

        Question. Mr. Secretary, does the possibility of further and
    perhaps more ambitious attacks against post housing, churches
    frequented by Americans, and American Schools concern you as much as it
    does me?
        I would not suggest that we should shift resources away from the
    security of our official buildings in favor of enhancing security at
    non-official locations. However, we must do more to assure the safety
    of overseas personnel outside the embassy walls. Above all, we must
    assure the safety of our children in their schools overseas.
        What do you believe is the State Department's proper role in this
    area? What level of responsibility should State bear for the security
    of non-official locales? Based on the risk and threat assessments that
    have, presumably, been conducted on these non-official locales, do you
    believe they/we are prepared? When can we expect the $15 million
    provided in the fiscal year 2003 Conference Report to start being
    distributed? Do you believe additional funds are necessary to protect
    U.S. personnel and their families in ``soft target'' environments?
        Answer. The possibility of attacks against soft targets overseas
    most certainly concerns me. However, there exist many more soft targets
    overseas where Americans gather than the U.S. government could ever
    possibly protect. I believe we must pursue a dual strategy. First,
    identify those soft targets that are readily identified with, and in
    some way connected to, U.S. Diplomatic facilities abroad. Housing for
    our employees overseas and schools supported by our missions certainly
    fit in this category, and it is appropriate that Congress has provided
    funding to mitigate security vulnerabilities in those areas. We should
    recognize, though, that in the latter case, a great many other children
    attend as well, American and non-American. Normal security costs should
    be borne by all that attend and be reflected in tuition costs. Our role
    for the schools should be to provide security advice and counsel, and
    to provide grants for high priority security upgrades such as window
    films, emergency public address systems, and communications with
    Embassies and local police and security.
        To ensure that the $15 million provided in the fiscal year 2003
    Conference Report, as well as the additional $10 million in the
    Supplemental, is distributed wisely, the Department has a working group
    with officers from the bureaus of Overseas Buildings Operations,
    Diplomatic Security, and the Office of Overseas Schools. We expect that
    funding may be provided to some schools prior to the end of the fiscal
    year, and continue over a 3-year period.
        For the many, many other possible soft targets, I believe our
    continuing responsibility, and a role that we fulfill very well, is to
    provide timely and accurate advice that fits the local situation. We
    fulfill this responsibility every day with Consular information
    bulletins, Overseas Security Advisory Counsel (OSAC) local country
    counsels, Regional Security Officer briefings, and other outreach
    programs.
        Question. How has the Consular Affairs mission changed in the
    aftermath of 9/11? Would you agree that the mission your consular
    officers perform is vital to our national security? What are the pros
    and cons of the Department's tradition of requiring new Foreign Service
    Officers to serve their first tour in Consular Affairs? Do you think
    this policy has contributed to creating a culture at State where CA
    officers are second class citizens? Do you agree that Consular Affairs
    is a sufficiently important component of the Department's mission that
    it should be staffed by career FSOs, rather than by novices?
        In my visits to U.S. embassies abroad, I have noted that it is
    often the Consular Affairs sections where conditions are the worst
    (most crowded, etc.). In my view, there is a direct link between the
    quality of CA workspace and the productivity and efficiency of our
    consular officers. Would you agree with this? What are you doing to
    change this situation?
        Answer. The work of Consular Affairs is a vital element of our
    country's overall plan to protect our national security. As part of our
    border security program, we have made significant changes in the wake
    of 9/11. We have expanded our automated lookout system to include more
    information shared with us by other government agencies and increased
    the number and type of special clearances required for applicants of
    particular concern. Our automated system now requires that we collect
    additional information on all visa applicants. And we are limiting the
    circumstances in which a personal appearance can be waived for visa
    applicants. All of these changes require additional personnel, and we
    have created additional positions to help meet this workload.
        The Department's traditional policy of requiring all junior
    officers to serve a tour in a consular assignment abroad has benefits
    for both the officer and the Department. The officer has an early
    opportunity to develop management skills, demonstrate leadership, and
    hone interpersonal and foreign language skills. For the Department, the
    Junior Officer's consular tour can be a chance to see how the officer
    performs in a difficult situation, dealing with both American and
    Foreign Service National (FSN) colleagues as well as with often
    demanding host country nationals. The officer's performance in the
    consular tour is a vital factor in determining whether the officer
    should be tenured in the Foreign Service.
        Junior Foreign Service Officers (FSOs) have gone through a rigorous
    examination process to arrive at this point. In addition to the
    consular training at the Foreign Service Institute, which has recently
    been expanded, they bring a wealth of academic and real world
    experience to their jobs. They are dedicated and motivated
    professionals who take their role in protecting homeland security
    seriously. Our junior officers are closely supervised by more senior
    career consular officers. At posts staffed by only a single consular
    officer, the Deputy Chief of Mission takes on the supervisory role and
    an experienced regional consular officer visits the posts regularly to
    provide management oversight and advice for the consular function.
        The consular cone is one of five career tracks for Foreign Service
    generalists. All Foreign Service generalists have the opportunity to
    serve in positions out of cone to broaden their experience and to
    compete for positions such as Deputy Chief of Mission.
        It has often been difficult for the physical facilities in our
    consular sections abroad to keep pace with the increasing numbers of
    personnel, both Foreign Service Officers and Foreign Service Nationals,
    required by the visa process, which has become even more complex in the
    post 9/11 world. The employees engaged in this vital work deserve
    working conditions that are secure, safe, and adequate for the job.
        Our Bureau of Overseas Buildings Operations (OBO) has embarked upon
    an ambitious building program to complete new embassies on time and
    within budget. The Bureau of Consular Affairs works closely with the
    designers and planners at OBO to ensure that consular sections in new
    embassy buildings are adequate to permit an efficient and effective
    consular operation. CA and OBO continue to work together to refine the
    standards for consular sections now being designed. OBO and CA also
    work collaboratively in the rehab of facilities to permit consular
    sections to be rehabbed along with other parts of the buildings. In
    order to react more quickly to fluctuations in consular workload, OBO
    is also looking at acquiring commercial space for consular sections. In
    the fiscal year 2003 appropriation, Congress directed OBO to undertake
    a 3-year Consular Workspace Improvement Initiative, earmarking up to $8
    million of OBO funds for this purpose. CA has worked closely with OBO
    to prioritize these projects.
        Question. Mr. Secretary, protecting information at our posts
    overseas is costly. If we had the technological capability to store
    information in the United States, rather than at post, wouldn't this be
    worth looking into? Would you agree such a technology could reduce the
    number of overseas personnel required to assure the security of
    information, and thus result in cost-savings?
        Answer. For the past two years, the Department of State has been
    exploring the technological capability to store information in the
    United States rather than at our overseas posts.
        We are also studying the implementation of the High Assurance
    Virtual Wide Area Network (HA VWAN) which will provide classified
    connectivity to critical threat posts and to posts that have
    environments with weak physical, administrative or technical security
    controls. This program would reduce classified holdings. A pilot on
    this technology will commence in Summer 2003.
        But at the core of my Information Technology priorities is to
    replace the current 60-year-old ``cable'' technology used by the
    Department and other Foreign Affairs Agencies with a new system. This
    new technology called SMART (State Messaging and Archive Retrieval Tool
    Set) will provide centralized storage in the United States of all
    document types (currently cables, memorandum, informal messages and
    notices).
        It will give our diplomats access to more information and minimize
    the holdings at a post because posts will access data from a server in
    the United States. We expect to deploy SMART in fiscal year 2005.
        While SMART will provide some reduction in classified holdings, we
    will need to continue to ensure the protection of the information and
    equipment that remains at post.
        However, we cannot guarantee, at this time, that there will be a
    reduction in the number of overseas personnel required to maintain,
    operate and ensure the integrity of our information stored overseas.
    Existing Marine Security Guard requirements would not be affected.
        Our Information Specialists safeguard and are responsible for the
    classified network infrastructure including encryption, COMSEC, and
    other classified network components that must be maintained and
    protected.
        The mandated duties of our Information Systems Security Officers
    (ISSOs) will not decrease significantly. While compliance and reporting
    requirements have increased in recent years, posts are not yet staffed
    properly to meet those new requirements. A restructuring of the duties
    of Information Specialists at overseas posts would enable the
    Department to better meet these reporting responsibilities.
        Question. I understand that the estimated cost of renovating the
    U.N. headquarters complex in New York City is $1.6 billion. Mr.
    Secretary, the design for the World Trade Center site (encompassing a
    museum, and opera house, a mall, and five office buildings, one of
    which will be the tallest building in the world) is expected to cost
    only $350 million. How is it possible, then, that the cost of
    renovating the U.N. headquarters is $1.6 billion?
        A reasonable person would expect that security of the new World
    Trade Center site would be as robust as any building complex in New
    York City. The cost of the new U.S. embassy compound in Beijing, China
    is expected to be $438 million. Surely the cost of security at the U.N.
    complex in New York City will not exceed our security costs in China by
    $1.2 billion. Can you explain this?
        Answer. As the design phase of the U.N. Capital Master Plan
    progresses, the Department remains in regular contact with U.N.
    secretariat officials to monitor closely the cost estimates and
    assumptions of the project to ensure that they are realistic and
    reasonable. Also, the General Accounting Office has just completed an
    updated study on the project--including the issue of cost estimates--
    and we urge you to examine the conclusions of that report when it is
    released shortly.
        The cost components of the U.N. Capital Master Plan, as currently
    estimated, are as follows:
      --Baseline cost: $1.05 billion, including rental of swing space; and
      --``Scope options,'' related to additional security, energy
            efficiency, and system contingencies: $150 million, assuming
            all were to be included in the final design.
      --In addition, as part of the overall plan, the U.N. Development
            Corporation--a public benefit corporation of the State and City
            of New York--has proposed to construct a new office building
            just south of the existing U.N. compound which would be used as
            swing space during the renovation of the existing U.N.
            facilities (permitting all staff to relocate and allowing the
            renovation work to proceed all at once, thus reducing costs)
            and ultimately to consolidate U.N. staff currently housed in
            several rental buildings off the U.N. compound, with no added
            costs to the United Nations.
        Security is a vital component of both the Beijing Embassy compound
    as well as the U.N. headquarters facilities. However, security elements
    do not represent the majority of the cost factors for either project.
    It is very difficult to compare these two projects, as they serve
    considerably different purposes. For the Beijing compound, our Office
    of Overseas Building Operations is working with a budget of $434
    million and is designing facilities to accommodate 846 staff as well as
    consular operations. The U.N. headquarters complex will continue to
    accommodate the needs of 191 U.N. member states and approximately 4,700
    U.N. staff. The existing U.N. facilities do not conform to current
    safety, fire, and building codes and do not meet U.N. technical or
    security requirements.
        The Department is not involved in the redevelopment of the World
    Trade Center (WTC) site and would refer you to the New York City
    Economic Development Corporation for the actual figures relating to
    that redevelopment project. We understand, however, that the total
    costs for the redevelopment will be significantly higher than the $350
    million figure, which we understand may only represent an estimate for
    the cost of the World Trade Center Memorial (as distinct from the
    facilities cited in your question).
        Question. The fiscal year 2007 State Department Appropriations Bill
    required the Secretary of State to notify Congress 15 days before the
    United States votes in the U.N. Security Council to establish or expand
    a peacekeeping mission. Mr. Secretary, since we have to fund these
    missions, do you believe Congress should have a more formal role in the
    decisions leading up to the Security Council votes? Wouldn't this
    lessen the need for Members of Congress to place ``holds'' in order to
    effect change in these missions?
        Answer. Pursuant to legislation, the Administration provides
    monthly briefings to Appropriations and Authorization Committee staffs
    on current and prospective peacekeeping missions and information
    related to expenditures from the Contributions to International
    Peacekeeping Activities (CIPA) appropriation. The Administration also
    provides formal Congressional notifications for proposed votes in the
    U.N. Security Council for new or expanded missions. We believe
    information provided provides sufficient information to permit the
    Appropriations Committees to exercise its Constitutionally-required
    responsibilities.
        Question. At the hearing, I raised the point that the American
    taxpayers have contributed more than $800 million to the U.N.
    peacekeeping mission to the Democratic Republic of the Congo. This
    mission is very important to France, and the United States has
    cooperated with the mission in every way. The Iraq resolution was
    important to the United States, and yet French negotiators took every
    opportunity to undermine U.S. efforts towards that end.
        Mr. Secretary, you indicated in your testimony that we should not
    break ties with our allies in one area merely because we are in
    disagreement with them in another area. Do you not support the concept
    of issue-linkage? Would you agree that issue-linkage is one of our most
    important diplomatic tools?
        If, in the case of the Congo peacekeeping mission, you believed
    that continued U.S. participation was vital to U.S. national interests,
    could you give me other examples of where the United States employed
    issue-linkage to try to elicit greater cooperation from the French (and
    Germans) in the U.N. Security Council negotiations over an Iraq
    resolution?
        Answer. The United States supported establishment and continuation
    of the U.N. peacekeeping mission in the Democratic Republic of the
    Congo, and requested funding to pay for our portion of U.N.
    peacekeeping assessments, because we believed, and continue to believe,
    that MONUC can contribute to restoration of stability in this critical
    African nation, which can help remove this destabilizing factor in
    Central Africa. You are correct that support to MONUC was an issue of
    high importance to France, but it is also an issue of high importance
    to the United States.
        As I have said publicly, France's intransigence in the United
    Nations Security Council on a resolution to follow UNSCR 1441 has
    consequences for our future relationship. There will be issues of
    special importance to France where we will seek to get their attention,
    but we should not fail to act on issues of manifest interest to the
    United States.
                                     ______

                Questions Submitted by Senator Pete V. Domenici

        Question. Late last congress, I joined with Senators Biden and
    Lugar in sponsoring the ``Nuclear and Radiological Threat Reduction
    Act.'' This legislation would authorize the Secretary of State to take
    specific steps to prevent the use of dirty bombs as a terrorist weapon.
    It is my understanding that this bill is likely to be introduced again
    this Congress.
        Also in the 107th Congress, the Senate passed my legislation
    authorizing the National Nuclear Security Administration to take the
    lead in the Department of Energy's strategy for combating radiological
    terrorism. Enhanced technology, mitigation systems and international
    cooperative efforts are a few of the mechanisms prescribed by my bill
    to better safeguard nuclear materials that are being sought by
    terrorists.
        In addition, my bill, which is now law, calls for greater
    coordination between all Federal departments and agencies with
    responsibilities for nonproliferation.
        Given the significant roles of both the State and Energy
    Departments in addressing issues of nonproliferation, I believe there
    is opportunity for tremendous synergy between them in addressing the
    problem of nuclear terrorism.
        Would you offer your thoughts about how the Department of State and
    the Department of Energy can more effectively coordinate efforts so as
    to maximize our progress on this issue?
        Answer. In combating radiological terrorism, coordination between
    the Department of State, NNSA and other agencies has improved regarding
    the detection of illicit nuclear and radioactive materials. Working
    with NNSA, the Department of State has taken the lead with NNSA/Second
    Line of Defense (SLD) in organizing an inter-agency effort by the
    Department of Homeland Security, State, Energy and the Department of
    Defense to develop a strategy for assisting key countries overseas in
    their detection of illicit nuclear materials. NNSA/Second Line of
    Defense assisted greatly in the drafting of an USG interagency
    strategic plan for provision of radiation detection equipment, which
    provides an action plan and performance measures to guide our efforts
    on this key anti-terrorism/nonproliferation initiative.
        State and NNSA are also executing a joint plan for maintaining,
    repairing and replacing radiation detection equipment the USG has
    provided to foreign countries in recent years. In 2002-2003, this
    program, using SLD assets, was very successful in performing required
    maintenance and re-training in several countries where equipment has
    been in active use for some time.
        Yet much remains to be accomplished in terms of denying terrorists
    access to high-risk radioactive sources. With your help, NNSA has made
    a good start on securing these sources. As you have stated, there is
    indeed an opportunity for tremendous synergy between the Department of
    State and NNSA.
        We believe that a diplomatic solution is the key to a meaningful
    long-term solution. The security of radioactive sources depends on
    convincing states to change the fundamental ways that they manage and
    secure sources. Governments must agree, and be committed, to secure
    high-risk radioactive sources and keep them secure throughout their
    life cycle. The Department of State has a history of engaging foreign
    governments at the highest levels to secure these types of commitments.
        More broadly, we are using the Nonproliferation and Disarmament
    Fund (NDF) to tackle tough, urgent and often unanticipated problems on
    a worldwide basis. We expect that NDF in the future could be used to
    help countries develop infrastructures to secure radioactive sources
    and track dangerous materials, including through the NDF's existing
    ``Tracker'' automated software system that helps governments strengthen
    control over sensitive exports. We hope that requested fiscal year 2004
    increases in NDF funding will support the Department's Dangerous
    Materials Initiative (DMI) to secure radioactive materials, pathogens
    and sensitive precursors. DMI aims for synergies among U.S. Government
    agencies and programs and also with international partners.
        We believe that an ongoing dialogue between NNSA and the Department
    of State, along with other relevant agencies, is necessary so that
    technical and diplomatic efforts can be combined to ensure that high-
    risk radioactive sources are secured over the long term.

                       RUSSIA AND IRAN'S NUCLEAR PROGRAM

        Question. I remain concerned about Iran's drive to obtain a nuclear
    capability. Despite its claims to the contrary, Iran's construction of
    new nuclear facilities along with announced plans to mine uranium point
    to its growing ambition to advance a nuclear weapons program.
        Russia's technical assistance to Iran's nuclear program has been a
    source of frustration for the United States. It has hastened Iran's
    efforts while slowing development of the new strategic partnership
    between Russia and the United States.
        It is my understanding that State Department officials were
    recently in Moscow to discuss arms control issues in general and the
    Iranian nuclear matter specifically.
        Can you report on the substance of those discussions? Do the
    Russians share our concerns about the prospects of a nuclear-armed
    Iran? Have they indicated a willingness to consider terminating their
    support of the Iranian program?
        Answer. We raise the subject of ending Russian nuclear cooperation
    with Iran at every opportunity with senior Russian officials.
        In these meetings, the Russians have professed to share our concern
    about the prospects of a nuclear-armed Iran. And recent revelations
    about the extent of the Iranian program to develop nuclear weapons have
    been very useful in making clear to Moscow that Tehran is indeed
    pursuing this objective.
        We appear to be making some progress in our discussions in curbing
    Russia's nuclear cooperation with Iran. The Russians have agreed to
    some measures that mitigate the nonproliferation risks of their
    cooperation--such as providing fuel for the lifetime of the Bushehr
    reactor as well as taking back all the spent fuel to obviate any
    rationale for Iran to develop fuel cycle facilities.
        Much remains to be done, however. We continue to press the Russians
    to agree to end all their nuclear cooperation with Iran and more
    effectively prevent Russian entities from cooperating in other
    sensitive areas such as missile technology.

                             ANTITERRORISM TRAINING

        Question. Mr. Secretary, I have just joined with Congressman Steve
    Pearce and Senator Bingaman in a letter to you to urge that the
    Department reinstate two anti-terrorism training programs at the New
    Mexico Institute of Mining and Technology in Socorro, New Mexico. At
    the end of last year, the State Department notified New Mexico Tech the
    Hostage Negotiation course was being relocated to Louisiana State
    University, which is a partner with New Mexico Tech in the ATA
    programs. Then this past January, New Mexico Tech was notified by the
    State Department that the Rural Border Patrol Operations program was
    being terminated and moved elsewhere. This is a mistake. The community
    of Socorro and the university have operated very successful ATA
    programs for the State Department. Both have invested significantly in
    facilities to accommodate these programs, and they have been very well
    received by the foreign dignitaries and officials receiving this
    training. The decision to relocate these programs will significantly
    impact the local economy. These programs follow successful New Mexico
    Tech training for the nation's first responders as one of four training
    partners in the Office of Domestic Preparedness and the National
    Consortium on Domestic Preparedness for the Department of Justice. I
    see no valid reason why these programs should be relocated, nor were
    explanations give to New Mexico Tech for this change.
        (A) Mr. Secretary, I understand that the State Department official
    that recently ordered the relocation of the Rural Border Patrol
    Operations course did not have the authority to do so. I am now told
    that this decision has been put on hold, but that the intention is
    still to move forward with this proposal through regular channels. Will
    you please take a look at the attached letter and investigate this
    matter for me? I would urge you to keep the Rural Border Patrol
    Operations Course right where it has been successfully run for the past
    several years--at New Mexico Tech in Socorro, New Mexico.
        (B) Will you please also investigate the decision that was made to
    relocate the Hostage Negotiation course to Louisiana State University?
    While the universities work very closely on these programs, they each
    have unique capabilities which they bring to the anti-terrorism
    assistance programs.

                                 Congress of the United States,
                                         Washington, DC, March 3, 2003.
    The Honorable Colin L. Powell,
    Department of State, 2201 C Street, N.W., Washington, DC 20520.
        Dear Secretary Powell: We write regarding the Antiterrorism
    Assistance (ATA) training program involving Louisiana State University
    (LSU) and New Mexico Tech (NMT). We are deeply concerned about the
    Department of State's (DoS) decision to terminate the Rural Border
    Patrol Operations training program at NMT. Our concerns are further
    heightened by the fact that the Hostage Negotiations program at NMT was
    terminated last year.
        Until the end of 2002, NMT successfully conducted both courses
    under a cooperative agreement between ATA and LSU and a subcontract
    between LSU and NMT. Before year end, LSU (at the direction of ATA)
    notified NMT that Hostage Negotiations training would relocate to LSU
    effective January 2003. At the time, NMT was led to believe that the
    loss of the Hostage Negotiations training program would be offset by
    increased activity in the Rural Border Patrol Operations course,
    thereby resulting in a program neutral change. However, NMT funding for
    both training programs has dwindled from approximately $1.7 million in
    fiscal year 2001 to an estimated $900,000 for fiscal year 2003.
    Obviously, the decision recently announced to relocate the Rural Border
    Patrol Operations course will eliminate any chance for a program
    neutral change and will instead have a significant negative financial
    impact on NMT.
        We are aware of the limited resources available to carry out this
    and other ATA activities during these critical times. Thus, it is
    imperative that our best resources are marshaled to provide important
    training to our allies in foreign countries. We believe the ATA
    training made available to these countries is important to their
    security and critical to our country as the front line of defense to
    antiterrorism activities. It is therefore incomprehensible to us that
    decisions have been made to terminate this important program at NMT,
    especially after NMT's success and contributions to the ATA program
    were formally recognized in the letter from ATA directing the training
    to be relocated.
        The principal reason given by the DoS for its relocation of the
    Rural Border Patrol Operations course was economic. ATA believes they
    can achieve a measure of cost savings by consolidating training at
    another location. It is important to note, however, that more dramatic
    savings can more likely be realized by consolidating additional
    training at NMT. We believe that the decision to terminate training at
    NMT will not represent the greatest cost savings and ignores other
    factors that impact on the economy and the overall quality of life of
    our citizens.
        It is also important for us to point out the considerable
    investment in the ATA training program that has been made by both the
    community of Socorro and NMT. These investments were made as a
    commitment to a long-term, productive relationship with the ATA
    program. First, NMT funded construction of a ``state-of-the-art'' small
    arms range to provide first class support for the program. Second,
    local businesses contributed to the success of the program by investing
    in expansion of their facilities to accommodate students, faculty and
    ATA representatives. Third, NMT provides an exclusive training area,
    which consists of 3,137 acres, for the Rural Border Patrol Operations
    training program at no cost to the ATA program.
        In light of the above, we affirm our desire to continue the
    successful ATA programs already established by NMT in Socorro, NM, and
    for the DoS to fully use the existing infrastructure and prior
    investments made to support these important programs. To re-establish
    this program at DOE training facilities in Albuquerque may require
    substantial investment of scarce funds and may require entry to a
    military installation where, due to heightened security restrictions,
    guaranteed access by foreign nationals could be limited, as was ATA
    student access to facilities on some military installations immediately
    following September 11th.
        The Department of State should take immediate action to accomplish
    the following actions:
      --Reverse the decision to relocate the Rural Border Patrol Operations
            training away from NMT.
      --Reestablish Hostage Negotiation (or a comparable training course)
            at NMT.
      --Use the unique facilities of NMT to support a Large Scale Terrorist
            Bombing course or similar training program.
      --Relocate the office of the ATA New Mexico representative from
            Albuquerque to Socorro, NM.
        These actions would help realize actual cost savings in the ATA
    program and permit full utilization of existing (and proven) high
    quality training facilities at NMT, thus eliminating costs associated
    with duplicating such facilities at new training locations.
        We greatly appreciate your attention to this time sensitive request
    and look forward to your swift response. Should you have any questions,
    please feel free to contact Ricardo Bernal of Rep. Steve Pearce's staff
    at (202) 225-2365.
                Sincerely,
                                                 Stevan Pearce,
                                                    Member of Congress.
                                                 Pete Domenici,
                                                 United States Senator.
                                                 Jeff Bingaman,
                                                 United States Senator.

        Answer. The Department has not made a final decision to relocate
    the Rural Border Patrol Operations course from New Mexico Tech. The
    Hostage Negotiations course was moved to Louisiana State University so
    that it could be co-located with the Advanced Crisis Response Team
    (SWAT) course that is taught there, where specialized facilities are
    available. Both courses end in a capstone joint exercise involving
    hostage negotiation and hostage rescue.
        New Mexico Tech has a sub-grant of a cooperative agreement between
    Louisiana State University and the Bureau of Diplomatic Security that
    is renewable each year. Diplomatic Security regularly reviews these
    agreements and compares costs for providing courses among various
    service providers. Recently, as a matter of fact, a course that was
    once taught in Washington state was relocated to a New Mexico facility.
        We would be happy to provide you or your staff with a detailed
    briefing on the consideration of this matter prior to any final
    decision.
        Question. Would you please tell the Subcommittee the Department's
    plans to fund the International Law Enforcement Academies in fiscal
    year 2003 under the omnibus appropriations bill?
        Are there sufficient funds to adequately support the operation of
    the ILEAs for the remainder of the fiscal year? If not, what
    adjustments does the Department plan to make in ILEA operating plans?
        Answer. The Department plans to continue to support the work of the
    established ILEAs in Bangkok, Budapest, Gaborone and Roswell. The level
    of funding will be approximately $3.5 million each for Bangkok,
    Budapest and Gaborone and $5 million for Roswell. In addition, $2
    million will provide initial funding for the development of the newest
    ILEA for Latin America. Existing funds can adequately support the
    current level of operations at all the ILEAs. No adjustments are
    necessary.
        Question. The conferees endorsed Senate and House report language
    regarding ILEA, and stated the expectation that the Administration
    provide sufficient funding to complete the Roswell Center where there
    is a building currently under construction. Can you please tell me what
    the status of that project is, and when it is expected to be completed?
        Answer. The Department has $3.5 million available for the
    construction of a new building at the Roswell facility. The New Mexico
    Institute of Mining and Technology has been instructed to present a
    proposal including detailed information and specifications, as required
    by statute for any building project, for review and approval. This type
    of building project typically takes 12 to 18 months to complete.
        Question. Under the President's fiscal year 2004 budget requests
    for International Law Enforcement and Narcotics Control, what are the
    Department's plans to fund each of the ILEA programs? Would you please
    provide the Subcommittee with the details on the proposed ILEA training
    for the upcoming fiscal year?
        Answer. The level of funding will be approximately $2.9 million
    each for Bangkok, $3.2 million for Budapest, $2.7 million for Gaborone,
    $5 million for Roswell and $3.3 million for San Jose. This funding will
    allow for continuing operations--at a reduced training tempo in the
    regional academies--based on fiscal year 2003 spending levels. No new
    initiatives are possible without additional funding.
                                     ______

             Questions Submitted by Senator Ben Nighthorse Campbell

        Question. Last October, I wrote to the Department, along with
    several colleagues from the Helsinki Commission, concerning Ukrainian
    President Kuchma's approval of the transfer to Iraq of the Kolchuga
    [COL-chew-ga] radar system.
        Have efforts been made to investigate possible financial benefit on
    the part of President Kuchma or his associates in connection with the
    Kolchuga affair?
        Has the Ukrainian government given indications of cooperating in
    resolving the problem of transfers of military equipment to rogue
    states such as Iraq?
        Answer. Although we remain convinced that President Kuchma
    authorized the transfer of Kolchuga to Iraq, we do not know if the
    transfer actually occurred. We are not aware of any violations of U.S.
    law in connection with payments President Kuchma or any other Ukrainian
    official might have received in connection with any transfer of the
    Kolchuga system to Iraq.
        The Kolchuga incident exposed serious weaknesses in Ukraine's arms
    export control system. The United States is working jointly with
    several other governments in a cooperative effort to strengthen
    Ukraine's export control system, enforcement, and oversight of defense
    industries and transshippers. We continue to engage the Government of
    Ukraine on these issues and are intensifying our diplomacy. As a result
    of our diplomatic efforts and pressure, the Ukrainian government has
    undertaken a number of preliminary structural reforms in the arms
    export industry that enhance nonproliferation. The Ukrainian parliament
    (Rada) also recently passed a new export control law that could
    contribute to stronger safeguards. We will be working with the
    Government of Ukraine to support effective implementation of its export
    control law and regulations in addition to pushing for continued
    structural reform.
        Question. We have seen disturbing reports that Belarus, Bulgaria,
    Bosnian Serbs and Serbia have also been actively involved with arms
    trade to Iraq. I am particularly disturbed over Belarus under
    Lukashenka--the last dictator in Europe and will soon introduce the
    Belarus Democracy Act in the Senate.
        How serious do you regard the problem of arms transfers to Iraq
    from other OSCE countries of the Former Soviet Union and Eastern
    Europe?
        While I understand some progress has been made in shutting off a
    notorious Serbian connection, are we making satisfactory progress with
    these other suppliers?
        Is the United States pursuing the issue of arms transfers within
    the OSCE framework?
        Answer. U.S. strategy to halt military assistance and gray arms
    transfers from Eastern and Central Europe and Eurasia to Saddam
    Hussein's Iraq and other state sponsors of terrorism has been a quiet,
    but significant, success for U.S. national security. Since July 2001,
    the United States has invested substantial diplomatic and intelligence
    resources in implementing nonproliferation strategies for states in
    this region, including for each of the NATO invitees. Relying on the
    tools of coordinated diplomacy, information sharing, interdiction, and
    coordinated assistance, our efforts to strengthen border security and
    encourage responsible export control policies in Eastern and Central
    Europe and Eurasia have worked remarkably well.
        Our cooperation with Serbia and Montenegro and Bulgaria in
    particular mirrors the very successful nonproliferation strategies
    pursued in Eastern Europe and the Balkans. The fruitful partnerships
    that developed as a result of this strategy proved invaluable to our
    efforts in Operation Iraqi Freedom and continue to play a significant
    role in the global war on terrorism.
        We are beginning to implement a synthesized approach to border
    security and nonproliferation cooperation in the Balkans, with support
    from many in Congress. The Department also continues to execute an
    effective small arms and light weapons destruction program. This
    program has destroyed 230,000 surplus weapons and several tons of
    ammunition in Albania, Bulgaria, and Serbia and Montenegro, and will
    destroy similar amounts in Bulgaria and Romania this year. Our
    diplomatic efforts have also resulted in virtually all Eastern and
    Central European governments vetting proposed arms sales and transfers
    with the USG. The United States has sought to use the OSCE to reinforce
    our work on conventional arms transfers in order fora, and to cement
    principles and good practices associated with arms transfers among the
    members of OSCE states. This effort dates back to agreement in 1993 on
    Principles Governing Conventional Arms Transfers, but became more
    focused at the 1999 Istanbul OSCE Summit with the OSCE Document on
    Small Arms and Light Weapons. The specific measures contained in the
    Document on Small Arms and Light Weapons go beyond the earlier
    statement of general principles--firmly based on U.S. principles and
    practices--and provide a concrete basis for U.S. efforts to encourage
    institute good practices among our OSCE partners in this regard.
        We are at an important point in implementing this strategy. We have
    begun to steer Eastern Europe away from the arms markets and military
    cooperation of the past toward productive areas for the future. These
    positive changes will contribute not only to our efforts to cut off
    supply lines to terrorists, but also to our goal of supporting further
    integration into western security and defense institutions. We will
    continue to work within the effective framework of bilateral and
    multilateral relationships, including the Wassenaar Arrangement, NATO,
    and the G-8, to ensure the sustained improvement in arms transfer
    policies in all OSCE countries.
        Question. Mr. Secretary, despite our frustration and disappointment
    with President Kuchma and his associates in Ukraine, it is important
    that we continue to assist those elements of Ukrainian society striving
    for democracy, rule of law and Euro-Atlantic integration.
        Cuts in Voice of America and Radio Liberty programming to Ukraine
    have been proposed. Isn't this a premature move, given the poor
    environment for independent media there especially in the run-up to
    next year's presidential elections?
        Answer. We share your views on the critical importance of
    developing a strong civil society in Ukraine, and on the important
    contributions made by Voice of America and especially Radio Free
    Europe/Radio Liberty (RFE/RL). In the interest of seeing a free and
    fair 2004 presidential election in Ukraine, in which all major
    candidates have access to the media, the role of the Ukrainian service
    of RFE/RL is especially vital. This is a central goal of U.S. policy
    towards Ukraine.
        In March, Under Secretary Beers sent a letter to the Chairman of
    the Board of Broadcast Governors (BBG) expressing our concerns about
    rumored reductions in staffing and operational funding for RFE/RL's
    Ukrainian language service. We also briefed the BBG on the results of
    our Ukraine policy review, which called for greater support for
    independent media in Ukraine. The Chairman, Mr. Tomlinson, assured us
    that no reductions for RFE/RL were contemplated.
        Question. As Co-Chairman of the Helsinki Commission, I recently
    introduced a bipartisan resolution (S. Con. Res. 7) concerning anti-
    Semitism and related violence in the OSCE region.
        What actions is the Department taking to ensure that our friends
    are doing everything possible to confront such attacks, prosecute and
    publicly denounce such violence?
        The Porto OSCE ministerial called for a meeting focused
    specifically on anti-Semitism, a subject high on the Helsinki
    Commission agenda. Is that meeting on track to take place?
        Answer. The Department of State is concerned about the increase in
    anti-Semitic violence in the OSCE region. We have made combating anti-
    Semitism a priority for our diplomacy throughout the region and
    especially at the OSCE.
        The OSCE Parliamentary Assembly led the way on this issue by
    issuing a statement at the Berlin summer session last July highlighting
    the need for vigilance and governmental attention to the problem of
    anti-Semitic activities.
        Our success at the Ministerial meeting in Porto in scheduling an
    OSCE meeting on anti-Semitism is in large part a result of the work
    done on this issue by the Parliamentary Assembly.
        Through the OSCE Permanent Council and on a bilateral basis we
    raise incidents of anti-Semitic violence or policies with the
    governments concerned.
        The OSCE meeting on anti-Semitism scheduled for June 2003, will be
    a forum to discuss best practices in the fight against anti-Semitic
    violence and tendencies in societies. The U.S. delegation, to include
    prominent governmental officials and private individuals, will be
    robust and will reflect the importance we place on this conference.
        Question. Mr. Secretary there have been reports in the media
    suggesting that the United States is allowing, if not encouraging,
    other countries to torture individuals suspected of involvement in
    terrorism. In his State of the Union Address, the President described
    the horrific forms of torture employed by the Hussein regime and
    concluded, ``if this is not evil, then evil has no meaning.'' Can you
    clarify what the U.S. policy is with respect to torture in the war
    against terrorism?
        Answer. The United States condemns and prohibits torture. The
    President recently reaffirmed this to the United Nations High
    Commissioner for Human Rights. The Department of Defense General
    Counsel has further advised in a letter on the subject addressed to
    Human Rights Watch that:
      --(1) When questioning enemy combatants, U.S. personnel are required
            to follow this policy and applicable U.S. laws prohibiting
            torture.
      --(2) With respect to the transfer of detained enemy combatants to
            other countries for continued detention, U.S. Government
            instructions are to seek and obtain appropriate assurances that
            such enemy combatants are not tortured.
      --(3) U.S. Government personnel are instructed to report allegations
            of mistreatment of or injuries to detained enemy combatants,
            and to investigate any such reports.
      --(4) U.S. Government officials investigate any known reports of
            mistreatment or injuries to detainees.
        The United States does not condone torture and is committed to
    protecting human rights as well as protecting the people of the United
    States and other countries against terrorism of global reach.
        Question. A year ago I asked you what action might be taken against
    OSCE countries like Turkmenistan who flagrantly violate their human
    rights commitments. I understand that the situation has only
    deteriorated further over the past year. What is the Department doing
    to address these developments?
        Answer. The human rights situation has continued to deteriorate in
    Turkmenistan, particularly since the November 2002 attack against
    President Niyazov's motorcade. The United States is deeply concerned
    about the human rights situation in Turkmenistan, and we have embarked
    on a number of bilateral and multilateral initiatives to address the
    problems there.
        We have raised our human rights concerns directly with President
    Niyazov and other senior officials in Turkmenistan on a number of
    occasions, as well as the Turkmen Ambassador in Washington. In those
    conversations, we especially discussed the conduct of the Turkmenistan
    Government during its investigation of the November incident. We have
    also encouraged other countries to raise the matter with the Government
    of Turkmenistan.
        We have also vigorously pursued multilateral efforts to improve
    Turkmenistan's human rights record. In December 2002, the United States
    joined other OSCE member states to invoke the rarely used ``Moscow
    Mechanism,'' requiring the Government of Turkmenistan to reply in
    writing to a request for information on the whereabouts and conditions
    of those arrested. Ashgabat failed to respond adequately, thereby
    bringing into motion the second stage of the Moscow Mechanism--the
    sending of a fact-finding team to Ashgabat to report on the situation.
    Under its OSCE commitments, the Government of Turkmenistan is obliged
    to accept a visit by the team and must appoint one member to the team.
    Despite this obligation, the Government of Turkmenistan did not
    cooperate, and the OSCE team had to investigate the matter without
    assistance.
        On March 13, 2003, the OSCE Moscow Mechanism Rapporteur submitted
    his report on abuses in Turkmenistan following the November attack on
    President Niyazov. The report condemned the attack itself, catalogued a
    range of grave human rights abuses following the attack, and publicly
    called on Turkmenistan to make reforms and work with the OSCE to
    address the problems. Turkmenistan has rejected the findings of the
    report.
        The United States also co-sponsored an April 2003 United Nations
    Human Rights Commission resolution condemning Turkmenistan for a range
    of human rights abuses including torture and political and religious
    repression. In particular, the resolution cited abuses in the crackdown
    following the November incident. We hope this resolution will encourage
    reforms in Turkmenistan and enhance U.N. engagement on this issue.
        The United States is committed to sustained diplomatic engagement
    with Turkmenistan to press for fundamental political, economic, and
    societal reforms, and to push Turkmenistan to develop a healthy respect
    for human rights in accord with its U.N. and OSCE obligations. The
    development of such reforms is inextricably tied to security,
    stability, and prosperity in Turkmenistan. Understanding that
    significant political change will take time, we have increased our
    assistance programs that promote democratic freedoms, including human
    rights, civil society and rule of law.
                                     ______

               Questions Submitted by Senator Ernest F. Hollings

                            COST SHARING INITIATIVE

        Question. Is the program voluntary or mandatory?
        Answer. The Administration's Security Capital Cost Sharing Program
    will be mandatory for all agencies under Chief of Mission authority. As
    envisioned, agencies, including the Department of State and ICASS, will
    be required to pay on a per capita basis for each authorized overseas
    position. It is an Administration initiative that is part of the
    President's Management agenda. It aligns costs with the overseas
    assignment process and is a significant right-sizing initiative. It is
    also consistent with the OPAP recommendations. This approach is
    reflected in the Foreign Affairs Authorization Bills now being
    considered by both the Senate and House.
        Question. How are you going to guarantee that other agencies will
    reimburse the Department through the Cost Sharing Program?
        Answer. The legislation now being considered (S. 925 and H.R. 1950)
    would authorize State to collect the amounts due automatically through
    the Intra-Governmental Payment and Collection System, which is the same
    way GSA collects rent for domestic buildings. Payment and collection
    would not be contingent on a particular cost sharing appropriation to
    an agency.
        Question. What specifically is the $120 million for?
        Answer. All cost sharing funds will be used solely for the
    construction of secure, safe, and functional New Embassy Compounds
    (NEC), in accordance with the Long-Range Overseas Buildings Plan. The
    fiscal year 2004 funds will help fund the NEC's identified in the
    President's fiscal year 2004 Budget. The $120 million includes State's
    cost share of $64 million and $56 million for other agencies' cost
    share. The actual transfer of funds from agencies will begin in fiscal
    year 2005 and will be fully phased in by fiscal year 2009.
        Question. You propose to phase the program in over 5 years. Does
    this mean that DOS shoulders the expense for the next 5 years?
        Answer. Under this program, State will not have to shoulder all the
    expense for the next 5 years. State has traditionally provided 100
    percent of the capital cost of New Embassy Compounds (NEC), and even
    when the Cost Sharing Program is fully phased in, the Department will
    be responsible for about two-thirds of the total budget based on its
    overseas positions. The 5-year phase-in period will allow other
    agencies time to rationalize their overseas presence, deciding either
    to increase their budgets for overseas activities or reduce the numbers
    of their least essential personnel overseas. The Department of State
    would also be making the same judgments about its own staffing in light
    of the larger financial consequences of maintaining positions overseas.
    The Administration believes that the 5-year phase-in is a practical
    accommodation to account for a significant change in the Government's
    approach to funding the construction of approximately 150 New Embassy
    Compounds over the next 12 to 14 years.
        Question. Would you provide the Committee with a breakout of DOS
    costs and costs of participating agencies for each of the next 5 years?
        Answer. The breakout of Department of State costs and costs of
    participating agencies currently available are based on data collected
    almost two years ago. The Department has recently collected fresh data
    and is now computing new cost figures. As soon as they are available,
    we will make them available to the committee. We anticipate they will
    be ready in late June.

                                USAID FACILITIES

        Question. Why did State decide to request additional funding for
    USAID facilities through CJS, when Congress has consistently not
    supported this approach?
        Answer. The Department of State and the Administration are strongly
    committed to ensuring that USAID is also provided with secure, safe,
    and functional facilities. The Secure Embassy Construction and
    Counterterrorism Act of 1999 requires all agencies, and therefore USAID
    as well, to be located on the embassy compound. This also allows for
    economies of scale resulting from concurrent construction. We are eager
    to work with the Congress to achieve this legislated mandate.
        Previous budget submissions have requested full funding from the
    Commerce, Justice, State, and Judiciary Subcommittees and from the
    Foreign Operations Subcommittees in different years, and neither
    subcommittee has been willing to fund USAID buildings. The fiscal year
    2004 budget request places the ``catch up'' projects that should have
    accompanied the already funded New Embassy Compounds (NECs) in the
    Foreign Operations budget request. USAID facilities that will accompany
    the proposed NECs are included in the CJS budget request.
        The Administration's proposed Security Capital Cost Sharing Program
    should render the USAID facilities funding issue moot since USAID, like
    other agencies, will pay into the program for the space they need.

                          BERLIN/FRANKFURT FACILITIES

        Question. What steps are you taking to ensure that the facility
    will remain safe in light of the fact that you will not know who owns
    property inches away from the embassy wall?
        Answer. The new embassy in Berlin will be built to withstand
    catastrophic and progressive collapse from blast, and is being designed
    with buffer spaces between the building and the contiguous buildings.
    Additionally, our design features non-office space such as elevator
    shafts and mechanical rooms located along the space contiguous with
    adjacent buildings, to the maximum extent feasible.
        Question. Will you know who purchases the condominiums next door?
        Answer. Our security and intelligence units keep in close contact
    with German security and intelligence services, as well as building
    owners and landlords. It is in all of our interests to provide safety
    and security for not only our facility, but for the Germans and German
    facilities close to ours. The German authorities and the owners of the
    adjacent buildings appreciate our concerns and we foresee a very high
    level of cooperation to address this issue.
        Question. If you are capable of building a structure within inches
    of private property without any knowledge of who owns that property,
    then do we truly need the 100-foot setback requirement?
        Answer. The location of our new Embassy in Berlin is a unique
    opportunity to build a chancery on a historic and prestigious site. It
    is not without security challenges, but both the Department and German
    authorities are working to provide an adequate level of security. While
    the site does have contiguous buildings, we are working to mitigate the
    threat from the buildings using both physical and procedural methods.
    It should also be noted that we are working with the Germans to ensure
    that uninspected vehicles on the roads around the chancery are kept at
    a distance of no less than 82 feet. The chancery will be built
    stronger, to the same level of protection as if it had 100 feet of
    setback.
        While certain waivers will be signed for this particular chancery
    building, the normal requirement for 100 feet of setback has allowed
    the Department to construct safe and secure facilities in many
    countries in the world that may not provide the same level of
    cooperation or have the same capabilities as the German government.
    Congress wisely included a waiver process in the Secure Embassy
    Construction and Counterterrorism Act, and that process will be used
    only when appropriate. The 100-foot requirement is still valid.
        Question. What steps are you taking to secure the property where
    the subway runs?
        Answer. The subway does not run under the building. It does run
    under the Pariser Platz in front of the chancery. There is an emergency
    escape tunnel from the subway with an exit in the street approximately
    60 feet in front of the embassy, which would open into an area where
    the public has free pedestrian circulation. We do not consider the
    subway a vulnerability.
        Question. Given the current climate and anti-American sentiment in
    Germany because of the potential war with Iraq, do you still feel as
    certain about maintaining the security of the facility today as you did
    one year ago?
        Answer. While there were differences in our positions over Iraq,
    the Germans provided excellent security for our existing facilities
    throughout this period of heightened threat. I have no doubt that they
    will continue to honor their security responsibilities and provide us
    with excellent services and support. The decision to build on Pariser
    Platz was taken only after careful consideration, with the condition
    that security issues be adequately addressed. We continue to move
    toward that goal.
        Question. When will you actually sign the waiver for the security
    requirements?
        Answer. The waiver will be signed when the Department is assured
    that security issues have been adequately addressed.

                        EVALUATING THE HIRING INITIATIVE

        Question. Since the whole notion of the 1,158-position Hiring
    Initiative was to meet DOS's high priority needs, why are the 68
    additional positions needed for Consular Activities not absorbed in the
    Hiring Initiative?
        Answer. The Diplomatic Readiness Initiative (DRI) request was
    introduced as a three-year plan by Secretary of State Powell in 2001 to
    fill gaps created by underhiring in relation to workload in the 1990's.
    The DRI addresses many of our core needs, some of which are determined
    by our Overseas Staffing Model and training requirements. However, some
    personnel requirements are assessed and resources requested separately
    such as security, IT, and consular which tend to have specific needs
    due to outside events.
        It did not take into account the additional requirements that would
    follow from the events of September 11th. Currently, the Department is
    assessing future personnel needs taking into account the long-term
    needs of the Department, to include the implications following the
    events of September 11th.
        The 68 CA positions that are referenced in the question represent
    new positions not originally contemplated in the DRI. These positions
    will be used to replace temporary consular associates with full-time
    consular officers. This is a critical element in the Department's'
    efforts to support homeland security initiatives.
        Additionally, Consular positions have traditionally been funded
    through the MRV fees collected by the Department. Post September 11,
    travel has decreased and therefore so has MRV income. This means that
    we need to request appropriated funds for these additional personnel
    requirements.
        Question. Does the Department support, as you stated in the letter
    of May 22, 2002, a comprehensive plan for compensation?
        Answer. Yes. We have stated on many occasions that we favor a
    comprehensive approach to compensation for U.S. victims of
    international terrorism. We sympathize greatly with suffering endured
    by U.S. victims of terrorism and their families, including the 1979
    Tehran hostages. We support a comprehensive program that allows them to
    receive quick payments in their time of need.
        The current ad hoc, piecemeal legislative approach, however, which
    depends on the vagaries of litigation, does not work. It is not fair
    and equitable, as it has provided some victims or categories of victims
    with compensation and has left others with nothing.
        Deputy Secretary Armitage's letter to Congress, dated June 12,
    2002, laid out the Administration's principles for a comprehensive
    plan. The letter stated that such a plan should provide compensation on
    par with that for death or injury to public safety officers killed in
    the line of duty in a quick, streamlined and simple claims process,
    without regard to income. It stated further that such a comprehensive
    plan should preserve the President's ability to conduct foreign policy
    by not using blocked assets to fund victims compensation.
        Question. Since you have drafted something, perhaps you would like
    to share with the committee exactly what you propose to do to
    compensate the original 52 hostages?
        Answer. First, some background on this issue is helpful. This is
    not the first time that Congress or the President has considered the
    question of compensation for the 1979 hostages. In 1980, Congress
    passed the Hostage Relief Act, which provided compensation with respect
    to the hostages' tax liabilities and other benefits in 1980. After the
    Algiers Accords were entered into in 1981, which waived the hostages'
    claims in order to secure their release from captivity, and after
    extensive hearings were held in both houses of Congress on the Accords
    as a whole and on this waiver in particular, the President established
    a special commission to make recommendations to the Congress as to how
    the hostages should be compensated for their ordeal.
        The President's Commission issued its Final Report and
    Recommendations on Hostage Compensation in 1981. It recommended that
    the hostages receive a certain amount of compensation and other
    benefits. In 1986, the Victims of Terrorism Compensation Act was passed
    and enacted into law. Section 802 and 803 of that act provided for
    additional compensation and benefits to the hostages. I understand that
    all of the hostages received compensation according to the directives
    of that act.
        Deputy Secretary Armitage's letter to Congress of June 12, 2002,
    outlined the Administration's principles for a comprehensive
    compensation plan. Because the plan is designed to address compensation
    for all U.S. victims of international terrorism, it does not single out
    any particular group or category, such as the 1979 hostages.
        Question. When can we expect to see such a proposal?
        When was the proposal submitted to OMB? What steps are you taking
    to the proposal released from OMB?
        Answer. The submission of a proposal and its timing depend on OMB.
    We have been working with OMB for some time to develop such a proposal.
    In November 2001, we sent a draft proposal to OMB that could be
    circulated for inter-agency review. Our discussions with OMB ultimately
    resulted in the letter that Deputy Secretary Armitage sent to Congress
    last June. Following my oral testimony in March, I sent a letter to
    then-OMB Director, Mitch Daniels, urging that OMB complete its review
    of our draft proposal as soon as possible. We have been in further
    discussions about this with OMB and the White House. We have made
    progress, and I am hopeful that these discussions will result in a
    proposal that is worked out between the Administration and Congress
    soon.
        Question. To date, how much funding has the Department of State
    expended on defending Iran--a known terrorist state--in court against
    American citizens?
        Answer. None. We have made appearances in proceedings in U.S. court
    to protect the interests of the United States. Unfortunately,
    plaintiffs' lawyers have sometimes mischaracterized our actions. In the
    Roeder v. Iran case in the U.S. District Court for the District of
    Columbia, Judge Sullivan noted in his decision,

        ``Plaintiffs consistently mischaracterize the nature of the
    interest asserted by the United States. The United States is not
    seeking to vindicate Iran's interests, but rather its own commitment
    under a binding international agreement, and its ever-present interest
    in the enforcement of its laws.''

        Judge Sullivan recognized that we had appeared in the litigation to
    protect U.S. interests in light of our obligations in the Algiers
    Accords.
        I would also like to address certain statements made by Senator
    Harkin concerning the Algiers Accords in recent congressional hearings.
    He suggested that the Algiers Accords should not have any binding
    effect, asserting that they were never a treaty ratified by the Senate
    and because they resulted from blackmail.
        After the Algiers Accords were signed, and after the hostages were
    released, Congress had extensive hearings on the Accords in both
    houses. Former Deputy Secretary Warren Christopher, who was the lead
    negotiator for the United States, recounted in his testimony how he had
    reported to the then-Senate Foreign Relations Committee ``on nearly a
    daily basis'' concerning the ongoing negotiations. As reflected in the
    hearings, the Accords and the negotiators received overwhelming
    bipartisan support and praise. For example, the Chairman of the House
    Foreign Affairs Committee, Rep. Zablocki, stated, ``The agreements
    preserved the honor of the United States and secured the safe release
    of the hostages.'' The Chairman of the Senate Foreign Relations
    Committee, Senator Percy, also stated, ``President Reagan has
    determined that Presidential authority did exist and does exist to
    implement these agreements and it is in the best interests of the
    United States of America that we honor them. I applaud this decision by
    President Reagan and Secretary Haig.'' And the Supreme Court noted
    Congress' approval of the Algiers Accords in its decision in Dames &
    Moore.
        Upholding U.S. obligations in the Algiers Accords is in the
    interests of the United States, and it is those interests that the
    United States has sought to protect by appearing in court in these
    cases.
        Question. What other terrorist states or organizations has the
    Department of State defended in court?
        How much has been expended on those cases?
        Answer. None.

                               DOLPHIN-SAFE TUNA

        Question. With all due respect, doesn't NMFS have greater
    scientific expertise than the Department of State to make this decision
    as to whether the science supports changing the standard?
        Answer. Yes. The Department of Commerce in general, and the
    National Marine Fisheries Service in particular, has both the capacity
    and the statutory responsibility to evaluate the scientific evidence
    bearing on the issue of dolphin-safe tuna fishing. We understand that
    the decision was made on this basis.
        Question. Despite the clear science-based standard in the statute,
    isn't it true that the Department of State believes that keeping Mexico
    and other countries at the table in the international treaty on the
    tuna fishery in the Eastern Tropical Pacific is an important factor in
    deciding whether to change the U.S. law? Wasn't this view expressed to
    the Department of Commerce?
        Answer. At the end of 2002, the Secretary of Commerce had the
    responsibility under the law in question to determine whether the purse
    seine tuna fishery in the Eastern Pacific Ocean is having a significant
    adverse impact on any of the depleted dolphin stocks in that region. As
    you know, he found that the fishery is not having such an impact.
        In advance of that finding, I wrote to Secretary Evans to describe
    what the Department of State saw as a wide range of views of various
    scientific organizations that were examining this issue and urged him
    to weigh all the competing evidence carefully, as he certainly did.
        The United States has a strong interest in maintaining the
    International Dolphin Conservation Program, which has reduced dolphin
    mortality in this fishery by 98 percent. However, the statutory
    criteria on which the Secretary of Commerce made his finding relate
    solely to the issue of whether the fishery is having a significant
    adverse impact on dolphin stocks. The Department of State has not
    argued otherwise.
        Question. There have been serious concerns raised with respect to
    the failure of certain member countries to comply with the
    international agreement to reduce dolphin mortalities in the Eastern
    Tropical Pacific. As a result of these concerns, the fiscal year 2003
    Omnibus Appropriations bill includes language calling for a report to
    Congress on compliance with the international agreement, and also
    provides $750,000 of the budget for the Bureau of Oceans and
    International Environmental and Scientific Affairs only for negotiating
    measures to strengthen the IDCP. I hope you are taking our message
    seriously.
        Answer. The Department of State is aware of the concerns that some
    have raised with respect to the implementation of the international
    dolphin conservation program. Since the initial implementation of the
    program, we have stressed to all participants the need for the highest
    standards of compliance with the provisions of the agreement and have
    worked to achieve this result in a number of ways. However, more can
    and should be done. We will continue to work with the Department of
    Commerce, Congress and affected U.S. constituent groups to pursue
    effective implementation of this program.
                                     ______

               Questions Submitted by Senator Barbara A. Mikulski

        Question. Mr. Secretary, thank you for pursuing the Diplomatic
    Readiness Initiative to fill staffing gaps in the Foreign Service and
    Civil Service. Fiscal year 2004 will be the third and final year of the
    Diplomatic Readiness Initiative.
        The State Department authorization act (Public Law 107-228, at Sec.
    301) requires that you submit to the Congress a comprehensive workforce
    plan for the Department for fiscal years 2003 through 2007. We look
    forward to receiving this workforce plan, which is due 180 days after
    enactment of the Act. The world has changed considerably since the
    Diplomatic Readiness Initiative targets were set two years ago, and we
    expect changes in the State Department to be reflected in the workforce
    plan.
        Are Diplomatic Readiness Initiative targets still adequate to fill
    the current and anticipated open positions at our diplomatic missions
    and consular posts?
        Will there be a sufficient number of Foreign Service personnel so
    they can receive needed training without leaving positions unfilled?
        Do you anticipate personnel shortfalls or unmet skills needs, which
    would be identified in the workforce plan? Do you anticipate the need
    to shift personnel, or problems in recruitment and retention, that the
    subcommittee should be prepared to consider?
        Answer. As mentioned, the Diplomatic Readiness Initiative (DRI)
    program was intended to ``right-size'' the State Department staff
    following a long period of under hiring in the mid-1990's. Events since
    the initial DRI (developed in 2001) could support increases. We
    anticipate that the next iteration of the Overseas Staffing Model will
    take some of these events into consideration and we will also be
    reviewing results of our analysis of the Domestic Staffing Model
    results.
        DRI was designed to help make it possible to plan for crises and to
    have enough people to be able to reprioritize quickly within existing
    resources; without enough people in the system, those who leave to
    cover a crisis would leave major staffing gaps.
        But for some of these new issues, they cease being crisis
    requirements and become baseline requirements--such as an embassy in
    Kabul and the increased consular workload.
        We have had to use some of the DRI positions to cover new consular
    needs in the wake of 9/11 when the workload went up even as MRV fees--
    which have funded many consular position increases--went down. We have
    also had increased visa processing requirements that have increased
    workload while we have also striven to ensure that we have fully
    trained commissioned Foreign Service Officers in all positions. In the
    short run we have had to meet these new requirements within our current
    workforce. These requirements will need to be met continuously, but the
    original DRI did not envision these changes.
        Even though we had to use some DRI positions for these unexpected
    contingencies, we still need the personnel complement foreseen by DRI
    to make training and future crisis response possible.
        Question. A June 2002 General Accounting Office report on
    Diplomatic Readiness at Hardship Posts, stated, ``According to State
    officials and Foreign Service employees, the incentive provided by
    differential (hardship) pay for overseas service has been diminished by
    rules governing locality pay . . .. State has not analyzed the effect
    that this difference has had since 1994 on the number of Foreign
    Service employees who bid on overseas assignments, including hardship
    posts. However, State Department officials, the American Foreign
    Service Association, and many officers with whom we met said that this
    gap penalizes overseas employees and that if it continues to grow, it
    will inevitably keep employees from choosing an overseas career in the
    Foreign Service . . .. We estimate that by 2006 and 2010, the
    differential pay incentives from the 15 percent and 20 percent
    differential posts, respectively, will be less than the locality pay
    for Washington, D.C., assuming that the locality pay rate continues to
    increase at about 1 percent per year.''
        Do you believe the gap identified as a problem by GAO will result
    in difficulty filling positions at hardship posts? If so, how can this
    problem be addressed?
        Answer. While our employees always step up to do what is needed, we
    do believe that the overseas pay gap (now nearly 13 percent as
    Washington, DC locality pay rose in 2003) has created serious morale
    problems, causing employees to question our commitment to them as we
    ask them to do ever more difficult and dangerous work overseas.
        The hardship incentive--post ``differential''--is intended to both
    compensate employees for difficult conditions as well as to provide an
    incentive for service. It is not intended to make up for lost salary.
    Hardship incentives to do not count as salary for the purposes of
    annuity calculations or retirement fund contributions.
        We believe that this inequity between overseas and domestic
    salaries will make it harder for us to staff overseas posts--especially
    hardship posts, but all posts. At nearly a quarter of our posts, even
    including allowances such as hardship pay, salary is less than
    Washington salaries.
        Unlike the CIA, we do not currently have the legal authority to pay
    employees overseas at the Washington, DC pay level. In addition, the
    cost of doing so cannot be managed without additional appropriations.
    We are working with the Administration on a solution to this inequity
    and workforce management problem.
        Question. At the time of the bombings of our embassies in east
    Africa, about 88 percent of our embassies did not meet the Department's
    basic safety standards (according to the Overseas Presence Advisory
    Panel report).
        After five years of a ten or eleven year plan to protect our posts
    and missions abroad, what percentage now meets the Department's basis
    safety standards?
        Also, because of the changing nature of international terrorism, do
    you believe additional funds are necessary to protect U.S. personnel
    and their families in ``soft target'' environments such as
    international schools attended by our children, churches and places of
    entertainment frequented by American families, and even our housing
    complexes?
        Answer. In the immediate period after the embassy bombings,
    Congressional funding and Department effort was focused on providing
    immediate improvements to our existing facilities using the Emergency
    Security Appropriation. These efforts provided necessary and timely
    upgrades to our facilities, and were instrumental in protecting our
    people in such places as Karachi from a car bomb attack. However, this
    effort could not provide substantial improvements such as blast
    resistant buildings and improvements in setback for most of our
    buildings.
        Since early 2001, the Department has embarked on a truly ambitious
    new building program. Since then, new embassy facilities have been
    constructed in Kampala, Doha, Dar Es Salaam, Tunis, and Abu Dhabi.
    Three new embassies will be finished in 2003, including Zagreb,
    Nairobi, and Istanbul. The 88 percent figure relates to 142 of the 163
    ``Inman'' era embassies that were not up to standard, leaving 21 (12
    percent) that were up to standard. Adding these 8 new embassies, the
    percentage rises to nearly 18 percent. With 2004 plans for another 8
    embassies, this figure will continue to improve.
        As to the question of soft targets, I believe funding can and is
    being provided to improve the security at overseas schools and for our
    housing. However, the school program is just commencing, and it is
    unclear how much funding will be appropriate. The Department will also
    continue to provide timely and appropriate security advice and guidance
    to businesses and religious groups overseas to enhance their ability to
    protect themselves.

                              subcommittee recess

        Senator Gregg. The subcommittee will stand in recess.
        [Whereupon, at 11:04 a.m., Thursday, March 6, the
    subcommittee was recessed, to reconvene subject to the call of
    the Chair.]

    DEPARTMENTS OF COMMERCE, JUSTICE, AND STATE, THE JUDICIARY, AND RELATED
                  AGENCIES APPROPRIATIONS FOR FISCAL YEAR 2004

                                  ----------

                            THURSDAY, MARCH 20, 2003

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 10 a.m., in room S-146A, the
    Capitol, Hon. Judd Gregg (chairman) presiding.
        Present: Senators Gregg, Stevens, Hollings, and Kohl.

                             DEPARTMENT OF COMMERCE

                            Office of the Secretary

    STATEMENT OF HON. DONALD L. EVANS, SECRETARY OF
                COMMERCE
        Senator Gregg. Let me formally welcome you, Mr. Secretary.
    We appreciate your coming by to tell us what is happening at
    the Commerce Department. The floor is yours.
        Did you have a statement or anything?
        Senator Hollings. No, thank you.
        Secretary Evans. Thank you, Mr. Chairman. If you do not
    mind, Mr. Chairman, for the record let me go ahead and read a
    brief edition of what I would like to submit to the record in
    my written remarks.
        Mr. Chairman, Mr. Hollings, members of the committee, I am
    pleased to be here again to present the President's fiscal year
    2004 budget request for the Department of Commerce. With your
    permission, I would like to briefly highlight some of the key
    components of our budget and submit my written testimony for
    the record.
        A vibrant private sector is essential to American jobs and
    security. One hundred years ago, Congress created the
    Department of Commerce to promote American industry and
    business and economic opportunity for our citizens. This is the
    nexus of our diverse programs in trade, technology,
    entrepreneurship, and environmental stewardship.
        In developing the budget request, I have carefully followed
    the President's directive to focus on four priorities. As you
    know, making a budget entails difficult decisions and resources
    are limited. Choices have to be made. Clearly, these troubled
    times of war and attacks on our way of life demand responsible,
    targeted spending. The President's total budget request for the
    Department of Commerce is $5.4 billion. This budget provides
    for the continued funding of key Commerce programs, while
    focusing resources on four critical priorities: fostering
    economic growth, contributing to homeland security, advancing
    science and technology, and upgrading facilities.
        To generate jobs and economic growth, government and
    business decisionmakers need the best possible economic
    information. An additional $5.4 million is requested for the
    Bureau of Economic Analysis. These funds are required to
    improve the quality and timeliness of GDP and economic accounts
    data. As you know, two-thirds of the revisions in the last
    three GDP annual releases were due to lack of information.
        For the Census Bureau, which monitors the Nation's social
    and economic development, we are asking $9.3 million in
    increased spending. The money is for improved data collection
    and methods for measurement of the important services sector
    and continued planning for the 2010 census.
        The President and I are very concerned about the economic
    security of America's workers. A proposed increase of $13.8
    million for economic development administration will assist
    communities severely impacted by plant closures and layoffs.
        To meet homeland security needs, the President is
    requesting an additional $2.3 million for the Bureau of
    Industry and Security. The funds will be used to strengthen
    export controls on the dual use of goods and technologies that
    would strengthen the military capabilities of our adversaries.
        The NOAA budget request includes $5.5 million to expand
    NOAA weather radio to a truly national all-hazards warning
    network. The funding will allow first responders and emergency
    managers direct access to the network to transmit all hazard
    messages, and to further strengthen homeland security, we are
    requesting $10.3 million for NIST. As you know, NIST is
    investigating the collapse of the World Trade Center buildings.
    Using lessons learned, we want to help develop new standards
    for cost-effective safety and security of buildings.
    Additionally, the funds will be used to test performance
    standards for biometric systems used to identify visitors to
    our country and to test radiation standards.
        To support technology innovation and provide for
    intellectual property protection, the Department is working to
    eliminate the practice of using USPTO revenues for unrelated
    Federal programs. Making more fees available sooner will enable
    the agency to increase the quality of patents and trademarks
    issued. Because America's leadership in science and technology
    has a direct impact on our economic and homeland security, we
    also are requesting $9.2 million for NIST research in such
    emerging areas as nanotechnology, quantum computing, and health
    care quality assurance.
        We also include a $16.9 million increase for NOAA to study
    areas of scientific uncertainty in climate change, and an
    additional $29.8 million increase to modernize fishery
    management to better protect this $50 billion industry.
        Mr. Chairman, the scientists, engineers, and support staff
    in our Commerce laboratories are world-class. Unfortunately, in
    some cases, the facilities they occupy are not. For example,
    the NIST facilities in Boulder, Colorado were built in the
    1950s under the Eisenhower administration. I have seen them.
    They lack adequate temperature controls. They suffer power
    outages and spikes. All of this adversely affects our vital
    research. The fiscal year 2004 budget request includes funding
    to renovate the NIST Boulder facilities and to bolster safety
    and security in NOAA's facilities and throughout the
    Department.
        One last comment. As I said earlier, these are troubled,
    threatening times for our Nation, and we have had to make some
    tough choices affecting some very good programs. To enable us
    to focus on new economic and homeland security needs, this
    budget phases out funding for the Advanced Technology Program
    and the Technology Opportunities Program. It includes funding
    only for those manufacturing extension partnership centers in
    operation for less than 7 years, as the original law specifies,
    and it suspends funding for the public telecommunications
    facilities planning and construction.
        I know that there will not be universal agreement about
    these choices. There are members of this committee and other
    Members of Congress who will have different views on priorities
    and on funding. Let me say here, I sincerely respect those
    views and those judgments, and I look forward to working with
    you and working through the budget process with you on the many
    issues affecting this Department.
        Mr. Chairman, we appreciate the support of the committee
    and the support of the committee members that provided for the
    Commerce programs and initiatives in the past. This budget is
    focused on helping our Nation meet the challenges it faces in
    these difficult times.

                               PREPARED STATEMENT

        I welcome your comments, and will be pleased to answer any
    questions you may have. Thank you, Mr. Chairman.
        [The statement follows:]

                     Prepared Statement of Donald L. Evans

        Thank you for the opportunity to appear before you to present the
    Department of Commerce's fiscal year 2004 budget request. Our focus is
    on funding the core mission of the Department and its bureaus. As you
    know, the Administration faces great challenges in its commitment to
    fight and win the war on terrorism, while at the same time harnessing
    the resources of the Federal government to protect the lives and safety
    of all Americans. I hope to fully utilize the resources of the
    Department of Commerce not only to provide for the physical security of
    the Nation, but also to work with other agencies and the private sector
    to promote economic security.
        The Commerce Department's budget request of $5.4 billion supports
    the President's budget plan to focus resources to strengthen our core
    Commerce activities. In particular, our request supports the
    Administration's economic revitalization and homeland security
    priorities and continues our commitment to fund important work of the
    Department to provide infrastructure for technological innovation and
    to observe and manage the Nation's oceanic and atmospheric environment.
    To complement the digital convergence in the private sector, we will be
    proposing legislation to modernize the technology and telecommunication
    entities of the Department.
        The Commerce Department undertakes a wide range of activities
    designed to stimulate growth of the nation's economy. Commerce gathers
    and develops economic and demographic data for business and government
    decision-making; helps American firms and consumers benefit from open
    and fair international trade; issues patents and trademarks that
    support innovation; helps set industrial standards and performs
    cutting-edge scientific research; forecasts the weather to improve
    public safety; and promotes sustainable stewardship of the oceans,
    including ocean fisheries.
        This diversity of activities is reflected in Commerce's five
    strategic goals:
      --Foster the Nation's economic growth.
      --Secure our homeland and enhance public safety.
      --Upgrade the Department's facilities, infrastructure, and safety.
      --Improve and streamline the Nation's fishery management system to
            better meet commercial, recreational, and conservation
            objectives.
      --Implement the Administration's Climate Change Research Initiative
            to reduce present uncertainties in climate science, and support
            policy and management decisions to benefit public safety and
            quality of life.
        To enhance these activities, resources will be shifted from various
    lower priority programs.

                                ECONOMIC GROWTH

        Economic growth is a central theme for the President and for the
    Department of Commerce's bureaus for fiscal year 2004. The Economics
    Statistics Administration's Bureau of Economic Analysis (BEA) supplies
    the nation's key economic statistics, including gross domestic product
    (GDP), which are crucial ingredients for business and government
    decision making. BEA seeks to strengthen the understanding of the
    United States economy and its competitive position by providing
    accurate economic accounts data in a timely and cost-effective manner.
    BEA's request includes a $5.4 million increase to accelerate the
    release of major economic estimates, to incorporate new international
    economic data classifications, and to acquire real-time data to improve
    the quality and timeliness of economic statistics.
        In conjunction with BEA's request, the Census Bureau's budget
    request includes an increase of $39.1 million in current economic and
    demographic statistics to fill gaps in data collection, to improve
    methodologies for collecting that information, and to improve the
    measurement of the Nation's service sector. The Census Bureau's budget
    for fiscal year 2004 also includes funding to process and to review
    data from the Economic Census, and to continue planning and designing
    the 2010 Decennial Census.
        The International Trade Administration (ITA) is responsible for
    assisting the growth of export businesses, enforcing U.S. trade laws
    and agreements, and improving access to overseas markets by identifying
    and pressing for the removal of trade barriers. ITA's budget for fiscal
    year 2004 focuses on promoting U.S. exports and enhancing the
    competitiveness of U.S. businesses in the global economy, by fighting
    unfair foreign trade barriers and by negotiating and implementing
    multilateral and bilateral trade agreements.
        The Economic Development Administration (EDA) helps communities
    across the nation create economic opportunity by promoting a favorable
    business environment to attract private capital investments and higher-
    skill, higher-wage jobs. EDA accomplishes this principally through
    infrastructure investments and capacity building. A program increase of
    $13.8 million is requested for EDA to assist communities that
    demonstrate a high level of economic distress.
        The Minority Business Development Agency (MBDA) will continue to
    focus on accelerating the competitiveness and growth of minority-owned
    businesses by closing the gap in economic opportunities and capital
    access. MBDA is transitioning from an administrative agency to an
    entrepreneurial organization, and is driven by entrepreneurship and
    innovation. MBDA will continue to provide minority business development
    services, through its Minority Business Information Portal and local
    Business Development Centers.
        For more than one hundred years, the Nation has relied upon the
    Technology Administration's National Institute for Standards and
    Technology (NIST) for scientific and technical expertise to promote
    economic growth, commerce and trade, and national security. The quality
    of NIST work is exemplified by the awards in 1997 and 2001 of the Nobel
    Prize, the world's ultimate recognition in science, to two NIST
    scientists--Bill Phillips in Gaithersburg, Maryland, and Eric Cornell
    in Boulder, Colorado. The work they are leading in super-cold matter
    and the strange nature of quantum mechanics is driving whole new areas
    of science and technology, from atomic clocks that do not gain or lose
    more than a billionth of a second in thirty years, to the potential for
    unimaginably powerful computers based on individual atoms, to new forms
    of telecommunications that provide the ultimate in information
    security.
        The President's request includes a total of $340.8 million for the
    NIST Laboratories to strengthen the national measurements and standards
    infrastructure that enables innovation and economic growth. The request
    will enable NIST to expand its work in the areas of nanotechnology,
    advanced information technology, and health care diagnostics--all areas
    with broad economic impact.
        NIST will expand its program in nanotechnology, the so-called
    ``tiny revolution'' in technology, (total request of $62 million).
    Nearly all industrial sectors plan to exploit this emerging technology,
    and most of these plans call for appropriately scaled measurements and
    standards, which is NIST's specialty. NIST closely coordinates its
    nanotechnology work with other Federal agencies through the President's
    National Nanotechnology Initiative, or NNI. NIST appropriately has the
    lead in providing the measurements and standards infrastructure for the
    NNI.
        The request also includes $7.3 million to build on NIST's world-
    class expertise in quantum computing and communications. This effort,
    with teams led by NIST's two Nobel laureates, is developing
    revolutionary means of making calculations much more quickly than
    traditional electronic computers will ever be able to do. NIST
    scientists already have made the working elements of quantum computers
    based on individual atoms.
        The fiscal year 2004 Budget also requests funding to allow NIST to
    strengthen its programs supporting health care diagnostics, which not
    only improve the quality of health care, but also ensure that U.S.
    manufacturers can compete fairly in the $20 billion global market for
    these products. The request includes a total of $17.1 million to
    strengthen this effort. Consistent with the President's emphasis on
    shifting resources to reflect changing national needs, the President's
    fiscal year 2004 Budget proposes terminating the Advanced Technology
    Program (ATP) and requests a total of $27 million for administrative
    and close-out costs. The fiscal year 2004 President's Budget also
    proposes maintaining the fiscal year 2003 policy of significantly
    reducing Federal funding for the Manufacturing Extension Partnership
    (MEP), for which the budget requests $12.6 million. These programs have
    been well-run, but the scarce resources are needed for higher priority
    programs. The budget request focuses on NIST's core mission of
    measurements, standards, and laboratory research, rather than its
    extramural programs, by providing the 21st century facilities the NIST
    Laboratories need for success. Investment of limited NIST resources in
    the Laboratory programs and facilities will have the greatest impact on
    fostering innovation that leads to economic growth.
        The U.S. Patent and Trademark Office (PTO) request will support the
    second year of the agency's strategic plan to enhance the quality of
    products and services and to keep pace with workload growth by
    promoting e-government activities and reducing pendency. We understand
    that intellectual property protection is paramount to the Nation's
    ability to innovate and move products into the marketplace.
    Concurrently, Commerce has recently proposed legislation to restructure
    PTO fees to better align the fee system with the work undertaken by
    PTO. The Department is also working to eliminate the practice of using
    USPTO revenues for unrelated Federal programs so that a greater share
    of the applicants' fees are available to the agency in the year they
    are collected.

                               HOMELAND SECURITY

        The Bureau of Industry and Security (BIS) seeks to advance U.S.
    national security and foreign policy interests by regulating exports of
    critical goods and technologies that could be used to damage those
    interests, while furthering the growth of legitimate U.S. exporters to
    maintain our economic leadership. The fiscal year 2004 budget includes
    a $5.6 million increase for BIS to address vulnerabilities in
    regulating exports of critical goods and technologies. This budget
    increase will enable BIS to strengthen export enforcement with
    additional agents and capabilities and to enhance the bureau's analysis
    of U.S. export control regulations to ensure they reflect the dynamics
    of 21st century market and technological changes.
        We request an increase of $13.3 million (for a total of $38.7
    million) for NIST to address key national needs for homeland security
    measurements, standards, and technologies. This request will strengthen
    NIST's portfolio of more than 100 projects that address homeland
    security technology needs.
        Included in this request is an increase of $7 million (for a total
    of $10.9 million) as part of a program to use lessons learned from the
    NIST-led investigation of the World Trade Center (WTC) collapse to make
    buildings, occupants, and emergency responders safer from terrorist
    attacks on buildings and other building disasters. NIST has the unique
    combination of technical expertise in a broad range of building and
    fire sciences and lengthy experience working with the building and
    emergency responder communities to provide the Nation with the maximum
    benefit from the WTC investigation and associated research.
        The NIST homeland security request also includes an increase of
    $5.3 million (for a total of $26.8 million) to develop the measurement
    infrastructure needed to detect nuclear and radiological (``dirty
    bomb'') threats, to improve the use of radiation such as x-rays and
    other imaging techniques to detect concealed terrorist threats, and to
    use radiation safely and effectively to destroy biowarfare agents such
    as anthrax.
        Our homeland security request also includes a total of $1 million
    to develop standards and test methods for biometric identification
    systems, used to positively identify the approximately 20 million non-
    citizens who enter the United States each year or apply for visas. This
    will enable NIST to carry out the mandate of the USA PATRIOT Act, which
    requires NIST to develop technology standards for biometric
    identification, recognizing NIST's long history of expertise in this
    area.
        Ensuring public safety remains a priority of NOAA and its National
    Weather Service (NWS). The budget request for NOAA includes an increase
    of $7.7 million (for a total of $65.1 million) to enhance homeland
    security. This increase includes new funding in the amount of $5.5
    million to support a scaled upgrade of the current NOAA Weather Radio
    (NWR) operation to an All Hazards Warning Network. This upgrade
    includes systems to standardize and automate receipt and dissemination
    of non-weather emergency messages. The Administration is also
    requesting $2.2 million in new funding for emergency preparedness and
    safety to improve physical security at 149 NWS facilities to prevent
    unauthorized individuals from entering and/or tampering with NWS
    property.
        The fiscal year 2004 budget request also includes an increase of
    $3.7 million to secure core aspects of ITA's worldwide communications
    network, to defend against unauthorized access, and to create recovery
    mechanisms should damaging events occur.

                     FACILITIES, INFRASTRUCTURE AND SAFETY

        The fiscal year 2004 budget strengthens key Commerce programs that
    provide the infrastructure that enables U.S. businesses to maintain
    their technological edge in world markets. Important priorities for
    fiscal year 2004 are to upgrade NIST's and NOAA's facilities and
    laboratories and begin consolidating PTO facilities. The NIST budget
    request includes $36.2 million to address inefficiencies and safety
    problems at its facilities in Boulder, Colorado and Gaithersburg,
    Maryland. Valuable research continues to be lost or interrupted by
    power outages, spikes, and fluctuations. This budget increase will
    enable NIST to protect critical research data from degradation, and to
    maintain employee safety and security. The budget also requests $8.2
    million to equip, maintain, and operate NIST's Advanced Measurement
    Laboratory, and to fund time scale and time dissemination backup
    elements.
        The budget includes a $47.7 million program increase for NOAA to
    address safety and security concerns associated with its buildings,
    aircraft, and ships, to upgrade weather forecast offices in the
    continental United States, Alaska and the Pacific Islands, to modernize
    the primary NWS telecommunications gateway, to continue construction of
    the NOAA Satellite Operations Facility in Suitland, Maryland, and to
    plan the replacement of the World Weather Building to be co-located
    with a major research institution. During fiscal year 2004, NOAA will
    also continue the tri-agency acquisition (with DOD and NASA) of the
    next-generation polar-orbiting satellites, and systems design and
    development for the next-generation geostationary satellite series
    (GOES R).
        In fiscal year 2004, the PTO will begin relocating its facilities
    from 18 buildings in Arlington, VA into a consolidated 5-building
    campus in Alexandria, VA with an initial move into two of the buildings
    this December. The new consolidated facility is designed to meet the
    PTO's operational needs, provide flexibility to future program or
    process changes, and fully comply with current fire, life-safety and
    accessibility guidelines. The budget includes a $44.6 million program
    increase for construction inflation costs that occurred during the
    project delay generated by litigation and maintaining dual rent and
    simultaneous operations during the eighteen-month move period.
        To strengthen the spectrum management capabilities of the National
    Telecommunications and Information Administration (NTIA), to meet the
    increasing demand for Federal wireless communication systems and
    services, the Department of Commerce requests an increase of $1 million
    for NTIA to establish a paperless system for spectrum issue resolution,
    certification, satellite coordination and frequency authorization, and
    to intensify research aimed at expanding spectrum utilization through
    greater understanding of radio frequency interference. The fiscal year
    2004 budget also proposes to suspend the Public Telecommunications
    Facilities Planning and Construction (PTFPC) grants, a program
    reduction of $41.1 million for NTIA during fiscal year 2004. Up to $80
    million in funding for digital conversion grants for public television
    stations can be made available from within the Corporation for Public
    Broadcasting (CPB) $380 million appropriation, which has already been
    enacted. The fiscal year 2004 President's Budget also proposes to
    terminate the Technology Opportunities Program (TOP) as funding within
    the Department of Commerce has been redirected to higher priority
    programs.
        GSA, in coordination with DOC, is planning a major renovation of
    the 70-year old Herbert C. Hoover Building. This initiative will
    restore the great building to its original condition, bring it up to
    current code requirements, address the realities of post 9/11 security
    needs and extend the useful life of this historic building. It is
    essential to the optimal stewardship of the taxpayers money that we
    establish a Renovations Office in fiscal year 2004. In addition, the
    Department will focus on safety issues by instituting a new
    Occupational Safety and Health Program targeted toward preventing
    accidents and injuries through incident tracking and proactive
    prevention.

                                   FISHERIES

        NOAA's budget request for fiscal year 2004 contains a $29.8 million
    program increase to modernize and improve the nation's fishery
    management system. Specifically, the requested funding addresses the
    need to improve socioeconomic data collection, to reduce bycatch in
    targeted fisheries, to increase fishery observer coverage, to
    streamline the current fisheries regulatory process, and to implement
    the Columbia River Biological Opinion effectively. New funds will also
    increase the understanding of the effects of climate change on marine
    and coastal ecosystems, and build a national observer program for the
    collection of high-quality fisheries and environmental data. The fiscal
    year 2004 budget includes a reduction of $40 million for the Pacific
    Salmon Treaty for which all U.S. obligations have been met.

                                 CLIMATE CHANGE

        Finally, one of the highlights of the Department's fiscal year 2004
    Budget is the request of $295.9 million for NOAA's climate change
    research, observations and services. This amount includes an increase
    of $16.9 million as part of a total request of $41.6 million for NOAA's
    contribution to the President's interagency Climate Change Research
    Initiative (CCRI). The NOAA fiscal year 2004 CCRI request supports
    NOAA's efforts to: enhance ocean observations for climate; augment
    carbon-monitoring capabilities in North America as well as in key
    under-sampled oceanic and continental regions around the globe; advance
    the understanding of all major types of aerosols; establish a climate
    modeling center within NOAA's Geophysical Fluid Dynamics Laboratory,
    which will focus on research, analysis, and policy applications for the
    development of model product generation; and coordinate and manage the
    Nation's interagency climate and global change programs through the
    Climate Change Science Program Office.
        The President's CCRI led to the creation of a new interagency
    framework in order to enhance coordination of Federal agency resources
    and research activities. Under this framework, thirteen Federal
    agencies are working together under the leadership of a Cabinet-level
    committee on climate change to improve the value of U.S. climate change
    research.
        The President's fiscal year 2004 Budget request for climate change
    activities reflects the President's priorities by focusing Federal
    research on the elements of the U.S. Global Change Research Program
    (USGCRP) that can best support improved public discussion and decision-
    making. Under the CCRI, various agencies will adhere to specific
    performance goals, including providing products to decision-makers
    within four years. The priorities of the CCRI are: reducing key
    scientific uncertainties; designing and implementing a comprehensive
    global climate and ecosystem monitoring and data management system; and
    providing resources to support public evaluation of a wide range of
    climate change scenarios and response options. Even in this time of
    difficult budget decisions, the President is committed to fully funding
    climate research so that we can continue to reduce the uncertainties
    associated with climate change.
        As I previously stated, this budget request for the Department of
    Commerce has been carefully crafted to focus on those core functions
    that the American people rely on from this agency. We will focus on
    promoting innovation, entrepreneurship, exports, and safety, while
    spreading opportunity to all Americans and ensuring responsible
    stewardship of our natural resources.

                        CIAO MOVED TO HOMELAND SECURITY

        Senator Gregg. Thank you, Mr. Secretary. CIAO has been
    moved over to Homeland Security, at least in theory. I am
    wondering to what extent that has actually occurred, how it is
    physically being done, and whether the transfers are affecting
    the operations past the infrastructure protection efforts.
        Secretary Evans. It has been done. As far as I know the
    transfer was made smoothly. We continue within NIST to work
    with areas of CIAO in terms of protecting cybersecurity in this
    country, but the CIAO group has been moved over.
        Senator Gregg. Have they physically left?
        Secretary Evans. Yes, gone. At least, I am not seeing them
    around there any more. On March 1, 2003, pursuant to Public Law
    107-296 Homeland Security Act of 2002, the CIAO was transferred
    from the Department of Commerce to the Department of Homeland
    Security. There are plans for the CIAO/DHS to move out of the
    Herbert C. Hoover Building, but the move has not yet taken
    place.

                     ENTRY/EXIT SYSTEM BASED ON BIOMETRICS

        Senator Gregg. NIST is doing biometric identification work.
    To what extent is that being coordinated with the INS efforts
    to produce an exit/entry system which is based on biometrics,
    do you know?
        Secretary Evans. I am certain that there is close
    coordination, because that is the purpose of it, is to be used
    in identifying people coming into this country with biometric
    techniques, and so I know there is close coordination. I am not
    sure of the specific meetings.
        Senator Gregg. I would be interested in getting, or having
    your staff get for us an explanation of to what extent you are
    working with INS and to what extent NIST has evaluated the INS
    efforts in exit/entry, and whether or not they are on the right
    track.
        Secretary Evans. Sure.
        Senator Gregg. This committee has had very serious
    reservations about INS' capacity to do exit/entry system based
    on biometrics. NIST is an extremely talented agency, filled
    with talented people, a very strong agency. I would be very
    interested in their evaluation of the INS efforts in this area.
        Secretary Evans. You bet.
        [The information follows:]

                 NIST's Work With INS on the Entry/Exit System

        Under the USA PATRIOT Act of 2001 and the Enhanced Border
    Security and Visa Entry Reform Act of 2002, NIST (with the
    Attorney General and Secretary of State) is required to
    ``develop and certify a technology standard, including
    appropriate biometric identifier standards, that can be used to
    verify the identity of persons applying for a United States
    visa or such persons seeking to enter the United States
    pursuant to a visa for the purposes of conducting background
    checks, confirming identity, and ensuring that a person has not
    received a visa under a different name . . .'' NIST has an on-
    going mandate to provide technical guidance on appropriate
    biometric identifiers based on technology evaluations and to
    write reports with the Departments of Justice, State, Defense,
    and Homeland Security/INS on recommendations for entry-exit
    systems. The first report, entitled ``Use of Technology
    Standards and Interoperable Databases With Machine-Readable,
    Tamper-Resistant Travel Documents,'' was submitted to Congress
    on February 4, 2003. The NIST appendix to that report is
    available at http://222.itl.nist.gov/iad/894.03/
    NISTAPPXNov02.pdf. The second report on biometric standards has
    been completed and is currently circulating for comments within
    the agencies. NIST is evaluating face recognition and
    fingerprint matching systems for the INS and is planning an
    evaluation of the INS' Automated Biometric INDENTification
    System (IDENT) later in fiscal year 2003.

                    NIST PROGRESS INVESTIGATING WTC ATTACKS

        Senator Gregg. NIST is also investigating the WTC attack
    and the destruction of the buildings. Do you have any
    conclusions yet that we can share?
        Secretary Evans. No--well, I think there are some, Mr.
    Chairman. I know that we have been sharing with some of the
    designers in New York some of the preliminary findings. I think
    there is a preliminary report, I believe that will be out this
    summer, but the full study is scheduled to take 2 years, which
    means we will not be finished for I think another year or so,
    but I know that those who are doing the designs under the new
    construction in New York have been talking to NIST, and they
    have been communicating, but still the findings, of course, are
    preliminary.
        Senator Gregg. Do they have the funding they need? There
    has been some indication maybe too much stuff has been sent to
    the scrap heap and NIST could not get their hands on the
    necessary material.
        Secretary Evans. Right, Mr. Chairman. That was an issue
    that was brought up about 1 year ago. I went back and inquired
    and yes, there was concern about that initially. But after
    inquiring, my understanding now is, they feel like they have
    the necessary materials to provide the public with a full, and
    complete, and thorough report of what occurred, and what kind
    of standards we ought to think about implementing for providing
    more safety and security of these kinds of structures.

                         BACKLOG OF PATENT APPLICATIONS

        Senator Gregg. The Patent Office has a 400,000 backlog of
    patent applications, and that is staggering. What is the game
    plan for getting that to some sort of reasonable conclusion?
        Secretary Evans. Well, as I mentioned, part of the game
    plan is more funding, and recruiting more examiners. Part of
    the game plan is modernization of the systems going from a
    paper-loaded system to a paperless system, which will take some
    time. In general, pendency rates have not moved a lot. They
    have come down a little bit, but I think the thrust, I would
    say, Mr. Chairman, is to move from a paper system to a
    technology computer information kind of system where we make
    more use of the modern information systems we have today, as
    well as continuing to recruit more examiners.
        But I must say to you that a substantial amount of the
    funding also is going to go into a new program that we are
    implementing which is just the requalification of the examiners
    themselves. Right now, the way PTO works is, examiners, once
    they are a full-time examiner, you would think of it as tenure.
    They are always a full-time examiner, and we felt like it was
    important to have a system in place where periodically they go
    through a requalification process.
        One other area, Mr. Chairman, I think--I mean, we are
    putting a lot of energy and a lot of effort into this, because
    it is so critical not only to protecting patents here in the
    United States--not protecting them, but approving them in a
    timely kind of way, but also making sure that those patents are
    recognized and honored around the world, and we are moving very
    aggressively toward a global patent system.
        We are working aggressively with USPTO, Europe and with
    Japan--85 percent of the patents in the world are in those
    three areas, and so we are working toward a system that would
    eventually result in the mutual exploitation of search results
    in terms of integrating the information we have and sharing it
    with the European Patent Office (EPO) and with Japan, and other
    intellectual property offices and also them sharing their
    information with us. We feel like that would not only make the
    patent system more efficient but reduce a lot of duplication
    that is out there in the world today.
        So just rest assured that I think we have got a very good
    team working on this. It is certainly a big focus of ours. We
    understand, just industry after industry in our country, how
    important intellectual property is, and protecting intellectual
    property.
        Senator Gregg. Well, I do not know about other Members of
    the Senate, but I have heard from a number of folks in New
    Hampshire that their frustration with the Patent Office is
    fairly significant right now. Some of them have just given up
    on going that route, so I would be interested if there is a
    plan, a formalized plan for how you are going to reduce the
    backlog and how you are going to make it more electronically
    controlled, and how you are going to develop this international
    system. I would like to see such a plan, if it is a formal
    plan.
        Secretary Evans. We will be glad to provide that to you,
    you bet.
        [The information follows:]

        The U.S. Patent and Trademark Office (USPTO), in response to
    stakeholder input, updated its June 2002 21st Century Strategic Plan on
    February 3, 2003, and submitted it to the Congress in support of the
    fiscal year 2004 President's budget.
        The USPTO prepared its 21st Century Strategic Plan in response to
    Congressional direction. For example, the Senate CJS Subcommittee
    report language dated July 19, 2001 directed the Secretary of Commerce
    to develop a five-year plan with three core objectives: Prepare the
    agency to handle the workload associated with the 21st century economy;
    improve patent quality; and reduce patent and trademark pendency.
        The Committee further said that the plan should include:
    Recommendations to improve retention and productivity of examiner
    workforce; targeted hiring increases to deal with high-growth areas;
    improved training; E-Government and other capital improvements designed
    to improve productivity; and benchmarks for measuring progress in
    achieving each of these objectives.
        The Committee also directed that the ``electronic file wrapper'' be
    fully implemented by the end of fiscal year 2004.
        The attached plan identifies the specific actions the USPTO is
    taking to
      --Deliver an operational system to process patent applications
            electronically by October 1, 2004.
      --Reduce duplication of effort and decrease workload by relying on
            search results obtained via partnerships with other
            intellectual property offices (see Work Sharing 1).
      --Achieve an interim patent pendency goal of 27 months by fiscal year
            2008. The USPTO will continue to work toward reducing pendency
            and pursue the long-term optimum goal of 18 months pendency
            beyond the five-year horizon of the strategic plan.
      --Reduce total patent examiner hires through fiscal year 2008
            compared to the fiscal year 2003 budget and business plan
            projection.
        Each of these actions is supported by a detailed analysis of the
    issue and an implementation plan. These are posted on the USPTO web
    site and can be made available to the Senator's staff.

                        The 21st Century Strategic Plan

                               EXECUTIVE OVERVIEW

        Today, the United States Patent and Trademark Office (USPTO) is
    under siege. Patent application filings have increased dramatically
    throughout the world. There are an estimated seven million pending
    applications in the world's examination pipeline, and the annual
    workload growth rate in the previous decade was in the range of 20-30
    percent. Technology has become increasingly complex, and demands from
    customers for higher quality products and services have escalated. Our
    applicants are concerned that the USPTO does not have access to all of
    the fees they pay to have their patent and trademark applications
    examined, thereby jeopardizing the benefits intellectual property
    rights bring to our national economy. In the United States, these
    demands have created a workload crisis. The Congress, the owners of
    intellectual property, the patent bar, and the public-at-large have all
    told us that we must address these challenges aggressively and
    promptly.
        We agree. We believe that the USPTO must transform itself into a
    quality-focused, highly productive, responsive organization supporting
    a market-driven intellectual property system. And we also believe that
    we have the tools, the skills, the will and the plan to do so.
      --The tools.--The technology exists to create a high-quality, cost-
            effective, responsive, paperless patent examination process,
            building on our current success in automating trademarks.
      --The skills.--We have a cadre of talented staff with the technical
            expertise and the vision to help guide and support the
            technical and, even more important, the cultural transformation
            of the USPTO.
      --The will.--Organizational transformations require sustained
            commitment and constancy of purpose ``from the top.'' The USPTO
            leadership is dedicated to this task.
      --The plan.--This strategic plan lays out our approach to creating,
            over the next five years, an agile, capable and productive
            organization fully worthy of the unique leadership role the
            American intellectual property system plays in both the
            American and the global economies.
        This new 21st Century Strategic Plan is aggressive and far-
    reaching. However, anything less would fall short of the expectations
    of the U.S. Congress, the applicants for, and owners of, patents and
    trademarks, the patent and trademark bar, and the public-at-large.
    Additionally, the failure to adopt this strategic plan would have
    negative consequences. We would be unable to implement our quality and
    e-Government initiatives, pendency would rise to uncontrollable levels,
    and our costs would continue to grow.
        After the implementation of this strategic plan:
      --Market forces will drive our business model.
      --Geography and time will be irrelevant when doing business with the
            USPTO.
      --We will strengthen our ability to be ranked as one of the highest
            quality, most-efficient intellectual property organizations in
            the world.
      --Our products and services will be tailored to meet the needs of
            customers.
      --Examination will be our core expertise.
      --Our employees will be recognized as expert decision makers.
      --Independent inventors, U.S. industry and the public will benefit
            from stronger, more enforceable intellectual property rights
            worldwide.
      --Our workplace will become a state-of-the-art facility designed for
            the 21st Century.
      --Following implementation of this plan and its underlying
            assumptions, including the enactment of legislation to
            restructure fees, statutory fees will remain steady for the
            foreseeable future.

                     ABOUT THE 21ST CENTURY STRATEGIC PLAN

        This five-year strategic plan reflects both a thorough internal
    process review and a systematic attempt to incorporate the best
    thinking of our applicants, our counterparts in Europe, Japan and other
    countries, and our stakeholders, including our Public Advisory
    Committees. Key stakeholders also include our dedicated employees,
    without whose commitment the strategic plan could not have been
    developed and its success could not be assured.
        The strategic plan takes a global perspective by envisioning the
    patent and trademark systems of the future that American innovators
    would need to remain competitive around the world. It is built on the
    premise that American innovators want to obtain enforceable
    intellectual property rights here and abroad as seamlessly and cost-
    effectively as possible. It emphasizes the opportunity for the USPTO to
    collaborate with intellectual property organizations in automation,
    global patent classification, and exploitation of search results.
    Finally, the plan is predicated on changes to the way all players in
    the intellectual property system do business with the USPTO and the way
    USPTO employees respond.
        The strategic plan is supported with detailed documentation
    analyzing all of the related issues, a five-year implementation plan
    with identified critical tasks, proposed revisions to the fiscal year
    2003 budget request to enable timely implementation of the strategic
    plan, and corresponding proposed legislation and regulations necessary
    for a successful multi-year implementation.
        This strategic plan cannot succeed without enactment of the
    legislation changing the USPTO's current fee schedule and access to
    revenue generated in fiscal year 2003, to the extent provided in the
    President's fiscal year 2003 Budget, revisions to current rules, and
    legislation for streamlining the patent and trademark systems to
    facilitate these changes. There are a number of variables, such as
    potential changes in restriction practice and the use of commercial
    search services that could affect our projected costs and revenues.
    Once they have been clarified, any ensuing revisions to our program
    costs and fee schedule will be resolved in the context of the USPTO's
    annual budget submission to the Congress.

    Proof of Concept
        To ensure the USPTO proposes appropriate changes to patent and
    trademark laws, makes changes to internal processes that provide
    benefits and increased efficiency, and makes sound investment
    decisions, the initiatives proposed in this plan will be subjected to
    thorough evaluation. Pilot projects will be initiated and tested
    wherever necessary. Evaluation plans will incorporate, where
    appropriate, measurable objectives, critical measures of success,
    baseline data, and conditions for full implementation.

    Performance Measures
        This plan contains measurable objectives and milestones for each of
    the general goals. The annual budget submission to the Congress will
    provide additional criteria by establishing key measurements and yearly
    milestones that will be used to determine the USPTO's success in
    achieving these goals. The annual integrated budget/performance plan is
    the most efficient and effective way of establishing accountability by
    making sure that performance measures and milestones are consistent
    with the views of the Administration and the Congress in the enacted
    annual budget.

                                STRATEGIC AGENDA

    Vision
        The USPTO will lead the way in creating a quality-focused, highly
    productive, responsive organization supporting a market-driven
    intellectual property system for the 21st Century.
        We believe that quality must permeate every action taken by every
    employee of the USPTO. The new initiatives in our strategic plan are
    targeted toward creating a cultural transformation whereby quality is
    the principal focus of everything we do.

    Mission
        The USPTO mission is to ensure that the intellectual property
    system contributes to a strong global economy, encourages investment in
    innovation, and fosters entrepreneurial spirit.
        In order to accomplish our mission, we have prepared this strategic
    plan. Provided we receive the funding and statutory changes necessary
    to implement this new strategy, we will:
      --Enhance the quality of patent and trademark examining operations
            through consolidation of quality assurance activities in fiscal
            year 2003.
      --Achieve 27 months overall patent pendency goal \1\ in fiscal year
            2008.
    ---------------------------------------------------------------------------
        \1\ Pendency is a measurement of USPTO's traditional examination
    processing time; i.e., from filing (under 35 U.S.C. 111(a)) to ultimate
    disposal.
    ---------------------------------------------------------------------------
      --Reduce total patent examiner hires through fiscal year 2008 by
            2,400 compared to the 2003 Business Plan.\2\
    ---------------------------------------------------------------------------
        \2\ The 2003 Business Plan was submitted to the Congress in
    February 2002 as part of the USPTO's fiscal year 2003 Budget.
    ---------------------------------------------------------------------------
      --Accelerate processing time by implementing e-Government in
            Trademarks by November 2, 2003, and in Patents by October 1,
            2004.
      --Competitively source classification and search functions, and
            concentrate Office expertise as much as possible on the core
            government functions.
      --Expand our bilateral and multilateral discussions to strengthen
            intellectual property rights globally and to reduce duplication
            of effort among offices.

    Strategic Themes
        To achieve our vision and accomplish our mission, we must transform
    our organization and become a more agile, more capable and more
    productive USPTO. The Congress has directed us to (1) improve patent
    and trademark quality, (2) aggressively implement e-Government to
    handle the workload associated with the 21st Century economy, and (3)
    reduce patent and trademark pendency. We have identified three
    strategic themes that correspond directly to these Congressional
    requirements:
      --1. Agility: Address the 21st Century Economy by Becoming a More
            Agile Organization.--We will create a flexible organization and
            work processes that can handle the increasing expectations of
            our markets, the growing complexity and volume of our work, and
            the globalization that characterize the 21st Century economy.
            We will work, both bilaterally and multilaterally, with our
            partners to create a stronger, better-coordinated and more
            streamlined framework for protecting intellectual property
            around the world. We will transform the USPTO workplace by
            radically reducing labor-intensive paper processing.
      --2. Capability: Enhance Quality through Workforce and Process
            Improvements.--We will make patent and trademark quality our
            highest priority by emphasizing quality in every component of
            this strategic plan. Through the timely issuance of high-
            quality patents and trademarks, we will respond to market
            forces by promoting advances in technology, expanding business
            opportunities and creating jobs.
      --3. Productivity: Accelerate Processing Times Through Focused
            Examination.--We will control patent and trademark pendency,
            reduce time to first Office action, and recover our investments
            in people, processes and technology.
        We will transform the USPTO by adhering to these themes in each of
    the improvement initiatives upon which this strategic plan is based, as
    well as in all of our other programs. These initiatives are discussed
    in more detail under each of the major theme sections.

    Agility: Address the 21st Century Economy by Becoming a More Agile
            Organization
        An agile organization responds quickly and efficiently to changes
    in the economy, the marketplace, and the nature and size of workloads.
    In pursuit of an agile organization, the USPTO will focus both
    internally and externally.
        As a first priority, we have made electronic end-to-end processing
    of both patents and trademarks the centerpiece of our business model.
        We will create a nimble, flexible enterprise that responds rapidly
    to changing market conditions. We will make the USPTO a premier place
    to work; we will rely on a smaller cadre of highly trained and skilled
    employees; and we will place greater reliance on the private sector,
    including drawing on the strengths of the information industry. We will
    enhance the quality of work life for our employees by exploring
    expansion of work-at-home opportunities and moving to the new Carlyle
    campus facility in Alexandria, Virginia.
        Further, we will enhance existing and establish new alliances with
    our friends in other national and international intellectual property
    organizations to strengthen American intellectual property rights
    around the world.
        Specific actions, with parenthetical cross-references to the
    analyses and implementation plans in the Appendices, include:
                Implement automation for patent and trademark applications
        Develop a trademark electronic file management system and begin e-
    Government operations on November 2, 2003, in tandem with
    implementation of the Madrid Protocol. [E-Government 1]
        Deliver an operational system to process patent applications
    electronically by October 1, 2004, including electronic image capture
    of all incoming and outgoing paper documents. [E-Government 2]
        Develop an automated information system to support a post-grant
    patent review process. [E-Government 3]
        Establish an information technology security program for fully
    certifying and accrediting the security of automated information
    systems. [E-Government 4]
        Provide back-up systems to ensure maximum availability of computer
    systems to examiners, attorneys, the public and other patent and
    trademark offices by establishing appropriate back-up systems. [E-
    Government 5]
                Expand work-at-home opportunities
        Increase the efficiency and return on investment of our work-at-
    home program and thereby encourage more employees to participate.
    [Work-at-Home 1]
                Increase flexibility through greater reliance on the
                        private sector or other intellectual property
                        offices
        Increase reliance on the private sector or other intellectual
    property offices for:
        Classifying patent documents. [Flexibility 1]
        Supporting national application and Patent Cooperation Treaty
    search activities. [Flexibility 2]
        Transitioning to a new global patent classification system.
    [Flexibility 3]
        Classifying trademark goods/services and searching design codes.
    [Flexibility 4]
                Global Development: Streamline intellectual property
                        systems and strengthen intellectual property rights
                        around the world
        Promote harmonization in the framework of the World Intellectual
    Property Organization and its Standing Committee on the Law of Patents;
    resolve major issues in a broader context and pursue substantive
    harmonization goals that will strengthen the rights of American
    intellectual property holders by making it easier to obtain
    international protection for their inventions and creations. [Global
    Development 1]
        Negotiate bilateral and multilateral agreements to facilitate
    global convergence of patent standards. [Global Development 2]
        Accelerate Patent Cooperation Treaty reform efforts, focusing on
    the USPTO's proposal for simplified processing. [Global Development 3]
        Develop a ``universal'' trademark electronic application by
    leveraging the United States' experience with electronic filing of
    trademark applications. [Global Development 4]
                Share search results with other intellectual property
                        offices
        Reduce duplication of effort and decrease workload by relying on
    search results obtained via partnerships with other intellectual
    property offices. [Work Sharing 1]
                Planned Agility Accomplishments
        Accelerate processing time by implementing e-Government in
    Trademarks by November 2, 2003, and in Patents by October 1, 2004.
        Competitively source classification and search functions, and
    concentrate USPTO expertise as much as possible on core government
    functions.
        Expand our bilateral and multilateral discussions to strengthen
    intellectual property rights globally and to reduce duplication of
    effort among intellectual property offices.
    Capability: Enhance Quality Through Workforce and Process Improvements
        A capable organization has a highly skilled, appropriately sized
    workforce; it has systems and procedures that enhance the capability of
    every employee; and it has in place effective quality management
    processes to ensure high quality work and continuous performance
    improvement. In other words, a capable organization is committed to
    doing the right job right--the first time and every time. We will be
    such an organization.
        Quality will be assured throughout the process by hiring the people
    who make the best patent and trademark examiners, certifying their
    knowledge and competencies throughout their careers at the USPTO, and
    focusing on quality throughout the examination of patent and trademark
    applications. By bolstering confidence in the quality of U.S. patents
    and trademarks, the USPTO will enhance the reliability in the quality
    of products and services needed to increasingly spur our economy and
    reduce litigation costs.
        Specific actions, with parenthetical cross-references to the
    analyses and implementation plans in the Appendices, include:
                Enhance workforce capabilities by certifying competencies
        Create an enterprise-wide training strategy that meets the needs of
    the new business model and the e-Government generation. [Transformation
    1]
        Restructure the USPTO by redirecting resources to core examination
    activities, implement revised performance plans to incorporate changes
    required to implement an e-Government workplace, meet agency-wide
    standards for senior executives, and implement selected award packages.
    [Transformation 2 and 3]
        Transform the workforce by exploring alternative organizational
    concepts and structures. [Transformation 4]
        Ensure that professionals, support staff and supervisors
    responsible for the patent process possess the requisite skills needed
    to carry out their responsibilities. [Transformation 5]
        Certification of knowledge, skills and ability in the Trademark
    Process. [Transformation 6]
        Implement pre-employment testing for patent examiners.
    [Transformation 7 and 8]
        Recertify the knowledge, skills and abilities of primary examiners
    to ensure currency in patent law, practice and procedures.
    [Transformation 9]
        Certify the legal competency and negotiation abilities of patent
    examiners before promotion to grade 13. [Transformation 10]
        Improve the selection and training of supervisory patent examiners
    to focus on their primary responsibilities of training patent examiners
    and reviewing and approving their work. [Transformation 11]
                Make improvements in patent and trademark quality assurance
                        techniques
        Enhance the current quality assurance programs by integrating
    reviews to cover all stages of examination. [Quality 1]
        Expand reviews of primary examiner work. [Quality 2]
        Engineer quality into our processing including the selective
    expansion of the ``second pair of eyes'' review \3\ of work products in
    such advanced fields of technology as semiconductors,
    telecommunications, and biotechnology. [Quality 3 and 4]
    ---------------------------------------------------------------------------
        \3\ A secondary review of applications for proper claim
    interpretation and to ensure that the closest prior art has been
    discovered and correctly applied.
    ---------------------------------------------------------------------------
        Incorporate an evaluation of search quality into the patent work
    product review process, and survey practitioners on specific
    applications. [Quality 5 and 6]
        Enhance the reviewable record of prosecution in patent
    applications. [Quality 7]
        Certify and monitor the quality of searching authorities to ensure
    that patent searches provided by the private sector contractors or
    other patent offices are complete and of the highest quality. [Quality
    8]
                Make process improvements that contribute to enhanced
                        quality through legislation/rule changes
        Propose legislation and/or rule changes that have been identified
    as critical for the accomplishment of this strategic plan. Continue the
    process of seeking comments from stakeholders on proposed changes.
                Planned Capability Accomplishments
        Enhance the quality of patent and trademark examining operations
    through consolidation of quality assurance activities in fiscal year
    2003.
    Productivity: Accelerate Processing Times Through Focused Examination
        We are committed to promoting advances in technology, expansion of
    business opportunities and creation of jobs through the timely issuance
    of high quality patents and trademarks. A productive organization
    maximizes its output of work performed. Improved productivity is key to
    reducing pendency and inventory.
        This strategic plan has aggressive timeliness goals: to make
    available, on average, a first Office action for first-filed U.S. non-
    provisional patent applications, at the time of 18-month publication,
    and a patent search report for other patent applications in the same
    time frame--by far the fastest in the world. This will be accomplished
    through a redesign of the entire patent search and examination systems
    based upon multiple-examination tracks, greater reliance on qualified
    patent search services, and variable, incentive-driven fees. In
    Trademarks, achieve an average 12-month total pendency. This will be
    accomplished by a three-track examination system. Likewise, both
    Patents and Trademarks will restructure the way they do business to be
    compatible with an e-Government environment.
        Specific actions, with parenthetical cross-references to the
    analyses and implementation plans in the Appendices, include:
                Transition to market-driven examination options
        Adopt procedures that give greater choice and flexibility to
    trademark applicants for filing and examination of applications for the
    registration of trademarks, with a focus on using technology to improve
    the process and provide a lower cost filing option. [Pendency 1]
        Move from a ``one-size-fits-all'' patent examination process to a
    multi-track examination process that leverages search results of other
    organizations and permits applicants to have freedom of choice in the
    processing of their applications. This new process will eliminate
    duplication of effort, encourage greater participation by the applicant
    community and public, and improve the quality of our patents and
    decrease processing time. [Pendency 2]
        Address the number of claims presented for examination in an
    application and the size of applications through fee-setting
    legislation to reflect the cost of processing complex applications.
    [Shared Responsibility 1]
        Achieve greater examiner productivity by reducing their prior art
    search responsibilities. [Pendency 3]
                Implement an accelerated examination path option
        Offer patent applicants the market-driven new ``rocket docket''
    option of choosing an accelerated examination procedure with priority
    processing and a pendency time of no longer than 12 months.
    [Accelerated Examination 1]
                Share responsibility for timely and high quality patents
                        and trademarks between applicant and the USPTO
        Seek enactment of legislation to restructure the USPTO fee schedule
    by mid-fiscal year 2003, and thereby create incentives that contribute
    to achievement of USPTO goals. For example, the filing fee will be kept
    as low as possible to incentivize applicants to file, and the refund
    provision expanded to allow the USPTO to refund a portion of the search
    fee if the application is expressly abandoned before search or
    examination. [Shared Responsibility 1]
        Make patents more reliable by proposing amendments to patent laws
    to improve a post-grant review of patents. [Shared Responsibility 2]
                Planned Productivity Accomplishments
        Achieve first Office action patent pendency of 14.7 months in
    fiscal year 2008.
        Achieve an interim patent pendency goal of 27 months by fiscal year
    2008. Note: The USPTO will continue to work toward reducing pendency
    and pursue the long-term optimum goal of 18 months pendency beyond the
    five-year horizon of this strategic plan. Our best estimate is that it
    will take at least a decade to achieve the 18-month goal.
        Reduce total patent examiner hires through fiscal year 2008 by
    2,400 compared to the 2003 Business Plan projection. [See Figure 1]

                  Figure 1. Patent Examiner Hiring Comparison

                Critical Needs
        The performance commitments outlined in this strategic plan demand
    extraordinary effort from every USPTO employee, and the full support of
    our key stakeholders. Our strategic plan is built around the following
    critical needs.
    Multilateral and Bilateral Agreements
        We need to consult with, and receive support of, other patent
    offices in structuring new bilateral and multilateral initiatives.
    Legislation/Rules
        We will need enactment of legislation by the Congress to adjust
    certain patent and trademark fees and access to revenue generated by
    mid-fiscal year 2003 to the extent provided in the President's fiscal
    year 2003 Budget. We also will need to promulgate final rules to effect
    fee changes.
        We will need to continue working to develop the proposed
    legislation and rule changes that have been identified, and continue
    the process of seeking comments from interested parties on ways to
    improve our operation.
                Labor Relations
        We will need to notify the three bargaining units representing
    USPTO employees of proposed changes and negotiate, where necessary, any
    changes in working conditions.
    Budget
        We will need enactment of an appropriation for fiscal year 2003
    that is consistent with the level of the President's 2003 Budget.
    Move to Carlyle in Alexandria, Virginia
        We will need to carefully plan the logistics for relocating the
    USPTO to a consolidated campus in Alexandria, Virginia, while
    minimizing any adverse effects on employees, applicants and the public.
    The USPTO is quickly moving into the implementation phase of the
    relocation of its facilities from 18 buildings spread throughout
    Crystal City to a single lease in a consolidated campus. This
    consolidation is expected to save us $72 million over the 20-year term
    of the lease, but it is a highly complex and difficult endeavor.
                President's Management Agenda
        Secretary Donald Evans has committed the Department of Commerce to
    speedy implementation of the President's Management Agenda. President
    Bush has stated that true government reform must be based on a
    reexamination of the role of the Federal Government. In this regard, he
    has called for ``active, but limited'' government: a government that
    empowers states, cities, and citizens to make decisions; ensures
    results through accountability; and promotes innovation through
    competition. The reforms that he has identified to help the Federal
    Government adapt to a rapidly changing world include a government that
    is: Citizen-centered--not bureaucracy-centered; results-oriented--not
    process-oriented; and market-based--actively promoting, not stifling,
    innovation, and competition.
        This strategic plan supports the President's Management Agenda:
        Human Capital.--We will provide the tools and the resources to
    ensure that we have a highly qualified, certified, knowledge-based,
    accountable workforce. Specifically, we will strengthen pre-employment
    testing; develop a competency certification program; create a new
    labor-management paradigm to meet changing business needs; streamline
    our workforce to maximize quality and efficiency; and focus our
    training, performance evaluation and assessment environment on our core
    expertise--examination.
        Competitive Sourcing.--We are committed to achieving performance
    enhancements and cost-savings, through the process of competitive
    sourcing. This process compares the capabilities and costs of
    commercial service providers with current government program providers.
    Greater competition drives down costs and yields more innovative
    solutions. We will seek improved effectiveness in the following areas:
    patent searching, patent documentation classification, and information
    technology and logistical support operations.
        Improved Financial Management.--The USPTO has a strong, fully
    integrated financial management system in place and we will continue to
    strengthen our internal controls, improve the timeliness and usefulness
    of our management information and continue to achieve an unqualified
    financial audit opinion.
        E-Government.--We are accelerating deployment of critical automated
    information systems, particularly electronic end-to-end processing of
    patent and trademark applications. In addition, we are currently
    working on ways to improve delivery schedules, reliability,
    performance, security and the cost of all our automated information
    systems.
        Budget/Performance Integration.--We will allocate budget resources
    to the programs based on the concept of linking them to the achievement
    of both enterprise-wide goals and individual unit performance. The
    USPTO will expand the involvement of applicants and the public in
    assessing the accomplishment of our goals and performance targets.
        As a reflection of our commitment to fund our strategic priorities,
    we conducted a comprehensive review of current operations and
    redirected substantial fiscal year 2003 resources toward improving
    examination quality and implementing e-Government processing.
    Long-term Agenda
        This strategic plan is only the first step toward creating a
    quality-focused, highly productive, responsive USPTO that supports a
    market-based intellectual property system for the 21st Century. Once
    the initial phases of this plan have been supported, adopted and
    implemented, the USPTO will explore further options to enhance its
    ability to more fully operate like a business.
        Within the framework of the legislative and regulatory packages
    there are a number of items that will be implemented in the out-years
    of the strategic plan.
        Restriction practice.--We will conduct a study of the changes
    needed to implement a Patent Cooperation Treaty (PCT) style unity of
    invention standard in the United States. The study will be completed
    and appropriate legislation will be introduced before the end of the
    108th Congress.
        Patent term adjustment.--Before seeking legislation to simplify
    patent term adjustment, we will explore a number of options to address
    this issue with the small business community and other key
    stakeholders.
        Mutual exploitation of examination results.--In anticipation of
    achieving our long-term goal of substantive patent harmonization, we
    will take a cautious approach to mutual exploitation of examination
    results by first evaluating International Preliminary Examination
    Reports during national stage examination. We will subsequently analyze
    the potential of whether the acceptance of examination results (granted
    patents) from foreign offices is a proper basis for use in counterpart
    applications in the United States. However, the USPTO will never
    recommend any changes that would compromise our sovereign right to
    determine patentability issues or to preclude our right to make further
    examinations when necessary.
        Copyright issues.--As part of the implementation of the electronic
    file wrapper, we will ascertain the best means for assuring that these
    documents in an application file that may be subject to copyright
    protection can be included in the USPTO's databases. The intent of this
    option would be to ensure full public access to all the information
    contained in a pending application file.
        Third party request for reexamination.--As part of the initiative
    to seek post-grant review legislation, we will explore the need for
    retention of third-party requested reexamination.
        District court actions.--We will evaluate the desirability of a
    revision to the provisions for judicial review of USPTO decisions to
    make an appeal to the U.S. Court of Appeals for the Federal Circuit the
    sole avenue for judicial review of a Board of Patent Appeals and
    Interferences or a Trademark Trial and Appeal Board decision.
        Patent Cooperation Treaty Activities.--We will actively pursue
    revisions to Patent Cooperation Treaty search and examination
    guidelines to achieve an enhanced level of reliance on PCT
    International Search Reports and International Preliminary Examination
    Reports.
        Business-like practices.--We also will explore whether we have a
    good justification for operating in a more business-like manner.
        USPTO Campus.--Once we have settled into the Carlyle campus and
    have fully implemented automated patent and trademark processing, we
    will be able to assess the feasibility of expanding our work-at-home
    program by using such virtual office concepts as telecommuting and
    flexible workplace to the maximum potential.
        Examiner Training.--We will evaluate the feasibility of reinstating
    the Examiner Education Program through corporate sponsorship to enable
    patent examiners to gain better insights into technological
    developments in the fields in which they examine.
    Some Final Thoughts
        This 21st Century Strategic Plan sets forth an ambitious agenda to
    resolve the crisis all intellectual property organizations are facing.
    We believe economic and technological progress in the United States and
    the global market can be significantly enhanced through the
    implementation of the initiatives proposed in this plan.
        We intend to refine and update our strategic plan periodically to
    adjust to changing conditions and to incorporate the best thinking of
    the entire intellectual property community. We are eager to work with
    those who believe, as we do, that American innovators and businesses
    must have the very best intellectual property system in the world. This
    21st Century Strategic Plan represents an important first step in the
    pursuit of this goal.

                              FREE TRADE CONCERNS

        Senator Gregg. Senator Hollings.
        Senator Hollings. Thank you, Mr. Chairman.
        Mr. Secretary, we have got a hot war ongoing, and there is
    no question in this Senator's mind or anybody in this room that
    we will win that one, but we have got a cold war economically
    that we are losing, and you are the Chairman of the Joint
    Chiefs of Staff in that cold war.
        As Secretary of Commerce, you are the most important
    member, and with the President, the most influential member,
    and we are looking at the results. The war did not start when
    you folks came to town. This war has been going on since World
    War II, and we had the Marshall Plan. It worked. We sent over
    the expertise, we sent over the technology and everything else
    into Europe and to the Pacific Rim and they revived them.
        But now you look and you find out you have got over $420-
    some billion in the deficit in the balance of trade last year,
    and now it is inching up to over $500 billion this year, and I
    am looking at different items--well, I've already lost, don't
    worry about my questions being about textiles. They are
    Republican and they have gone anyway, so it is a sort of twofer
    for me.
        Senator Gregg. They left New Hampshire a long time ago to
    go to South Carolina.
        Senator Hollings. Over two-thirds of the clothing I am
    looking at is imported, over 86 percent of the shoes on the
    floor are imported, but then I look at the list that you made
    of critical items to our national security, and you list about
    some 500, and we have a $5 billion deficit in the balance of
    trade in those critical items.
        We have got a deficit in the balance of trade in
    semiconductors. I know I have got a deficit in the balance of
    trade in cotton. I am riding through the cotton fields
    politicking down home, but I am importing Chinese cotton
    because we do not produce enough in this country, and then I
    looked and found that we made finally a deficit in the balance
    of trade in farm products for the second time in the history of
    the country.
        Free trade is fine in the textbooks, and fine for England
    when she was in control of the world's empire. In other words,
    when old Alexander Hamilton got the note that what we ought to
    do, having won our little freedom as a colony, we ought to
    trade back what we produced best, and they in Britain would
    trade back what they produced best, the doctrine of comparative
    advantage, David Ricardo, old Hamilton said bug off--we are not
    going to remain your colony, just shipping our timber and our
    coal and our iron ore and farm products. We are going to build
    up our own manufacturing.
        So he introduced, and by gosh, old Madison supported him in
    the second bill. The first bill was for the U.S. Seal as a
    Nation. The second bill that passed the Congress was the 50-
    percent tariff bill, protectionism, on about 60 articles, and
    we started rebuilding, and in fact we financed the country with
    protectionism until 1913, when we finally got the income tax.
        Other countries are doing the same thing, after World War
    II, the Japanese, the Koreans and everybody coming right on
    down the road, and they do not practice free trade, they
    practice protectionism.
        One of the big reasons behind my Advanced Technology
    Program was to try to compete with the subsidization, the
    financing of the industry, the banking, and not only that, but
    also protecting in every respect the retail markets, and the
    pricing by our foreign competitors. My Lexus cost me $30,000.
    In downtown Tokyo, that same car, I priced it, is $45,000.
        So my point is, I am trying to bring around our
    administration to where even Ronald Reagan was. He was long on
    common sense. We were losing out on semiconductors and still
    are, but he put in a voluntary restraint agreement on
    semiconductors and they instituted at the congressional level,
    Senator Danforth and myself, Sematech. We had VRAs in steel and
    automobiles and machine tools, and it worked, and it saved
    those industries.
        Now, we have got to start competing here. I am looking at
    the Ambassador from Singapore, Frank Levin. He recently
    concluded this United States-Singapore free trade agreement,
    and Levin said in the long run, and I quote him, the most
    significant economic aspect of this FTA, free trade agreement,
    could be provisions allowing products assembled in the two
    Indonesian outer islands to be counted as Singaporean in origin
    for the purpose of the FTA. This would allow U.S. electronics
    manufacturers to take advantage of low wage rates on those
    islands to assemble components from Singapore and then the
    electronic products can enter the United States duty free. Do
    you agree with that?
        Secretary Evans. Well, I have not seen the statement. You
    read the statement. I have not seen it before. I mean, I must
    say that I think that when you have a free trade agreement with
    Singapore, you have a free trade agreement with Singapore. You
    do not have a free trade agreement with some other country, or
    some other island. That is who the free trade agreement is
    with.
        And so I think there is a basic principle, and it is
    products and services that come from that country, not from
    some other sovereign nation or country to that country and into
    the United States, but I must admit, I do not know the exact
    relationship of those islands with Singapore. Are they separate
    countries or separate sovereign nations, or are they a part of
    Singapore? I do not think they are.
        Senator Hollings. Well, it is not the technicality of the
    thing, it is the actual tenor and thrust of low wage rates.
    That is what happened--58,000 textile jobs have gone from my
    little State of South Carolina down to Mexico. If your
    competition leaves, you have got to leave, so that swishing
    sound that old Ross talked about, I am telling you right now,
    we can hear it loud and clear in the Piedmont section of South
    Carolina, I can tell you.
        That is the whole point. What we have got to do is start
    competing, and we have done everything for that export
    administration. Your Commerce Department has commercial
    attaches around the world, and we have done everything to help
    our businesses compete.
        One other thing that we do is just that, the Advanced
    Technology Program. The distinguished Secretary talks growth,
    growth, growth. That is the buzzword around here. You get
    everybody on the message, so the growth thing is the Advanced
    Technology Program. That gives the growth. There is not any
    question.
        We have got I do not know how many studies. I think there
    were 14 studies, the Department of Commerce Inspector General,
    the National Academy of Sciences, the National Research
    Council, and go right on down the list, and they found that,
    quote, ATP could use more funding effectively and efficiently,
    and we cut and eliminated that and the Manufacturers Extension
    Partnership Program, but we give money to the Bureau of
    Economic Analysis to get more analysis. That is not going to
    hire any more people, except pointy-headed intellectuals, as
    George Wallace would say.
        We give money to the Patent and Trademark Office----
        Senator Gregg. We don't quote from George Wallace.
        Senator Hollings. That's right. Well, I thought I'd get
    you. I like to stick the Chairman every now and again.
        We give money to the International Trade Administration for
    promoting U.S. exports and all those things, they are not going
    to get growth. The one thing that is going to get the growth,
    and it has proved out, and they are not pork, they have got to
    be vetted by the National Academy of Engineering, like you
    said, and NIST.
        I got together--we had a fellow over there, Craig Fields in
    DARPA, and he found out the Navy program for research was rapid
    manufactured parts. We got it going through the Department of
    Commerce, because a boat would break down in the gulf and the
    destroyer is 30 years old, or whatever it is, and the part,
    they have to languish there in the gulf for 2 months and then
    go back. We have got a system now where they do not languish
    over 24 hours.
        So we have got DARPA, we have got NIST, we have got the
    Advanced Technology Program, and why do we eliminate it?
        Secretary Evans. Well, again, like I said, those are good
    programs, no question about it.
        Senator Hollings. That is all. You do not have to explain
    any more. I am going to quote you.
        Secretary Evans. You can.
        Senator Hollings. Thank you. I would yield to the
    distinguished Senator from Wisconsin.
        Secretary Evans. Good.

                  MANUFACTURING EXTENSION PARTNERSHIP PROGRAM

        Senator Kohl. Thank you, Mr. Chairman, and Secretary Evans,
    I would like to talk a little bit about the Manufacturing
    Extension Partnership Program.
        I know this administration supports research and
    development to maintain American leadership and technology
    development and commercialization. To quote from the Commerce
    Department's Web site, ``Americans will never win the game to
    see who can pay their workers less. We do not want to, and
    continued innovation means that we will not have to. Innovation
    excellence starts with research and development, and since
    taking office, the President has proposed record levels of
    Federal R&D.''
        So Mr. Secretary, I am concerned and puzzled by your
    proposed budget, which includes only $12.6 million for the
    Manufacturing Extension Partnership Program, called MEP. This
    program has always had bipartisan congressional support. By way
    of comparison for fiscal year 2003, we funded the program at
    well over $100 million. Given the current situation, I
    therefore cannot understand why you would virtually eliminate a
    program like this, which truly makes a difference.
        The United States is losing hundreds of thousands of
    manufacturing jobs and production know-how to low-wage
    countries like China. We have our largest imbalance with China,
    an imbalance growing by 30 percent a year. In my State of
    Wisconsin, the jobs we are losing to overseas production are
    high-paying jobs.
        To help counter this trend, my State MEP centers work
    directly with small manufacturers to help these companies
    compete by being more productive and more effective, and so my
    question is, why are you virtually gutting Federal support for
    this program? Virtually half of the program's costs and
    expenses come from the Federal Government. Small manufacturers
    in my State have said this program is important to them, and so
    I do not know what I should be telling them with respect to
    what I know is your commitment to the development of small
    manufacturing innovation, efficiency, technology, and your
    apparent opinion that the MEP program is not all that
    important. I just give you this map for you to peruse.
        Secretary Evans. Sure, thanks Senator.
        Senator Kohl. Those MEP centers, as you can see, are all
    over the country. There are hundreds and hundreds of MEP
    centers, and without Federal support they may well evaporate.
        Senator Gregg. Aren't they called Hollings centers?
        Senator Kohl. Pardon me?
        Senator Gregg. No, I think they're called Hollings centers,
    aren't they?
        Senator Kohl. Hollings centers?
        Secretary Evans. You know, I will say what I said earlier,
    I think, that there are certainly some very good stories from
    ATP that one can look to and can say were successes. I think
    the same thing applies to MEP, the Manufacturing Extension
    Partnership Program. I travel all across the country on
    university campuses, from time to time, talk to universities
    and how they are participating in these MEPs with the Federal
    Government, with other cities, with counties and so I am very
    much aware of the programs.
        First of all, I would just say it is a matter of
    priorities, and understanding at some point you have to draw
    the line, and we are not all going to draw the line at exactly
    the same place, and I know that and you know that, and so I am
    more than happy to work through the budget process with the
    committee and talk about our differences with respect to these
    programs, but when you look at the MEP program, what confuses
    me is why this program would not be a success in the private
    sector, and the reason I say that is because the studies people
    show me and want to give to me in the way of results are the
    sizeable returns that people enjoy by participating in the MEP.
        Well, having been somebody that was out there in the
    private sector for some 26 years of my life, that looks like to
    me a pretty good opportunity to start a business, because if I
    can give those kinds of returns to some of the small businesses
    in the area, then it seems like they would be willing to pay me
    for that service I am providing to them.
        You know, I had the same kind of issue, the same related
    issue with ATP, and that I really felt like if we were going to
    provide funding for seed capital, or venture capital for
    research, and if it is successful, then maybe some of that
    ought to come back to the American taxpayer that funded it to
    begin with.
        So I think it is good programs that--what I see opportunity
    for, I see some opportunity for the private sector to step in
    and provide the same kind of service. And I also see an
    opportunity, if it is successful, if it works, then maybe there
    is an opportunity to return some of the benefits, not all of
    them, but some of those benefits back to the American taxpayer
    to help pay for the program, if the program were to continue.
        Senator Kohl. I do not totally disagree with what you are
    saying, but my response is that this is not entirely a Federal
    program. This is a 50-50 partnership between the Federal
    Government and private industry, and so the question is not
    really why does the Federal Government have to fund this
    program entirely. It is that, what is wrong with the
    partnership concept?
        I mean, if this were 100 to nothing, or 100 to zero in
    terms of percent of funding, I would understand what you are
    saying, but it is 50-50. It seems to me that is reasonable--
    reasonable, and I guess my question is, why would you all take
    the position that on your list of priorities, in terms of
    funding, that almost comes down to zero?
        Secretary Evans. Well, again I guess I would say, Senator,
    it is priorities. I mean, like you, we think about the Federal
    debt and the deficit, and there are lots of worthwhile programs
    that we would like to see funded, but the resources are not
    there to fund all of the programs that we would all like to see
    funded, and so you have to draw the line some place. You have
    to make tough choices, and I understand that, we will have
    differences of opinion as to where the line should be drawn,
    and this is one of those areas where we have a difference of
    opinion.
        I am not here saying that these programs have not provided
    a service. I am not here saying that there is not some good
    results to point to historically, but I am saying that one,
    particularly at this moment in our history, we have some
    priorities of homeland security and national security that we
    are all certainly very focused on, and these are just some
    tough choices that have to be made, but certainly, as I
    mentioned, I look forward to working through the process,
    working with the committee and working through our differences
    of opinion.
        Senator Kohl. Well, thank you. I will keep on badgering if
    I can, and see if we cannot get something.
        Secretary Evans. Sure, sure.
        Senator Gregg. The Senator from Wisconsin is a very good
    badger.
        Secretary Evans. Very good, very good. Not bad. Very good,
    Chairman.
        Senator Gregg. Mr. Secretary, following up on the Senator's
    point, your comment that maybe there should be a greater return
    to the taxpayer when these MEPs produce a commercial event that
    has profitability, do you have language that you would insert
    to change the programs to create that atmosphere?
        Secretary Evans. No, Mr. Chairman, I have not. It is
    something that we would be glad to look at and would be glad to
    think about. It just seems that if you have a company that
    enjoys some 25 percent return or 35 percent return from the
    services they have been provided, then maybe they would want to
    return some funding back to the center to help some other small
    manufacturer who comes along.
        Senator Gregg. I'm attracted to the idea, so if we end up
    refunding these as a result of the Senator from Wisconsin's
    energies, I would be interested if you had language that could
    accomplish that as a part of the exercise.
        Secretary Evans. I know if I was out there running a small
    business and I had this available to my company, and it was
    successful, and we had great results from it, I would feel some
    kind of responsibility to support that program in a pretty
    direct kind of way, and so that the program could benefit other
    small, or other manufacturing companies that come along behind.
        Senator Kohl. They do. I say, the program is supported 50
    percent by these companies, so it is not as though they are
    only taking. They are also giving to the program.
        Senator Gregg. On ATP, we really do not have any place in
    the Government right now where people who are coming up with
    creative ideas on the issue of counterterrorism, technology
    ideas, can go and get a grant quickly that would allow them to
    expand their efforts, and I do not know about other offices.
    Maybe once a month somebody comes in with some fairly unique
    idea as to how they are going to screen somebody, or what they
    can do, or how they are going to develop something.

                 RESEARCH AND DEVELOPMENT FOR COUNTERTERRORISM

        Would it make sense if we reauthorized or refunded ATP to
    redirect it into an exercise of being more focused on
    counterterrorism, producing technology for counterterrorism,
    experimental or commercial?
        Secretary Evans. I guess what has been called to my
    attention is, Homeland Security is requesting some $900 million
    in this area of R&D for counterterrorism.
        Senator Gregg. How are they going to oversee that? Well, we
    will have Secretary Ridge. We will ask him.
        We have been joined by the chairman of the full committee.
        Senator Stevens. Good morning, Mr. Secretary.
        Senator Gregg. Do you have anything more?
        Senator Hollings. Yes, I will, but for example, from 1992
    to 2004, the ATP funded $270 million in projects with primary
    relevance to the detection of and protection from and response
    to potential terrorist activity. They have been coming to my
    office, too, and I have been sending them over there and it is
    working. You are helping Secretary Ridge.
        Senator Gregg. I think it makes a lot of sense.
        Senator Stevens, do you have any questions?
        Senator Stevens. No, I had no questions this year. I just
    stopped by to see our friend and say hello.
        Senator Hollings. Well, I have a few more questions, and I
    am like Senator Stevens and I am going to work with the
    chairman. Your budget is in good shape, and I will work with
    Chairman Gregg for what he thinks we ought to do.
        But frankly, I am worried about this war, and I have moved
    from the military to the trouble we have in the world
    community. If the President asked me to come over in the next
    10 minutes and asked me what to do, I would say, I would get
    that best friend of yours, Secretary Evans, up to Canada. You
    cannot just get everybody--I see on my TV this morning the
    President is on the phone trying to still get support. Isn't
    that a hell of a note? But he is on the phone this morning
    trying to get support.
        Now, we all support it, we are committed, but in my war,
    World War II, the first in was Canada. So we have got to get
    you back involved. You come with the calling card of President
    Bush--and you know how to talk to people. You can help us with
    Vicente Fox. You know him down there in Mexico.
        When you start an engagement of this kind, and can't even
    get Mexico and Canada, we have got to start working back
    upstream now to get some help from the United Nations and
    everything else like that, and do not worry about budgets and
    ATP and MEP and all that other stuff. Right now, let us get
    going on this war. Yes, sir.
        Senator Gregg. Senator Stevens.
        Senator Stevens. Mr. Secretary, we lost a big one yesterday
    as far as my State is concerned, but I know we have had talks
    about the Alaska gas pipeline. We have a new hybrid proposal we
    want to discuss with the administration, and I hope we can get
    some time on your schedule to discuss that sometime soon.
        Secretary Evans. We can.
        Senator Stevens. We will be coming in this week and next
    week to talk about it. It's not an immediate project--it won't
    run gas to our system before 2011, but it is an 8-year project
    at a minimum. If we can get it off the ground this year it will
    be very meaningful. I hope you are both familiar with that
    project.
        All of the gas that is produced with 17 billion barrels of
    oil we produce and send down the Alaska pipeline was separated
    out and put right back in the ground right there at Prudhoe. We
    do not have to explore for it. All we have to have is a
    mechanism to transport it, and it is a substantial amount of
    gas.
        Secretary Evans. I would be glad to come by at your
    calling. Just give me a call and I will be there.
        Senator Stevens. Maybe we can arrange for you to come back
    up to our State again this summer and take a look at it.
        Secretary Evans. Good. Thank you, Senator.
        Senator Gregg. While we are here, I do want to acknowledge
    and thank the chairman of the committee for returning a hearing
    room to its rightful spot.
        Senator Hollings. I thank you, Mr. Chairman.
        Senator Gregg. We very much appreciate it.
        Senator Hollings. I was chairman of legislative
    appropriations. I walked in here and it was just a pile of wood
    and paint cans and everything else, and the Architect of the
    Capitol was using this just as a storeroom to do repair work
    all over, and we cleaned it up.
        Senator Gregg. I believe this was the room that the
    Dartmouth College case was argued in by Daniel Webster.

                         ADDITIONAL COMMITTEE QUESTIONS

        Senator Hollings. And Marbury v. Madison.
        [The following questions were not asked at the hearing, but
    were submitted to the Department for response subsequent to the
    hearing:]
                   Questions Submitted by Senator Judd Gregg

                               HOMELAND SECURITY

        Question. Mr. Secretary, BIS' work towards controlling the
    proliferation of sensitive dual-use technologies is critical to our
    national security. We are now faced with a restless nuclear power on
    the Korean Peninsula that has already acquired the necessary
    technologies to create weapons of mass destruction. There are many more
    regimes in the world that are hostile to the United States and are
    aggressively pursuing these technologies. How is BIS adapting to this
    rapidly changing global security environment? How has its mission
    changed since 9/11? Have BIS' requirements changed?
        Answer. The Bureau of Industry and Security (BIS) administers U.S.
    export controls for dual-use items, including items that may be used
    for the development of weapons of mass destruction, delivery vehicles
    for these weapons, and advanced conventional arms. Its mission remains,
    as before, to advance U.S. national security, foreign policy, and
    economic interests. Since September 11, 2001, BIS has been actively
    working with its counterparts in the Departments of State, Energy, and
    Defense to ensure that export controls address current global security
    challenges and, in particular, are adequate to prevent the acquisition
    of such items and use by hostile nations or terrorist groups. To that
    end, we have advocated proposals to strengthen export controls and
    procedures in all four multilateral export control regimes (the Nuclear
    Suppliers Group (NSG), the Australia Group (AG), the Missile Technology
    Control Regime (MTCR), and the Wassenaar Arrangement).
        For example, in the NSG, the United States has proposed a ``watch
    list'' of non-controlled commodities that could be of use to North
    Korea's nuclear program. This list would be shared with non-regime
    partners to make them more aware of the commodities that could aid
    North Korea's nuclear program. The AG has accepted U.S. proposals to
    tighten the controls on small fermenters that terrorists could use to
    produce biological warfare agents. The AG also has agreed to a U.S.
    proposal to tighten controls on technology transferred through
    intangible means such as the Internet. In the MTCR, the United States
    has advocated expanding the controls to include small unmanned aerial
    vehicles that could have applicability in spreading chemical and
    biological weapons agents. In the Wassenaar Arrangement, the United
    States advocated amending the ``Initial Principles'' to include, as a
    core regime objective, the prevention of terrorism.
        These regime changes support BIS efforts to address security
    concerns originating not only from hostile nations but also from
    terrorist groups and individuals.
        Question. Your fiscal year 2004 request for the Bureau is only $3.5
    million above the fiscal year 2003 enacted level. Is this amount
    adequate to meet all of the new requirements you will surely face in
    the upcoming months and years?
        Answer. BIS is comfortable with the funding request contained in
    the President's budget. In order to address new requirements, BIS
    believes that the budget request should be funded in full.
        Question. Is BIS' technology infrastructure adequate? From high-
    powered data warehousing at headquarters to satellite phone capability
    in the field, does BIS have the tools it needs to do its job?
        Answer. BIS currently has an adequate technology infrastructure to
    perform its mission-critical functions. BIS is in the process of
    modernizing its Export Control Automated Support System (ECASS), which
    was developed in the mid-1980s, from a mainframe-based system to a
    modern server-based system with a relational database. BIS also has
    upgraded all personal computers, desktop software, and
    telecommunications links to provide its users with up-to-date
    technology and to improve productivity. BIS continues to seek ways to
    modernize its technology infrastructure to empower its employees to
    deliver critical services to its customers.
        To that end we note that in the President's fiscal year 2004 budget
    proposal, additional resources are requested to support BIS's Seized
    Computer Evidence Recovery System (SCERS) program. This program, which
    uses evidence seized from computer disk drives, has a significant
    backlog of evidence awaiting analysis. This delay has hindered the
    processing of cases and the completion of time-sensitive
    investigations. In the President's fiscal year 2004 budget, BIS seeks
    additional personnel (one agent and two technical analysts) to staff a
    modern SCERS lab, thus alleviating the burden placed on SCERS agents in
    the field currently performing this work.
        Question. To what extent will BIS be working with the Department of
    Homeland Security? In your opinion, what is the appropriate
    relationship between BIS and Homeland Security? To what degree will the
    new Department influence BIS' mission, policies, and agenda?
        Answer. BIS has an excellent working relationship with various
    agencies now located in the Department of Homeland Security, and we
    anticipate that we will continue to work well with those agencies. BIS
    has long had an excellent working relationship with the U.S. Customs
    Service in the administration and enforcement of dual-use export
    controls. BIS also maintains a good working relationship with the
    Information Analysis and Infrastructure Protection Directorate of DHS,
    to which BIS's Critical Infrastructure Assurance Office was transferred
    earlier this year. The creation of the Department of Homeland Security
    has not altered BIS's mission, policies, or agenda.
        Question. To what extent is the Bureau of Industry and Security
    working with the Department of State, which has responsibility for
    regulating weapons exports? Could you describe how this relationship
    has evolved since September 11? Are State and BIS sharing information
    and lessons-learned? Are State and BIS collaborating their efforts
    overseas, for example, sharing information about end-use checks,
    monitoring, enforcement, and the like?
        Answer. BIS continues to have a close working relationship with the
    Department of State on the implementation of U.S. export controls. BIS
    has been involved with the Departments of State, Defense, and Energy,
    and the National Security Council in a comprehensive review of goods
    and technologies on the U.S. Munitions List (USML). The State
    Department implements export controls under the USML. In addition, by
    Executive Order, State reviews export license applications submitted to
    BIS and BIS-promulgated regulations concerning exports of U.S. dual-use
    goods and technologies. BIS also works closely with State on changes to
    the multilateral export control regime lists. Through these various
    processes, State and BIS share information about countries and end-
    users of concern. Moreover, since the mid-1990s, BIS has worked closely
    with State to share information relevant to each other's watch lists
    and end-use checks. Finally, BIS works closely with the State
    Department in rendering technical assistance to other countries to
    assist the development of strong indigenous export control systems and
    improve cooperation in export controls, under the State Department
    administered Export Control and Border Security program.

                       CRITICAL INFRASTRUCTURE PROTECTION

        Question. Mr. Secretary, CIAO was created within the Department of
    Commerce in fiscal year 1999. A conscious decision was made to put CIAO
    at Commerce because of Commerce's strong ties to the private sector,
    which controls the lion's share of our national critical infrastructure
    (the Internet and utilities, to name just two examples). This month,
    CIAO began its transition to the Department of Homeland Security.
        How do you think CIAO's mission will change once it is incorporated
    into the new Department? Will CIAO continue to have primary
    responsibility for liaising with the private sector on matters relating
    to critical infrastructure protection and for ensuring that the private
    sector does not inadvertently create weaknesses in our national
    critical infrastructure, or will this responsibility remain at
    Commerce?
        Answer. CIAO's mission consisted of three main functions related to
    critical infrastructure protection when it transferred into the
    Department of Homeland Security (DHS): national outreach and awareness,
    planning and policy coordination, and critical asset and
    interdependency identification for federal government agencies (Project
    Matrix). Consistent with the requirements of the Homeland Security Act
    of 2002, these functions were fully integrated into the Information
    Analysis and Infrastructure Protection Directorate. Since private
    industry owns and operates 85-90 percent of the nation's critical
    infrastructures, we anticipate that DHS will need to continue to work
    closely with U.S. industry, and has primary responsibility for doing
    so. The Planning and Partnerships Office of the new Directorate retains
    CIAO's core public-private partnering competencies and previously-built
    contacts with the private sector. Commerce stands ready to assist where
    appropriate.
        Question. Do you think Homeland Security is well-suited to handle
    the task of liaising with the private sector, as CIAO did while it was
    at Commerce? How do you think companies will react to having DHS--which
    is essentially a law enforcement agency--involved in their internal
    efforts to strengthen their systems against attack?
        Answer. Our experience suggests that U.S. industry generally
    cooperates well with government agencies on issues of national security
    and homeland defense. As we all have seen since September 11, 2001,
    national and economic security depends on homeland security. Private
    industry in general recognizes this new reality. We are optimistic that
    industry and the Department of Homeland Security will have a productive
    and mutually beneficial relationship with respect to critical
    infrastructure protection. The Commerce Department stands ready to
    assist in this effort as appropriate.
        Question. With the transfer of CIAO, will the Bureau of Industry
    and Security have any role in critical infrastructure protection?
        Answer. The Department of Commerce generally, and the Bureau of
    Industry and Security specifically, will continue to carry out programs
    and activities relating to the economic security component of critical
    infrastructure protection--as they did before CIAO was created in the
    Department of Commerce. For example, the National Telecommunications
    and Information Administration has responsibility for spectrum
    management and chairs the interagency Internet Protocol version 6
    (IPv6) task force. The Technology Administration's National Institute
    for Standards and Technology will continue its leading role in
    developing standards relating to the physical and cyber security of
    products, services, and processes, which are shared internationally as
    well as domestically.
        The Bureau of Industry and Security (BIS) continues to have
    significant defense industrial base responsibilities. The defense
    industrial base was recognized as one of the fourteen critical sectors
    in the National Homeland Security Strategy. BIS administers the
    priorities and allocations authority under Title I of the Defense
    Production Act to ensure the timely delivery of industrial products,
    equipment, materials, and services for approved national defense and
    homeland security programs. Under that authority, BIS has assisted the
    Transportation Security Administration and the FBI in acquiring
    products and equipment needed for the war on terrorism. BIS also
    conducts assessments of the viability of various critical industry
    sectors. Finally, consistent with its mission of furthering U.S.
    national security and economic security, BIS continues to advocate the
    importance of protecting the country's critical infrastructures and
    assets.
    national institute of standards and technology (nist)/homeland security
        Question. It is clear that NIST and the Department of Homeland
    Security (DHS) must develop a close working relationship. Have you had
    any preliminary talks with Secretary Ridge on this subject? Do you
    believe the Director of NIST has a clear understanding of what will be
    expected of NIST under the new homeland security framework? Does he
    have the resources he needs to meet these requirements?
        Answer. There have been extensive discussions between the
    Department of Commerce (DoC) and the Department of Homeland Security
    (DHS) on the need to develop a close and effective collaboration. Such
    discussions led to the signing of a Memorandum of Understanding (MOU)
    on May 22, 2003, between the Technology Administration (TA) of DoC and
    the Science and Technology (S&T) Directorate of DHS. The MOU allows the
    S&T Directorate to leverage TA's, and specifically NIST's, expertise in
    measurement science and standards to accelerate the development,
    testing, evaluation, and deployment of homeland security technologies.
    S&T and TA seek to collaborate on research and planning activities, and
    share where appropriate facilities, personnel, and scientific
    information. This MOU builds on the long history of collaboration
    between NIST and the various agencies incorporated into DHS, such as
    the Federal Emergency Management Agency (FEMA), and the Office for
    Domestic Preparedness (ODP). To further improve ties between NIST and
    DHS in the areas of measurements and standards, NIST has detailed on a
    full-time basis the Division Chief from its Ionizing Radiation Division
    and a staff member (part time) from its Computer Security Division to
    the Office of Standards in the DHS S&T Directorate.
        The Director of NIST has a clear understanding of NIST's role in
    homeland security. This role is defined by NIST's unique mission to
    develop and promote measurement, standards, and technology to enhance
    productivity, facilitate trade, and improve the quality of life.
    Because of the overwhelming importance of homeland security to the
    quality of our life, NIST will work with the new DHS to ensure that the
    appropriate measurements and standards are in place to support the
    efforts of DHS in chemical, biological, radiological, nuclear, and
    explosive detection and defense, cybersecurity, critical infrastructure
    protection, first responders, etc. NIST's partnership with DHS will
    build upon years of experience working with a number of the agencies
    making up the new Department.
        NIST is also building upon its experience in consensus standards
    and its partnerships with standards development organizations (SDO's)
    to address the needs for homeland security standards. The Chief of
    NIST's Standards Services Division is the government co-chair of the
    ANSI Homeland Security Standards Panel that is coordinating the efforts
    of standards development organizations (SDOs) in developing standards
    required for homeland security technologies.
        Because of the importance of homeland security to our citizens,
    NIST has redirected resources to develop the critical measurements and
    standards in this area. When appropriate, NIST homeland security
    efforts are supplemented by funds from other government agencies. When
    sufficient funding is not available through these approaches, the
    Administration has proposed budget initiatives for NIST in the area of
    measurements and standards for homeland security. For fiscal year 2004
    the following homeland security budget initiatives have been proposed:
    Homeland Security: Standards, Technology, and Practices for Buildings
    and First Responders ($4.0 million, 7 permanent positions, and 5 FTE);
    Measurement Infrastructure for Homeland Security ($5.3 million, 12
    permanent positions, and 9 FTE); and Standards for Biometric
    Identification Systems ($1.0 million, 4 permanent positions, and 3
    FTE).

                  NIST/LAW ENFORCEMENT TECHNOLOGIES STANDARDS

        Question. Mr. Secretary, a great deal of funding has been earmarked
    during the last two years to help first responders purchase the
    equipment they need to effectively combat terrorism. Justice has been
    doing some work in the area, but standards-development is really NIST's
    bailiwick.
        The President's budget does not request any direct funding for the
    Office of Law Enforcement Standards at NIST. Are you planning to
    request funds for OLES in the fiscal year 2005 budget request? Wouldn't
    you agree that there is a significant need in this area and that NIST
    is uniquely qualified to fill it?
        Answer. In response to your statement, developing performance
    standards for communication and personal protection equipment for first
    responders is very important and the National Institute of Standards
    and Technology (NIST) has an important role to play here. For several
    years, NIST's Office of Law Enforcement Standards (OLES) has been
    working with the Department of Justice's National Institute of Justice
    (NIJ) and other government agencies developing performance standards
    for first responders.
        The ability of law enforcement and public safety agencies to
    communicate and exchange data in critical situations is fragmented by
    equipment incompatibilities and the lack of standards to provide a
    common, nationwide approach to telecommunications and information
    sharing. In its efforts to resolve this issue, NIST's OLES has been
    working hard on a Public Safety Communications Standards program geared
    toward solving public safety interoperability and information sharing
    problems by developing and adopting NIJ standards for voice, data,
    image, and video information transfers for first responders. In
    addition, OLES has been holding discussions with end users about their
    requirements and evaluating commercial devices instrumental to ensure
    that the equipment and technologies currently being used by the U.S.
    first responders community are interoperable, safe, dependable, and
    effective.
        In addition, OLES has been managing a program since 1999, to
    develop CBRNE (chemical, biological, radiological, nuclear, and
    explosive) protective equipment standards for emergency first
    responders. This program, initially funded by NIJ, will continue with
    funding provided by the Office for Domestic Preparedness (ODP). An
    Interagency Agreement has been signed between the ODP, formerly of the
    Office of Justice Programs, now part of the Borders and Transportation
    Security Directorate, Department of Homeland Security, to continue the
    program managed by OLES for the development of a national suite of
    CBRNE protective equipment standards for emergency first responders.
    This program led to a National Institute of Occupational Safety and
    Health (NIOSH) standard for Self-Contained Breathing Apparatus (SCBA)
    and Air Purifying Respirators (gas masks) and produced an important set
    of guides and databases to help emergency first responders in the
    evaluation and purchase of chemical and biological detection, personal
    protective, and communications equipment. The continuation of this
    program under ODP will be significantly expanded beyond development of
    personal protective equipment standards to address radiological
    threats, decontamination standards, and explosive detection standards.
        Yes, the National Institute of Standards and Technology (NIST)
    believes there is a significant need in the criminal justice and public
    safety area and NIST is uniquely qualified to fill it. NIST has
    successfully filled these needs over the past 32 years through a number
    of reimbursable agreements with other agencies, such as the Department
    of Justice's National Institute of Justice, the Department of
    Transportation, and most recently with the Department of Homeland
    Security's Office of Domestic Preparedness.
        The $3 million funding for NIST's Office of Law Enforcement
    Standards (OLES) provided in the fiscal year 2003 Omnibus
    Appropriations Act will go a long way in helping NIST to ensure that
    NIST has the critical personnel with the expertise to implement law
    enforcement standards initiatives proposed by their partner federal
    agencies as specifically stated in the Act itself. This funding
    supports NIST with an appropriation in fiscal year 2003 for the staff
    and administrative costs related to the Office of Law Enforcement
    Standards, giving NIST the means to independently hire, maintain and
    manage the appropriate technical expertise to perform its
    responsibilities to the law enforcement community. In addition, it
    allows NIST to devote the entirety of its funding from reimbursable
    sponsors to the technical needs of those sponsors, without diverting
    any funding from sponsors to cover staff and administrative costs at
    NIST.
        At the time the fiscal year 2004 President's budget request was
    submitted, the fiscal year 2003 Omnibus Appropriations Act had not been
    enacted. Therefore, the fiscal year 2004 President's budget request
    builds from the fiscal year 2003 President's budget request, which did
    not include any direct appropriated funding for NIST's OLES. Decisions
    on the funding priorities to be included in the President's fiscal year
    2005 budget have not been finalized, and we will bear your concerns in
    mind as we evaluate the many competing requests for funding.

                     NIST/WORLD TRADE CENTER INVESTIGATION

        Question. Before NIST took over the World Trade Center
    investigation, there was a huge controversy over whether too much of
    the structural steel from the Twin Towers had been sold to scrap yards,
    creating an impossible situation for NIST's scientist and engineers.
    Now that NIST is seven months into the investigation, has it been able
    to gather enough evidence including structural steel to conduct the
    investigation? Could you report on NIST's progress or any preliminary
    findings from the investigation?
        Answer. Yes, the National Institute of Standards and Technology
    (NIST) is basing its review, analysis, modeling, and testing work for
    the World Trade Center (WTC) investigation on a solid foundation of
    technical evidence.
        NIST has in its possession nearly 250 pieces of WTC steel. The vast
    majority of the pieces are of significant size and include perimeter
    prefabricated column-spandrel elements, rectangular box beams, wide
    flange sections, truss sections, channels and several smaller pieces,
    such as bolts. As of March 28, 2003, NIST has catalogued 235 pieces of
    WTC steel which includes a database with photographic records and
    member markings. In addition, NIST has examined additional steel stored
    by the Port Authority at JFK airport and has transported 12 specimens
    to NIST. NIST believes that this collection of steel from the WTC
    towers is adequate for purposes of the investigation.
        NIST has also received considerable cooperation and large volumes
    of information from a variety of organizations and agencies
    representing the building designers, owners, leaseholders, suppliers,
    contractors, and insurers.
        Local authorities providing information include the Port Authority
    of New York and New Jersey (PANYNJ or Port Authority) and its
    consultants and contractors; the Fire Department of New York (FDNY);
    the New York Police Department (NYPD); the New York City Department of
    Design and Construction (DDC); the New York City Department of
    Buildings (DOB); and the New York City Office of Emergency Management
    (OEM). In addition, the Occupational Safety and Health Administration
    (OSHA) provided correspondence sent to it regarding the evacuation
    experience of WTC occupants on September 11, 2001.
        NIST also has received information from Silverstein Properties
    (Silverstein) and its consultants and contractors; the group of
    companies that insured the WTC towers and its technical experts; Nippon
    Steel; Laclede Steel; Isolatek International, formerly known as U.S.
    Mineral Products; Marsh & McLennan (a tenant of WTC 1), and Roger Morse
    Associates. The information from Silverstein and the insurance
    companies includes the large body of technical work completed by both
    parties as part of the insurance litigation involving the WTC towers,
    such as reports on the structural collapse, fire spread and severity,
    and wind tunnel test results for the WTC towers. In addition, technical
    experts for both parties independently provided extensive briefings to
    the WTC investigation team and discussed the tenability environment and
    the evacuation procedures in the buildings.
        Solid progress has been made by the investigation team at the one-
    third mark of the ongoing 24-month effort. On May 7, 2003, NIST
    released a progress report (http://wtc.nist.gov/) on the WTC
    investigation, its second since the effort began in August 2002. This
    interim report does not include any conclusions or make any
    recommendations, since the investigation is still in its early stages.
        Key points in the progress report included:
      --a status update on efforts to collect critical data about the WTC
            disaster of September 11, 2001, such as building documents,
            video and photographic records, emergency response records and
            oral histories (a complete listing of materials collected to
            date and those items still needed are included in the report);
      --an interim report that documents the procedures and practices used
            to provide the passive fire protection (fireproofing) for the
            floor system of the WTC towers (nothing in the interim report
            based on a review of factual data in documents obtained by NIST
            should be taken to imply that the floor trusses played a
            critical role in the collapse of the WTC towers);
      --a detailed description of the key factors that NIST is considering
            in its analysis of the various collapse scenarios hypothesized
            for the WTC buildings, including fire endurance testing of a
            typical WTC floor system and individual steel members;
      --a look at the integrated approach for identifying the most probable
            of the technically possible collapse sequences for WTC 1 and 2
            (the Twin Towers) and WTC 7; and
      --a review of NIST plans originally presented in April 2003 for
            studying the WTC evacuation and emergency response by
            collecting first-person data from survivors (both WTC occupants
            and first responders), families of victims, and individuals
            with operational and command authority during the WTC disaster.

                 NIST/WARWICK, RHODE ISLAND FIRE INVESTIGATION

        Question. Mr. Secretary, in January, we in New England suffered a
    horrible tragedy when 96 people were killed in a nightclub fire in West
    Warwick, Rhode Island. Was the National Construction Safety Team Act
    successful in helping avoid confusion over responsibility for the
    investigation into this tragedy? How is the Administration proposing to
    fund this and future investigations? If NIST is going to be responsible
    for investigating these events when they occur, should funds be set
    aside within NIST for this purpose to avoid the delay in starting the
    investigation?
        Answer. The tragic fire in West Warwick, Rhode Island, is the type
    of event that the National Institute of Standards and Technology (NIST)
    would have investigated under its existing authority prior to the
    passage of the National Construction Safety Team (NCST) Act. What the
    Act has done, however, is to allow us to respond immediately and to
    raise the awareness and appreciation of our activities in the eyes of
    local officials and the other Federal agencies that are conducting
    investigations. The Act provides for the criminal investigation to have
    priority over NCST activities. We have briefed local and state
    authorities on the role and objectives of the NCST investigation, and
    established liaisons with the Rhode Island State Fire Marshal's office,
    the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) and the
    U.S. Fire Administration. The NCST is gathering evidence, to the extent
    possible, independent of any criminal investigations.
        The Rhode Island investigation plan was issued based upon the
    redirection of base funds. The plan targets completion of the
    investigation by the end of calendar year 2003.
        NIST has not been appropriated any additional funding for
    activities associated with the NCST Act. Where appropriate, NIST will
    continue to undertake investigations of major building disasters as
    authorized by law.

               PATENT AND TRADEMARK OFFICE, INCREASE IN USER FEES

        Question. PTO's fiscal year 2004 budget request includes a 15
    percent increase in user fees. This fee increase will mean an
    additional $300 million in fee revenue for the PTO that it would
    otherwise not collect. How is a 15 percent increase in user fees
    justified when, under the current plan, PTO does not expect to
    significantly decrease patent pendency?
        Answer. The fee legislation currently pending in Congress will
    generate additional revenues and ensure the implementation of the
    USPTO's 21st Century Strategic Plan. If the fee legislation is not
    implemented for fiscal year 2004, the USPTO's projection of fee
    collections is $1,302.7 million and if the fee legislation is
    implemented before fiscal year 2004, the USPTO's projection of fee
    collections is $1,503.8 million in fiscal year 2004. This equates to an
    additional $201.1 million, or a 15 percent increase. The proposed Fee
    Modernization Act of 2003 is a critical component to the successful
    implementation of the strategic plan. The strategic plan aims to
    modernize the agency for the 21st century by addressing patent pendency
    as well as quality, workload, and e-Government. As Under Secretary
    James E. Rogan has testified before Congress, without the additional
    fees secured by passage of a fee bill this year, average patent
    pendency will climb to more than 40 months by 2008.
        The USPTO has been responsive to concerns that it continually
    attempts to address workload demands by hiring increasingly more patent
    examiners. The 21st Century Strategic Plan addresses this concern
    through a number of initiatives that will enable patent examiners to
    focus on the core mission of the organization--the examination of
    patent applications. These initiatives include the multi-track patent
    examination process, the mutual exploitation of search results,
    competitive sourcing of search, and the proposed fee restructuring.
    These initiatives, plus Under Secretary Rogan's top-to-bottom review
    resulted in a plan that reduces patent examiner hires through fiscal
    year 2008 by 2,400 compared to the fiscal year 2003 Business Plan.\1\
    As noted in the strategic plan, average patent pendency time will
    increase over the short-term and be at 27 months in 2008. The USPTO
    will continue to work toward reducing pendency and pursue the long-term
    optimum goal of 18 months pendency beyond the five-year horizon of the
    strategic plan.
    ---------------------------------------------------------------------------
        \1\ The 2003 Business Plan was submitted to the Congress in
    February 2002 as part of the USPTO's fiscal year 2003 Budget.
    ---------------------------------------------------------------------------
                                  [ATTACHMENT]

            CONSEQUENCES OF FAILING TO ENACT FEE LEGISLATION IN 2003

        Inability to Hire Needed Examiners.--In fact, patent pendency will
    increase dramatically because of our inability to hire 2,900 new patent
    examiners. An inability to hire patent examiners beginning in fiscal
    year 2003 and the out years will increase processing delays and
    severely impact USPTO's ability to bring down pendency. Over 140,000
    patents will not issue over the next five years if the USPTO is held to
    current fees and funding levels.
        Unexamined Patent Applications Skyrocket.--If recommended funding
    levels are not appropriated in future years, the inventory of
    unexamined patent applications would skyrocket to over 1,000,000
    applications by 2008 (more than double the current amount).
        Average Patent Pendency Skyrockets.--As measured from the time of
    filing, pendency would jump to over 40 months in 2008, the highest
    pendency rate in more than four decades.
        Delaying Full e-Government.--Inability to meet the stated goals of
    a fully electronic, e-Government environment for patent and trademark
    applications.

                          PTO/FIVE YEAR STRATEGIC PLAN

        Question. Mr. Secretary, I understand the PTO is now placing a
    higher priority on goals like quality assurance and e-government
    initiatives (the latter goal being driven primarily by OMB). While I
    agree that these are valid goals, I remain concerned about the issue of
    patent pendency. I understand that there is currently a 400,000 patent
    backlog. How will the Five Year Strategic Plan help decrease patent
    pendency? Will the PTO remain committed to the goal of 18 months for
    patent pendency? When can we realistically expect PTO to meet this
    goal?
        Answer. As you know, there is general agreement among the nation's
    CEOs, the inventor community, throughout lawyers in the bar, and people
    in the capital equity markets that issuing U.S. patents faster (vis-a-
    vis reducing pendency) without adequate quality assurance behind them
    would lead to uncertainty for the tech community and be a terrible
    mistake overall. Further, if we do not complete our e-government
    initiatives to electronically process patent applications, we would
    remain less able to respond quickly to changes in workloads.
        As Under Secretary Rogan has also testified before Congress,
    without the passage of the Fee Bill, the USPTO's patent application
    backlog is predicted to rise to 1,000,000 by 2008 and more than 140,000
    patents will not issue in that time frame. We continue to work on all
    of these agency goals--pendency, backlog, quality assurance--through
    the 21st Century Strategic Plan and its initiatives. [See following
    graphs.]

        While the USPTO is making quality and e-Government initiatives an
    immediate priority, it continues to implement initiatives to support
    the USPTO's long-term pendency goals. The 21st Century Strategic Plan
    has aggressive timeliness goals: to make available, on average, a first
    Office action for first-filed U.S. non-provisional patent applications,
    at the time of 18 month publication, and a patent search report for
    other patent applications in the same time frame--by far the fastest in
    the world. This will be accomplished by redesigning the entire patent
    search and examination system based upon multiple-examination tracks,
    greater reliance on qualified patent search services, and variable,
    incentive-driven fees.
        Upon enactment of the Fee Modernization Act of 2003, the USPTO will
    move from a ``one-size-fits-all'' patent examination process to a
    multi-track examination process that leverages search results of other
    organizations and permits applicants to have freedom of choice in the
    processing of their applications. The new process will eliminate
    duplication of effort, encourage greater participation by the applicant
    community and the public, and improve the quality of patents and
    decrease processing time. For example, the proposed fee legislation
    contains significant authorities needed to implement the strategic
    plan, such as providing refundable search and examination fees rather
    than the composite fee currently charged. This change will provide
    patent applicants with the opportunity to terminate the application
    process because an invention does not have sufficient commercial
    viability and obtain a refund. This would abandon the application and
    obviate the need for the USPTO to proceed with the examination of the
    application. The USPTO will continue to work toward reducing pendency
    and pursue the long-term optimum goal of 18 months pendency beyond the
    five-year horizon of the strategic plan. Their best estimate is that it
    will take at least a decade to achieve the 18-month goal.
        Under a new paradigm, the USPTO will concentrate Office expertise
    as much as possible on the core government function of examination, and
    over the five-year horizon of the strategic plan, expects to hire 2,400
    fewer patent examiners than originally envisioned. However, they will
    make available, on average, a first Office action for first-filed U.S.
    non-provisional applications at the time of 18 month publication, and a
    patent search report for other patent applications in the same time
    frame which industry acknowledges is a highly beneficial interim
    pendency solution.

                      PAPERLESS PATENT APPLICATION PROCESS

        Question. Could you describe PTO's progress towards instituting a
    paperless patent application process? How high a priority is this for
    the PTO? How is this related to PTO's implementation of the various e-
    government initiatives?
        Answer. The USPTO's priorities in the 21st Century Strategic Plan
    are to (1) improve patent and trademark quality, (2) aggressively
    implement e-Government to handle workload associated with the 21st
    Century economy, and (3) reduce patent and trademark pendency. One of
    the USPTO's highest priority e-Government initiatives is delivering an
    operating pipeline to process patent applications electronically by
    October 1, 2004, including electronic capture of all post-filing paper
    correspondence. At the center of the e-Government strategy is the
    collaboration with the European Patent Office (EPO) to use their
    ePHOENIX system, and collaboration with the Trilateral Offices (EPO and
    the Japan Patent Office) to achieve common goals and share systems
    already in use or development. The USPTO's Tools for Electronic
    Application Management (TEAM) project will also continue to support the
    e-Government strategy.
        The USPTO is on schedule to meet its October 1, 2004 planned
    electronic patent application processing date as follows:
        In May 2003, a prototype Image File Wrapper (IFW) system was
    installed in five Patent Examining Pilot Art Units, and more than 100
    patent examiners and support staff were trained on the use of the
    system.
        In June 2003, the USPTO will begin scanning all newly filed patent
    applications into the IFW system, and the digital copy replaces paper
    as the official patent file.
        In July 2003, the USPTO will begin full production roll-out of the
    IFW system. Seven Art Units, comprised of about 100 employees, will be
    added to the system each week. Upwards of 7,000 applications will be
    scanned per week resulting in adding over 8 million pages to the
    database each month.
        In December 2003, all working patent application files of the three
    Technology Centers moving to the USPTO's new Carlyle facility in
    Alexandria, Virginia, will be operating on the IFW system. At this
    time, there will be over 2,000 total users of the system.
        In January 2004, the USPTO will begin the final phase of full
    deployment of the IFW system throughout the Patent Examining Corps.
        In October 2004, all patent application processing will occur in a
    totally electronic environment that will be used by over 4,000 patent
    examiners and 2,500 support staff.
        Beginning in fiscal year 2004, the USPTO will collaborate with the
    European Patent Office to initiate an effort to process captured patent
    application images into text and associated images. This effort will
    use an eXtensible Markup Language (XML)-based data representation
    enabling text-based patent application processing (e.g., document
    navigation, document searching) by fiscal year 2006.

                                SOFTWOOD LUMBER

        Question. Mr. Secretary, are you aware of the softwood lumber
    issue, and can you give us a status report on the countervailing and
    antidumping investigations? Are you aware of the particular problem
    that some loggers and landowners in New England have had, which is that
    a dumping tax was, in effect, imposed on U.S. lumber that is shipped to
    Canada for processing? Is there going to be any opportunity for these
    companies to present their case and thus rectify this situation?
        Answer. After complex and thorough investigations, antidumping and
    countervailing duty orders on softwood lumber from Canada were issued
    in May 2002.
        I am aware of the issue involving duties being imposed on U.S.
    lumber shipped to Canada for processing and re-imported into the United
    States. In fact, in February 2003, based on comments we received, the
    Department issued a scope ruling to address this very issue. In
    essence, we clarified that U.S.-origin softwood lumber that is further
    processed in Canada may re-enter the United States free of antidumping
    and countervailing duties so long as, at the time of importation, the
    Bureau of Customs and Border Protection (BCBP) can be satisfied that
    the lumber was first produced in the United States. We believe that
    this matter has now been resolved. Since the Department issued its
    scope clarification, we have heard of no instances of BCBP collecting
    duty deposits on U.S. lumber processed in Canada and returned to the
    United States.
        In addition, during May 2003, we received numerous requests for
    administrative reviews of both the antidumping and countervailing duty
    orders. We will be initiating the administrative reviews by the end of
    June 2003.

                              WORKING CAPITAL FUND

        Question. Mr. Secretary, what would be the advantages and
    disadvantages of directly appropriating funds for central
    administrative services, rather than depending upon the Working Capital
    Fund?
        Answer. The Department's Working Capital Fund (WCF) was established
    on June 28, 1944, pursuant to 5 U.S.C. 607 (15 U.S.C. 1521). The
    Working Capital Fund is a no-year revolving fund established to support
    departmental services delivered more efficiently, economically, or
    advantageously on a centralized basis. Although activities and services
    have changed over the years of operation, the WCF continues to display
    full costing of services in bureau budgets. We see no advantages to
    directly appropriating funds for central administrative services.
        The disadvantages of directly appropriating funds for central
    administration services include the loss of:
      --Responsiveness/Flexibility for Bureaus.--The WCF provides a
            mechanism where Bureaus can request additional services based
            on their needs and funding availability, which varies year to
            year. For example, additional guard service and security
            investigations are requested as needed by Bureaus. If directly
            appropriated, bureaus would lose this flexibility.
      --Flexible Cost Sharing Mechanism.--As a result of the 9/11/01
            tragedy, applications for government jobs through the Postal
            Service were significantly delayed throughout the federal
            government. Hiring came to a halt in most federal agencies.
            However, DOC job applications continued to be processed through
            Commerce Opportunities On-Line (COOL), an automated job
            application system. Individual DOC Bureaus may not have been
            able to fund this initiative alone, but collectively through
            the WCF this on-line job application system was developed and
            is being used successfully by all participating Bureaus.
      --Economies of Scale.--The WCF provides a better vehicle to manage
            inventory accounts and purchase large equipment or quantities
            of items in which the Bureaus share in expenses and cost
            savings. For example, we consolidate buying power and
            management of services through large orders for administrative
            services such as janitorial and printing. The WCF serves as a
            better vehicle to realize volume cost savings.
      --Full Cost in Bureau Budgets.--Costs charged through the WCF ensure
            that the Bureau's full cost of doing business is reflected in
            Bureau budgets, not in a general administration budget.
                                     ______

                 Question Submitted by Senator Pete V. Domenici

        PUBLIC TELECOMMUNICATIONS FACILITIES, PLANNING AND CONSTRUCTION

        Question. Secretary Evans, public television stations all across
    the country are facing a federal mandate to convert to digital
    broadcasting. Approximately 192 stations out of 355 have filed with the
    Federal Communications Commission for a waiver because they are not
    going to meet the May 2003 deadline due to lack of funding. These
    stations are counting on the Public Telecommunications Facilities
    Program (PTFP), which provides grants to public radio and TV stations
    for equipment, to help them cross the digital TV finish line with a
    federal matching grant.
        The President's fiscal year 2004 budget submission doesn't request
    funding for this important matching grant program. Can you please
    explain the thinking behind this decision?
        Answer. The President's fiscal year 2004 Budget proposes to suspend
    funding for the PTFP grant program in fiscal year 2004. The President's
    fiscal year 2004 Budget also proposes that Federal support of public
    television's digital television conversion be funded through monies
    previously appropriated to the Corporation for Public Broadcasting
    (CPB). As you probably are aware, CPB is funded through a two-year
    advance funding procedure. CPB's fiscal year 2004 appropriation of $380
    million was enacted into law on January 10, 2002, as part of the Labor/
    HHS/Education appropriation, Public Law 107-116.
        The Administration proposes that up to $80 million in funding for
    digital conversion grants be made available from within CPB's $380
    million appropriation. The President's fiscal year 2004 budget
    recognizes that the FCC digital conversion requirement should be
    addressed in the next fiscal year.
        To date, public television stations have kept pace with their
    commercial counterparts in the digital conversion. PTFP's 2003 funding
    will assist approximately 109 stations meet the FCC's 2004 deadline. In
    addition, CPB has been appropriated $48 million for the digital
    transition as part of its fiscal year 2003 appropriation. NTIA has been
    in contact with CPB officials and understands that CPB will award these
    funds later in the year. Given competing national budget priorities and
    the availability of funds within CPB, the Administration believes that
    suspending PTFP grants for a year is prudent.
                                     ______

                Questions Submitted by Senator Daniel K. Inouye

                                    TOURISM

        Question. Our country's engagement with Iraq has begun. The
    apprehension caused by this military conflict and terrorist incidents
    within the United States has led to a decline in air travel. This,
    coupled with weak economic conditions, has led to a decline in tourism
    such as we saw after September 11, 2001, and Desert Storm.
        Has the Commerce Department developed a strategy to reduce the
    effects on the tourism industry from this decline in business? Does the
    fiscal year 2004 budget request the necessary resources to shore up
    this important industry?
        Answer. In the fiscal year 2003 Omnibus Appropriation, Congress
    appropriated $50 million to market and promote the United States as a
    tourism destination. We are working with industry to implement this
    program and expect the tourism promotion campaign to commence in fiscal
    year 2004.
        The Department of Commerce is working in a number of ways to
    support the travel and tourism industry and to assist in its recovery.
    Immediately after 9/11, I reconvened the Tourism Policy Council (TPC)
    to coordinate throughout government the programs and policies that
    impact travel and tourism. The TPC provides the private sector with a
    forum for making known to the Federal government the industry's ideas
    and concerns. The TPC also ensures that the various Federal programs
    are coordinated to maximize support for the industry.
        The Department has launched a public-private partnership between
    the United States and Japan to restore travel and tourism between our
    two countries. Through promotional programs and events, this ``Tourism
    Export Expansion Initiative'' also seeks to address Japanese concerns
    about security and to convey that the United States is a safe
    destination--key to restoring travel from this market.
        The Department provides support to the travel and tourism industry
    through its Market Development Cooperator Program (MDCP). The MDCP is a
    competitive, matching grants program that seeks to leverage limited
    Federal support for expanding exports of small and medium-sized
    businesses. The Western States Tourism Policy Council received an award
    to focus on a cooperative strategy to restore international tourism in
    gateway communities in and around the federal public lands.
        The Department also provided a $788,000 grant to the State of
    Hawaii to help offset some of its losses attributable to the lack of
    tourism resulting from 9/11. The project was awarded to the Hawaii
    Visitor and Convention Bureau (Hawaii VCB) for a marketing campaign to
    attract visitors. Marketing will be multi-media and focused on mainland
    cities. The Hawaii VCB is based in Honolulu County but the project will
    benefit all counties of Hawaii.
        The Department provides support to the travel and tourism industry
    through its market research program. The Department is responsible for
    collecting and disseminating international traveler statistics,
    including arrival statistics and visitor expenditures.

             NATIONAL OCEANIC AND ATMOSPHERIC ADMINISTRATION (NOAA)

        Question. Support for NOAA activities and resources in Hawaii. I am
    concerned with what appears to be a lack of Administration support for
    NOAA's commitment to address critical needs in Hawaii and the American
    Flag Territories. I have two items of particular concern. First, the
    NOAA ship VINDICATOR (to be renamed HI'I ALAKAI) will be converted this
    fiscal year to support the National Ocean Service's activities in the
    Pacific including coral reef research. I understand that while the
    vessel will be ready for deployment during fiscal year 2004, the
    Administration's budget proposal does not include any funding for the
    operations of this vessel. Please explain in full detail why funds were
    not requested by the Administration for the operation of the
    VINDICATOR?
        Answer. At the time the fiscal year 2004 budget was being
    formulated, NOAA was still defining the multi-disciplinary mission
    requirements that would be used to develop the specification package to
    convert HI'I ALAKAI to meet the requirements. The likely date for award
    of the shipyard conversion contract was still unknown as was the
    expected amount of time that would be required for conversion and
    shakedown of new or modified systems. Considering those unknowns, it
    seemed unlikely the ship would be ready for operations early enough to
    require fiscal year 2004 operating funds.
        Second, the National Marine Fisheries Service will finally
    establish the new Pacific Islands Region next month. I am informed that
    NOAA does not have the two SES positions needed to provide the new
    Region with its top level managers: a Regional Administrator and a
    Science Director. In addition to the SES positions, I have not received
    any credible confirmation that there will be adequate FTE positions to
    staff the new Region.
        Question. Please explain how you plan to address these personnel
    problems and when we can expect these problems to be resolved.
        Answer. With respect to the two Senior Executive Service (SES)
    positions, the National Marine Fisheries Service has requested
    authority from the Department of Commerce to recruit for a Pacific
    Islands Regional Administrator and Science Center Director. We expect
    to receive approval shortly and have these positions filled permanently
    by the end of the year. To fully staff the Pacific Islands Region and
    Science Center, we have projected a long term requirement (2010) of 187
    FTE positions in addition to approximately 70 contract employees to
    primarily assist in carrying out science related activities. Currently,
    there are 117 funded FTE positions (including the two SES positions)
    and 70 contract employees located in Honolulu that constitute the
    initial staff for the Pacific Islands Region.
        Question. Streamlining Fisheries Management. According to your
    written statement, one of your Department's strategic goals is to
    ``improve and streamline the Nation's fishery management system to
    better meet commercial, recreational, and conservation objectives.''
    How do you plan to implement this goal on a national scale, and how far
    will the Administration's request of $29.8 million in fiscal year 2004
    go toward meeting this goal?
        Answer. The National Marine Fisheries Service (NOAA Fisheries) has
    responsibility for the management of sustainable fisheries, the
    recovery and protection of marine mammals and endangered and threatened
    species, and the conservation and restoration of marine habitat. NOAA
    Fisheries works closely with regional fishery management councils,
    states, and other constituents to carry out these mandates. The
    regulatory process affects not just marine resources but also the
    associated people, businesses, and communities.
        The goal of the Regulatory Streamlining Project (RSP) is to improve
    the efficiency and effectiveness of regulatory operations and decrease
    NMFS's vulnerability to litigation. While the RSP initiative highlights
    the National Environmental Policy Act (NEPA) as a critical component of
    the regulatory process, there are many other requirements that must be
    addressed to ensure compliance with all of the agency's mandates.
    Extensive analyses and documentation are required to comply with the
    Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-
    Stevens Act) and other associated mandates such as the Endangered
    Species Act (ESA), Marine Mammal Protection Act (MMPA), Administrative
    Procedure Act (APA), Regulatory Flexibility Act (RFA), Paperwork
    Reduction Act (PRA), Coastal Zone Management Act (CZMA), and Executive
    Orders 12612, 12630, and 12866. NOAA's fiscal year 2004 budget request
    for NOAA Fisheries includes $1.5 million specifically to implement RSP
    during fiscal year 2004, as well as requests for additional resources
    for increasing the number of stock assessments around the country and
    the collection of comprehensive biological, economic, and sociological
    data on an increasing number of species and the environmental factors
    that influence their health and abundance. Current and improved
    analyses are critical to front-loading the management and regulatory
    process.
        There are a number of other initiatives that are critical to
    regulatory streamlining on a national level. These include electronic
    rulemaking and information systems, improvements to the regulatory
    process, professional training to ensure compliance with all relevant
    laws and executive orders, and quality control/quality assurance.
        Fiscal year 2004 funding would support the development of an
    electronic web-based system for all regulatory and information
    collection activities, including rule development, the maintenance of
    administrative records or dockets that support rulemaking, and rule-
    related communications with stakeholders. This initiative will directly
    support the RSP by expanding constituent participation, facilitating
    information dissemination, encouraging a more transparent decision
    making process, fostering better collaboration with stakeholders, and
    contributing to problem-solving early in the rulemaking process. NOAA
    Fisheries' performance will be greatly enhanced as the time required to
    review and process rules and regulations is reduced and long-term cost
    savings are generated. NOAA Fisheries is developing a training program
    specific to our rulemaking needs. The program will ensure that all
    appropriate staff are fully conversant with Federal Register
    documentation requirements, Agency documentation standards, compliance
    with all legal requirements, etc. Existing internal and external
    training opportunities will be utilized to the extent possible.
    Nevertheless, it will be necessary to develop specialized training
    which incorporates all applicable requirements relative to the fishery
    management context. These needs will be assessed and addressed in
    conjunction with development of revised Operational Guidelines. As
    additional responsibility is transferred to the Regions under the RSP,
    the Regional staff will need specialized training to able to fulfill
    their changing responsibilities. In addition, during 2004, NOAA
    Fisheries will undertake a retrospective bench-marking of past
    performance dealing with litigation, timeliness, and the need for
    Federal Register corrections.
        As part of RSP, NOAA Fisheries delegated signature authority for
    Endangered Species Act (ESA) section 7 consultations to Regional
    Administrators, except for those that are national in scope (i.e.,
    programmatic, multi-Regional, etc.) or for permits issued by the Office
    of Protected Resources. In NOAA Fisheries Headquarters, the
    consultation program must conduct national consultations, provide
    guidance, training, expertise and program review to the Regional
    Offices, as well as all Federal agencies, Congress, and constituents.
    Regional Offices require additional resources to conduct a variety of
    consultations and to provide expert advice to fishery management
    councils and constituents. One important goal of the RSP is to have
    NOAA Fisheries alert fishery management councils and others early in
    their planning process of potential endangered species-fisheries
    interactions.
        A centerpiece of successful ESA section 7 delegation will be NOAA
    Fisheries' continued commitment to train managers and consulting
    biologists to ensure that they maintain the knowledge, skills, and
    abilities that are necessary to implement the agency's section 7
    program consistently, efficiently, and effectively. In particular, the
    following programs would be supported by fiscal year 2004 funding:
    Develop and implement basic and advanced section 7 training; develop
    and implement section 7 training for managers and Senior Executives;
    develop and implement annual regional section 7 workshops; and develop
    and implement training sessions for special topics.
        Question. You have highlighted the climate change request of $295.0
    million for fiscal year 2004. However, $266 million, or 89 percent of
    that figure, is listed as ``other programs,'' which are maintained at
    fiscal year 2003 level funding. Please explain how the majority of
    NOAA's $16.9 million increase for the Climate Change Research
    Initiative shows a commitment to ``fully funding climate research''
    when no new funds are being requested for long standing, well
    respected, NOAA climate programs?
        Answer. The $16.9 million request for the Climate Change Research
    Initiative (CCRI) represents a single NOAA climate request that is
    targeted toward the highest priority national needs as described in
    this Presidential initiative and in the National Academy of Sciences
    2001 report Climate Change Science: An Analysis of Some Key Questions.
    This is on top of providing full funding for NOAA's long-standing
    climate programs, including provision of inflationary costs and planned
    pay raises in the President's fiscal year 2004 budget. The request
    makes full use of NOAA's long-standing climate programs. In particular,
    of the $16.9 million request, we are using existing programs and
    laboratories as follows:
      --Global Ocean Observing System (+$6.3 million request).--This effort
            will be managed by NOAA's Office of Global Programs (OGP) and
            is expected to include support for Scripps Institution of
            Oceanography, University of Miami, Woods Hole Oceanographic
            Institution, and University of Hawaii, among others.
      --Carbon Cycle Observing System ($5.0 million).--This system, focused
            on determining the amount of carbon dioxide taken up by North
            America, is to be operated by NOAA's Climate Monitoring and
            Diagnostics Laboratory (CMDL) in conjunction with the Climate
            and Global Change Program. CMDL has substantial experience in
            operating large-scale atmospheric observing systems, having
            operated the Baseline Observatories (including Mauna Loa) that
            document the global rise in greenhouse gases. The Climate and
            Global Change Program will ensure university involvement in
            modeling and data analysis.
      --Aerosol-Climate Interactions ($1.0 million).--This increase builds
            on an existing program aimed at one of the most prominent
            uncertainties in climate projection, namely the impacts of fine
            airborne particles on climate. This will be administered
            through NOAA's Office of Global Programs and the Aeronomy
            Laboratory.
      --Supercomputing ($3.5 million).--This will support an increase in
            climate computational ability at NOAA's Geophysical Fluid
            Dynamics Laboratory, which originated the modeling of climate
            in the 1960's.
        The remaining $1.1 million in NOAA's fiscal year 2004 requested
    CCRI increase would be to fund the Climate Change Science Program
    Office, which would provide coordinated national leadership for the
    President's interagency climate and global change program, including
    the coordination for CCRI among the Departments of Commerce, State,
    Interior, Health and Human Services, Energy, Agriculture, and Defense,
    and the Environmental Protection Agency, the National Science
    Foundation, the National Aeronautics and Space Administration, the
    Smithsonian Institution, the Office of Management and Budget, and the
    Office of Science and Technology Policy.
        In addition, fiscal year 2003 CCRI funding is also being used in
    existing programs. CCRI supports expansion of the Regional Integrated
    Science and Assessments Program (RISA) of OGP, which focuses on
    developing pilot projects for using climate information and enhancing
    collaboration among researchers, decision-makers, and the public. This
    year, a new RISA project will be started in Hawaii at the East-West
    Center looking at the options, risks, and uncertainties in mitigating
    and adapting to year-to-year climate variability and long-term climate
    change.
                          trade adjustment assistance
        Question. The Commerce Department administers a small program,
    Trade Adjustment Assistance for Firms, that is authorized to be funded
    at $16 million, but is currently operating at $10.4 million. Small
    companies in my state have benefited from expertise provided through
    this program and have improved their competitiveness against imports. I
    was pleased that the fiscal year 2004 budget request includes funding
    of $13 million, but am concerned by reorganization proposals. It is my
    understanding that the Trade Adjustment Assistance Centers (TAACs) may
    be moved into the Economic Development Administration regional offices
    providing another level of bureaucracy to this small and successful
    program. I am aware that discussions have been initiated to keep the
    TAACs as free-standing programs under the International Trade
    Administration. It is also my understanding that the formula is being
    recalculated in a manner that would be unfavorable to the Western
    Region TAAC. Could you discuss these proposed changes and the effect
    they may have on the program?
        Answer. EDA's transition to a decentralized program delivery
    structure was begun during the last Administration. Current EDA
    leadership is simply completing the process. EDA's Public Works,
    Economic Adjustment and Local Technical Assistance (including
    University Centers) programs are all administered by EDA's six regional
    offices. The Trade Adjustment Assistance (TAA) for Firms program is the
    only regional program activity that is administered by EDA headquarters
    rather than by the EDA regional offices.
        The realignment of the TAA for Firms program to mirror the
    decentralized structure of EDA's other programs will simply transfer
    TAA for Firms processing functions, currently being performed in EDA
    headquarters, to the regional offices. The requirements and basic
    processes for the TAA for Firms program will remain unchanged. As with
    EDA's other programs that have been successfully decentralized to the
    regional level for many years, this action will bring the TAA for Firms
    program closer to the firms it serves and in line with the President
    Management Agenda. This change will not affect the structure of the 12
    Trade Assistance Adjustment Centers (TAAC).
        Under this structure, the TAACs will interact with new, more
    locally-based EDA personnel, but the structure will not result in an
    additional level of bureaucracy. In fact, the more robust program
    delivery capability of EDA regional offices is expected to improve
    EDA's overall administration of the TAA for Firms program.
        EDA funding allocations for the TAACs for fiscal year 2003 were
    calculated following the same methodology used in fiscal year 2002 and
    previous years. EDA is presently working with the TAAC community to
    establish a formalized and quantifiable funding formula that can be
    replicated year-to-year, allocating funding based on various factors,
    including TAAC performance levels. EDA has not yet proposed a funding
    formula for 2004 and beyond. On March 5, 2003, EDA staff met with
    representatives of the TAACs to seek input and to discuss possible
    funding formulas. On May 29, 2003, the TAAC community responded with a
    suggested funding formula, which EDA currently is considering. In
    addition, some TAACs, including the Great Lakes TAAC (Ann Arbor, MI)
    and the Western TAAC (Los Angeles, CA) expressed concerns about the
    overall TAAC community's recommendations to EDA. These minority
    opinions are also being considered by EDA. EDA intends to proceed with
    the development of a formalized and quantifiable funding formula, in
    consultation with the TAAC community, that will not only provide each
    TAAC with a base level of funding but will also reward those TAACs with
    the highest performance levels.
                                     ______

               Questions Submitted by Senator Barbara A. Mikulski

                       TRADE AGREEMENTS--IMPACT ON SUGAR

        Question. Mr. Secretary, the Administration has sought to move the
    WTO and FTAA negotiations into a more serious phase, concluded
    negotiations on free trade agreements (FTA's) with Chile and Singapore
    and launched four new FTA negotiations--with Central America, Morocco,
    the South Africa Customs Union, and Australia. And more such FTA
    initiatives may be on the way.
        I am concerned that negotiations pursued piecemeal, with inadequate
    attention to industry-specific problems, as they seem now headed, could
    bring disastrous results to American sugar beet and cane producers and
    refiners.
        Do you share my concern that inclusion of sugar trade provisions in
    bilateral or regional trade agreements could leave the U.S. sugar
    industry vulnerable to increased competition without opening European
    and other consumer markets?
        Answer. The U.S. Department of Agriculture has jurisdiction over
    this issue and therefore is the appropriate agency to respond to this
    question.
        Question. Every other major sugar producing country excludes sugar
    from their regional and bilateral trade agreements, even so-called
    ``free trade agreements.'' Why would the United States include
    sensitive products like sugar in FTA's if other countries do not?
        Answer. The U.S. Department of Agriculture has jurisdiction over
    this issue and therefore is the appropriate agency to respond to this
    question.
        Question. Should trade in sugar therefore be addressed only in the
    multilateral negotiations of the World Trade Organization (WTO)?
        Answer. The U.S. Department of Commerce, primarily through its
    International Trade Administration unit supports bilateral and multi-
    lateral trade negotiations and monitors the results of signed trade
    agreements. However, in relation to sugar trade issues the U.S.
    Department of Agriculture has jurisdiction and therefore is the
    appropriate agency to respond more fully to these questions.
        Question. How do you plan to address other countries' policies
    distorting trade in sugar, which create a ``dump'' in the market with
    prices averaging barely half the world average cost of production for
    the past two decades? Do you seek to impose restrictions on sugar
    trade-distorting policies on developing and developed countries alike?
        Answer. In general, the Department of Commerce is examining the
    role of market distortions and their effect on trade in the context of
    the Doha Round. We note that in their mandate for negotiations on Rules
    in the Doha Round, the Trade Ministers included disciplines on ``trade-
    distorting practices'' as an explicit area for further clarification
    and improvement. Accordingly, the United States has addressed this
    issue already in our submissions to the Rules Negotiating Group. For
    example, in our October 22, 2002 Basic Concepts and Principles paper,
    we noted that:

        ``A government's industrial policies or key aspects of the economic
    system supported by government inaction can enable injurious dumping to
    take place. Although these policies take on many different forms, they
    can provide similar artificial advantages to producers. For instance,
    these policies may allow producers to earn high profits in a home
    `sanctuary market,' which may in turn allow them to sell abroad at an
    artificially low price. Such practices can result in injury in the
    importing country since domestic firms may not be able to match the
    artificially low prices from producers in the sanctuary market.'' (TN/
    RL/W/27, at 4)

        We believe that addressing market- and trade-distorting practices
    is essential to a rules-based multilateral trading system where U.S.
    domestic producers and U.S. exporters can compete on a level playing
    field, and we will press strongly throughout these negotiations for
    strengthened disciplines in this area.
        More specifically, the Department of Commerce vigorously enforces
    the unfair trade laws, and has three outstanding antidumping duty
    orders covering sugar from Belgium, France, and Germany. There is also
    a countervailing duty order covering sugar from the European Community
    in effect. As you know, our antidumping and countervailing duty laws
    apply to developed and developing countries alike.

                       TRANSPARENCY IN TRADE NEGOTIATIONS

        Question. Representatives of American workers and industries report
    that they have not been consulted or even briefed sufficiently on
    ongoing trade negotiations, including Free Trade Agreements and the
    U.S.-Mexico sweetener agreement. What measures are you taking to
    improve transparency of trade negotiations with key American
    constituencies?
        Answer. Transparency throughout the negotiating process
    significantly strengthens the ability of U.S. negotiators to craft
    trade agreements that will benefit the U.S. economy. The Department of
    Commerce makes every effort to consult with American constituencies
    before, during, and after trade negotiations on all aspects of trade
    negotiations in which the Department is involved. The U.S.-Mexico
    sweetener agreement has been handled by the Department of Agriculture
    and the U.S. Trade Representative.
        At the launch of negotiations, and when major policy issues arise,
    the Administration issues a Federal Register notice. After carefully
    reviewing and cataloging the responses, we draw on this material to
    inform our positions throughout the negotiation. We also participate in
    public hearings to get additional input.
        During the negotiations, Department staff regularly brief industry
    groups on the status of trade negotiations. It is extremely important
    to share as much information as possible, as early as possible, with
    interested parties. One of the ways we seek private-sector input is
    through the Industry Consultations Program, which is jointly
    administered by Commerce and the United States Trade Representative,
    and includes 21 industry sector and functional advisory committees and
    approximately 345 industry executives as members.
        We also brief other industry groups, associations, and individual
    companies as requested. We coordinate with broad industry associations,
    such as the National Association of Manufacturers, to seek input on
    trade negotiations. Industry-specific trade specialists within the
    Department's Trade Development Unit canvass their sectors for input
    regarding all relevant policy decisions. Staff regularly draft material
    that contributes to trade negotiation summaries which are posted on
    USTR's public website. We also hold public hearings at important
    junctures in negotiations so interested parties can hear first-hand
    from the negotiators or from more senior U.S. officials how
    negotiations are proceeding. The Department uses other avenues such as
    World Trade Week and our export assistance centers to try to reach a
    broad spectrum of interests.
        After the negotiations are concluded, we prepare user-friendly
    summaries and industry-by-industry reports that are posted on our web
    site.

                          STEEL TARIFFS--WTO DECISION

        Question. Are the temporary tariffs on steel, imposed under section
    201 of the Trade Act, having the desired effect?
        Answer. In March 2002, following a thorough U.S. International
    Trade Commission (ITC) investigation and after reviewing the ITC
    recommendations, the President implemented the steel safeguard remedy
    to provide the temporary relief the industry needed to facilitate the
    adjustment and rationalization of the U.S. steel industry.
        The U.S. steel industry has experienced an unprecedented level of
    consolidation and restructuring, with additional consolidation likely
    in the near future. The International Steel Group led the way by
    acquiring and reorganizing the integrated production facilities of LTV
    and Acme Steel and last month bought Bethlehem Steel. US Steel recently
    acquired National Steel. These and other companies have negotiated more
    flexible labor agreements that are expected to generate significant
    cost savings. In the mini-mill sector, Nucor is investing heavily to
    modernize the mills it purchased from Trico Steel and Birmingham Steel.
    A number of smaller companies have closed and others have emerged from
    bankruptcy, downsized and under new ownership.
        Any decision regarding modification of the Section 201 remedy will
    follow submission of the ITC's mid-term review to the President and
    Congress on September 20, 2003. Our trade law requires the ITC to
    prepare this report, which will document the efforts of the domestic
    industry to adjust to import competition.
        After the President receives the mid-term report, the statute gives
    him greater authority to ``reduce, modify, or terminate'' the
    safeguard. A decision under this authority will be taken by the
    President, and we cannot prejudge what his decision may be.
        Question. What progress has been achieved in reducing excess steel-
    making capacity abroad?
        Answer. Since September 2001, the steel initiative at the
    Organization of Economic Cooperation and Development (OECD) has engaged
    in a serious review of the world steel capacity situation in light of
    the adverse impact on world steel markets from excess inefficient
    capacity. To this end, the OECD established the Capacity Working Group
    to examine approaches that could be used to monitor and encourage the
    closure of inefficient excess capacity and restructuring developments
    in the industry through market forces. The primary tool for the
    Capacity Working Group is the periodic peer review of the reports from
    the participating countries on their respective steel industry. These
    reports describe capacity and production levels, likely closures and
    new capacities. Information on significant legal and policy changes
    that affect the steel making capacity are also contained in these
    reports. The peer reviews are conducted at OECD among the participating
    countries. When the governments present their reports, the
    participating countries ask any questions they might have on the
    reports. The purpose of the peer review to highlight any significant
    problems related to inefficient excess capacities in the global steel
    market.
        As of May 2003, the participating countries have reported 107.07
    million metric tons of crude steel capacity that have been closed
    during 1998 to 2002. The United States accounts for approximately 14
    million metric tons of this reduction. They also forecasted an
    additional 29.00-35.60 millions of closures for the period of 2003-
    2005. However, some countries are also estimating some increase in new
    capacity or replacement of old capacity. On an aggregate level, we
    expect 16.75-17.05 million metric tons of new capacity for 2003-2005.
        Question. When can we expect to achieve a better balance between
    steel-making capacity and global demand?
        Answer. Global production and consumption of steel reached 902 and
    812 million metric tons respectively in 2002. While analysts generally
    agree that the figure for global capacity is about 1 billion metric
    tons, there is no definitive number. In 2002, production and
    consumption of steel products significantly increased from 2001, and
    most of the increase in demand and production has been from China. In
    some ways, the increase in demand for steel products in 2002 has
    diminished the need to reduce capacity in many regions. For example,
    there is no evidence that significant elimination of capacity or
    decreases in production have taken place in Russia and Ukraine, both
    countries which analysts cite as having significant amounts of
    inefficient excess capacity. Similar to the situation in China, these
    governments are reluctant to face the social cost of dismantling steel
    mills in towns where the steel mills are the major employment source.
    Meanwhile, we believe that Russia, Ukraine, Japan, Korea and India have
    all increased exports to China in 2002. Many analysts wonder how long
    China's growing economy will sustain this frantic pace of demand.
    China, which became the largest steel importer in the world in 2002,
    importing close to 30 million metric tons, is responsible for much of
    the increase in worldwide demand. Without continued import demand from
    China, countries that count on exports to sustain their production
    levels might become sources of excess supply. The OECD Capacity Working
    Group's peer review process will allow us to quickly detect excess
    capacity. It is therefore difficult to predict when we can achieve a
    better balance of capacity and demand. However, we do know that
    eliminating subsidy and other market-distorting practices from the
    world steel market is the key to permanently removing inefficient
    excess capacity.
        Question. Is the Administration prepared to continue the temporary
    steel tariffs, for as long as necessary, even if the World Trade
    Organization dispute settlement panel rules against the United States?
        Answer. The United States disagrees with many of the WTO panel's
    preliminary conclusions, but we are pleased that the panel rejected
    some of the complainants' claims. The WTO dispute settlement process
    regarding the steel safeguard measures is not yet complete, so it is
    premature to discuss any response to the panel report. In the WTO
    dispute settlement system, a report from either a panel or the
    Appellate Body is not final unless formally adopted. The steel panel
    report has not yet been publicly released in final form, and the appeal
    has not even begun.
        In the meantime, the steel safeguards measure will remain in place.
    From the beginning, we planned to reduce the supplemental tariffs by
    one-fifth each year. We made the first such reduction in March of this
    year. The panel report does not affect this process.
        Under our domestic safeguards laws, the International Trade
    Commission issues a report on domestic producers' condition midway
    through the term of a safeguard measure, which will occur toward the
    end of September 2003 in the steel case. The President may reduce,
    modify, or terminate a safeguard measure after receiving this report.
                                     ______

                 Questions Submitted by Senator Robert C. Byrd

                                 BYRD AMENDMENT

        Question. U.S. Trade Ambassador Zoellick assured me, personally,
    and publicly, that the Bush Administration would defend the Byrd
    Amendment against the case brought by our trade competitors before the
    World Trade Organization. Imagine my surprise, then, to learn that the
    Administration had recommended a repeal of the law in its fiscal year
    2004 budget request. In fact the press apparently was notified by the
    Administration of its intent to recommend a repeal of the Byrd
    Amendment the day before the WTO Appellate Body issued its final
    determination of the case.
        Why would the Administration advise me and recipients of Byrd
    Amendment funds across the nation that it strongly supported the Byrd
    Amendment, if, at the same time, the Administration was planning to
    request its repeal in the fiscal year 2004 budget?
        Answer. The Administration vigorously defended the Byrd Amendment
    at the WTO. Unfortunately, the WTO ruled against the United States on
    this issue. The Administration continues to believe that the decision
    on the Byrd Amendment (Continued Dumping and Subsidy Offset Act of
    2000) was not inconsistent with WTO rules.
        We look forward to working with USTR, Treasury and Congress to
    develop a response to the WTO's decision. We recognize that the
    ultimate response to the WTO decision lies with Congress, and your
    constitutional authority to determine whether, when, and in what way to
    comply. There may be a number of ways in which U.S. law could be
    amended to address the issues raised by the WTO Appellate Body without
    sacrificing our goal of providing effective assistance to companies and
    workers that have been injured by unfair trade.
        Question. On February 4, 2003, I sent a letter to the President
    signed by 70 Members of the U.S. Senate, urging the Administration to
    negotiate a solution to the Appellate Body's ruling on the Byrd
    Amendment, and to consult closely with the Congress on the particulars
    of these negotiations. Obviously, there is no support in Congress for a
    repeal of this law.
        How does the Administration intend to resolve this issue in WTO
    negotiations? When will the United States put this issue on the agenda
    of the WTO negotiations?
        Answer. The Office of the United States Trade Representative is the
    agency primarily responsible for developing the U.S. agenda for these
    negotiations. We would look forward to working with Congress in
    crafting a strategy that would allow us to comply while at the same
    time ensuring the effectiveness of our trade laws.

                     EMERGENCY STEEL LOAN GUARANTEE PROGRAM

        Question. Last year, in its fiscal year 2003 budget request, the
    Bush Administration recommended rescinding $96 million from the
    Emergency Steel Loan Guarantee Program. In its fiscal year 2004 budget
    request, the Administration again recommended rescinding whatever
    monies for the program remained in the budget. Congress rightfully
    rejected the Administration's recommendation for fiscal year 2003, and
    I fully anticipate it will reject the Administration's recommendation
    with respect to the fiscal year 2004 budget, as well.
        How can the Administration continue to tell America's steelworkers
    that it is doing all it can to support the U.S. steel industry on the
    one hand, while, at the same time, seeking to eliminate this program?
        Answer. Due to the lower than anticipated demand for steel loan
    guarantees, the Emergency Steel Loan Guarantee Program has been subject
    to proposed rescissions in both fiscal year 2003 and fiscal year 2004.
    The Administration believes that this program has not been an effective
    method of supporting the U.S. steel industry.
        Question. What do you say to families like the 25,000 in the Ohio
    River Valley, who, right now, are looking to the Emergency Steel Loan
    Guarantee Program to save their jobs and preserve their pensions?
        Answer. The Emergency Loan Guarantee Board has approved, with
    conditions, a loan guarantee for a loan amount of $250 million to
    Wheeling-Pittsburgh Steel Corporation, which is located in the Ohio
    River Valley.
        Question. Can you provide me with the names of any steel industry
    consultants that were recommended by Bush Administration officials to
    advise members of the Emergency Steel Loan Guarantee Program about the
    validity of the application submitted by Wheeling-Pittsburgh Steel?
        Answer. Bush Administration officials did not recommend steel
    industry consultants to advise members of the Emergency Steel Loan
    Guarantee Board or loan program staff concerning the application
    submitted by Royal Bank of Canada on behalf of Wheeling-Pittsburgh
    Steel Corporation. The loan program staff chooses and retains steel
    industry consultants to assist with review and analysis of applications
    for loan guarantees. Choices are made based on factors such as specific
    related prior experience, recommendations from third parties involved
    in the steel industry, general reputation, satisfactory performance on
    prior applications, and absence of conflicting relationships.

                           IMPORT MONITORING PROGRAM

        Question. What is the Administration's position regarding
    instituting a program to monitor surges of all [steel] imports into the
    United States, not just those steel imports that were originally
    subject to the 201 investigation of steel products? If the
    Administration will not support such an import monitoring program, why
    not?
        Answer. The Administration currently monitors steel imports through
    two steel import monitoring programs administered by the Department of
    Commerce's Import Administration. These two import monitoring programs
    differ in scope of coverage and source of information.
        One program, which was instituted as part of the safeguard remedy,
    applies only to products subject to the safeguard, and draws upon
    aggregate information collected from proprietary information reported
    on steel import licenses. Information on these imports is collected and
    reported by product category and country of origin. The primary purpose
    of this program is to provide early identification of import surges,
    particularly those from excluded developing countries, that could
    undermine the relief provided to the industry by the President.
        The other steel import monitoring program, which is much broader in
    scope, covers all imports of steel mill products. This monitoring
    program was established prior to the safeguard remedy, and is based on
    the early release of steel import data collected by the Census Bureau.
    It has been expanded over the past year to provide detailed monthly
    statistical information on steel imports including import quantity,
    value and unit values. This early release data is the most timely and
    reliable monthly data available on U.S. steel imports and is issued
    roughly three weeks after the close of the import month. Import volume
    and value data are collected and reported by AISI category as well as
    section 201 remedy category and by country of origin.
        To increase the usefulness of the monitoring programs, detailed
    information on steel imports compiled from both steel import monitoring
    programs is available to interested members of the domestic steel
    industry, government and public through the steel import monitoring
    website--www.ia.ita.doc.gov/steel/license/. The data is reviewed
    continuously and is updated on a regular basis--the day of release for
    monthly Census import data; each week for import license data.
        Expansion of the current import monitoring programs, particularly
    the extension of the licensing requirement to products beyond the scope
    of the section 201 remedies, would require additional authorizing
    legislation. Depending upon the scope of the expansion and the number
    of new product categories and additional Harmonized Tariff Schedule's
    (HTS) to be added to the system, the expanded monitoring system could
    entail a considerable outlay of new resources, particularly if the same
    level of detailed reporting is to be maintained.
        Currently, more than 25,000 licenses are issued each month and the
    website generates approximately 7,000-8,000 tables and graphs which
    must be reviewed and updated each week. Expansion to all steel mill
    products would more than double the number of licenses. The number of
    covered tariff numbers would almost triple and depending upon the
    number of steel categories added, the number of tables and graphs would
    likely triple as well. This is far beyond the capabilities of the
    existing database and monitoring program and would likely cause a
    decrease in service, timeliness and/or accuracy. Expansion to all
    tariff numbers in HTS Chapters 72 and 73 would greatly increase the
    number of licenses, covered tariff numbers and reported product
    categories and further tax the system.

                              201 MID-TERM REVIEW

        Question. The ITC has begun its mid-term review of the remedies
    that were imposed last year on imported steel under section 201. What
    criteria will the Bush Administration use to decide whether to lift the
    tariffs and other remedies that were imposed as a result of last year's
    investigation under section 201? Does the Administration plan to base
    its decision this fall on information gathered by the ITC during mid-
    term review, and on advice offered by the entities referenced in 19
    U.S.C. section 2254, or on additional input, including extraneous
    comments submitted to the White House, or the U.S. Commerce Department,
    by foreign countries or foreign exporters, or by U.S. importers of
    steel products otherwise subject to the 201?
        What impact will foreign policy concerns have on the
    Administration's decision in this respect?
        Answer. The President implemented the steel safeguard remedy to
    provide the temporary relief needed to facilitate the adjustment and
    rationalization of the U.S. steel industry. Since the implementation of
    the steel safeguard remedy, the U.S. steel industry has experienced an
    unprecedentedly high level of consolidation and restructuring, with
    additional consolidation likely in the near future.
        As required by section 201, the International Trade Commission
    (ITC) recently initiated a mid-term review of the effectiveness of the
    steel safeguard remedy and the restructuring efforts undertaken by the
    industry. The ITC will collect information from a broad range of U.S.
    steel producers, foreign steel producers, and steel importers. Based on
    a request from the House Ways and Means Committee, the ITC will also
    review the impact of the safeguard remedies on steel consumers. The ITC
    will issue its report to the President in September.
        The President may reduce, modify or terminate the section 201
    remedies imposed in March 2002; he may also leave the measures
    unchanged. In accordance with the statute, the President will take into
    account the report and advice of the ITC, as well as the advice of the
    Secretaries of Commerce and Labor, in reaching a decision under section
    204. In addition, the President may consult with the House Ways and
    Means Committee or the Senate Finance Committee.
        However, the statute does not limit the President to consider only
    these sources in his decision. As it does in every section 201
    proceeding, the Administration will consider any information that is
    potentially relevant to an evaluation of the statutory factors,
    including information or advice from members of Congress, U.S. steel
    producers, U.S. steel consumers, U.S. importers and other interested
    parties. The Administration will also consider any information
    presented to it by foreign governments or foreign parties that is
    relevant to the inquiry under section 204.

                    DEDUCTING 201 DUTIES FROM AD/CVD MARGINS

        Question. In a recent case, the Department considered but made no
    final determination regarding whether to deduct from the U.S. price of
    a dumped or countervailable product the amount of 201 duties that had
    already been imposed on an imported steel product. 201 duties reflect a
    decision by the President to increase normal customs duties,
    temporarily, and such duties can be deducted from the U.S. price in
    determining the margin in an antidumping or countervailing duty case.
    What is the Department's position concerning the deduction of 201
    duties from U.S. price in determining the margin in an antidumping or
    countervailing duty case?
        Answer. To date we have not made a decision concerning this
    important issue. We intend to address it in the context of upcoming
    antidumping case decisions after we have received comments from
    interested parties.
        The issue of how to treat section 201 duties in our dumping margin
    calculations was raised in the final weeks of our statutory time period
    in our recent investigation on steel wire rod from Trinidad and Tobago.
    In that case, the foreign respondent, the domestic producers and the
    United Steelworkers of America submitted comments on this issue, but
    the domestic producers and the United Steelworkers of America requested
    that the Department allow more time for broader comment on this far-
    reaching policy determination. Since the adjustment in the steel wire
    rod from Trinidad and Tobago case would have had an insignificant
    effect, we did not address the treatment of section 201 duties in that
    case.
        We have a few cases currently pending in which this issue has been
    raised. We are allowing all interested parties to comment fully on this
    issue, including parties not involved in these specific proceedings. We
    will carefully consider all comments before reaching a decision.

                             IMPORT ADMINISTRATION

        Question. My office has been advised that the Office of Policy
    within the Department's Office of Import Administration has been
    steadily expanding over the past several years. There is a concern that
    available resources within Import Administration are being diverted to
    the Office of Policy at the expense of the other offices within Import
    Administration that actually conduct the antidumping and countervailing
    duty investigations and administrative reviews. Could you please
    provide me with detailed information how the Office of Policy within
    Import Administration has expanded over the past five years? And for
    what purpose?
        Answer. At no time has the Office of Policy been expanded at the
    expense of the Operations offices. With the additional fiscal year 2001
    funding, management also increased the funding of the three Operations
    offices within IA that conduct AD/CVD cases. The growth of the Office
    of Policy resulted directly from increases in the annual
    appropriations, and represents a conscious decision of both the
    Executive and Legislative branches during the past two Administrations
    to develop tools for supporting and supplementing the enforcement of
    U.S. trade laws to address foreign unfair trade practices. There were
    no reductions in the budgets of the Operations during this period for
    the purpose of expanding the Office of Policy, nor was funding diverted
    to support Office of Policy growth.

     IMPORT ADMINISTRATION STAFFING OFFICE OF POLICY VS. OPERATIONS OFFICES
                              FISCAL YEAR 1999-2002
    ------------------------------------------------------------------------
                                                                  DAS Groups
                      Fiscal Year                      Policy      (I, II,
                                                                     III)
    ------------------------------------------------------------------------
    1999..........................................           27          222
    2000..........................................           27          222
    2001..........................................           55          222
    2002..........................................           65      \1\ 222
    ------------------------------------------------------------------------
    \1\ Does not include miscellaneous overhires to work on steel issues.

    (Source: IA Staffing Plans).

        During the past five years, IA received two budget increases
    through the annual appropriations process in fiscal year 1999 and
    fiscal year 2001. The fiscal year 1999 appropriation included a funding
    increase for IA to conduct new AD/CVD program activities set forth in
    the Uruguay Round Agreements Act (URAA). IA management directed the
    Office of Policy to assume responsibility for the new activities
    described below.
      --AD/CVD Sunset Reviews
      --Subsidies Enforcement
        The fiscal year 2001 appropriation included a funding increase to
    support the Trade Compliance Initiative (TCI) first proposed by the
    Clinton Administration and subsequently supported by the Bush
    Administration. IA's new TCI program activities were assigned to the
    Office of Policy and included the following new activities:
      --Overseas Compliance Program
      --China Trade Compliance and Japan Trade Compliance
      --Import Surge Monitoring, Expedited Investigations & Subsidies
            Enforcement
      --IA Senior Official Stationed in Geneva, Switzerland.
        In particular, a significant portion of these funds and increased
    staffing were used to support Import Administration's increasing
    activity on three fronts--(1) steel issues, (2) pre-petition support to
    potential users of the AD/CVD laws, and (3) WTO negotiations on rules.
    Of the new policy analysts hired in the past two years, more than half
    have been dedicated to these new areas.

                  IMPORT ADMINISTRATION: CUSTOMS INSTRUCTIONS

        Question. I learned of possibly misallocated resources when my
    office was advised that certain companies have been unable to obtain
    funds from the special accounts that have been established at the
    Treasury Department under the Byrd Amendment. It is my understanding
    that certain companies cannot access funds in the relevant accounts
    because investigators in Import Administration have been too short-
    staffed to send necessary instructions regarding certain cases to the
    U.S. Customs Service. Consequently, some U.S. companies that have been
    eligible to receive funds under the Byrd Amendment have been told by
    Customs that there is simply no money in relevant accounts at the U.S.
    Treasury Department. Are you aware of this problem and can you tell me
    whether there has been any effort by the Department to address this
    issue?
        Answer. As explained below, it is true that, in some instances,
    there has been a delay at the Department of Commerce in issuing
    liquidation instructions. It should be understood, however, that the
    DOC does not maintain the special accounts established under the Byrd
    Amendment and cannot, therefore, speak to the reason(s) why any
    particular claimant has been unable to receive distributions.
        DOC conducts administrative reviews of antidumping (AD) and
    countervailing duty (CVD) orders where a request for review is timely
    filed by an appropriate interested party. If a review is initiated, the
    entries covered by the review remain suspended until the Department
    completes the review (typically 12 to 18 months from initiation). If
    the Department's final results are not challenged (in either the Court
    of International Trade or NAFTA), Import Administration issues
    liquidation instructions, whenever possible, within 15 days of the
    issuance of the final results of the administrative review. However, if
    parties challenge our final results and obtain an injunction against
    liquidation of the entries covered by the review, those entries will be
    suspended until the litigation is resolved. If the Department does not
    receive a request for administrative review, or if a review request
    covers only entries from certain producers/exporters, the Department
    advises the Department of Homeland Security's Bureau of Customs and
    Border Protection (BCBP) to liquidate the entries for which a review
    was not requested.
        The Department's liquidation instructions indicate to the BCBP how
    much in the way of special duties to assess on entries of merchandise
    subject to an AD and/or CVD order. BCBP then assesses duties on the
    entries and places the proceeds in special accounts pursuant to the
    Byrd Amendment. When claims are made for the funds in the special
    accounts, BCBP determines whether--and to what degree--the claims will
    be satisfied.
        The Department takes a proactive approach to ensure that
    liquidation instructions are properly issued. Despite these efforts,
    given the sheer volume of cases and instructions that must be issued by
    the Department to the BCBP, there may be instances where entries have
    inadvertently not been liquidated. Typically, the Department is
    notified of these instances by the BCBP or private parties (such as the
    domestic producer or the U.S. importer). Import Administration makes
    every effort to work with parties and the BCBP to identify the problem,
    and to address it as expeditiously as possible. We closely monitor the
    accuracy and the timeliness of our issuance of instructions to BCBP and
    immediately address any problem that we identify or is brought to our
    attention. We are not aware of any instances in which customs
    instructions were not sent due to staffing issues.
        Finally, we note that, to address concerns that there had been
    significant delays in the issuance of liquidation instructions in
    certain cases, the Department conducted a review of all completed
    proceedings to ensure that BCBP has been issued appropriate
    instructions. Import Administration officials reviewed more than 200
    final decisions in the course of this project, which took several years
    to complete. As a result, the Department ensured that all liquidation
    instructions had been issued for all entries subject to the orders/
    findings involved.

                  VALIDITY OF OUTSIDE CONTRACTOR PATENT SEARCH

        Question. Why does the PTO trust that an outside contractor with no
    relevant patent experience would conduct a valid patent search in the
    same thorough and learned manner as a patent examiner with years of
    experience?
        Answer. The USPTO is confident that a certified outside contractor
    can conduct a valid patent search in the same thorough manner as an
    experienced patent examiner. The USPTO's decision to split the search
    and examination functions--a key component of the 21st Century
    Strategic Plan--is not an unprecedented or untested approach. The USPTO
    and its sister patent offices throughout the world have considerable
    experience in splitting the two tasks of search and examination. For
    example, search and examination have been separated within the European
    Patent Office (EPO) for more than twenty years without any detriment to
    quality. Indeed, search quality will actually improve under a
    Contractor Search Service (CSS) system, as the examiner will be acting
    as a second pair of eyes relative to the search contractors.
        The USPTO will provide detailed search guidelines and quality
    measures to ensure the quality and uniformity of prior art searches
    performed by a CSS. Prior to contract award, all offerors will be
    evaluated to ascertain the technical background and skills of their
    employees and their abilities to provide a high quality search.
        The USPTO plans to have multiple levels of Quality Control/Review
    and will promptly terminate its contract with any provider whose
    searches and search reports do not meet the standards. Furthermore,
    patent examiners can always request a further search or perform a
    supplemental search with approval of their supervisor if the examiner
    feels the search supplied is inadequate.
        With these quality assurance measures, there should be no adverse
    effects on the presumption of validity or the public confidence in
    patents. In fact, this collaborative effort in prior art searching will
    improve both efficiency and substantive focus in the preparation,
    examination, and prosecution of patent applications in a more cost
    effective and expeditious manner. It will, with the implementation of
    the quality measures outlined in the 21st Century Strategic Plan,
    strengthen the validity of patents, thus providing a more substantive
    and valuable end product for our customers.

                    COST OF OUTSIDE CONTRACTOR PATENT SEARCH

        Question. Why is the PTO not concerned that outsourcing this
    function could increase, rather than a decrease agency costs?
        Answer. The USPTO believes that, overall, it will be cost effective
    to competitively source patent searches. The USPTO has been criticized
    for ``hiring its way out'' of its growing patent workload problem. For
    example, in 2002 the Senate Appropriations Committee stated, ``PTO
    management has not been sufficiently innovative. Although patent
    filings have increased dramatically over the past decade, PTO
    management chose to remain wedded to an archaic patent process and
    attempted to hire its way out of its workload problems.''
        Competitive sourcing of searches is part of the USPTO's effort to
    address incoming work and an inventory of pending applications by
    allowing patent examiners to concentrate on patentability
    determinations rather than spending time on searching. The removal of
    search functions will allow examiners to process more patent
    applications, assisting the USPTO in lowering pendency and reducing
    backlogged applications.
        Competitive-sourcing of the search will be validated by a proof of
    concept before we proceed to full implementation.

                RELIABILITY OF OUTSIDE CONTRACTOR PATENT SEARCH

        Question. How does the PTO plan to address the issue that searches
    conducted by an outside firm could prove faulty or unreliable and, as a
    result, could undermine the validity of patents issued by the PTO?
        Answer. In addition to the steps outlined in response to the
    question above regarding confidence in contractor abilities to conduct
    prior art searches, the USPTO has benchmarked models that other
    intellectual property organizations have used for many years. For
    example:
      --The Japan Patent Office (JPO) also has experience in splitting the
            two tasks of search and examination. The Japanese government
            established the Industrial Property Cooperation Center (IPCC)
            in 1985 for such purposes as providing search reports on patent
            applications pending before the JPO, indexing patents according
            to the F-term classification scheme used by the JPO, and
            assigning classifications to patents according to the
            International Patent Classification system. Since then, more
            than one million prior art searches have been conducted by IPCC
            for JPO's patent examiners and more than two million F-term
            assignments have been made to JPO's searchable database. The
            IPCC is now staffed with about 1,100 engineers, only 40 of whom
            were previously employed as patent examiners. Based on such an
            extensive base of empirical data, together with on-site
            benchmarking reviews that have been conducted with JPO
            officials over the past decade, we have no doubt that searches
            can be done with high quality by experienced and skilled
            engineers.
      --Closer to home, the USPTO has allowed examiners to elect the
            services of searchers to search non-patent literature and
            foreign patents in the Office's Electronic Information Centers
            for the last decade. Thus far this year, examiners have
            requested 13,011 searches. These searches are conducted by
            contract staff or Government employees who have extensive
            knowledge of the database content, search strategy formulation,
            and command language of several commercial online providers,
            such as Dialog and Lexis-Nexis. They also have knowledge of
            internal search systems, such as the Examiner's Automated
            Search Tool (EAST) and the Web-based Examiner Search Tool
            (WEST), and are adept at searching the Internet.
      --The European Patent Office (EPO) serves as another benchmark. The
            EPO has extensive experience that clearly demonstrates that a
            high quality search can be generated by someone other than the
            substantive patent examiner with no diminution in the quality
            of the patentability determination or the patent examiner's
            ability to keep current with his or her understanding of, or
            currency with, the technology and/or state of the art. Since
            1978, EPO searchers in The Hague and Berlin (and more recently,
            Munich) produced almost 1.8 million searches of which half were
            for EPO's substantive patent examiners in Munich. In fact, the
            USPTO has already received more than 75,000 patent search
            reports from the EPO over the past few years pursuant to the
            Patent Cooperation Treaty (PCT). While that is not a direct
            ``contractor'' model, conceptually there is virtually no
            difference with the IPCC model described earlier.
        The EPO, where the search was carried out by an examiner in The
    Hague or Berlin and the examination was conducted by a three-man
    examining division in Munich, currently is moving towards combining the
    search and examination functions to improve productivity, not because
    there are quality issues associated with the separation of search and
    examination. Survey data collected from U.S. patent attorneys over the
    past five years show that the EPO's searches and patentability
    decisions are consistently of high quality.
        As Director Rogan explained in his April 3, 2003, testimony before
    the House Judiciary Committee's Subcommittee on Courts, the Internet
    and Intellectual Property, the USPTO and its sister patent offices
    throughout the world have considerable experience in splitting the two
    tasks of search and examination, as described above. Contrary to the
    assertion that quality suffers under such a structure, the reverse is
    true. During the hearing, Director Rogan entered into the record a
    letter from the President of the EPO, Dr. Ingo Kober, which discusses
    Europe's experience in this area. See attachment.
        While the EPO does not competitively source the search function,
    search and examination have been separated within the EPO for more than
    twenty years without any detriment to quality.
        For firms that would like to offer search services, the USPTO will
    follow the Federal procurement process to enter into contractual
    arrangements with them. The USPTO would maintain the authority to
    certify that a private firm, individual, or commercial entity was
    capable of providing a valid, thorough, and complete search of the
    prior art for patent examination processes.

                  [ATTACHMENT--EUROPEAN PATENT OFFICE LETTER]

                                                         March 4, 2003.
    Mr. James E. Rogan,
    Under Secretary of Commerce for Intellectual Property and Director of
            the United States Patent and Trademark Office, 2121 Crystal
            Drive, Suite 906, Arlington, VA 22202 USA.
        Dear Mr. Rogan, I understand that some organisations and
    individuals in the United States have recently expressed certain
    misconceptions concerning a program of the European Patent Office,
    namely, Bringing Examination and Search Together or BEST. I would like
    to clarify some basic facts about this program to ensure it is properly
    understood.
        Any characterisation that the European Patent Office chose to
    ``adopt'' the American system of searching and examining patent
    applications is simply not true. Our decision to combine the search and
    examination functions was based on the need to increase examiner
    productivity. As you know, these changes occurred during a time of
    transition to a more automated environment and a significant expansion
    of our staff.
        Indeed, the previous arrangement was initially dictated by
    historical and geographical reasons which no longer apply. However,
    this separate search and examination program, where the search was
    carried out by an examiner in The Hague or Berlin and the examination
    was conducted by a three-man examining division in Munich, produced
    high quality results and served us very well over a period of more than
    25 years. In fact, feedback we have received from our interested
    circles has consistently indicated high satisfaction levels with our
    searches.
        Finally, all major industrial property offices in the world
    currently confront a workload crisis that demands creative solutions.
    That is why I agreed to sign a bilateral record of discussion with you
    to explore the potential of exploiting searches generated by our
    respective Offices for counterpart patent applications. I am convinced
    that this will help improve patent quality, increase efficiency and
    productivity, and reduce operating costs.
        It is unfortunate that recent statements made by commentators on
    the EPO's current and future plans as well as on the USPTO's plans have
    characterised our processes as diverging, when in fact they are indeed
    converging.
        Should you wish further clarification of my views on this matter, I
    shall be glad to provide additional details.
                Yours sincerely,
                                           Dr. H.C. Ingo Kober,
                                                             President.

                  VALIDITY OF OUTSIDE CONTRACTOR PATENT SEARCH

        Question. Why does the PTO trust that an outside contractor with no
    relevant patent experience would conduct a valid patent search in the
    same thorough and learned manner as a patent examiner with years of
    experience?
        Answer. The USPTO is confident that a certified outside contractor
    can conduct a valid patent search in the same thorough manner as an
    experienced patent examiner. The USPTO's decision to split the search
    and examination functions--a key component of the 21st Century
    Strategic Plan--is not an unprecedented or untested approach. The USPTO
    and its sister patent offices throughout the world have considerable
    experience in splitting the two tasks of search and examination. For
    example, search and examination have been separated within the European
    Patent Office (EPO) for more than twenty years without any detriment to
    quality. Indeed, search quality will actually improve under a
    Contractor Search Service (CSS) system, as the examiner will be acting
    as a second pair of eyes relative to the search contractors.
        The USPTO will provide detailed search guidelines and quality
    measures to ensure the quality and uniformity of prior art searches
    performed by a CSS. Prior to contract award, all offerors will be
    evaluated to ascertain the technical background and skills of their
    employees and their abilities to provide a high quality search.
        The USPTO plans to have multiple levels of Quality Control/Review
    and will promptly terminate its contract with any provider whose
    searches and search reports do not meet the standards. Furthermore,
    patent examiners can always request a further search or perform a
    supplemental search with approval of their supervisor if the examiner
    feels the search supplied is inadequate.
        With these quality assurance measures, there should be no adverse
    effects on the presumption of validity or the public confidence in
    patents. In fact, this collaborative effort in prior art searching will
    improve both efficiency and substantive focus in the preparation,
    examination, and prosecution of patent applications in a more cost
    effective and expeditious manner. It will, with the implementation of
    the quality measures outlined in the 21st Century Strategic Plan,
    strengthen the validity of patents, thus providing a more substantive
    and valuable end product for our customers.

                   PILOT OF OUTSIDE CONTRACTOR PATENT SEARCH

        Question. If the PTO plans to test these searches in some sort of
    ``pilot program,'' what assurances are there that such a pilot program
    will actually be undertaken? How will the PTO measure success? Who will
    measure success? Will the Congress be involved?
        Answer. To meet the requirements of their customers and to
    determine the feasibility of competitively sourcing search functions,
    the USPTO will implement a proof of concept through a pilot program.
    The Office will assure quality of contractor performance through
    continuous monitoring of the pilot and the conduct of a formal
    evaluation. The planned proof of concept will be widely vetted with
    USPTO's key stakeholders and the Patent Public Advisory Committee. The
    results of the pilot will also be widely shared. USPTO will conduct a
    formal review of the pilot prior to making a final decision as to
    whether or not to proceed with full implementation. The Congress will
    be kept informed throughout the process. Although the specifics of the
    pilot and evaluation have not been finalized, the USPTO is considering
    using an outside contractor to validate the quality of the searches.
        The USPTO already has obtained public comment on its plans and
    posted on its website for many months the answers to questions or
    suggestions they have received from the public, patent examiners, and
    the professional associations with whom it has worked extensively. The
    Office recently published on its website a detailed action plan which
    describes the implementation approach. What follows are the highlights
    of the administrative structure and processes USPTO is fully prepared
    to implement, including a description of the proof of concept.
        The USPTO will use the contractors to prepare complete and accurate
    search reports for patent applications. One or more contracts would be
    awarded. It is anticipated that there will be at least one contract
    specializing in each discipline. The contractor may be a private or
    commercial search entity with demonstrated expertise and search skills.
    The request for a search and the resulting search report are activities
    between the USPTO and the contractor.
        The USPTO would administer the same preliminary processing
    procedures currently established for new application filings. A copy of
    the application would be forwarded to the contractor approximately
    three months prior to the examination. The contractor would perform a
    prior art search and prepare a report using Patent Cooperation Treaty
    (PCT) guidelines and USPTO search guidelines for additional non-patent
    literature (NPL) resources as stated above.
        Upon completion of the report, the application would be forwarded
    to the Patent Technology Center to await review by the examiner. The
    examiner would then review the report and prior art cited. If the
    report was inadequate or if the examiner was personally aware of other
    prior art, the examiner could request time to search them, or have the
    report sent back to the contractor with an explanation of the
    deficiency and a request for supplemental information.
        The USPTO would maintain the authority to certify that a private
    firm, individual, or commercial entity was capable of providing a
    valid, thorough, and complete search of the prior art for patent
    examination processes. A certification process would be done at the
    USPTO. The process could be given to firms or individuals or a
    combination thereof. The certification process may be based on industry
    specific criteria and be given on an individual basis based on the
    firm's or individual's qualifications. Similar to the Primary Examiner
    at the USPTO, a senior member of the firm could sign off on an
    ``assistant's'' search. Thus, while there are multiple options
    available, a preferred one would be to certify the ``firm'' which, in
    turn, would be responsible for certifying their individual searchers.
        The critical measures of success would be determined based on the
    contractors' ability to: (1) determine if disclosed invention is
    subject to an international search; (2) identify a field of search that
    would cover the disclosed invention; (3) select the proper tools and
    art collections to perform the search; (4) determine the appropriate
    search strategy for each of the selected search tools and art
    collections; (5) search the art collections using the selected search
    tools and search strategy, and using any additional strategy suggested
    by the art that is found; (6) retrieve sufficient information from art
    that is identified during the search to evaluate the pertinence of the
    art; (7) select the prior art that is most pertinent to the claimed
    subject matter; (8) record the results of the art that is selected
    according to the criteria set forth in the guidelines; and (9)
    determine if certain claims are found to be searchable subject matter
    and/or lack clarity or distinctness.
        The contractor would have to prove that it has ready access to the
    appropriate industry-specific search tools. Much of the work in
    developing industry-specific search tools is either in the process of
    being done or has already been published on the USPTO intranet in the
    form of Search Guidelines. These guidelines were developed by Quality
    Action Teams and represent a listing of appropriate search tools and
    databases for each technology. The guidelines include PCT Minimum
    Document requirements, appropriate text search systems, as well as the
    pertinent commercially available databases. In addition to using the
    established guidelines, a classified search using the U.S. Patent
    Classification (USPC) system would also need to be performed, if
    appropriate.
        Another requirement would be the technical qualifications of the
    contractors' staff. Just as in examining, varying levels of technical
    expertise are required for searching different technologies. In
    addition, the contractor would have to provide proof of a thorough
    understanding of the patent examining procedures and patent statutes.
    It is essential that any contractor have the ability to read and
    analyze claims, as well as broadly apply the prior art to produce a
    PCT-type search report, which would be submitted to USPTO. The
    contractor would need to be aware of patent law and practice and be
    able to understand such concepts as ``motivation'' for example. This
    could be ensured through testing requirements. Finally, the
    contractors' ability to provide timely reports would be essential to
    the program's success. Special attention would be paid to ensure treaty
    deadlines were enforced.
        For proper examination and quality comparisons, a search submission
    would be expected to include, at a minimum, a listing for every search
    including: (1) text search systems; (2) commercial databases; (3) USPC
    classified search, if appropriate; (4) the complete search statement
    and logic; and (5) a statement regarding the teachings and
    applicability of each reference against each claim.
        The USPTO also would have to maintain a ``search quality review
    process'' in order to ``sample'' the quality of searches submitted by
    the certified search authorities. A component of the in-process review
    activity is to evaluate the quality of the search results for each
    contractor. A statistically valid sample of cases would be reviewed
    using criteria such as whether the search was based on what is claimed
    and reasonably expected to be claimed. Additionally, an experienced
    examiner will conduct a separate search on the same application, to
    ensure the contractor used the proper search procedures.
        The Office would retain the ability to terminate any contract and
    ``de-certify'' authorities that submit a number of poor searches from
    either the test sample or from other sources such as examiner reports,
    requests for re-examination or post-grant opposition that show clear
    errors.
        It is possible that separate contractor support would be needed to
    set up, implement, and maintain the necessary certification procedures,
    along with a dedicated staff of search and examination experts.
        Contractors may be required to supply certified translations or
    English language equivalents, with valid dates, for any non-English
    language prior art references cited, which would also eliminate the
    need for examiners requesting certified translations, partial
    translations and/or on-the-spot translations of non-English documents.
        Proof of Concept: The USPTO recognizes that the use of contractors
    to provide prior art search and/or opinion reports for patent
    applications is a major change to current patent examination processes.
    The USPTO also understands customer concerns for excellence in a prior
    art search. To ensure quality art searches are maintained and that
    there is uninterrupted service to all USPTO customers, the Office would
    use the results of the PCT pilot as its foundation for competitively
    sourcing all other search activities within the Office. By using the
    pilot study, the USPTO will be able to assess accurately the
    feasibility of competitively sourcing prior art searches. Performance
    and product will be reviewed to ensure the highest quality is
    maintained, using both an in-process review procedure and separate
    searches performed by experienced examiners.
        The PCT competitive sourcing pilot will be implemented in multiple
    arts to ensure the contractors can provide a quality search report for
    any technology. Between three and six different art areas, all with
    generally high backlogs, would be selected as pilot areas. The results
    of the PCT pilot will provide the Office with the information necessary
    to implement the best possible transition from examiner searches to
    contractor searches. Prior to full-scale implementation, a final report
    would be developed that identifies the strengths, weaknesses, costs and
    benefits. This report would be published and made available for general
    review prior to a decision on whether to further implement competitive-
    sourcing in other areas of the Office.
        There would be multiple evaluations of the search and reports
    prepared by the contractors. Examiners would complete an evaluation
    every time a contracted search is used in the examination of a U.S.
    application. There would also be independent evaluations both during
    in-process reviews, and by independent third parties (similar to a
    quality review of the examination). Failure of a contractor to maintain
    the high quality expectations could result in the ``forfeit'' of the
    contract to the contractor.
        Regarding the costs of the commercial search, the USPTO's
    stakeholders' view is that quality has not been properly emphasized in
    recent years. Accordingly, the USPTO has listened to patent applicants
    and the consistent message they have conveyed is that quality must be
    improved and the cost of improving quality is something for which they
    are prepared to pay.

                     STOPPING PILOT OF COMPETITIVE-SOURCING

        Question. Is there any certainty that the outsourcing will stop if
    the pilot program proves that the experiment is not working?
        Answer. Yes. First, the planned proof of concept will be vetted in
    advance with the USPTO's key stakeholders and the Patent Public
    Advisory Committee.
        Second, the USPTO has committed to developing a final report
    documenting the strengths, weaknesses, costs and benefits. The report
    will be published and made available for general review prior to a
    decision on whether to implement further competitive-sourcing.
        The final decision to implement further competitive-sourcing will
    rest with the Director, based on the recommendation of the Management
    Council, which is chaired by the Deputy Director and comprised of
    senior managers from all USPTO divisions. The Management Council has
    responsibility for monitoring implementation of the 21st Century
    Strategic Plan. Once the proof of concept has been completed and the
    results documented, the Management Council will be responsible for
    making a final recommendation to the Director.

                       SEARCH CONTRACTORS OWNING PATENTS

        Question. Finally, what safeguards are in place to make sure that
    the contractors who are chosen to conduct these patent searches do not,
    themselves, have a financial stake in the patent system?
        Currently, by law, patent examiners may not own patents with narrow
    exceptions such as by inheritance. Will the PTO likewise bar search
    contractors from owning patents?
        Answer. The Federal Acquisition Regulation (``FAR''), 48 C.F.R.
    9.5 et seq., provides guidance and prescribes responsibilities and
    procedures for identifying, evaluating and resolving organizational
    conflicts of interest (``OCOI''). In particular, FAR  9.504 requires
    the contracting officer, before issuing a solicitation, to prepare an
    analysis and a recommendation for avoiding, neutralizing, or mitigating
    organizational conflicts of interest. Pursuant to this guidance, the
    USPTO is presently considering various plans and methods to avoid and
    neutralize actual and potential OCOIs that may occur as a result of
    contracting out patent search services. At a minimum, the USPTO will
    require patent search firms not only to disclose actual or potential
    OCOIs, such as past or present associations with major patent
    application filers, but also to submit suitable OCOI mitigation plans
    as an integral part of the evaluation of proposals to conduct patent
    search services. PTO will also seek to ensure that any personal
    conflicts of interest by employees of the search firms are minimized to
    the maximum extent practicable. The USPTO plans to award multiple
    contracts to fulfill its needs and require that all applicable OCOI
    requirements flow-down to any subcontractors and employees as well.
        The USPTO will include in all solicitations and contracts for
    patent search services clauses that: (1) invite the offerors' attention
    to FAR part 9.5; (2) state the nature of the OCOI or potential OCOI;
    (3) require the prompt disclosure of actual and potential OCOIs; and
    (4) state the proposed remedies available to the government upon
    discovery of an OCOI. As part of the procurement process, the Office
    also plans to solicit comments and suggestions on how the Agency can
    best mitigate actual or potential OCOIs.
        The USPTO also plans to include in its contracts for patent search
    services clauses which reference 35 U.S.C.  122 and prohibit the
    disclosure of information contained in patent applications as well as
    requirements to safeguard patent applicants' proprietary and trade
    secret information.
        Although the USPTO has not yet made a decision to impose a total
    ban on the ownership of patents, if ownership of patents creates an
    impermissible organizational or personal conflict of interest, which
    cannot be neutralized or mitigated, the USPTO may disqualify that firm
    from competing for the search contracts. In addition, the USPTO may
    structure the resulting contracts to allow for termination of the
    contracts for impermissible conflicts of interest.
        As described above, the USPTO fully intends to obtain early
    exchanges of information from all interested parties through a variety
    of means, such as additional Requests for Information or draft
    solicitations, to determine whether a total ban on the ownership of
    patents will be required from search firms. Further, on May 22, 2003,
    the USPTO will be holding an ``Industry Day,'' a vendor conference
    whereby USPTO will be showcasing existing and new agency initiatives.
    During Industry Day, the Office will be soliciting comments regarding
    the initiatives from vendors who conduct or will conduct business with
    the USPTO. The Office will include the issue of OCOI among search firms
    as a topic for discussion at that time.

                              SUBCOMMITTEE RECESS

        Senator Gregg. Thank you, Mr. Secretary.
        [Whereupon, at 10:40 a.m., Thursday, March 20, the
    subcommittee was recessed, to reconvene subject to the call of
    the Chair.]

    DEPARTMENTS OF COMMERCE, JUSTICE, AND STATE, THE JUDICIARY, AND RELATED
                  AGENCIES APPROPRIATIONS FOR FISCAL YEAR 2004

                                  ----------

                             TUESDAY, APRIL 1, 2003

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 10 a.m., in room SD-192, Dirksen
    Senate Office Building, Hon. Judd Gregg (chairman) presiding.
        Present: Senators Gregg, Stevens, Domenici, Campbell,
    Hollings, and Kohl.

                             DEPARTMENT OF JUSTICE

                         Office of the Attorney General

    STATEMENT OF HON. JOHN ASHCROFT, ATTORNEY GENERAL OF
                THE UNITED STATES

                    OPENING STATEMENT OF SENATOR JUDD GREGG

        Senator Gregg. Welcome to this hearing. Senator Hollings is
    headed in this direction. It was kind of the Attorney General
    to arrive early, which we appreciate. And we thank him for
    that.
        This is obviously a time of acute sensitivities on a lot of
    issues. And we appreciate the Attorney General taking time out
    of his day to testify before the Appropriations Committee which
    has jurisdiction over the Justice Department. We also have
    jurisdiction over the Commerce Department, State Department,
    Judiciary, and a variety of independent agencies. But the
    Justice Department is the largest account in this
    subcommittee's jurisdiction and one of the most complicated.
        There is a lot going on that deals with the question of our
    national security and how we protect Americans and America. The
    Attorney General is at the center of that.
        So rather than my going on for an extended period of time
    about those concerns, we would like to hear from the Attorney
    General. And then we will proceed with questions.
        Mr. Attorney General.

                      ATTORNEY GENERAL'S OPENING STATEMENT

        Attorney General Ashcroft. Thank you very much. Good
    morning, Chairman Gregg and members of the subcommittee.
        We are at war. And I know that as we watch the events
    unfolding overseas, that our thoughts and prayers are with the
    young men and women who are defending our freedom. We pray also
    for the families who have lost loved ones or whose loved ones
    have been captured or are missing in action or wounded. Their
    efforts in the defense of freedom, which is a noble, if not the
    most noble of causes, will never be forgotten. We will honor
    their sacrifice with an ever-vigilant commitment to our war on
    terrorism.
        Indeed, the first and overriding priority of this budget
    and of the Department is to protect America from acts of
    terrorism and bring terrorists to justice. I am pleased to be
    here to present the President's fiscal year 2004 budget request
    for the Department of Justice. I thank you for your continued
    assistance in providing the Department of Justice with the
    resources to detect, disrupt, and dismantle terrorist activity.

                             IRAQI TASK FORCE PLAN

        The Justice Department's terrorism prevention efforts have
    included planning for the possibility of intensified conflict
    with Iraq. Last spring, the FBI began developing an action plan
    to address any related threats that might face us in the event
    of this intensification of the conflict. An Iraqi Task Force
    Plan was developed, in addition to the integrated prevention
    security framework put in place after September 11, 2001. The
    Iraqi Task Force Plan includes: around-the-clock operations at
    FBI headquarters and field offices, since the escalation of
    hostilities with Iraq and outreach to Middle Eastern and
    Islamic communities in the United States. The plan includes an
    analysis of prior cases involving Iraq and/or supporters of
    Iraq to identify potential intelligence targets or persons of
    interest. The plan includes stepped-up monitoring of
    individuals suspected of links to the Iraqi hostile forces or
    other terrorist organizations. The plan also includes voluntary
    interviews of 11,000 U.S.-based Iraqis to obtain
    counterterrorism information and intelligence information, as
    well as to identify any backlash threats to Iraqis in the
    United States. When I say backlash threats, I mean that we do
    not want Iraqi individuals in the United States to be the
    subject of discrimination, intimidation, harassment, or
    injustice. Those individuals of Iraqi origin are entitled to
    the same kind of security, freedom, and liberty as are other
    citizens in the United States. The voluntary interviews include
    inquiries about whether or not their well-being has been
    threatened.
        We appreciate the valuable information we have gained from
    the voluntary interviews and the cooperation of the Iraqi
    community in the United States. This cooperation has assisted
    us in our efforts in Iraq, as well as in our own domestic
    antiterrorism efforts. We have gathered intelligence about such
    things as Iraqi bunkers, tunnel systems, telecommunications
    networks, manufacturing plants, and Iraqi military officials.
    This information is being shared and analyzed by our law
    enforcement, military and intelligence officials.

                        2003 SUPPLEMENTAL BUDGET REQUEST

        On March 25, 2003, the President submitted a supplemental
    budget request for fiscal year 2003 to address the continuing
    threat to the national security of the United States posed by
    Iraq. For the Department of Justice, the request includes $500
    million for the Counterterrorism Fund to meet terrorism-related
    prevention and response requirements. Among our top priorities
    for the use of this funding is critical funding for the FBI
    that addresses response capabilities, security enhancements,
    language translation services, operational field expenses, and
    surveillance support.
        We also anticipate using a small portion of this funding to
    meet increased U.S. Marshal Service security requirements for
    the Federal judiciary and to upgrade the capability of the
    Office of Intelligence Policy and Review for its role in the
    Foreign Intelligence Surveillance Act warrant process.

                              2004 BUDGET REQUEST

        The President's overall Justice Department budget request I
    am discussing today will strengthen our capacity to fulfill all
    of the Department's top priorities. The President's budget
    requests $23.3 billion for the Department of Justice, including
    $19 billion in discretionary funding and $4.3 billion for the
    Department's mandatory and fee funded accounts.

                              TERRORISM PREVENTION

        The September 11 attacks made it clear that America's
    defense requires a new culture, a culture of prevention,
    nurtured by cooperation, built on coordination, and rooted in
    our constitutional liberties. The Justice Department is
    battling terrorism by integrating our law enforcement effort,
    not separating it, and by integrating, not separating, our
    intelligence capabilities.
        Our integrated terrorism prevention strategy is having an
    impact on terrorist threats. Listen to this recorded
    conversation between charged terrorist cell member Jeffrey
    Battle and an FBI informant on May 8, 2002, in Portland,
    Oregon. In this conversation, which was unsealed by the Court,
    Battle explained why his threatening enterprise was not as
    organized as he thought it should be. I will quote Mr. Battle
    now.

        ``Because we don't have support. Everybody's scared to give
    up any money to help us. You know what I'm saying? Because that
    law that Bush wrote about, you know, supporting terrorism,
    whatever, the whole thing. Everybody's scared. He made a law
    that says, for instance, I left out of the country and I
    fought. Right? But I wasn't able to afford a ticket. But you
    bought my plane ticket. You gave me the money to do it. By me
    going and me fighting and doing what they can by this new law,
    they can come and take you and put you in jail.''

        Mr. Chairman, terrorists clearly recognize the
    effectiveness of the laws passed by Congress and utilized by
    the Department to disrupt terrorist activity by interdicting
    the funding of terrorism. It is a credit to our new
    investigative tools, the hard work of the law enforcement
    community, and our intelligence agencies, as well as a vigilant
    public, that we have not suffered another major terrorist
    attack in this country.
        The FBI indicates that since September 11, 2001, over 100
    terrorist plots have been disrupted and some, no doubt,
    disrupted, delayed, or abandoned because funding was not
    available as the intercepted conversation between two
    individuals involved in terrorism clearly indicates.
        Nevertheless, as the President recently stated, ``There is
    no such thing as perfect security against a hidden network of
    cold-blooded killers. Yet abroad and at home we are not going
    to wait until the worst dangers are upon us.'' Therefore, we
    will continue to seek the assistance of Congress as we enhance
    a culture of prevention and ensure the resources of our
    Government are dedicated to defending Americans.

                         INTEGRATED PREVENTION STRATEGY

        Now, I would like to give you a brief overview of the
    results to date of our integrated prevention strategy to fight
    the war on terrorism.
        First, we are gathering and cultivating detailed
    intelligence on terrorism in the United States. Hundreds of
    suspected terrorists have been identified and tracked
    throughout the United States. Our human sources of information
    intelligence have doubled. Our counterterrorism investigations
    have doubled in the last year. In 2002, over 18,000 subpoenas
    and search warrants have been issued. Over 1,000 applications
    were made to the Foreign Intelligence Surveillance Act (FISA)
    court targeting terrorist spies, foreign powers that threaten
    our security, including 170 emergency FISA applications. These
    are emergency requests for surveillance activity based on our
    belief and information that there are threatening circumstances
    requiring us to implement coverage immediately. Those calls
    come to me at virtually any time of the day or night; and it is
    my responsibility to approve those, when appropriate.
        Second, we are arresting and detaining potential
    terrorists. Four alleged terrorist cells were broken up in
    Buffalo, Portland, Detroit, and Seattle. Two hundred twenty-
    eight criminal charges have been brought to date. One hundred
    thirteen individuals have been convicted or pled guilty,
    including shoe bomber Richard Reid, American Taliban John
    Walker Lindh, three of the six members of the Buffalo cell, two
    more of whom pled guilty just last week, joining another
    defendant who was already cooperating, and there are 478
    deportations linked to the September 11 investigation.
        Third, we are dismantling the terrorist financial network.
    Thirty-six terrorist organizations have been designated as
    terrorist organizations, $125 million in assets have been
    frozen, and over 660 accounts frozen around the world; 70
    investigations into terrorist financing, with 23 convictions or
    guilty pleas to date related to terrorist financing.
        Fourth, we are disrupting potential terrorist travel. Nine
    major alien smuggling networks have been disrupted. Hundreds of
    terrorist criminals have been stopped through the National
    Security Entry-Exit Registration System, called NSEERS. Among
    those individuals stopped, 11 suspected terrorists with at
    least one known member of Al-Qaeda; 649 stopped at the border
    who were wanted criminals, who had committed past felonies or
    violated other laws; and 77 felons identified through domestic
    enrollment, who were in the country illegally. They were not
    stopped at the border but asked to come in and register as part
    of the NSEERS program. These included a murderer, a cocaine
    trafficker, child molesters, and individuals convicted of
    assault with a deadly weapon.
        Fifth, we are building our long-term counterterrorism
    capacity. A near threefold increase in the counterterrorism
    funds devoted by the Department, over 1,000 new and redirected
    FBI agents dedicated to counterterrorism and
    counterintelligence, 250 new assistant U.S. attorneys, 66 joint
    terrorism task forces, a 337 percent increase in the joint
    terrorism task force staffing, and fly-away expert teams for
    rapid deployment to hot spots around the world.
        We have made progress, but there is always additional work
    to be done. And to that end, the budget request includes an
    increase of $598.2 million for programs that support our
    mission to prevent and combat terrorism, including $516 million
    to enhance or complement the FBI's counterterrorism program.
        Even as the men and women of the Justice Department fight
    the war on terrorism, we do so within a framework that upholds
    our other crucial responsibilities. Let me briefly review these
    other core missions.

                           CORPORATE FRAUD TASK FORCE

        First, the Department of Justice has taken decisive action
    to combat corporate corruption and punish corporate
    lawbreakers. The relentless work of the Corporate Fraud Task
    Force, chaired by Deputy Attorney General Larry Thompson, has
    resulted in over 200 investigations opened into suspected
    corporate fraud, over 200 people charged to date, and 70
    convictions have been obtained. To date $20 million in assets
    have been frozen, $14 million in forfeitures, and we are
    seeking to forfeit more than $2.5 billion to restore to the
    creditors and investors the resources, which were lost as a
    result of the corporate fraud.
        The Department is committed to ensuring a marketplace of
    integrity and restoring the confidence of American investors
    and protecting their assets. And to that end, the fiscal year
    2004 budget requests $24.5 million to support the Corporate
    Fraud Task Force.

                                DRUG ENFORCEMENT

        Second, the Department of Justice has continued to fight
    the scourge of illegal drugs. Thanks to the tireless efforts of
    the Drug Enforcement Administration and the Organized Crime
    Drug Enforcement Task Force, we have increased the seizures of
    drug assets from major drug trafficking organizations by 20
    percent. We have dismantled 305 drug trafficking organizations
    in 2002 alone. We have more than doubled the amount of heroin
    seizures from 2000 to 2002. We have reached a 9-year low in
    student drug use.
        We have attacked the nexus, the connection between drug
    trafficking and terrorism, including bringing charges in San
    Diego against individuals for conspiring to trade heroin and
    hashish for anti-aircraft missiles, which they allegedly
    intended to sell to Al-Qaeda forces in Afghanistan. The fiscal
    year 2004 budget request includes $117.9 million to augment our
    efforts to reduce the availability of illegal drugs, to
    identify and dismantle drug trafficking organizations, and
    support drug treatment.

                            CRIMES AGAINST CHILDREN

        Third, the Department of Justice has prevented and
    prosecuted crimes against children. It allocated $2.5 million
    to develop an effective nationwide Amber Alert Network. We have
    reassigned three FBI investigative analysts to work full-time
    at the National Center for Missing and Exploited Children. We
    are supporting Internet Crimes Against Children Task Forces
    across the Nation with technology and capacity. We are
    dedicating a total of $15.2 million to the FBI's Innocent
    Images National Initiative, a $3.6 million increase, to keep
    pace with the nearly 2,000 percent increase in investigations
    since 1996, investigations to combat the proliferation of child
    pornography and child sexual exploitation via the Internet.

                           PROJECT SAFE NEIGHBORHOODS

        Fourth, the Department of Justice has provided increasing
    protection to Americans from gun crime. In the first 2 years of
    this administration's Project Safe Neighborhoods Initiative to
    combat gun crime, we have increased Federal gun crime
    prosecutions by 36 percent, which has helped lock up repeat
    offenders and lower crime in cities across America.
        For example, in Philadelphia, robberies at gunpoint dropped
    11 percent, and the homicide rate is the lowest it has been
    since 1985. In Kansas City, the murder rate dropped 23 percent
    to its lowest level in three decades. This reduction translates
    to 27 more people alive today who might not have been alive if
    the previous trend had continued.
        U.S. attorneys have charged 10,634 defendants for violating
    gun statutes, and they have convicted and taken 7,747 gun
    criminals off the street with those prosecutions. In 2002, the
    conviction rate for those charged with Federal gun crimes--
    which may include other non-gun related charges as well--was
    near 90 percent. More than half of those charged were sentenced
    to more than 5 years in Federal prison. Our success in these
    areas would not be possible without the diligence and hard work
    of State and local law enforcement agencies who are partners in
    the Project Safe Neighborhoods endeavor.

                                FIRST RESPONDERS

        To that end, the administration is requesting $8.5 billion
    for first responders and state and local law enforcement in the
    budget and in the supplemental appropriation; $2 billion in the
    current war supplemental that is pending; and $6.5 billion in
    the fiscal year 2004 budget request for both the Justice
    Department and the Department of Homeland Security providing
    funding for State and local law enforcement and first
    responders.

                                  CIVIL RIGHTS

        Fifth, the Department of Justice has protected vigorously
    the civil rights of all Americans. The Department has
    strengthened our Civil Rights Division with an approximately 10
    percent increase in both full-time attorneys at 355 and total
    employees at 709, enforcing the Nation's civil rights laws
    since the beginning of this administration; a 12 percent
    increase in successful prosecutions of criminal civil rights
    violations from the previous 2 years; a 100 percent increase in
    settling pattern or practice police misconduct cases during the
    first 2 years of the Bush administration than during the final
    2 years of the previous administration; a $500 million amount
    obtained for traditional black colleges through settlement of a
    25-year-old desegregation lawsuit.
        The Department has prosecuted more than 80 discriminatory
    backlash hate crimes in the wake of September 11, for example,
    by securing the conviction of Zachary Rolnik for violating the
    civil rights of Dr. James J. Zogby, the president of the Arab
    American Institute, by securing the guilty plea of Earl Leslie
    Krugel for conspiracy to manufacture and detonate bombs at a
    mosque and at a field office of United States Congressman
    Darrell Issa of California.
        The Department has prosecuted 43 non-September 11-related
    hate crimes cases in the last 2 years and initiated over 600
    non-September 11 hate crimes investigations.
        The Department has coordinated the Voting Rights Initiative
    to ensure access, honesty, and integrity at the polls on
    election day that resulted in a smooth election with far fewer
    complaints than were reported in recent years.
        The Department has investigated, prosecuted, and convicted
    record numbers of human trafficking and sex trafficking cases,
    doubling the number of trafficking prosecutions and the number
    of convictions over the previous 2 years.
        Now, obviously, our Department has other vital missions I
    have not been able to address here fully, but I would be happy
    to address them during the questions. For example, the
    Department's Antitrust Division successfully settled the
    Microsoft case, receiving praise from Judge Colar Catelli for,
    and I quote her now, ``The clear, consistent, and coherent
    manner'' in which the Division reached this historic
    settlement.
        On the criminal enforcement front last year, individuals
    convicted for antitrust violations and related criminal
    offenses received a record average sentence of greater than 18
    months.

                               prepared statement

        Mr. Chairman, ranking member, and other members of the
    subcommittee, as we work to achieve our Department's
    objectives, I want you to know that none of these are possible
    without the funding and the support and the framework of law,
    which is provided through the Department into the Nation by the
    Congress. And I want to express my appreciation to you for your
    conscientious devotion to your duties of protecting America and
    providing the resources through which the administration can
    join you in that effort to protect this Nation.
        I would be pleased to respond to questions.
        [The statement follows:]

                      Prepared Statement of John Ashcroft

        Mr. Chairman and Members of the Subcommittee: It is an honor to
    appear once again before this Subcommittee to present the President's
    budget request for the Department of Justice. For fiscal year 2004, the
    Budget seeks $23,334,844,000 for the Department of Justice, including
    $19,001,955,000 in discretionary funding and $4,332,889,000 for the
    Department's mandatory and fee-funded accounts. In total, the fiscal
    year 2004 request is $259,513,000 over the comparable fiscal year 2003
    Budget Request. The fiscal year 2004 Budget reflects the transfer of
    the Immigration and Naturalization Service, the Office of Domestic
    Programs, and a portion of the FBI's National Infrastructure Protection
    Center (NIPC) and other Departmental resources to the new Department of
    Homeland Security. It also reflects the transfer of the Bureau of
    Alcohol, Tobacco, Firearms and Explosives (ATF) from the Department of
    the Treasury to the Department of Justice.
        On March 25, 2003, the President submitted a supplemental budget
    request for fiscal year 2003 to address the continuing threat to the
    national security of the United States posed by Iraq. For the
    Department of Justice, the request includes $500,000,000 for the
    Counterterrorism Fund to meet immediate or emerging terrorism-related
    prevention and response requirements. Among our top priorities for the
    use of this funding are critical items for the FBI that address
    response capabilities, security enhancements, language translation
    services, operational field expenses, and surveillance support. We
    would also anticipate using a small portion of this funding to upgrade
    the capability of the Office of Intelligence Policy and Review for its
    role in the FISA warrant process, and to meet increased U.S. Marshals
    Service security requirements for the Federal Judiciary. The use of the
    Counterterrorism Fund provides the Department with the flexibility to
    allocate resources among components and priorities to meet
    unanticipated requirements. The Department, of course, will apprise the
    Committee through existing notification procedures of proposed
    allocations.
        The ongoing support of this Subcommittee for the Department's
    critical mission--the prevention and disruption of terrorist attacks--
    is recognized and deeply appreciated. You have worked with us to stand
    up the Foreign Terrorist Tracking Task Force; reorganize the Federal
    Bureau of Investigation and the Criminal Division; improve security at
    our Nation's borders; improve inspections at our air and seaports;
    enhance our information technology infrastructure; increase information
    sharing among federal agencies and with our state and local partners;
    and undertake the largest criminal investigation in U.S. history.
    America is now more secure, more prepared, and better equipped to
    defeat the continued threat of terrorism.

       PREVENTING AND COMBATING TERRORISM, INCLUDING COUNTERINTELLIGENCE

        The fiscal year 2004 Budget places a high priority on securing
    additional resources needed to fight the nation's war on terrorism,
    while at the same time being sensitive to the overall economic picture
    that confronts our Nation. Our budget increases overall
    counterterrorism resources, while also reprioritizing some current
    resources to supplement requests for new program enhancements.
        In the days following the September 11th attacks, we initiated a
    comprehensive review and wartime reorganization in order to identify
    and redirect appropriate resources to our primary mission:
    counterterrorism. With the submission of the fiscal year 2004 Budget,
    the resources devoted to counterterrorism and homeland security have
    increased by approximately $1.9 billion over the Department's fiscal
    year 2001 Budget, representing an increase of 10 percent in the share
    of the Department's resources devoted to counterterrorism prior to
    September 11. Our budget request includes increases of $598,258,000 for
    programs supporting our mission requirements for preventing and
    combating terrorism.
        For the Federal Bureau of Investigation, the Budget requests
    $516,258,000 in enhancements above the fiscal year 2003 request that
    support or complement the FBI's Counterterrorism Program. Of the total,
    $189,107,000 is focused exclusively on the FBI's counterterrorism
    investigative capabilities. These increases will permit the FBI to
    continue its efforts to identify, track and prevent terrorist cells
    from operating within the United States and overseas and, where
    necessary, to investigate terrorist acts.
        To prevent terrorist attacks, the FBI must recognize and understand
    worldwide economic, political, social, and technological changes that
    have occurred over the last decade, and it must leverage existing
    intelligence in support of ongoing cases and operations. Following
    September 11th, with the support of this Subcommittee, Director Mueller
    restructured the FBI's Counterterrorism Division to implement a
    nationally-managed and centrally-driven Counterterrorism program (CT).
    The program seeks to improve intelligence coordination and analysis,
    enhance technical capabilities, and build a national response
    capability that is more mobile, agile, and flexible and provides a more
    proactive orientation toward meeting the terrorism threat. The fiscal
    year 2004 Budget requests 430 support positions and $27,381,000 to
    improve the FBI's capacity to manage this program, including:
      --62 positions and $3,641,000 to build a national level of expertise
            and knowledge that can be accessed by and deployed to all field
            offices;
      --115 positions and $7,081,000 to facilitate the collection,
            analysis, exploitation, and dissemination of intelligence
            gathered through the lawful interception of e-mail traffic of
            known and suspected terrorists;
      --61 positions and $3,605,000 to provide a centralized and
            coordinated financial investigative component to identify,
            disrupt, and dismantle terrorist financing operations;
      --72 positions and $4,430,000 to significantly enhance the capacity
            of the Terrorist Reports and Requirements Section to establish
            policies and to develop and disseminate Intelligence
            Information Reports;
      --19 positions and $1,056,000 to improve the capability of the FBI's
            National Threat Center to evaluate terrorist threats for
            credibility and disseminate intelligence reports to the
            appropriate intelligence and law enforcement communities;
      --15 positions and $844,000 to support a robust analytical capacity
            that will enable the FBI to better predict national security
            vulnerabilities or targets;
      --86 positions and $5,224,000 to provide additional support to FBI
            Headquarters to expand the centralized management capacity of
            its counterterrorism mission; and
      --$1,500,000 to fund operational travel and to coordinate FBI
            investigative efforts.
        For Counterterrorism field analytical support, the Budget requests
    214 positions and $14,603,000 to develop a comprehensive intelligence
    program that can identify emerging threats and patterns, find
    relationships among individuals and groups, and provide useful
    information to investigators in a timely manner.
        To support the FBI's prevention mission in the field, the fiscal
    year 2004 Budget includes an additional 248 positions (149 agents) and
    $28,046,000. These additional resources will expand the Bureau's
    ability to identify terrorist operatives and their targets, penetrate
    terrorist organizations, and neutralize or disrupt the threats posed by
    terrorist activities.
        New funding of $4,600,000 is requested for a communications
    application tool capable of conducting sophisticated link analysis on
    high volumes of telephone call and other relational data.
        On October 29, 2001, President Bush directed the establishment of
    the Foreign Terrorist Tracking Task Force (FTTTF), a multi-agency
    endeavor, whose mission is to prevent admission to the United States of
    foreign terrorists and their supporters and to identify and locate
    known and suspected terrorists who have gained entry to this country.
    This Subcommittee has supported the Administration's efforts to stand
    up the Task Force and to ensure a sufficient level of funding for its
    critical mission. We recognize the difficulty you faced with your
    allocation constraints and we deeply appreciate your support of the
    FTTTF in the fiscal year 2003 Omnibus Appropriations Act. The fiscal
    year 2004 Budget includes a total of $72,607,000 for on-going support
    of the FTTTF.
        The Joint Terrorism Task Forces (JTTTF) are the cornerstone of a
    coordinated Federal, State, and local law enforcement effort for
    conducting international and domestic terrorism investigations. The
    JTTFs promote an atmosphere of immediate transparency between the FBI
    and its other law enforcement partners that encourages and ensures the
    sharing of intelligence information among participating agencies. The
    fiscal year 2004 Budget requests an increase of $11,548,000 in non-
    personnel funding to support the JTTF Program, of which $5,000,000 will
    support an Information Sharing Initiative.
        The FBI's Computer Intrusion Program targets cyber matters
    affecting our national security and our economic security. The FBI
    provides deterrence to disruptive intrusions by foreign powers,
    terrorists, and criminal elements through the successful
    identification, investigation, and prosecution of illegal computer
    intrusion activity. The proposed increase of 113 positions (53 agents)
    and $41,113,000 includes 66 positions (45 agents) and $11,128,000 to
    combat computer intrusions and 47 positions (8 agents) and $29,985,000
    for the Special Technologies Application Section to enhance technical
    analysis capabilities in support of cyber investigations.
        In response to the September 11th attacks, the FBI modified its
    public information system infrastructure to establish a means for the
    general public to report suspected terrorist activity via the Internet.
    Located in the FBI's Strategic Information and Operations Center
    (SIOC), the Internet Team has received 375,000 tips, resulting in
    40,000 investigative leads. The fiscal year 2004 budget proposes an
    additional 19 positions and $1,209,000 to provide 24/7 coverage for tip
    review and analysis.

    Complementary Terrorism Support Programs
        The fiscal year 2004 Budget also requests an increase of
    $409,151,000 for the Department's counterintelligence, national
    security and criminal enterprise programs, all of which provide
    complementary counterterrorism support. Of this total, $327,151,000 is
    for programs and initiatives of the FBI and $82,000,000 supports
    initiatives in other DOJ components. With your support in December
    2002, the FBI reprogrammed $28,736,000 to counter the growing national
    security threats around the country and strengthen the central
    management of its counter-intelligence program. This was the first step
    in an ongoing effort to implement the FBI's counter-intelligence
    strategy. The fiscal year 2004 budget requests an additional 583
    positions (94 agents) and $69,880,000 for the FBI's counter-
    intelligence mission.
        FBI Director Mueller has identified the need for upgraded
    technology as one of the top 10 priorities of the FBI, recognizing that
    over the years, the FBI failed to develop a sufficient capacity to
    collect, store, search, retrieve, analyze and share information. As
    this Committee is aware, the FBI has embarked on a comprehensive
    overhaul and revitalization of its information technology
    infrastructure. We appreciate your support of those efforts. The fiscal
    year 2004 Budget provides enhanced funding for the FBI's information
    technology programs of 3 positions and $82,247,000. Included in the
    request is an additional $61,689,000 for operation and maintenance
    costs associated with Trilogy hardware, $18,558,000 for recurring
    hardware and software upgrades over the next several years to avoid a
    gradual return to a technological state of obsolescence, and $2,000,000
    for costs associated with operations and maintenance of the FBI's Top
    Secret/Sensitive Compartmentalized Information Local Area Network (TS/
    SCI LAN).
        To enhance the FBI's response to crisis situations worldwide,
    including secure, remote communications networks, specialty vehicles
    and equipment, and helicopter support for hostage rescue, the fiscal
    year 2004 Budget requests an additional 35 positions (7 agents) and
    $24,187,000. The request includes 27 positions (6 agents) and
    $14,984,000 to enhance Crisis Response Unit capabilities; $850,000 for
    automation equipment in support of rapid deployment team operations; 6
    positions (1 agent) and $2,226,000 for the Hostage Rescue Team (HRT) to
    provide aviation support during a terrorist or criminal act directed
    against the United States, its citizens, or interests; and 2 positions
    and $6,127,000 to provide Weapons of Mass Destruction (WMD) equipment
    and supplies, staff, and training, for HRT and the SWAT teams to ensure
    an appropriate state of preparedness to respond to counter-terrorism
    threats and other assigned tasks.
        The investigation of the attacks on the World Trade Center and the
    Pentagon underscores the global nature of terrorism and the ability of
    terrorists to plan, finance, and conduct operations in a variety of
    countries around the world. Terrorist organizations such as Osama Bin
    Laden's Al Qaeda have a presence throughout the Middle East, Europe,
    and Asia. The FBI's Legal Attache (Legat) Offices continue to be
    critical to our ongoing efforts to deny Al-Qaeda the ability to mount
    future attacks by building and maintaining effective international
    partnerships. For fiscal year 2004, the President's Budget includes an
    additional 82 positions (19 agents) and $61,755,000 to expand and
    support the Legal Attache (Legat) Program and the Visa Identification
    Terrorist Automated Lookout (VITAL) System. Legats and VITAL will
    provide a coordinated defense against terrorists seeking entry to the
    United States or threatening our interests and citizens abroad. The
    requested enhancements to the Legat Program of 30 positions (17
    agents), and $47,527,000 will add personnel and upgrade the
    communications capacity of the FBI's overseas offices, bringing the
    technology infrastructure of Legats in line with the Trilogy Project.
    Five new Legat Offices are requested in Sarajevo, Bosnia; Kuwait City,
    Kuwait; Tashkent, Uzbekistan; Kabul, Afghanistan; and Belgrade, Serbia.
    The requested funding will also expand five existing offices in Ottawa,
    Seoul, London, Berlin, and Moscow.
        The FBI's VITAL project will improve the Nation's security by
    providing the United States embassies and consulates with the ability
    to identify individuals who are threats to our national security before
    they can gain entry into the United States via air and seaports. When
    fully implemented, consular and immigrant officials will be able to
    electronically process fingerprint-based criminal history checks of
    visa applicants against the records in the Integrated Automated
    Fingerprint Identification System (IAFIS) and authenticate identities
    of travelers through biometrics prior to the issuance of visas. The
    budget request of 52 positions (2 agents) and $14,228,000 lays the
    groundwork for this important program by providing the necessary
    personnel and funding to develop and manage the VITAL project and to
    modify the IAFIS to provide the additional storage capacity needed to
    retain and store embassy and consulate fingerprint submissions.
        With the proliferation of information technology and the increased
    availability of computers, criminal and terrorist activity has shifted
    from a physical dimension in which evidence and investigations are
    described in tangible terms, to a cyber dimension. The role of the
    FBI's Computer Analysis Response Team (CART) is to provide assistance
    to FBI field offices in the search and seizure of computer evidence and
    in the conduct of forensic examinations where computers and storage
    media are required as evidence. It is anticipated that more than 60
    percent of the FBI's caseload will require at least one computer
    forensic examination. To meet this growing demand, the fiscal year 2004
    Budget includes an additional 45 positions (1 agent) and $18,040,000.
    Resources will be used to maintain existing and establish new Regional
    Computer Forensic Laboratories and to provide funding for rapid
    deployment teams. This Subcommittee has led the support for the FBI's
    CART program in the past and we look forward to continuing to work with
    you on this important initiative in the future.
        Since his appointment as FBI Director, Bob Mueller has made
    significant changes in the organizational structure at the FBI in an
    effort to make the agency more flexible, agile, and mobile in its
    capacity to respond to the many challenges it faces. The Director
    recognizes that the FBI must better shape its workforce and develop
    core competencies if it is to effectively respond to the array of
    national security and criminal threats facing our nation. Additional
    training resources are a necessary component of reshaping the FBI. The
    fiscal year 2004 Budget requests an additional 111 positions (76
    agents) and $17,559,000 to improve training in the fields of
    intelligence analysis ($2,450,000), counterterrorism ($14,027,000), and
    cyber crime ($1,082,000).
        The National Security Law Unit provides legal advice on all matters
    relating to the national security responsibilities of the FBI,
    including foreign counterintelligence, international terrorism,
    domestic security/terrorism, and computer intrusion/infrastructure
    protection matters. With the FBI's shift in focus to preventing future
    terrorist attacks, the workload of the National Security Law Unit has
    increased substantially. In fiscal year 2004, an additional 14
    positions and $1,405,000 is requested to meet the expanded workload of
    this office.
        Mr. Chairman and Members of the Subcommittee, you have been
    instrumental in the elevation of the role of security within the FBI
    through the establishment of a new Security Division that for the first
    time in FBI history is responsible for ALL FBI security matters. As the
    premier domestic agency conducting criminal, counterintelligence, and
    counterterrorism investigations, the FBI is an attractive target for
    individuals and organizations that seek to impede investigations, or
    obtain sensitive national security information. The fiscal year 2004
    budget requests 120 positions (32 agents) and $37,146,000 for continued
    security improvements. The request includes:
      --$5,050,000 to conduct additional contract background investigations
            of on-board personnel and others with access to FBI information
            and facilities;
      --5 positions and $968,000 for an enhanced adjudication program aimed
            at ensuring that security clearances are granted as necessary
            and appropriate;
      --24 positions and $6,888,000 for additional technical and physical
            security improvements;
      --54 positions and $15,821,000 for Police Force and Guard Services to
            meet increased security requirements at FBI Headquarters, the
            Washington Field Office, the FBI Academy, the Criminal Justice
            Information Services Facility in Clarksburg, WV; and the New
            York Field Office;
      --37 positions (32 agents) and $6,419,000 to expand the polygraph
            program, which is aimed at assuring that national security
            information is not compromised by an FBI employee, contractor
            or other individual; and
      --$2,000,000 for the Defensive Programs Unit to develop technical
            surveillance countermeasures.
        The final fiscal year 2004 budget enhancement for the FBI relates
    to its critical need for additional staff support for field
    investigations. An increase of 300 positions and $14,932,000 is
    requested for essential personnel to focus on the administrative tasks
    associated with investigations, thereby allowing field agents, field
    investigators, and technical support personnel to focus exclusively on
    terrorist and criminal threats.
        The war against terrorism cannot be won without the support and
    assistance of our State and local partners. Our successes will depend
    on our ability to share information and intelligence in a timely manner
    with state and local law enforcement agencies. At its inception the
    OJP-funded Regional Information Sharing System (RISS) supported State
    and local law enforcement efforts to combat drug trafficking and
    organized criminal activity. However, the regional information-sharing
    concept has expanded and now more law enforcement agencies routinely
    reach out to share intelligence across jurisdictional boundaries.
    Section 701 of the USA Patriot Act authorizes RISS to operate secure
    information sharing systems to enhance the investigative and
    prosecutorial abilities of participating law enforcement agencies in
    addressing terrorism.
        A significant achievement in the last year has been the successful
    effort undertaken to link the various databases used by State and local
    law enforcement. We have connected the RISS with the FBI's Law
    Enforcement Online (LEO) system developing a backbone for further
    information sharing improvements. The fiscal year 2004 Budget seeks an
    additional $12,000,000 to further expand RISS' accessibility to state
    and local public safety agencies for the purpose of sharing terrorism
    alerts and related information.
        The Office of Justice Programs also provides significant assistance
    to State and local law enforcement and public safety entities through
    the training and technical assistance provided by its program experts.
    OJP's training and technical assistance programs provide direct
    assistance to state and local jurisdictions in developing and
    implementing comprehensive, system-wide strategies and in demonstrating
    and documenting programs that work. The fiscal year 2004 Budget
    requests an enhancement of $3,000,000 to provide training to state and
    local law enforcement, prosecution, and intelligence agency personnel
    at the command level in the areas of domestic anti-terrorism and
    extremist criminal activity. This funding will be combined with
    existing funding of $1,238,000 for the hate crimes training and
    technical assistance program to form one Bureau of Justice Assistance-
    administered training program totaling $4,238,000.
        The President's fiscal year 2004 Budget for the Department of
    Justice includes $851,987,000 for the Bureau of Alcohol, Tobacco,
    Firearms, and Explosives, which became a component of the Department of
    Justice on January 24, 2003, pursuant to the Homeland Security Act of
    2002, Public Law 107-296.
        The Homeland Security Act authorized the Safe Explosives Act,
    establishing a new program of explosives licenses and permits,
    expanding the number of individuals required to have licenses and
    permits, requiring fingerprinting and background checks for all
    applicants, and mandating the establishment of a National Explosives
    Licensing Center. The provisions of this new Act will aid in the fight
    against terrorism. The fiscal year 2004 Budget requests 88 positions
    and $10,000,000 for ATF to carry out this new initiative. This budget
    request will build upon the efforts being undertaken by the ATF to
    implement these new responsibilities during fiscal year 2003.
        As we succeed in the arrest, prosecution, and conviction of
    terrorists, we must also provide for the safe incarceration of those
    individuals. An increase of 2 positions and $23,000,000 is requested
    for the Bureau of Prisons' Salaries and Expenses Account to provide
    physical security upgrades at an existing facility that will house
    terrorist inmates. The upgrades include enhancements to the perimeter
    security of the facility and construction of maximum isolation cells to
    ensure minimal exposure to other inmates.
        The ability of law enforcement and public safety agencies to
    communicate effectively is essential to our ability to respond to
    future terrorism incidents. The Department's Narrowband Communications
    Program is responsible for developing the Integrated Wireless Network,
    a joint initiative with the Department of the Treasury, and several
    agencies of the Department of Homeland Security. The fiscal year 2004
    Budget requests an increase of $32,000,000 to continue the narrowband
    investment in radio infrastructure and radio investments principally
    along the Northern and Southern land borders and in key operational
    areas such as New York City.
        The Office of Intelligence Policy and Review (OIPR) in the
    Department of Justice plays a critical role in terrorism prevention by
    providing operational support to the FBI in its investigation of
    terrorism, primarily through the application for warrants under the
    Foreign Intelligence Surveillance Act of 1978 (FISA). OIPR prepares and
    files all applications for electronic surveillance and physical search
    under FISA, assists government agencies by providing legal advice on
    matters of national security law and policy, and represents the
    Department of Justice in a variety of inter-agency forums related to
    counterintelligence. The fiscal year 2004 Budget requests an increase
    of 12 positions and $2,000,000 to increase the operational support
    provided to the FBI through the application of FISA warrants and for
    information technology improvements.

                           COMBATING CORPORATE FRAUD

        Since the exposure of the corporate fraud scandals, the Department
    of Justice has taken decisive action to combat corporate fraud and
    punish corporate wrongdoers. To restore confidence in the integrity of
    our markets, President Bush created the Corporate Fraud Task Force,
    chaired by Deputy Attorney General Larry Thompson, to bring the maximum
    combined force of the Federal Government to investigate and prosecute
    corporate fraud. In addition to the Deputy Attorney General, the
    Department's Corporate Fraud Task Force members include the Director of
    the FBI, the Assistant Attorneys General of the Criminal and Tax
    Divisions of the Department, and several United States Attorneys from
    around the Nation. We appreciate this Committee's support for the
    Department's corporate fraud efforts and the $23,000,000 in additional
    funding provided in fiscal year 2003 for the FBI and the U.S.
    Attorneys.
        The Department of Justice is working closely in coordination with
    the Securities and Exchange Commission and other agencies through the
    Corporate Fraud Task Force to ensure a marketplace of integrity. The
    goal of our law enforcement efforts is clear: Information cannot be
    corrupted; trust must not be abused; confidence must be maintained in
    the markets; and the jobs, savings, investments, and pension plans of
    hard working Americans must be protected.
        For fiscal year 2004, our budget requests enhancements of 212
    positions (56 agents and 22 attorneys) and $24,538,000 to continue
    these efforts. For the FBI, we are requesting 118 positions (56 agents)
    and $16,000,000 for staff and resources to target corporate fraud
    cases. These resources will fund the immediate development or
    improvement of existing liaison with other agencies, increased
    corporate fraud training for agents and financial analysts and fund the
    establishment of corporate fraud ``Reserve Teams'' of financial experts
    dispatched to major fraud investigations. The budget also seeks
    $8,538,000 for additional prosecutors, financial analysts and other
    staff for the U.S. Attorneys, Criminal Division, and Tax Division to
    enhance prosecutorial capacity in this arena.

                         DRUG ENFORCEMENT AND TREATMENT

        Combating illegal drug trafficking and the continued wave of
    violent crime associated with it remains among the Department's highest
    priorities. The drug threat we face is not a new one, nor is the
    priority we place on ending the toll that illegal drugs take on the
    lives of Americans. The growing combination of drug trafficking and
    terrorism serves to call us even more urgently to action. In March
    2002, I announced a strategy to reduce the availability of illegal
    drugs. The centerpiece of this strategy is the reorganization,
    revitalization and restoration of the Organized Crime Drug Enforcement
    Task Force (OCDETF) program. It is a strategy that recognizes illegal
    drugs as both a destructive force in the lives of individuals and a
    destructive force to the security of this nation.
        OCDETF's cadre of experienced and talented federal agents and
    prosecutors, with support from state and local law enforcement,
    exemplifies the government's collaborative capabilities to disrupt and
    dismantle drug trafficking organizations and their related enterprises.
    For 2004, the Administration has proposed to once again consolidate all
    OCDETF funding for participating agencies from the Departments of the
    Treasury, Homeland Security, and Justice within the Department of
    Justice's Interagency Crime Drug Enforcement appropriation. The
    reconsolidation of this funding will support the OCDETF program's
    refocused mission and removes bureaucratic barriers to improved
    accountability and resource management throughout the program.
    Moreover, the reconsolidation supports the Department's strategy for
    OCDETF to lead the charge in disrupting and dismantling the most
    significant drug trafficking and money laundering organizations.
        To establish the automated capacity to analyze and disseminate
    OCDETF investigative information, our budget proposes an enhancement of
    $22,000,000. By leveraging existing Foreign Terrorist Tracking Task
    Force (FTTTF) technology, OCDETF would analyze the drug investigative
    information stored in existing database systems and, more importantly,
    provide crucial capacity needed to rapidly ingest, conduct cross-case
    analysis, and disseminate drug investigative information. Ultimately,
    this system would expand the capability of OCDETF to use both existing
    and new drug investigative information to make nationwide connections
    among the sophisticated, compartmentalized components of major drug
    trafficking and money laundering organizations.
        In addition, our budget proposes an additional 192 positions and
    $26,000,000 to enable OCDETF participants to mount comprehensive
    attacks, in multiple national and international locations, on the
    highest-level drug traffickers and drug organizations identified on the
    Department's Consolidated Priority Organization Target (CPOT) List. By
    concentrating our efforts on the top 53 command and control targets,
    our resources will have the most profound impact on the overall drug
    supply. Drug organizations are driven by the desire for profit; as
    these organizations develop into larger enterprises, they employ
    illegal financial techniques to transfer or transport drug proceeds, to
    obtain and conceal assets, and to reinvest profits to promote ongoing
    illegal activity. To combat these efforts, our budget proposes an
    enhancement of 83 positions and $10,000,000 to expand the capability of
    OCDETF agencies to conduct meaningful investigations of the financial
    infrastructure supporting major drug organizations.
        As the world's leading drug enforcement agency and the only single-
    mission federal agency dedicated to drug law enforcement, the Drug
    Enforcement Administration (DEA) continues to target aggressively the
    Nation's illegal drug threats in the post-September 11, 2001
    environment. Our budget proposes an enhancement of 329 positions
    (including 123 agents and 20 Diversion Investigators) and $38,880,000
    for the Priority Targeting Initiative. Through this initiative, DEA
    will target Priority Drug Trafficking Organizations involved in the
    manufacture and distribution of illegal drugs as well as those involved
    in the diversion of precursor chemicals used for manufacturing illegal
    drugs. International partnerships are critical to our Nation's efforts
    to combat the threat of illegal drugs. To continue the DEA's drug law
    enforcement training to our counterparts overseas, our budget proposes
    an enhancement of 20 positions (16 agents) and $1,500,000. Our fiscal
    year 2004 budget also proposes an increase of 20 positions and
    $2,500,000 to improve DEA's financial and asset management programs and
    $7,847,000 in prior-year unobligated balances to design and construct a
    state-of-the-art laboratory in the Southeast region (Miami, Florida).
    This request will provide DEA's highly skilled and specialized chemists
    with a modern, state-of-the-art facility.
        The Department's fiscal year 2004 budget requests additional
    funding for drug treatment programs in the Office of Justice Programs
    and the Bureau of Prisons. To expand the Drug Courts Program, our
    budget proposes an enhancement of $16,614,000 for fiscal year 2004. The
    Drug Courts Program provides alternatives to incarceration to encourage
    abstinence and alter behavior with a combination of escalating
    sanctions, mandatory drug testing, treatment and strong aftercare. For
    the Bureau of Prisons, our budget proposes an enhancement of 12
    positions and $467,000 to support drug treatment for approximately
    16,500 inmates. This will bring the BOP to its treatment threshold as
    required by the Violent Crime Control and Law Enforcement Act of 1994.

                       PREVENTING CRIMES AGAINST CHILDREN

        A critical focus of the fiscal year 2004 Budget and a primary
    objective of Goal II of the Department's Strategic Plan is to Combat
    Crimes Against Children and Other Vulnerable Victims of Violence and
    Exploitation. Children today face dangers wholly new to any generation.
    The rapid expansion of the Internet into our homes, libraries and
    public institutions has brought boundless opportunity within reach, but
    the same vehicle that serves young people also aids those who would
    harm them. The fiscal year 2004 Budget includes enhancements totaling
    $19,094,000 to support efforts to reduce child abductions and firearms
    violence.
        The impact of firearms violence is particularly severe on our
    children and young adults. Of the approximately 1,400 juveniles
    murdered in 2001, 44 percent were killed with a firearm; and over 2,800
    students were expelled in 1999-2000 for bringing firearms to school.
    The Youth Crime Gun Interdiction Initiative of the Bureau of Alcohol,
    Tobacco, Firearms, and Explosives (ATF) is a model partnership between
    ATF and local law enforcement designed to reduce firearms violence by
    investigating illegal trafficking to youth. The fiscal year 2004 Budget
    proposes to expand this initiative, begun in 17 cities in 1996, to an
    additional 10 cities. The enhancement of 118 positions (62 agents) and
    $13,000,000 will bring the total number of participating cities to 70.
        Nothing hits home more than a missing child and nothing galvanizes
    law enforcement and the communities they serve more than finding that
    missing child and returning that child home safely. AMBER--America's
    Missing: Broadcast Emergency Response--was created in 1996 as a legacy
    to 9-year-old Amber Hagerman, who was kidnapped while riding her
    bicycle in Arlington, Texas and then brutally murdered. After this
    heinous crime, Dallas-Fort Worth broadcasters teamed with local police
    to develop an early warning system to help find abducted children. I am
    pleased that the fiscal year 2004 Budget includes $2,500,000 to develop
    an effective, coordinated AMBER Alert program nationwide. The
    Department's AMBER Coordinator, Assistant Attorney General Deborah
    Daniels, will use these funds to train law enforcement and others in
    operating an effective AMBER Alert system and to give radio stations
    the software to upgrade their emergency alert systems so they can
    broadcast an AMBER Alert. A sound AMBER plan is vital to the swift
    recovery of a child in imminent danger of physical harm.
        The Innocent Images National Initiative, a component of the FBI's
    Cyber Crime Program, combats the proliferation of child pornography and
    child sexual exploitation facilitated by on-line computers. The
    Innocent Images National Initiative focuses on individuals who indicate
    a willingness to travel interstate for the purposes of engaging in
    sexual activity with a minor and on major producers and/or distributors
    of child pornography. In the last six years, the FBI has seen a 20-fold
    increase in the number of Innocent Images cases opened. The fiscal year
    2004 Budget requests an additional 32 positions (19 agents) and
    $3,594,000 to increase investigations and keep pace with the rising
    trend of child pornography and sexual exploitation via the Internet.

                             ENHANCING DNA PROGRAMS

        The fiscal year 2004 Budget includes increases of $106,220,000 in
    expanded funding for DNA analysis. Forensic DNA analysis has rapidly
    developed into a vital tool used to support an increasing number of
    investigative efforts. Increased demand and limited processing
    capability has created a significant backlog in cases requiring
    forensic DNA analysis. The FBI's Nuclear DNA Program has examined
    evidence from terrorist activities such as the U.S.S. Cole bombings,
    assaults on the World Trade Center and the Pentagon, the anthrax-laced
    mailings and numerous hoax anthrax letters. On the State level, DNA
    analysis has proved invaluable by instantly identifying repeat
    offenders, as well as narrowing the field of potential suspects. The
    fiscal year 2004 Budget will provide continued support to this
    indispensable investigative tool for both State and Federal programs.
        The FBI's Combined DNA Index System (CODIS) and National DNA
    Database utilize forensic sciences and computer technology as an
    effective tool for solving violent crimes. CODIS and the National
    Database enable Federal, State, and local crime laboratories to
    exchange and compare DNA profiles electronically, thereby linking
    crimes to each other and to convicted offenders. The FBI's DNA effort
    began as a pilot project in 1990 serving 14 State and local
    laboratories. Today, the FBI's National DNA Index System includes 42
    States, two Federal laboratories and the Commonwealth of Puerto Rico.
    It has produced more than 6,000 hits, assisting in more than 6,400
    criminal investigations. Ultimately, the number of crimes it helps to
    solve measures its success.
        In fiscal year 2004, the Budget is proposing an increase of 32
    positions and $3,283,000 to expand the FBI's capacity to collect,
    analyze, and store DNA forensic evidence. The FBI plans to double the
    processing rate of nuclear DNA cases by 2005, by increasing the number
    of Forensic DNA Examiners and Biologist Technicians by two-thirds and
    developing Rapid DNA Analysis Systems to replace manual processing. The
    Budget requests 28 positions and $2,692,000 for this purpose. In
    addition, 4 positions and $591,000 is requested to staff, supply and
    equip the Federal Convicted Offender Program to collect DNA samples and
    produce DNA profiles for CODIS. These resources will enable the FBI to
    keep pace with the expanded terrorism-related offenses authorized by
    the USA Patriot Act.
        The fiscal year 2004 Budget also proposes a consolidated DNA effort
    in the Office of Justice Programs (OJP) to assist state and local
    laboratories to reduce backlogs of DNA samples and improve their
    capabilities through increased information and research to make DNA
    tests faster and cheaper. The Budget request proposes funding this
    consolidated effort at a level of $177,000,000, an increase of
    $102,937,000 above the fiscal year 2003 Budget request level.
        Many of our Nation's crime labs lack the capacity to analyze all of
    the DNA evidence collected by police. While all 50 States collect DNA
    from their convicted felons, many lack the resources to enter these
    samples into the national DNA database. As a result, there are some
    500,000 samples awaiting analysis in laboratories across the country.
    Reducing this backlog by entering these samples in State and national
    DNA databases will assist law enforcement in linking offenders already
    in custody to unsolved crimes. As of March 2002, the FBI's DNA database
    had identified 610 offenders and produced 193 ``forensic hits'' in
    which cases not known to be related were found to have been committed
    by the same offender. The proposed enhancements for fiscal year 2004
    will be used to--
      --Reduce the DNA backlog through formula-based grants to expedite the
            entry of DNA samples from convicted felons and unsolved crimes
            into the national database;
      --Improve the capacity of DNA crime labs through grants to state and
            local crime labs for the acquisition of DNA analysis equipment
            that will process samples more quickly and accurately; and
      --Support continuing research on forensic DNA technology and provide
            assistance for pilot projects.

       PROTECTING THE JUDICIAL SYSTEM AND MANAGING FEDERAL DETENTION AND
                             INCARCERATION CAPACITY

        The Department's fiscal year 2004 budget request seeks significant
    resources to improve courtroom security, to detain the accused in
    Federal custody and to protect the American public by providing for the
    safe, secure and humane incarceration of sentenced offenders. Security
    associated with terrorist-related court proceedings requires an
    unprecedented level of protection for all trial participants because of
    the global interest and intense media attention. These high-security,
    high profile proceedings require extensive operational planning and
    support from specially trained and equipped law enforcement personnel.
    The United States Marshal Service (USMS) is responsible for safely
    transporting accused individuals to and from judicial proceedings and
    ensuring the safety of the judicial participants, the public, and USMS
    personnel. To meet better the security needs of these proceedings; our
    budget seeks 275 positions (231 Deputy United States Marshals) and
    $26,599,000. The budget request for USMS also seeks $2,000,000 from the
    Department's Working Capital Fund for courthouse security equipment.
    This additional funding is sought to fund security systems, relocation,
    and telephone and data lines for four new courthouse facilities opening
    during fiscal year 2004.
        During 2002, the Nation's prison population rose 4.4 percent, by
    over 6,800 inmates. The Department's fiscal year 2004 budget request
    seeks additional resources for the Bureau of Prisons to manage this
    growth, including activation costs for seven new facilities. Our budget
    seeks a total of 2,727 positions and $251,978,000 to activate 7 new
    facilities including United States Penitentiary (USP)--Hazelton, West
    Virginia, USP--Canaan, Pennsylvania, and USP--Terre Haute, Indiana,
    Federal Correctional Institution (FCI)--Victorville, California, FCI--
    Forrest City, Arkansas, FCI--Herlong/Sierra, California, and FCI--
    Williamsburg, South Carolina. These facilities will add 8,000
    critically needed beds to reduce overcrowding.
        To provide adequate space to detain individuals in the custody of
    USMS, our budget seeks an increase of $34,705,000. These resources will
    fund additional bed space in state, local and private facilities for
    Federal detainees.

        MANAGING THE DEPARTMENT'S FINANCIAL AND INFORMATION RESOURCES,
                    INCLUDING ENHANCING INFORMATION SECURITY

        The Congress has entrusted a significant level of resources to the
    Department of Justice to enable it to carry out its important mission.
    Our budget seeks additional funding to ensure that resources entrusted
    have sufficient oversight. To strengthen the Department's management
    and oversight of information technology security, including the
    continued implementation of a Department-wide security architecture and
    security standards, and the development and initial implementation of a
    Public Key Infrastructure, the Department seeks an enhancement of 13
    positions and $9,000,000. For fiscal year 2004, the Department also
    seeks an enhancement of $15,000,000 for the Department's Unified
    Financial Management System that will improve financial management and
    oversight with standardized core functions across the Department.
        To continue the deployment of the Department's Justice Consolidated
    Office Network (JCON), our fiscal year 2004 budget seeks an enhancement
    of $17,000,000 and $33,000,000 from the Department's Working Capital
    Fund. These resources will continue to enable the United States
    Marshals Service to increase the JCON-architecture deployment to 92
    percent.

                           OTHER IMPORTANT ACTIVITIES

        Our budget seeks $40,730,000, including $35,030,000 in appropriated
    resources and $5,655,000 from the Department's Working Capital Fund, to
    enhance several items of critical importance to the Department's
    continued efforts. For the United States Attorneys, we are seeking 145
    positions and $15,862,000. Of this amount, $10,207,000 in appropriated
    resources would enable the United States Attorneys throughout the
    Nation to address critical areas including civil defensive litigation
    needs arising from greater demands associated with the implementation
    of anti-terrorism programs after September 11, 2001, expanding civil
    defensive case loads, and increased complexity of employment
    discrimination and tort cases; and to provide for much needed
    litigation support and enhanced timeliness of financial reporting. In
    addition, $5,700,000 from the Department's Working Capital Fund would
    enhance the United States Attorneys' information technology
    infrastructure.
        Our budget also seeks additional resources for the Environment and
    Natural Resources and Civil Divisions of the Department. Requested
    enhancements totaling 32 positions and $4,188,000 would enable the
    Environment and Natural Resources Division to address its Tribal Trust
    Fund docket and to further implement a critically needed initiative to
    seek out and prosecute violators of hazardous material transportation
    and handling laws. Additional resources of 30 positions and $4,500,000
    for the Civil Division would enable the Division to continue to address
    high-profile immigration cases which implicate the integrity of the
    September 11, 2001 investigation and the Federal Government's response
    and to fund additional costs generated by the 2000 amendments to the
    Radiation Exposure Compensation Act (RECA), which triggered a nearly
    five-fold increase in the number of RECA claims filed. An additional 28
    positions and $2,000,000 are also sought for the Executive Office for
    Immigration Review (EOIR). These additional resources would enable EOIR
    to keep pace with workload increases as a direct result of increased
    interior and border enforcement.
        For fiscal year 2004, we are seeking $5,500,000 for the Office of
    Justice Programs to fund additional Public Safety Officers Educational
    Assistance payments and to begin converting the National Crime
    Victimization Survey conversion from primarily a paper-and-pencil
    operation to a fully automated data collection process.
        The United States National Central Bureau continues to facilitate
    international law enforcement cooperation as the United States
    representative with the International Criminal Police Organization
    (INTERPOL). Our fiscal year 2004 budget seeks an additional $932,000 to
    fund increased dues payments on behalf of the United States to
    INTERPOL. Additional funds are needed to replenish depleted reserve
    accounts, while at the same time expanding operations and personnel to
    focus on combating international terrorism.
        We are proposing additional resources to provide enhanced building
    security. In fiscal year 2004, our budget request seeks $6,517,000 for
    improved perimeter security and guard services. This request builds
    upon the fiscal year 2002 reprogramming proposal submitted by the
    Department. In addition, for the United States Trustee Program, we seek
    an additional $1,104,000 to enhance the information technology
    infrastructure of the Program.

                                   CONCLUSION

        Chairman Gregg, Senator Hollings, and Members of the Subcommittee,
    I have outlined for you today the principal focus of the fiscal year
    2004 budget request for the Department of Justice. The Department
    continues to evaluate its programs and operations with the goal of
    achieving both component-specific and departmental economies of scale;
    increased efficiencies; and cost savings. Aided by ongoing reviews of
    business practices, we are beginning a comprehensive, multi-year
    process to implement a wide range of streamlining and efficiency
    measures that will result in substantial savings. Many of these
    proposals have been incorporated into our fiscal year 2004 budget
    proposal.
        I look forward to working with you on this budget proposal and
    other issues.
        Thank you. I would be pleased to answer any questions you might
    have.

        Senator Gregg. Thank you, Mr. Attorney General, for that
    extensive opening statement. It does remind me a bit of a
    fellow I used to represent when I was practicing law named
    Oscar Payne. He was about 78 years old, and he worked on a farm
    up in Acworth, New Hampshire. He went to church once, and it
    appeared he was the only one at church. And the minister spoke,
    and did three readings from the Bible. He sang four hymns and
    did a sermon, a full sermon. It was a very good sermon. They
    even had the offering. They passed the plate.
        And at the end of the service, the minister went to the
    front door and said to Oscar, as he walked out, shook his hand,
    ``Oscar, what did you think?'' And Oscar said, ``Well, when I
    go down in my field, if I only find one stalk of corn, I don't
    dump the whole load of manure on it.''
        We certainly appreciate that extensive statement.
        And as is the tradition of this committee, we always defer
    to the chairman when he comes.
        Senator Stevens. I left my truck behind today, Mr.
    Chairman.
        Nice to see you, John. And you are doing a wonderful job.
    We thank you very much for what you are doing. I have to go get
    ready for the supplemental today and just dropped by briefly.
    Thank you very much.
        Attorney General Ashcroft. It is an honor to serve with
    you, sir.
        Senator Gregg. I also want to say you are doing an
    exceptional job. And we----
        Attorney General Ashcroft. You could have at least----
        Senator Gregg. As an old friend, I enjoy you.
        Senator Hollings.

                                CORPORATE FRAUD

        Senator Hollings. Thank you, Mr. Chairman.
        General, I was listening to that litany of the various
    prosecutions, indictments, convictions, and what have you, and
    particularly with respect to corporate fraud. At the time that
    you put the Deputy Attorney General Larry Thompson in charge of
    corporate fraud, at that particular time the question arose
    that his firm represented Enron, Kenny-boy, Ken Lay.
        Now 1\1/2\ years later, with all of those convictions that
    you talk about, prosecutions and indictments and everything
    else like that, we have not heard anything about Kenneth Lay.
    Specifically, we see now in the news what we heard the first
    couple of months before our Commerce Committee from California,
    that it was a total fraud the way Enron was taking more than
    their shortage of so-called allocation. And then with the more
    or overage of that particular shortage, they were sending a
    note, shipping it back in with the increased price, defrauding
    the State of California. Now that has been verified in several
    news stories here in the last 2 weeks.
        At that time, there was a witness from the California
    Public Service Commission or Authority or whatever. And I asked
    him, I said, ``Wait a minute here now. That morning, Mrs. Lay
    appeared on my television before I came to work, said that her
    husband did not know anything about it. And the witness
    testified he knew everything about it. He knew all the
    details.''
        With that in the public sector, what happens? You have
    everybody but Kenneth Lay. And that is where it all started.
    Can you tell the committee?
        Attorney General Ashcroft. Senator, the corporate fraud
    investigations are ongoing. As it relates to the Enron
    Corporation, I am not informed about that. I am not a part of
    it, because I was recused from those investigations as a result
    of a determination that was reached that recusal would be
    appropriate for me in regard to Enron. I do not want to be non-
    responsive, but it would be inappropriate for me to comment on
    something in which I am not involved, which is an ongoing
    investigation, and something from which I am recused.
        Senator Hollings. Well, as the Attorney General, you should
    be curious, just as this Senator is curious. Suppose you get a
    report from Deputy Attorney General Larry Thompson for you and
    for me on the status of the Kenneth Lay case.
        Attorney General Ashcroft. I would be happy to instruct the
    Department to give you a complete report, to the extent it is
    appropriate, on that investigation. It is something about which
    I cannot give you a report.
        [The information follows:]

                                Enron Task Force

        As of June 19, 2003, the Department's Enron investigation
    has resulted in the convictions of Arthur Andersen and 5
    individuals, as well as the indictment of 15 other individuals,
    including both the Chief Financial Officer and Treasurer of
    Enron. The investigation into possible additional criminal
    activity is active and ongoing.

                           NATIONAL SECURITY COUNCIL

        Senator Hollings. Very good. Now let me ask with
    specificity with respect to the National Security Council. Now
    that we have changed over to domestic threats, at the time
    President Truman organized the National Security Council, you
    had the Vice President, the Secretary of State, and the
    Secretary of Defense, and everything else of that kind. We came
    within a vote of really asking that the Attorney General and
    that the FBI and others also be a part of that.
        My concern is that the President gets a complete report
    from his National Security Council. Do you meet with him every
    day and give him a report intelligence-wise, or what is the
    score on that? Because the old rule was that the FBI just
    handled domestic crime; the CIA handled intelligence abroad.
    Now we have got to doing or developing as you are doing, a
    domestic intelligence. And you have to coordinate the two. And
    I have some questions about the coordination. But I am
    wondering if the President gets a complete report on the
    domestic intelligence. What is the setup?
        Attorney General Ashcroft. Well, every morning at just
    about 7 o'clock, I begin my day meeting with FBI officials, as
    we prepare to go and brief the President of the United States.
    On a daily basis, we brief the President of the United States,
    and we do so in the presence of those individuals who brief the
    international intelligence.
        One of the things that is very apparent to us is that there
    is no longer a discontinuity or a break between things that
    might be happening in the United States and things that might
    be happening overseas. It is important that a complete picture
    be given and that the FBI knows what is happening
    internationally, and that the CIA knows what is happening as a
    result of the domestic thing, and that the President hears it
    all and be able to respond to it all.
        The President devotes himself to that with a discipline and
    an intensity which is very, very impressive to me. He does it
    on a daily basis, and I witness it personally.

                      TERRORISM THREAT INTEGRATION CENTER

        Senator Hollings. Good. What about the status of the TTIC,
    the Terrorism Threat Integration Center? Is that developed?
        Attorney General Ashcroft. The Terrorism Threat Integration
    Center, TTIC as some folks are calling it, is being stood up at
    this time. It will go into effect on the first of May in a
    formal sense, as a way of integrating intelligence that comes
    from virtually all the sources that generate intelligence for
    the country. It will provide access to participants in the TTIC
    operation, meaning both the intelligence sources from overseas
    and from at home, and the intelligence that is gathered, say,
    by agencies that are not thought of as being intelligence
    agencies but uncover information. For example, the Immigration
    authorities who encounter information or Customs authorities,
    who hear about potential smuggling and the like.
        The Terrorist Threat Integration Center, which would have
    the means of examining the intelligence information from all
    agencies by virtue of having search engines, could harmonize
    this information so it is all available. It is an attempt to
    have it in a format which would provide easy processing, so
    that information from different agencies, which has previously
    been assembled in different ways, would be comparable.
        The TTIC will first come into existence and be stood up, as
    I said, on the first of May. It is later expected to be housed
    at an independent location, directed by an individual chosen by
    the Director of the CIA in consultation with the Attorney
    General and the Director of the FBI and others. It will also be
    at a location which will house the counterterrorism effort of
    the FBI and the CIA. But they will be separately administered.
        I believe it is important that the output of these
    intelligence-gathering agencies be available broadly to both
    sides. They have separate gathering operations, primarily
    because the CIA has a culture of gathering outside the United
    States, where the rules are far different than the culture of
    gathering information inside the United States where we have to
    have strict adherence to the laws and to the Constitution of
    the United States.
        Once information has been gathered by each of these
    agencies and by the other contributing agencies, it is
    available in this Terrorist Threat Integration Center. The
    intelligence of these various agencies that participate is
    available through a search engine function in the center that
    should make intelligence available to the FBI, which was
    developed originally by CIA, or vice-versa, and the other
    agencies, so that we should have a far more comprehensive
    understanding.
        We should be able to integrate our understanding, rather
    than having the right hand maybe have some substantial assets
    the left hand does not know about. These assets should be
    jointly understood, although they are independently developed.
    The techniques for developing information in the United States,
    as opposed to abroad, follow a different set of protocols,
    guidelines, rules, which follow our Constitution, as opposed to
    a variety of other rules which are available and imposed in
    different settings overseas.

                   TERRORIST THREAT INTEGRATION CENTER BUDGET

        Senator Hollings. The budget for TTIC, do you have it? Who
    appropriates for that?
        Attorney General Ashcroft. Well, I believe TTIC is not
    provided for in our Department. I turned to make an inquiry
    because funding associated with the TTIC will be for the entire
    counterterrorism section of the FBI, which is part of our
    budget. The $50 million to stand this project up was provided
    originally in the Defense area. But I am not--I would have to
    get back to you on the specifics.
        [The information follows:]

                      Terrorist Threat Integration Center

        The fiscal year 2003 Department of Defense appropriation
    included $104 million for the Terrorist Threat Integration
    Center (TTIC), of which no less than $50 million is to be used
    for FBI costs associated with TTIC.

                  EMERGENCY WARTIME SUPPLEMENTAL APPROPRIATION

        Senator Hollings. Let us get a hold of it, so we can follow
    it.
        Now the distinguished chairman, Senator Stevens, just left
    for the supplemental. I note that you have some $500 million
    for the Department of Justice in that particular supplemental.
    Can you give the committee a breakdown on what that $500
    million will be expended for?
        Attorney General Ashcroft. Included in the $500 million are
    resources that relate to the terrorist threats, and retaliatory
    actions that might be taken against the United States.
    Counterterrorism funds are requested to reimburse departmental
    components for extraordinary costs, security enhancements,
    language translation services, operational field expenses,
    including overtime and surveillance support.
        The Office of Intelligence Policy and Review has been the
    subject of very serious demands recently and needs----
        Senator Hollings. Do you have amounts for each one of those
    items?
        Attorney General Ashcroft. We do not have a specific amount
    for each of those items listed in the request that went to the
    Congress.
        Senator Hollings. Can you furnish that for the committee?
        Attorney General Ashcroft. Pardon?
        Senator Hollings. Could you furnish the committee with the
    itemized amounts?
        Attorney General Ashcroft. We will be happy to discuss
    these needs with the committee. I do not know that I am
    prepared to provide a detailed list. But as monies would be
    spent, we would expect to be conferring with the committee
    about the way in which they are spent. I can read the list of
    the kinds of things, as I was beginning to do, that the funds
    would be used for. It goes on to include the United States
    Marshals Service courthouse security, which had to be elevated
    as a result of a number of our law enforcement efforts in
    terrorism.
        We would be happy to be very collaborative about this
    particular set of resources and understand the desire of the
    Congress to watch carefully the expenditure.
        Senator Hollings. Let me yield to----
        Senator Gregg. Okay. I have some questions.
        On that point, Senator Hollings and I expect, to offer
    language to the markup which would require that we reintroduce
    the transfer language and make it applicable to this account,
    this extra $500 million, which does not sound to be
    inconsistent with what you are suggesting you would be willing
    to do anyway.
        Senator Campbell, do you have some questions?
        Senator Campbell. Thank you, Mr. Chairman. I have listened
    very carefully and read the Attorney General's statement, too.
    And I found it very detailed, a lot of information in there. I
    was even interested in your analogy concerning the volume of
    his testimony.
        I do not want to know your reaction to that, Mr. A.G.
        Attorney General Ashcroft. Well, could I please----
        Senator Campbell. Yes. Why do you not go ahead?
        Attorney General Ashcroft [continuing]. Just personally
    note that this is April Fool's Day. And I was hoping----
        Senator Campbell. Oh, okay. That explains it.
        Attorney General Ashcroft [continuing]. That he would at
    least follow that remark with the words ``April Fool.''

                                  CIVIL RIGHTS

        Senator Campbell. Well, in any event, I just want to tell
    you, I think you are in a very, very tough job. You are really
    in unchartered waters. And I want to associate my words with
    the brief remarks that Senator Stevens said before he left. I
    know that you are getting some accusations from different civil
    libertarians about, you know, sort of a punitive agenda or
    infringing on civil rights. And I do not see that at all.
        We are facing a time in the United States that we have
    never faced before. And from my perspective, I think you are
    doing just about as good a job as a person can do, fully
    recognizing that in America anybody gets to accuse anybody of
    anything. And being at sort of the top of that ladder, you are
    going to be the recipient of a lot of accusations.
        But I noted with interest the number of people you have
    increased in the Civil Rights Division, 709 employees now, I
    believe you said. And the number of hate crimes that you have
    prosecuted, and I did not remember the number of the 9/11-
    related crimes you have also prosecuted, but I know that is
    going up considerably, too.
        And I think, very frankly, the numbers that you use would
    do all of us well, because we get questions in our town
    meetings and we get questions in our different forums about
    what we are doing when we hear some of these accusations. And I
    just wanted to commend you and say that you are setting an
    example, I think, for all of us to try to find that balance
    between preserving civil liberties and making sure that this is
    a safer Nation.
        I just wanted to put that in the record, Mr. Chairman.
    Thank you.

                                TERRORIST THREAT

        Senator Gregg. Thank you, Senator Campbell.
        In regard to the expanded war, Hosni Mubarak made an
    interesting comment yesterday about the expansion of the
    terrorist threat that the war is creating from his perspective.
    Do you see an expansion of terrorist activity within the United
    States?
        Attorney General Ashcroft. We have expanded our efforts
    dramatically. I think it is fair to say that there was
    intelligence that indicated that an elevated and escalated
    military presence by the United States and escalated activity
    in Iraq might occasion additional activity by terrorists. And
    we have acted to do that.
        I think in my opening statement, it may have been somewhere
    in the middle although it was less distinguishable, we have had
    a very substantial presence in seeking to curtail the
    activities of anyone who might be associated with terrorism,
    including the interviews that would help us learn about
    terrorist activities.
        So, frankly, in the United States to date, we have an
    increased effort by law enforcement and by the Department to
    make sure that we are not placed at higher risk. And to date, I
    must thank the hard work of the FBI and other law enforcement
    agencies, State and locals, who have worked very diligently
    with us to make sure that we have not seen specific terrorist
    acts carried out in the United States.
        Senator Gregg. Is there higher activity, however, that you
    are trying to interdict?
        Attorney General Ashcroft. As I indicated before, the
    intelligence indicated that there were levels of threats that
    were high. We believe that--and very frequently the level of
    threats that you have is related to the level of activity. That
    is what we are seeking to interdict. We hope that we can
    continue to do it successfully.

                      TERRORIST THREAT INTEGRATION CENTER

        Senator Gregg. Now when you were talking with Senator
    Hollings about TTIC, I am wondering how this coordinates with
    all the other activities that we have. We have the Foreign
    Terrorist Tracking Task Force. Homeland Security has a task
    force. You have the National Theater Center--the National
    Threat Center, and the FBI's analytical operations on
    counterterrorism. Are these all going to be moved out to the
    TTIC building?
        Attorney General Ashcroft. No, I do not believe they are.
    The FBI will maintain its own analysis. But it will also
    contribute its information intelligence on terrorism to the
    combined Terrorist Threat Integration Center. I think we
    anticipate that the FBI will continue to make its own
    independent evaluations but do so with the ability to gain the
    information that is available to TTIC and contribute the
    information it has to TTIC.

                              DEPORTED INDIVIDUALS

        Senator Gregg. When you deport 436 people, do you keep
    track of them after you deport them? It is sort of like putting
    the sharks back in the ocean, is it not?
        Attorney General Ashcroft. We maintain a list of those
    individuals who have been deported and seek to make sure that
    they do not come back into the United States. There are times
    when individuals are deported and, depending upon the nature of
    the situation, we alert the countries to which they are
    deported. Frequently individuals in this setting are
    individuals that we believe the receiving country ought to be
    aware of and interested in. And we try and make sure that
    happens.
        We have not deported individuals when we have felt that we
    had a valid basis for pursuing them for violations of the law
    in the United States. Generally, if persons have violated the
    law here in the United States in ways that are provable in the
    Article III Courts--and, you know, we have standards in that
    respect--for those individuals, we seek to prosecute them.
        Senator Gregg. Senator Domenici.
        Senator Domenici. Thanks very much, Mr. Chairman. I have
    three or four questions.
        It is good to see you----
        Senator Gregg. Excuse me, Senator Domenici. Senator
    Domenici, I apologize. Senator Kohl was here before you. I
    apologize.
        Senator Kohl. I would be pleased to yield. Go ahead,
    Senator.
        Senator Domenici. Thank you.
        It is good to see you. We are neighbors, but we still do
    not see each other very much.
        Attorney General Ashcroft. We sure do not.
        Senator Domenici. It looks like you are doing all right,
    though. You look healthy.
        Attorney General Ashcroft. Thank you.
        Senator Domenici. Is everything going all right, as well as
    possible?
        Attorney General Ashcroft. We are grateful for the
    successes we have. And we are going to keep working as hard as
    we can.

                            ALIEN ASSISTANCE PROGRAM

        Senator Domenici. Well, I have a few questions, I think
    three or four. My first one has to do with the Alien Assistance
    Program, SCAAP, and the Border Prosecutors Initiative. The
    President's budget eliminates funding for the State Criminal
    Alien Assistance Program, as it did last year, a $565 million
    reduction from 2002. I am concerned about the impact that
    cutting this program is going to have on struggling counties in
    States like mine, as they shoulder the significant cost burden
    created by illegal immigration, which obviously is a Federal
    responsibility.
        I am also concerned that this cost burden may damage
    localities' abilities to address other homeland security needs
    that they may have. Border counties are growing faster than any
    other region in the Nation. At the same time, they have a lower
    per capita income, and a higher percentage of people below the
    poverty level than any other region, making them the least able
    to foot the cost of services for criminal illegal aliens.
        In this time of heightened security in the border regions,
    I think it is imperative to ensure the effective processing of
    criminal illegal aliens, including incarceration by local law
    enforcement agencies. So in the past years, I have fought to
    increase SCAAP resources to relieve some of these costs for
    local communities for detaining these aliens.
        The State of New Mexico received a small amount, but
    important, $2.3 million in 2002 for funding this program. A
    recent New Mexico border county coalition study detailing the
    costs associated with processing criminal illegal aliens
    estimates that New Mexico's three counties will spend an
    estimated $5 million annually on criminal justice, law
    enforcement, and emergency medical care for illegal aliens.
    This is a small amount in your very large budget, but it is
    very important for these rural impoverished counties.
        So in view of this tremendous burden on border criminal
    justice systems, how does the Department of Justice propose to
    meet the costs of the Federal responsibilities that are
    currently shouldered by States, if not through this program?
        Attorney General Ashcroft. Well, first, Senator, let me be
    the first to recognize that the incarceration of individuals
    who come into the United States and commit crimes falls
    inordinately heavily on those States that are on the border.
    And the States of Texas, New Mexico, Arizona, California,
    Florida, Illinois as well, have relied heavily on this program,
    which is designed to undertake some of the costs of
    incarcerating individuals who commit crimes after coming to the
    United States illegally, and therefore are detained.
        The administration has sought to improve our performance at
    the borders, stop people from coming here illegally, and has
    focused its resources on doing that, so as to diminish the need
    to have people who come here illegally incarcerated because
    they commit crimes. We want to stop them before they get here.
    I think it is debatable as to how successful we are in all of
    that. We have a Border Assistance Initiative that related to
    the Southwest border that we are requesting that relates to
    prosecution. But I understand that if you prosecute, you need a
    place to put individuals, and that does not address the
    detention of those individuals.
        Ideally, we need to do a better job and continue to improve
    our performance at preventing those individuals from coming, so
    that later on we do not have to seek to remediate the problem
    by detaining them in our prison systems at great expense.
        As you mentioned, in the 2003 omnibus appropriation bill,
    Congress provided $250 million for the State Criminal Alien
    Assistance Program (SCAAP). The administration is seeking to
    address those issues by improving our border performance and
    providing the other assistance in the Border Initiative
    Program.
        Senator Domenici. Well, I bring it up because I think in
    the preparation of the budget it is so easy to eliminate and
    forget about these programs because of the bigger ones. But
    actually, when you have a border State, and especially one
    which is a broad area, not very much population in just a few
    communities, this is a tough area. A couple million dollars is
    pretty tough for those systems to try to accommodate. We will
    try to see what we can do in the process to be helpful.

                            STATE JUSTICE INSTITUTE

        There is an institute called the State Justice Institute.
    Are you aware of that within the Department, the State Justice
    Institute? It has $6 million in the past----
        Senator Gregg. I believe that is independent of the Justice
    Department.
        Attorney General Ashcroft. I am not aware of it. I think it
    may be in the court system.
        Senator Domenici. It is not in their budget?
        Senator Gregg. No, it is not. It is an independent agency.

            AMERICA'S LAW ENFORCEMENT AND MENTAL HEALTH PROJECT ACT

        Senator Domenici. I am sorry.
        Let me leave you a question with reference to the kind of
    court system that is evolving called the mental health courts.
    I am very aware of them, and had something to do with starting
    them. They are beginning to mature. I personally believe that
    they can have a great deal of positive impact on alleviating
    overcrowding and creating greater judicial economy within our
    court systems.
        Are you aware of any steps that the DOJ is taking to
    distribute the $3 million to implement America's Law
    Enforcement and Mental Health Project Act?
        Attorney General Ashcroft. We, in this fiscal year, have a
    $4 million appropriation for distribution to assist about 23
    different mental health courts around the country. As you have
    indicated, this is something sort of on the cutting edge, new.
        Senator Domenici. Yes.
        Attorney General Ashcroft. In addition to working with
    them, we are trying to develop a set of guidelines, procedures,
    develop the information that would be valuable to other groups
    that might seek to start such courts. The grant program is
    underway. The awards are in the process of being made. There
    are a couple dozen that appear to be most likely to be the
    beneficiaries of the $4 million of grant money.
        Senator Domenici. Well, I thank you for being empathetic
    toward them. Some people seem to think they are a bother. But
    essentially, when you look around the country and find that so
    many individuals occupying prison space are actually mentally
    ill. They are put there either in county courts or others
    because of their mental illness, and nobody knows what else to
    do, so they throw them in jail for a while. It does not really
    work. Setting these courts up is a very good intermediary
    process to do a better job in that regard.
        Attorney General Ashcroft. Well, Senator, last year you
    asked me at this hearing if I would get a briefing on these so
    that I could become aware----
        Senator Domenici. That is right.
        Attorney General Ashcroft [continuing]. Of the value. And I
    did get that briefing. And I have asked that the Department
    work carefully to make sure that the grant resources are
    properly made available.

                    RADIATION EXPOSURE COMPENSATION PROGRAM

        Senator Domenici. My last observations and a few questions,
    which I will submit for the record, have to do with the
    Radiation Exposure Compensation Program. Now that program has
    been a difficult one. We have gone back and forth as to how it
    will be funded. But eventually we made it a mandatory program
    and put $172 million in law. The Department has $172 million to
    pay claims in 2002 and $143 million for claims in 2003.
        I would like you to submit for the record a status report
    on the payment of these claims. How many claims has the
    Department approved, and how much has been spent, and what is
    the average amount of the claims approved? This has become over
    time a program that got bounced back and forth. It became
    somewhat scandalous when people with claims could not get the
    money because they were given IOUs, because we did not have the
    appropriated funds.
        Between the chairman and others, we have attempted to fund
    it properly. It has been a terribly difficult program, not only
    for me as one who helped start it, but for the chairman. I have
    about five questions that will get this on the record so
    everybody will know exactly where we are. I would appreciate it
    if you would answer them as early as the chairman expects the
    responses to the committee.

                           FEDERAL JUDGES--NEW MEXICO

        And my last question has to do with New Mexico judges. The
    latest reports on the need for Federal judges would indicate
    that the area of the judiciary, Federal judiciary, that is most
    in need are those courts along the borders of the United
    States. And my State, while it is a small one, continues to be
    one that needs judges because of the enormous criminal
    caseload. I believe there is an indication in the latest study
    that New Mexico needs three additional judges.
        Are you aware of the last report? And are you going to do
    something to recommend that there be compliance and an effort
    to fill the need, as recommended, with reference to the Federal
    judges?
        Attorney General Ashcroft. Well, Senator, last year in the
    reauthorization of the Department, there were judges created,
    additional judges. The Department supported that. And the
    Department supports the additional judges' specific numbers in
    a particular report. Regional allocations are not something
    that I am focused on at this time. I have been made aware of
    the need, and I think that it is a need that this
    administration understands and is willing to address.
        Senator Domenici. Well, I will ask you for some specific
    answers as to what would help alleviate this, if you would
    answer those, also. We need some indication from you about them
    so we can pursue it with a little more vigor to get the
    positions filled. Thank you.
        Thank you, Mr. Chairman.
        Senator Gregg. Okay. Senator Kohl. I apologize, Senator
    Kohl, for the mixup in the order.
        Senator Kohl. Good morning.
        Attorney General Ashcroft. Good morning.

                                CHEMICAL WEAPONS

        Senator Kohl. Mr. Attorney General, within the past month
    the FBI has warned law enforcement agencies nationwide that
    terrorists could build a simple but very deadly chemical weapon
    out of readily available materials. Specifically, the FBI cited
    hydrogen cyanide, or chlorine gas, as easy to make chemical
    weapons created by combining liquid and solid materials. In the
    case of hydrogen cyanide, which was once used as a war gas, one
    need only to combine cyanide and salt--cyanide salt and acid.
    Pardon me.
        What is so disturbing is how easy it is to obtain cyanide.
    It is readily available at chemical weapon supply houses, from
    mail order catalogs, or even via the Internet. Even more
    disturbing is evidence that terrorists could use cyanide in a
    future terrorist attack.
        Has the Department of Justice reviewed the potential use of
    these poisons as a terror weapon? Do you think that Congress
    needs to consider regulating the sale of toxic substances like
    cyanide through a permit system to ensure that it does not fall
    into the wrong hands?
        Attorney General Ashcroft. Well, first let me say, Senator,
    that this is a matter of real concern. I know that this is a
    matter that the terrorist community is aware of, that among the
    kinds of evil chemistry and other threats that they deal in,
    this is among those kinds of circumstances.
        And I would be very happy to work with individuals in the
    Senate, and in the House for that matter, if they were to
    choose to seek to address this problem, just as we have been
    very pleased to work with you as it related to the Bureau of
    Alcohol, Tobacco, Firearms and Explosives (ATF). The new
    explosives regulatory format, which is being implemented--and I
    must commend your staff for working with the Justice Department
    closely to iron out the difficulties there. The ATF has become
    a part of the Department of Justice. This new regulating
    responsibility for explosives is something they are working
    together on and, I think, productively.
        We would be happy to confer in regard to efforts in the
    Congress that might relate to improving our safety and the
    security of the country when threatened by evil chemistry from
    terrorists or others.

                     TOBACCO SMUGGLING/TERRORIST FINANCING

        Senator Kohl. Thank you. I would like to work with you on
    that. Mr. Attorney General, recent ATF investigations reveal
    that tobacco smugglers are using the profits they make from
    their illegal operations in the United States to fund terrorist
    groups, like Hezbollah, among others. Furthermore, the GAO
    estimates that State governments are losing billions of dollars
    in tax revenue because of cigarette smuggling and Internet
    sales of cigarettes. This is a serious problem that is not
    getting the attention it deserves as a funding source for
    terrorism.
        I am considering introducing legislation to increase the
    penalties associated with tobacco smuggling. Do you agree that
    this is a serious terrorism-related concern? And will you
    pledge to work with me and my staff on this legislation?
        Attorney General Ashcroft. I certainly do agree that it is
    a serious terrorist concern. Last fall, in Charlotte, North
    Carolina, the Joint Terrorism Task Force of the FBI, together
    with the ATF, dismantled the terrorist financial support cell
    which operated there, which was funding terrorism, according to
    the allegations, out of the smuggled cigarettes which are
    bought in a low tax jurisdiction, transported to a high tax
    jurisdiction, and sold. The money which would have otherwise
    been available as tax revenue in the higher tax jurisdiction is
    diverted either into criminal activity or terrorist activity.
        And in the case last fall, 26 individuals were charged with
    various crimes, including racketeering, money laundering,
    immigration fraud, credit card fraud, marriage fraud, visa
    fraud, bribery, and providing materials to support terrorist
    organizations. Now that is not a litany of good things.
        So we are concerned about the problem and would be happy to
    work with you in regard to legislation that might help
    remediate the capacity of criminals generally, and terrorists
    as well, to fund their activities that threaten the security of
    our people through the use of these kinds of resources in
    smuggling.

                         LOCAL LAW ENFORCEMENT FUNDING

        Senator Kohl. Thank you. I would like to ask a question
    about local law enforcement funding. This budget slashes
    funding for State and local law enforcement. For example, the
    following programs are either drastically reduced or just plain
    eliminated. The Burne Memorial Grant Program, the Local Law
    Enforcement Block Grant Program, the Juvenile Accountability
    Incentive Block Grant Program, and State Criminal Alien
    Assistance Program, the COPS Universal Hiring Program, COPS and
    School Program, and the COPS Technology Program. Combined,
    these important programs delivered more than $2.9 billion to
    police departments across the country last year.
        The fiscal year 2004 DOJ proposal rolls most of these
    programs into a $559 million Justice Assistant Grant Program.
    And only the COPS Technology Program has survived, although
    even that program had a reduced funding level. This is a
    startling cutback of law enforcement assistance of more than $2
    billion.
        What does not make sense about this huge reduction is that
    we are asking State and local law enforcement, as you know, to
    devote even more time and resources in the fight against
    terrorism. Many of our law enforcement agencies' budgets are
    dependent on Federal aid, as you well know. And if we abandon
    them, then they will have a very tough time doing what we are
    asking them to do with even less funding. It does not seem to
    make too much sense. What are your comments?
        Attorney General Ashcroft. Well, first of all, if you
    combine the supplemental request and the request for this
    appropriation year, it is clear that the money that goes to
    local law enforcement through the Justice Department and
    through the Department of Homeland Security is far more than it
    has ever been before; so while the justice portion of the
    resources may not be what it once was, the development of new
    resources through the Department of Homeland Security provides
    a much greater resource. For example, the President's 2004
    budget request, plus the supplemental transmitted last week,
    totals $8.5 billion, which is a very, very substantial sum of
    money.
        Now as it relates to the COPS Hiring Program and a number
    of the other programs, some of them are discontinued because
    this administration believes that they have fulfilled their
    purpose. Others, like the resources available under the Justice
    Assistance Program, which is right at $600 million, are not
    earmarked for specific programs to provide for greater
    flexibility on the part of law enforcement to meet the needs
    that they have. This administration believes flexibility is
    more valuable.
        I understand that there is a difference between the
    administration and the Congress, as it relates to earmarks and
    that is probably going to be something that there is continuing
    discussion on. But overall, when you put together the
    supplemental and the budget request, it totals far in excess of
    anything we have ever done to assist State and local first
    responders and law enforcement personnel. And we believe that
    it should help them be the kind of excellent partners they have
    turned out to be.
        If I could just take this moment again to commend our
    colleagues in State and law enforcement. They have risen to the
    challenge of defending America with the kind of team work that
    is very, very gratifying.

                        TERRORISM THREAT WARNING SYSTEM

        Senator Kohl. I appreciate your comment. And I am sure you
    are aware of the many complaints across the country in terms of
    our asking them to do more and their contention that we are, in
    fact, providing fewer dollars while at the same time asking
    them to do more.
        I would like to ask a question about the orange terror
    threat level alert. For the second time in the last 2 months,
    the country is again at the orange terror threat level. Last
    month we talked about these warnings. And I asked whether they
    could be reorganized or regionalized or made more specific. And
    you gave a very thoughtful answer at that time.
        That said, the threat level was raised when the war began
    in Iraq. Was the war the rationale for raising the threat
    level, or had there been particular threats to certain cities
    or industries? My concern is that when we put the entire Nation
    at a heightened sense of alert for extended periods of time,
    then vigilance will fade. And we will become perhaps even numb
    to the orange alert.
        Is there any better way to target this alert system so that
    local law enforcement agencies or particular States and
    localities that really need to be on the lookout are alerted,
    and other places in our country which are much less at risk are
    not put at the same high level of alert?
        Attorney General Ashcroft. Senator, when we last spoke
    about this, a migration was underway, which has been underway
    for some months now, of moving that from the Department of
    Justice, in terms of primary responsibility, to the Department
    of Homeland Security. I am pleased to make a response.
        I think when we talked last, we talked about understanding
    that, I think as everyone can, there are many areas in the
    country that are not as likely as other areas to be the subject
    of major attacks. That is one of the reasons why the alert
    system is an advisory system that does not mandate specific
    activities on the part of people, but suggest things that might
    be done based on the kinds of assets, infrastructure, or
    otherwise that exist there.
        At that time, I did comment as well, and I thank you for
    reflecting on my comments then. We have learned, however, that
    preparations for terrorist attacks tend to take place in a wide
    variety of settings that are not likely to be the ultimate
    attack locations, or at least were not on September 11. We saw
    terrorist preparations all across America, in towns small and
    large, from Portland, Maine, to Oklahoma City, I believe it
    was, to the west coast, across the Southwest, Minneapolis, a
    wide variety of places.
        So one of the things we want to ask Americans to do is not
    just to be alert to the fact that there might be an attack
    there, but be alert to the kinds of circumstances that might be
    preparatory for an attack or individuals who might be involved
    in the developing of the skills or assets necessary to launch
    an attack.
        I have said all this now to say that the Department of
    Homeland Security is now the final arbiter of whether we
    change. I would just add this one final remark, which I believe
    is in direct answer to your question. I know of no instance
    when the risk, when the level was raised that it was not raised
    in response to an understanding of the risk being higher. I
    know of no instance when the level was lowered when it was not
    lowered in response to the fact that we believed that we had
    digested some of the risk, and we could go back to the lower
    level.
        So that threat warning system is a risk-related system. It
    is designed to reduce risk and that is sort of strange. As you
    know, weather reporting is not designed to reduce or change the
    weather. But this system is designed to actually reduce the
    risk because if we get on a higher alert, it is very likely
    that we can, by being more active, reduce the likelihood that
    we will be hit. And that is an anomaly, but it is the truth.
        I hope that when we elevate our sensitivity and we take
    extra steps, we displace and disrupt terrorism. So it is risk-
    driven. It is information-driven, not aspiration-driven. We do
    not put the risk where we want it to be. We take a look at the
    information, and we make the determination. I am kind of
    reporting historically now, since this is not my final call
    anymore, but that is the way I believe it is run.
        And when we do it properly, we report a risk, we diminish
    the risk by reporting it and enlisting the American people in
    working to make sure the risk never materializes.

                     ROCKET LAUNCHERS AND AIRLINE SECURITY

        Senator Kohl. All right. Thank you. One last question on
    rocket launchers and airline security: Recent news reports have
    highlighted the danger that shoulder-mounted rocket launchers
    pose to commercial aircraft. In fact, there was an attempted
    rocket attack on an Israeli airliner in Kenya last November.
    Fortunately, it was not successful. News reports suggest that
    Federal authorities are concerned about the issue with regard
    to airports, or particular airports, around our country.
        Given that these weapons are widely available, cheap, and
    easy to make, should not the American flying public be
    justifiably concerned that what happened in Kenya could happen
    here? Are you doing anything to assess this risk? Do you have
    any activities that you have undertaken to help prevent such an
    attack here in this country?
        Attorney General Ashcroft. This is a matter of concern. I
    believe that the airline industry provides secure air traffic
    in the United States. My family and I are in the planes on a
    regular basis. My wife will be flying today.
        So we believe that this is a matter that is appropriate for
    our attention, and it is a matter that we consider and are
    carefully assessing.

              RISK OF INTERNATIONAL TERRORISM IN THE UNITED STATES

        Senator Kohl. One last question, if I might ask: Was 9/11
    the watershed moment in terms of all the terrorism that we are
    trying to prevent in this country? Was the risk as great before
    9/11, but we were not aware of it? I guess many of my
    constituents back home are trying to understand and figure out
    why it is today we are so, so concerned, justifiably, about
    terrorism, doing so much and spending so much to prevent
    terrorism.
        What happened before 9/11, or were we fortunate, you know,
    and perhaps somewhat naive, and we are much more sophisticated
    now? In your mind, this is just a judgment, but----
        Attorney General Ashcroft. Well, frankly, Senator, I think
    9/11 was a watershed event. I think if the water did anything,
    it washed our eyes so that we could see that America was not as
    isolated as we had once thought and hoped. We had relied on
    oceans to defend us and to make us different.
        Terrorism had been significant around the world, but it had
    only really reached America in one previous setting where it
    was an American terrorist who had killed almost 170 people in
    Oklahoma City, a very serious event. But we had not seen
    terrorism as international. We had seen terrorism in other
    settings, in other countries, but the international terrorists
    had never reached into America.
        And while we were concerned about things that were
    happening overseas and happening to our assets overseas, no
    relation, but the U.S.S. Cole bombing was one of those things.
    The bombings of our Embassies were things like that, but they
    were overseas.
        We were introduced to the idea of international terrorism
    actually having very serious impacts here, and I do not want to
    disregard the fact that there was the attempt on the World
    Trade Center in the early 1990s, which was a bombing attempt,
    and that should be understood. But we saw it entirely
    differently after 9/11, and we should. And if I could do it
    over again, I would. If I could relive the 1990s, I would spend
    some of these resources in the 1990s to see if we could have
    prevented what happened in 2001.
        It is clear from what we know, having survived 9/11, and
    what we have learned in the intelligence community, that there
    are still very serious individuals with capacity, who would
    continue to hurt the United States, at a level as great as or
    greater than the injury to the United States on 9/11. We take
    that very seriously and are addressing those threats as
    intensely as we possibly can, respecting the framework of
    freedom which we have the responsibility to defend, and without
    which we would not care about defense. The only thing worth
    securing is liberty, and we are not going to trample on liberty
    in order to develop security.
        Senator Kohl. Thank you. Thank you, Mr. Attorney General,
    Senator Gregg.

                               OPERATION TOP OFF

        Senator Gregg. That was an interesting question, Senator
    Kohl. I would just note that this committee, prior to 9/11, did
    a lot in the area of terrorism and had a lot of trouble getting
    the attention of the community out there on that issue. We held
    two operations, called Operation Top Off, which was a chemical
    attack and a major bomb attack. One was held in Denver, and one
    was held in Portsmouth, New Hampshire. They were held over the
    strongest objection of the community out there that was
    supposed to be doing the exercises. And finally this community
    had to actually force those communities to pursue that.
        In addition, we held a joint hearing with this committee,
    the Defense Committee, the Intelligence Committee, where we
    asked all the agencies to come up and testify before us. The
    Attorney General was kind enough to do that prior to 9/11. And
    what was highlighted there was once again our lack of
    readiness.
        I think our culture has a lot of trouble dealing with
    issues until we have an event. And that is just the nature of
    the American culture, I am afraid. We have had the event, and
    we are certainly aggressively dealing with it. And the Attorney
    General, I think, is doing a superb job, as is the FBI, to try
    to deal with it.
        Senator Hollings.
        Senator Hollings. Senator Gregg is too modest. Actually he,
    long before any kind of hearing or finding by Hart and Rudman,
    this subcommittee, under his leadership, had hearings on
    terrorism. He instituted a training course. Several hundred
    were lost at 9/11 that had been trained. And 80,000 at that
    time, I will never forget it, had already been trained in
    terrorism work that was an initiative by Senator Judd Gregg. So
    we have been working on it.
        On your successes, and I speak only from experience having
    served with the Hoover Commission some 50 years ago,
    investigating the CIA and the FBI, amongst other intelligence
    agencies, I was inculcated by Alan Dulles and J. Edgar Hoover
    on this need to know discipline. And yes, everybody has to be
    proud of the successes. But in your game in antiterrorism and
    otherwise, a lot of them should not be even announced.
        Specifically, I will never forget when we got that hit in
    Yemen, that car full of terrorists, the FBI participated in
    leads for that particular hit. The Yemenites covered for us.
    They said there must have been explosives in the car. They do
    not know what happened. No, no. Big mouth, ``Oh, no. We have a
    drone. We run them down with a drone.''
        We got Mohammed in Pakistan. We followed him for 6 months.
    We could not keep our mouths shut for 6 hours so the FBI could
    follow the leads we got from him.
        And on top of it, we bragged about, ``Oh, we got the
    computer, we got this, we got that.'' Lies, so you got nothing.
    You just got the fellow, but he just did not give you any
    information. But use the leads to enforce law.
        I find too much braggadocio. ``You are either with us or
    against us here. Now is the time. The time has run out. You are
    irrelevant.'' Now, ha-ha, we are running around saying, ``You
    are very relevant, and we need your help.'' I mean, this crowd
    has been bragging too much.

                            STATE AND LOCAL FUNDING

        Other than that, let us get back to Senator Kohl's question
    because, General, you said that none of this was possible
    without the funding. Yes, the Office of Domestic Preparedness
    was transferred to Home Security. And I am on that
    subcommittee. But that did not supplant the $500 million of the
    Burne Formula Grants. That does not supplant the $397.4 million
    that you cut out of local law enforcement block grants. You
    eliminated COPS Hiring Programs, the COPS interoperability, the
    $139.9 million in the COPS Law Enforcement Technology Program.
    Just when crime is on the way up, you cut out the money and
    give us a Mitch Daniel put-off, that ``Oh, well, we have a lot
    more money in the other budget.'' We are here on all the
    budgets.
        And you had the successes. And now you are cutting it out.
    Well, in the DEA, that is under you, you changed the FBI to 567
    FBI agents that were working on drug enforcement that are now
    working on terrorism. So what happens to the DEA? That was like
    the hearing we just had last Thursday. You had both Governor
    Ridge and Secretary Rumsfeld up here, and they are fighting
    over the same people. These first responders, policemen and
    firemen and the National Guard, and all my crowd had cleared
    out. They are out in the Persian Gulf now and in Iraq. And we
    look around, and we find out that we just do not have enough.
        I told Secretary Rumsfeld rather than a money supplemental,
    he needed a manpower supplemental. You have 12 of these
    peacekeeping. You have a war in Iraq. You have a war in
    Afghanistan. And you have a terrorism war here. And you are
    still trying to do it. And everybody is fighting over the same
    manpower. And we cannot afford to cut these particular grants,
    cops hiring programs and different other things of that kind,
    the DEA. A war in Iraq is not going to be shortchanged money.
    You cannot shortchange the terrorism war. We need way more
    cops. We need way more effort and everything else.
        Last week, when they had that other alert that you folks
    put out, the Governor of South Carolina had to take and put
    parole officers around the Port of Charleston. He just ran out
    of personnel. And that is the same with the airports and
    everything else.
        I just want you to get a grasp of this thing, because this
    is a grasp that you can, Senator Kohl, Chairman Gregg, all of
    us have. I mean, the buck stops here. And we are not going to
    shortchange Iraq. You do not have to worry about the money for
    Iraq. We would be falling over each other. Support the troops.
    Support the troops. We are running around with the flag. Of
    course, we are not going to pay for it. We are going to borrow
    for the troops.
        This is some crowd. But then to go even further and cut out
    the working programs when crime is on the increase and
    everything else of that kind, I just want to register that
    observation.

                                    TRILOGY

        Let me ask about Trilogy. Where is that? What is the final
    price tag? What is the status of it, you know? So everybody in
    the FBI is talking to everybody. We had the Arizona agent, that
    somehow it fell between the cracks. The Minnesota young lady
    who had to travel all the way, and they then would not listen
    to her, and everything else. So we gave Mueller, Director
    Mueller, millions and millions of dollars. This committee had a
    program transfer November a year ago, a year and a half ago
    now. So what is the program? Do we have it? Is it working? Do
    you need more money? We are going to get it done.
        Attorney General Ashcroft. We are going to get Trilogy
    done. It was a project started several years ago, before 9/11.
    It has been upgraded on the basis of several things, including
    9/11. The first big deadline was to get all the computers
    talking to each other. That was to take place by March 31,
    yesterday. I am happy to report to you that we came in 3 days
    early on that. We met the deadline. By March 28 Trilogy was
    operational.
        The Trilogy Wide Area Network connects computers throughout
    the FBI, except for a couple crucial computers that were
    involved in specific matters that were ongoing and could not be
    disrupted in order to make the switch-over at this time.
        The next big deadline, which is scheduled for completion,
    is the upgrade of software for desktop computers by November
    2003. And by the end of this year, December----
        Senator Hollings. Do you have the money for that, for the
    November time line?
        Attorney General Ashcroft. The money is in the request. The
    original request was short $137.9 million. It was short for two
    reasons: 20 percent of that, about $27 million, close to $30
    million, was underestimated. The other 80 percent, $111
    million, has gone up as a result of the Hanssen case. We
    learned we did not have the security in our computer system we
    needed, if you remember the case.
        Senator Hollings. Oh, yes.
        Attorney General Ashcroft. We cannot forget it, and we
    should not forget it.
        In the McVeigh case, you will remember, that was the first
    execution the Federal Government had undertook in about 25
    years. We found out that we needed, according to the Inspector
    General, additional capacity to track evidence and the like in
    the computer system. Trilogy was upgraded as a result of 9/11.
        All of these things are accommodated in the budget. And we
    expect to have the virtual case file capacity in place by
    December of 2003. The virtual case file addresses the idea that
    you raised in your question about whether people in one part of
    the organization can know about information that is developed
    in another part of the organization. As a case oriented
    organization, when it was a paper system, the paper file of a
    case was where the case was prosecuted. The rest of the
    organization did not necessarily know about the facts and
    circumstances in that setting.
        The electronic file, of course, can be transferred and
    replicated without expense, once you have an electronic system.
    That is known as the Virtual Case File Program of the Trilogy
    effort. That is on schedule to be implemented by December of
    2003 so we will no longer have disparities between what is
    known about a circumstance in one part of the country and
    another part of the country.
        When case information is available on a broader basis, the
    information which comes out of these cases and investigations
    is also intelligence. It has intelligence value. And it
    appropriately can be fed into TTIC, so that the Terrorist
    Threat Integration Center, can be aware of that as well.
        The work in this respect is very important. We just met the
    March 31 deadline. We are on schedule to meet the other
    deadlines. And the resources are in the budget to achieve that,
    according to my best information from the Department, which is
    making major progress in this respect.
        [The information follows:]

      Clarification of Fiscal Year 2004 Trilogy Request and Reprogramming

        The fiscal year 2004 President's Budget includes $82.2
    million and 3 positions for Information Technology (IT)
    Projects, including funds to continue the Trilogy initiative
    and other critical IT projects. Funds include $18.5 million for
    recurring hardware and software upgrades and replacement over
    the next several years to preserve the gains made through the
    Trilogy program and avoid gradual erosion of the FBI's upgraded
    technology. These funds also include $61.7 million for costs
    associated with completing the communications circuit
    installation; hardware and software acquisition and
    maintenance; and contractor support for the Enterprise
    Operations Center. Finally, $2 million of the fiscal year 2004
    President's Budget is to upgrade the Top Secret/Sensitive
    Compartmented Information Local Area Network at FBI
    Headquarters.
        In addition, the Department of Justice transmitted a
    reprogramming request to Congress on May 21, 2003, proposing to
    redirect $137.9 million in existing resources to the Trilogy
    program. This proposal represents an increased level of funding
    to complete Trilogy, from a total project cost of $457.8
    million to $595.7 million. Additional funding is needed to
    ensure Trilogy addresses all identified requirements related to
    the network/infrastructure and applications components, as well
    as program management support and component integration issues.
    The reprogramming reflects the Department's response to
    changing requirements resulting from events such as the World
    Trade Center and Pentagon attacks, as well as the Hanssen and
    McVeigh cases, most notably expanding the scope and adding risk
    mitigation to ensure success of the Trilogy project.

                         ADDITIONAL COMMITTEE QUESTIONS

        Senator Hollings. Great.
        Thank you, Mr. Chairman. I will submit some other
    questions.
        Senator Gregg. Mr. Attorney General, we have a variety of
    questions, especially dealing with technical aspects of the
    budget and dealing with capital costs specifically and
    personnel, that we will submit to you in writing and would
    appreciate your staff getting back to us with some answers, if
    they have the opportunity.
        And we appreciate you taking the time to come and thank you
    for your courtesy.
        Attorney General Ashcroft. We will make the answers to the
    questions a matter of priority. And thank you very much for
    your help.
        [The following questions were not asked at the hearing, but
    were submitted to the Department for response subsequent to the
    hearing:]

                Questions Submitted by Senator Pete V. Domenici

                           SCAAP AND SOUTHWEST BORDER

        Question. Mr. Attorney General, as you are aware, the President's
    Budget completely eliminates funding for the State Criminal Alien
    Assistance Program, as it did last year, a $565 million reduction from
    fiscal year 2002. I am highly concerned about the impact cutting this
    program would have on many struggling counties in New Mexico, as they
    shoulder the significant cost burden created by illegal immigration, a
    federal responsibility. I am also concerned that this unbearable cost
    burden may damage localities' ability to address other homeland
    security needs.
        Border counties are growing faster than any other region in the
    nation. At the same time, they have a lower per capita income and a
    higher percentage of people below the federal poverty level than any
    other region, making them the least able to foot the cost of services
    for criminal illegal aliens. In this time of heightened security in our
    border regions, it is imperative to ensure the effective processing of
    criminal illegal aliens, including incarceration by local law
    enforcement agencies.
        In past years, I have fought to increase SCAAP resources to relieve
    the significant costs imposed on local communities by the costs of
    detaining criminal aliens. The state of New Mexico received $2.3
    million in fiscal year 2002 funding through this program. However, a
    recent U.S.-Mexico Border Counties Coalition study detailing costs
    associated with processing criminal illegal aliens estimates that New
    Mexico's three border counties alone spend an estimated $5.0 million
    annually on criminal justice, law enforcement, and emergency medical
    care for illegal immigrants.
        In view of the tremendous burden on border criminal justice systems
    in the border region, how does the Department of Justice propose to
    meet the costs of the federal responsibilities currently shouldered by
    states and localities, if not through SCAAP?
        Answer. The State Criminal Alien Assistance Program (SCAAP) is a
    payment program designed to provide federal assistance to states and
    localities that incur costs for incarcerating certain criminal aliens
    held as a result of state convictions. In fiscal year 2004, the Office
    of Justice Programs (OJP) requests no funding for SCAAP for the
    following reasons:
      --SCAAP does not advance the core mission of the Department of
            Justice (DOJ). Since 1995, approximately $3.45 billion has been
            distributed to eligible state and local jurisdictions. By
            statute, SCAAP funds are unrestricted, and recipient
            jurisdictions may use these funds for any lawful state or local
            purpose. Expenditures are not limited to correctional or even
            criminal justice purposes. Thus, in contrast to other programs
            administered by the Department, funds awarded under SCAAP do
            not necessarily support efforts to develop the nation's
            capacity to prevent and control crime, administer justice, or
            assist crime victims. Further, funds awarded are not linked to
            overall performance or evaluation data as is now required for
            other DOJ programs.
      --Redirecting resources from SCAAP will provide funding for
            Congressional and Administration initiatives. These initiatives
            include increasing resources available to stem the tide of
            illegal immigration as well as the funding of programs such as
            OJP'S Southwest Border Initiative (SWBI), a $50 million program
            that provides targeted assistance to southwestern state and
            local jurisdictions, including those in New Mexico, that
            prosecute referred Federal drug cases. The Administration has
            already begun to prioritize and move resources among programs
            that are competing for scarce federal dollars in order to
            ultimately fund those programs that provide the most cost-
            effective and direct support to jurisdictions for addressing
            pressing national crime problems.
      --Finally, since the Bureau of Justice Assistance (BJA) began
            administering SCAAP in fiscal year 1995, there has been only
            marginal improvement in the technical ability of the
            Immigration and Naturalization Service to positively identify
            those offenders being held in the nation's prisons and jails
            who are undocumented aliens. Yet, the number of jurisdictions
            claiming they are housing undocumented aliens has increased to
            more than 800 applicants as of the fiscal year 2003 cycle. The
            vast majority of these applicants will receive some funds, and
            many of these awards will be quite small, some falling below
            $1,000. Without better individual verification of offender
            identity and a clearer link between payments and relieving the
            burden of detention costs, this trend toward more jurisdictions
            sharing each new appropriation dilutes the impact of these
            program funds and fails to address the purpose for which this
            program was initiated. That purpose was to help relieve an
            unfair financial burden on a limited number of states and
            localities that were seriously inundated with undocumented
            alien offenders who should have been prevented from crossing
            the nation's borders.
        In fiscal year 2002, funds distributed to New Mexico under the
    SCAAP program totaled approximately $2.33 million of the total of $540
    million awarded. Only 14 of New Mexico's 33 counties received awards,
    which ranged from $402 to $250,610; the state's award was approximately
    $1.77 million. In contrast, more than $1.5 million had been requested
    under SWBI by New Mexico jurisdictions through June 2003. More funding
    is available, and there will be another funding opportunity to cover
    costs incurred in the second half of fiscal year 2003 later this year.
    Thus, while the scope and coverage of these two programs are not
    identical and not all cases for which payments will be provided will
    involve illegal aliens, both the offender populations involved and the
    goals of the program are very similar. And, more importantly, for the
    state of New Mexico specifically, SWBI will generate proportionally
    more funding that will go to directly reimburse local jurisdictions
    affected by illegal crime than will SCAAP.

             NEED FOR ADDITIONAL PERMANENT JUDGESHIPS IN NEW MEXICO

        Question. Attorney General Ashcroft, the Chief Justice of the
    United States Supreme Court, William H. Rehnquist, and the Chief
    Circuit Judge for the Tenth Circuit, Deanell Reece Tacha, have
    described the Southwest Border states as being in crisis. This
    description is based upon the massive number of cases that each federal
    judge currently has on his or her docket. Chief Circuit Judge Tacha
    expressed her concern about the District of New Mexico in particular.
    The District of New Mexico ranks fifth in the nation in weighted
    filings per judgeship. Two weeks ago the Judicial Conference of the
    United States asked Congress for 57 new Judgeships, including 3 more
    for the District of New Mexico (only Northern California, Eastern
    California, Southern Florida, and Eastern New York have need for a
    greater number of judgeships).
        Based upon the experiences of the U.S. Attorney practicing in this
    district, would you agree that the judicial system in the district of
    New Mexico is in a state of crisis? What would help to alleviate the
    problems that are making the administration of justice so difficult?
        Answer. The District of New Mexico has seen a marked increase in
    criminal case filings over the last ten years. In fiscal year 1992, 602
    criminal cases were filed against 905 defendants. In contrast, during
    fiscal year 2002, 2,232 criminal cases were filed against 2,570
    defendants. Clearly the heavy workload in this area impacts the federal
    judiciary. Increased staffing combined with more efficient case
    processing procedures has been highly beneficial to the United States
    Attorneys along the Southwest Border. Further refinements of the
    court's case processing procedures might have similar benefits for the
    courts.
        The Las Cruces United States Attorney's Branch Office has an area
    of responsibility that includes 15 counties comprising more than 60,000
    square miles including a 180-mile border with Mexico. The 180-mile
    Mexico/New Mexico border is highly porous, remote, and unpopulated. The
    increase in criminal immigration cases has been particularly striking.
    In fiscal year 1992, 76 cases were filed involving 92 defendants. In
    fiscal year 2002, 1,339 cases were filed against 1,401 defendants.
        Virtually 100 percent of the immigration related offenses
    prosecuted in Las Cruces are generated by the U.S. Border Patrol, now a
    part of the Department of Homeland Security. El Paso Sector Border
    Patrol encompasses West Texas and all of New Mexico. In 1993, El Paso
    Sector inaugurated an operation called ``Hold the Line.'' The
    preliminary concept of ``Hold the Line'' was to move undocumented
    immigrant traffic to areas that were less populated and would be more
    manageable. This endeavor appears to be continuing successfully.
        Undocumented immigrant apprehensions dropped dramatically (72
    percent) in El Paso at the initiation of ``Hold the Line'' in fiscal
    year 1994. Apprehensions then increased for the next two fiscal years
    until the implementation of the Illegal Immigration Reform and
    Immigrant Responsibilities Act (IIRIRA) on April 1, 1997.
        Though the number of illegal alien apprehensions dramatically
    declined after enactment of the IIRIRA, the ``Hold the Line'' stations
    that bordered the Rio Grande River continued to apprehend the largest
    number of illegal aliens. As time went on, ``Hold the Line'' stations'
    apprehensions declined and apprehensions in New Mexico began to
    increase. In 1998, Border Patrol stations in the New Mexico sector
    began to apprehend more aliens than the El Paso sector stations in
    Texas.
        The Las Cruces Office expects this trend to continue. As the
    enforcement presence remains highly visible in and around central El
    Paso and as the Border Patrol's presence continues to escalate in
    southern Arizona. The number of aliens apprehended in southern New
    Mexico will continue to skyrocket.
        Another factor in the continued rise is prosecution cases for the
    State of New Mexico is the IDENT system at all the New Mexico Stations
    and the Integrated Automated Fingerprint Identification System (IAFIS)
    in Deming, New Mexico. These systems identify fugitive aliens and
    aliens who are prior deportees and aggravated felons. When the prior
    deportees and aggravated felons are located, we are required by law to
    federally prosecute these aliens. In the near future the IAFIS system
    will be deployed in all the Border Patrol Stations in New Mexico and
    will again increase the prosecution load for the USAO in New Mexico.
        To put this into context, the El Paso Border Patrol Sector
    Prosecutions Program has seen dramatic increases in New Mexico cases
    prosecuted. In fiscal year 1999 the average number of cases prosecuted
    per month for New Mexico was 53. Currently for fiscal year 2003 the
    average number of cases prosecuted per month is 131. That is a 147
    percent increase in four years.
        There are currently no resident district judges in Las Cruces, even
    though more than 70 percent of the criminal cases in the District of
    New Mexico are prosecuted here. The active district judges, augmented
    by senior district and circuit judges as well as an array of visiting
    judges, take turns coming to Las Cruces. A given case can easily pass
    to three or four district judges prior to trial. The assignment of two
    or more district judges to Las Cruces would help our ability to
    appropriately service our caseload.

                    RADIATION EXPOSURE COMPENSATION PROGRAM

        Question. Attorney General Ashcroft, I want to congratulate the
    Department of Justice for its hard work to ensure that claimants under
    the Radiation Exposure Compensation Act are receiving claims payments
    instead of IOUs as was the case a couple of years ago. I commend the
    Department for aggressively implementing language I sponsored in the
    fiscal year 2001 Supplemental Appropriations bill that provided ``such
    sums as may be necessary'' to pay RECA claims approved by September 30,
    2001, to compensate those who sustained injury as a result of the
    United States open-air nuclear testing and uranium mining activities in
    the 1950's through 1970's.
        Will you please give the Subcommittee a status report on this
    program?
        Answer. The July 2000 Amendments to the Radiation Exposure
    Compensation Act (RECA) markedly expanded the scope of the Program.
    Major changes include new categories of beneficiaries; expansion of
    eligible diseases, geographic area, and time period; and a reduction in
    the radiation exposure threshold for miners.
        It has been nearly three years since the Amendments were enacted.
    Since that time, the level of activity has increased dramatically:
      --The approval rate increased from 49 percent--before enactment--to
            83 percent, since enactment.
      --Nearly 9,800 claims have been received since enactment--compared
            with some 1,200 claims received in the three fiscal years
            preceding the Amendments.
      --More than 6,200 claims, valued at over $380 million, have been
            approved since enactment--compared with 574 approvals valued at
            less than $42 million in the three fiscal years preceding the
            Amendments.
        Our most current estimates for fiscal year 2003:

                                WORKLOAD SUMMARY
    ------------------------------------------------------------------------
                                                 Fiscal year--
                                 -------------------------------------------
                                     2000       2001       2002    2003 est.
    ------------------------------------------------------------------------
    Pending, Beginning of Year..        353        728      2,936      2,679
    Received....................        854      3,828      3,416      3,200
    Approved....................        316      1,561      2,807      2,480
    Denied......................        163         59        866        620
    Pending, End of Year........        728      2,936      2,679      2,779
    ------------------------------------------------------------------------

        To address this sharp rise in workload, we are doing all we can to
    ensure the program is being administered to provide timely and accurate
    compensation for all eligible claimants. Currently, there are 20 staff
    on board, including 11 claims examiners. With nearly 2,800 claims
    pending, each examiner is responsible for an average of 252 claims.
    Thus, while the program is able to process a huge volume--some 3,100
    projected this fiscal year, the backlog is growing: we will end the
    year with a greater number of pending claims than the number pending at
    the year's outset.
        So that we may reduce the number of pending claims significantly,
    the Department seeks Congressional approval to reprogram funds for RECA
    administration this fiscal year. In addition, the President's fiscal
    year 2004 budget includes an increase of $1 million for RECA
    Administrative Expenses. This increase will provide examiners with much
    needed support to review claims, assist claimants in providing
    information that will complete claims, and perform many of the time-
    consuming administrative tasks that detract from the primary mission--
    resolving claims.
        As you know, the Fiscal Year 2002 National Defense Authorization
    Act (Public Law 107-107) made the Trust Fund a mandatory account and
    provided $665 million, setting annual spending caps for 2002-2011. We
    applaud Congress' decision to make the RECA Trust Fund mandatory. We
    are monitoring spending under the caps and can report the following
    with respect to the current status:
      --In fiscal year 2002, the cap provided $172 million and the
            Department obligated the full amount.
      --The fiscal year 2003 cap is $143 million. To date, an average of
            $12.3 million has been obligated per month. To stay within the
            cap, obligations will have to drop to about $9.5 million per
            month for the remainder of this fiscal year.
      --No ``IOU's'' will be necessary this fiscal year. However,
            compensation for some current claims will be paid from fiscal
            year 2004 funds.
        Question. Would you please provide for the record an updated
    breakdown of the number of claims paid by state and by category of
    beneficiary?
        Answer. The table at Attachment 1 displays the number of claims
    approved through June 11, 2003, by state and by type of claim.
    Residents of Utah, Arizona, Colorado, and New Mexico have been awarded
    79 percent of the compensation approved. However, RECA awards have been
    made to residents of all 50 states and the District of Columbia.
        Question. I also congratulate the President and the Department for
    proposing in the 2002 budget to make payments for claims under RECA an
    entitlement. Congress did enact as part of the Defense Authorization
    bill, my amendment to make the RECA program a mandatory program. The
    Department has $172 million to pay claims in 2002 and $143 million to
    pay claims in 2003, and additional amounts in future years.
        Will you please give the Subcommittee a status report on the
    payment of RECA claims? How many claims has the Department approved and
    how much has been spent out of the Trust Fund to pay these claims since
    the inception of RECA?
        Answer. Through June 11, 2003, a total of 9,588 claims have been
    approved, with a value of $631,323,282.
        Question. What is the average amount of the claims approved, the
    number of claims denied, and the general reason for denial of these
    claims?
        Answer. RECA award amounts are fixed by statute. Uranium workers
    (uranium miners, mill workers, ore transporters) are eligible for a
    $100,000 award; onsite participants are eligible for a $75,000 award;
    and downwinders are eligible for a $50,000 award. Over the 11-year
    history of the Program, the average amount approved is $65,845.
    However, since enactment of the Amendments, the average has declined
    from $74,000 to $61,000--due to the predominance of downwinder awards.
        Through June 11, 2003, the RECA Program has denied 4,866 claims.
    Claims are denied if one or more of the eligibility criteria are not
    satisfied. For example, uranium worker claims are typically denied in
    cases where the documentation does not establish that the individual
    contracted an illness specified under the law. Similarly, downwinder
    and onsite participant claims are most frequently denied where the
    records fail to establish a covered disease or the individual was
    either not present in the affected ``downwind'' area or did not
    participate in atmospheric weapons testing.
        Question. For the record, would you please provide the Subcommittee
    with a breakdown of the types of claims approved or disapproved
    (childhood leukemia, other downwinder, onsite participants, or uranium
    miners), the number of claims currently pending, and the amounts
    disbursed by type of claim paid?
        Answer. The table on the following page provides the requested
    information as of June 11, 2003.

                            RADIATION EXPOSURE COMPENSATION PROGRAM APRIL 1992-JUNE 11, 2003
    ----------------------------------------------------------------------------------------------------------------
                                                               Value of     Claims
                                                                Awards     Received   Approved    Denied    Pending
    ----------------------------------------------------------------------------------------------------------------
    Childhood Leukemia.....................................   $1,200,000         44         24         19          1
    Downwinder.............................................  309,170,000      9,723      6,184      1,981      1,558
    Onsite Participant.....................................   42,461,782      1,808        589        955        264
    Uranium Miner..........................................  251,391,500      5,096      2,520      1,861        715
    Uranium Miller.........................................   21,700,000        419        217         40        162
    Ore Transporter........................................    5,400,000        106         54         10         42
                                                            --------------------------------------------------------
          TOTAL............................................  631,323,282     17,196      9,588      4,866      2,742
    ----------------------------------------------------------------------------------------------------------------

        Question. For my use, would you please provide this same
    information specifically for claims from New Mexico, including the
    total claims received, the total claims approved, the total claims
    denied, and the total claims pending?
        Answer. With respect to claims for which the primary claimant
    resides in New Mexico, the Department has approved 801 claims, with a
    total value of $76,277,799 through June 11, 2003. The following table
    provides the requested information.

                      RADIATION EXPOSURE COMPENSATION PROGRAM: NEW MEXICO APRIL 1992-JUNE 11, 2003
    ----------------------------------------------------------------------------------------------------------------
                                                           Value of     Claims
                                                            Awards     Received    Approved     Denied      Pending
    ----------------------------------------------------------------------------------------------------------------
    Childhood Leukemia..................................     $50,000           1           1           0           0
    Downwinder..........................................   3,300,000         151          66          38          47
    Onsite Participant..................................     993,299          55          14          33           8
    Uranium Miner.......................................  66,334,500       1,706         664         753         289
    Uranium Miller......................................   5,300,000         109          53          10          46
    Ore Transporter.....................................     300,000          16           3           4           9
                                                         -----------------------------------------------------------
          TOTAL.........................................  76,277,799       2,038         801         838         399
    ----------------------------------------------------------------------------------------------------------------

        Question. How many claims are projected to be filed and processed
    under current law in the upcoming year?
        Answer. For fiscal year 2004, we estimate that 2,900 claims will be
    filed and 3,100 claims will be processed. Of the 3,100 that may be
    processed, at an estimated 2,215 claims would be approved, valued at
    $135 million. This assumes that the approval rate will fall from 80
    percent in fiscal year 2003 to 71 percent in fiscal year 2004, while
    the average value of awards holds at $61,000. Based on these
    conservative assumptions, the value of approvals would exceed the $107
    million cap by more than $28 million--exclusive of unfunded awards from
    the end of fiscal year 2003.
        To stay within the $107 million cap set for fiscal year 2004, while
    paying for awards made in the final weeks for fiscal year 2003, the
    approval rate would have to fall to 48 percent.
        Question. Does the Administration have any long-range estimates as
    to the number of claims that might still be filed under the Radiation
    Exposure Compensation Act under current law and regulations?
        Answer. In May 2000, the Congressional Budget Office (CBO)
    developed cost estimates for a bill that became the Radiation Exposure
    Compensation Act Amendments of 2000 (Public Law 106-245). CBO roughly
    estimated that about 15,600 claims might be filed over the 22-year
    lifetime of the Act. CBO projected that about 11,700 claims would be
    filed in the first five years--or, roughly 2,340 per year. These
    estimates appear to be low. In less than three years, nearly 9,800
    claims have been filed--more than 3,200 annually. Based on a three-year
    track record with the expanded program, we have developed detailed
    projections through fiscal year 2005. The following chart includes
    these projections, along with our ``guesstimates'' regarding the fiscal
    year 2006-2011 period--bearing in mind that the farther we delve into
    the future, the greater is the uncertainty we attach to our estimates.
    These projections suggest that (1) more people are responding more
    quickly then CBO anticipated and (2) the amount that may be approved in
    a given year may exceed existing caps.

                                         OUT YEAR WORKLOAD AND FUNDING ESTIMATES
                                                  [Dollars in millions]
    ----------------------------------------------------------------------------------------------------------------
                                                                                       Fiscal year--
                                                                     -----------------------------------------------
                                                                           2004            2005          2006-2011
    ----------------------------------------------------------------------------------------------------------------
    Pending, Beginning of Year......................................           2,779           2,579           2,179
    Received........................................................           2,900           2,300           5,200
    Approved........................................................           2,215           1,625           3,235
    Denied..........................................................             885           1,075           3,240
    Pending, End of Year............................................           2,579           2,179             904
    Value of Approvals..............................................            $135             $99            $197
    Public Law 107-107 Cap..........................................            $107             $65            $168
    ----------------------------------------------------------------------------------------------------------------

                                                     ATTACHMENT 1--AWARDS APPROVED BY STATE AND BY CATEGORY
    --------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                Onsite      Uranium      Uranium        Ore         Total        Value of
                                                                 Downwinder  Participant     Miner        Miller    Transporter     Awards        Awards
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    Alabama...................................................            4            9            3  ...........  ...........           16      $1,081,344
    Alaska....................................................           10            1            7  ...........  ...........           18      $1,275,000
    Arizona...................................................        2,386           38          292           10            3        2,729    $152,502,016
    Arkansas..................................................           15            5           12            2  ...........           34      $2,495,490
    California................................................          198           80           33            1            1          313     $19,135,196
    Colorado..................................................           67           11          869           87           28        1,062    $102,575,000
    Connecticut...............................................            1            2  ...........  ...........  ...........            3        $200,000
    Delaware..................................................            1            3  ...........  ...........  ...........            4        $275,000
    D.C.......................................................            2            1  ...........  ...........  ...........            3        $175,000
    Florida...................................................           12           35            6  ...........  ...........           53      $3,692,507
    Georgia...................................................            5            8            1  ...........  ...........           14        $927,181
    Hawaii....................................................            3           16            1  ...........            1           21      $1,473,334
    Idaho.....................................................           60            8           22            1  ...........           91      $5,870,000
    Illinois..................................................            5           10            6  ...........  ...........           21      $1,585,511
    Indiana...................................................            3            3            9  ...........  ...........           15      $1,275,000
    Iowa......................................................            3            4            3            1  ...........           11        $822,503
    Kansas....................................................           12            6            3  ...........  ...........           21      $1,350,000
    Kentucky..................................................            1            4            1  ...........  ...........            6        $395,319
    Louisiana.................................................  ...........            8  ...........  ...........  ...........            8        $549,170
    Maine.....................................................  ...........            2  ...........  ...........  ...........            2        $150,000
    Maryland..................................................           10           19            1  ...........  ...........           30      $1,945,180
    Massachusetts.............................................            1            6  ...........  ...........  ...........            7        $500,000
    Michigan..................................................            4            8  ...........  ...........  ...........           12        $800,000
    Minnesota.................................................            8            6            2            1  ...........           17      $1,150,000
    Mississippi...............................................  ...........            1            1            1  ...........            3        $275,000
    Missouri..................................................           11            7           12            1  ...........           31      $2,375,000
    Montana...................................................           15            4            8            1  ...........           28      $1,909,872
    Nebraska..................................................            4            3            6  ...........  ...........           13      $1,025,000
    Nevada....................................................          619           94           45            2            1          761     $42,775,000
    New Hampshire.............................................            1            1            1  ...........  ...........            3        $225,000
    New Jersey................................................            2            3  ...........  ...........  ...........            5        $325,000
    New Mexico................................................           67           14          664           53            3          801     $76,277,799
    New York..................................................            9            9            1  ...........  ...........           19      $1,212,608
    North Carolina............................................            3           10            4  ...........  ...........           17      $1,253,241
    North Dakota..............................................            1  ...........  ...........            1  ...........            2        $150,000
    Ohio......................................................            2            6            3            2  ...........           13      $1,050,000
    Oklahoma..................................................           13            4           24            2  ...........           43      $3,509,500
    Oregon....................................................           41           10           23  ...........  ...........           74      $5,097,234
    Pennsylvania..............................................            7           10  ...........  ...........  ...........           17      $1,072,054
    Rhode Island..............................................  ...........            2  ...........  ...........  ...........            2        $150,000
    South Carolina............................................            1            5  ...........  ...........  ...........            6        $411,328
    South Dakota..............................................            2            2            5            4            1           14      $1,235,174
    Tennessee.................................................            7            8            1  ...........  ...........           16        $981,133
    Texas.....................................................           40           20           17            2  ...........           79      $5,298,097
    Utah......................................................        2,473           35          350           37           13        2,908    $165,719,850
    Vermont...................................................  ...........            1            1  ...........  ...........            2        $175,000
    Virginia..................................................            9           17  ...........  ...........  ...........           26      $1,656,302
    Washington................................................           42           20           26            1            1           90      $6,278,077
    West Virginia.............................................  ...........            1           22  ...........  ...........           23      $2,275,000
    Wisconsin.................................................  ...........            7            1  ...........  ...........            8        $561,262
    Wyoming...................................................           27            2           34            6            2           71      $5,700,000
                                                               ---------------------------------------------------------------------------------------------
          Subtotal............................................        6,207          589        2,520          216           54        9,586    $631,173,282
    Canada....................................................            1  ...........  ...........            1  ...........            2        $150,000
                                                               ---------------------------------------------------------------------------------------------
          TOTAL...............................................        6,208          589        2,520          217           54        9,588    $631,323,282
    --------------------------------------------------------------------------------------------------------------------------------------------------------

                              MENTAL HEALTH COURTS

        Question. Attorney General Ashcroft, as you are aware, the fiscal
    year 2003 Omnibus Appropriations Bill contained $3 million for Mental
    Health Courts. The funding is the result of the Americas Law
    Enforcement and Mental Health Project Act, enacted into law three years
    ago. The Act authorized the creation of Mental Health Courts with
    separate dockets to handle cases involving individuals with a mental
    illness.
        The specific thrust of Mental Health Courts is simple to provide an
    individual with a mental illness and charged with a misdemeanor or
    nonviolent offense the option of out-patient or in-patient mental
    health treatment as an alternative to incarceration.
        Finally, the Department of Justice estimates that sixteen percent
    of all inmates in local and state jails suffer from a mental illness
    and the American Jail Association estimates that as many as 700,000
    persons suffering from a mental illness are jailed each year.
        Do you believe Mental Health Courts can alleviate prison
    overcrowding and create greater judicial economy within our court
    systems?
        Answer. Mental Health Courts can help alleviate overcrowding, to a
    degree, by employing problem-solving approaches that use alternative
    sentencing options to reduce the demands on correctional institutions
    while offering approaches that address the underlying issues of these
    mentally ill offenders. These courts use several critical elements as
    part of their comprehensive case management approach, such as complete
    individualized mental assessments as soon as possible after interface
    with law enforcement, judicial supervision, immediate mental health
    services as needed, and a plan for longer-term services. They can
    alleviate prison overcrowding by segregating a population whose minor
    criminal misbehavior is likely to be a function of their illness and
    providing the treatment they need. In doing so, it is hoped that
    communities with mental health courts will see reduced recidivism, and
    a reduction in the recurring costs to the system of continued criminal
    behavior by this population.
        This approach ensures a coordinated response between the service
    providers and community supervision that reinforces accountability and
    access to the critical services needed for the offenders to gain
    stability in their mental health and uses sanctions and incentives that
    are meaningful to the mentally ill offenders to help keep them crime
    free.
        Question. What steps are being taken by DOJ to distribute the $3
    million appropriated to implement Americas Law Enforcement and Mental
    Health Project Act?
        Answer. The competition for the fiscal year 2003 funds has taken
    place. The Bureau of Justice Assistance received 44 applications. The
    peer review process is underway, and 14 awards are expected to be made
    by the end of this fiscal year. These 14 sites will be in addition to
    the 23 sites awarded during the first cycle (fiscal year 2002 funding).
    Site awards in both cycles were for up to $150,000 each, varying
    according to the applicant's request and budget clearances, and have
    grant periods of 18 months. Additional funding will be used for
    technical support. An evaluator is assessing and documenting a sample
    of the courts in sites funded with fiscal year 2002 resources.
        Question. What plans does DOJ have to provide assistance to court
    systems seeking to develop and implement a Mental Health Court and does
    DOJ plan to offer continued technical assistance after the
    implementation of a Mental Health Court?
        Answer. Approximately $500,000 from the initial earmark in fiscal
    year 2002 was used to support non-site work related to examining the
    mental health courts approach. The Crime and Justice Research Institute
    received a grant to provide an update of an overview of the issues
    related to mental health courts and reported in May 2002 in Emerging
    Judicial Strategies for the Mentally Ill in the Criminal Caseload. The
    Bureau of Justice Assistance also funded the Criminal Justice/Mental
    Health Consensus Project. This national scope, 2-year effort prepared
    specific recommendations for local, state and federal policymakers and
    criminal justice and mental health professionals on how to improve the
    criminal justice system response to people with mental illness. The
    Council of State Governments coordinated this effort, working with the
    Association of State Correctional Administrators, Bazelon Center for
    Mental Health Law, Center for Behavioral Health, Justice and Public
    Policy, National Association of State Mental Health Program Directors,
    Police Executive Research Forum, and the Pretrial Services Resource
    Center.
        This year, approximately $750,000 will be set aside for technical
    assistance support to the sites, primarily to bring professionals
    involved in the courts to the funded sites. It is anticipated that
    several organizations will be involved, each bringing to the table
    expertise in reaching constituencies in different areas, including law
    enforcement, prosecutor, judges, community correctional personnel, and
    treatment coordinators. This technical assistance will be available to
    the courts selected and, to the extent feasible, to other jurisdictions
    attempting this approach without federal funding. Courts will be
    assisted at least through the initial startup phase.

                                     ______

                   Questions Submitted by Senator Ted Stevens

        VILLAGE OF CHICKALOON AND VILLAGE FORESTRY DEPARTMENT OF ALASKA

        Question. The Office of Community Oriented Policing Services (COPS)
    was created to meet the needs of law enforcement in Native American
    Communities. According to DOJ records, the Village of Chickaloon and
    the Village of Forestry Department (of Alaska) have received
    $1,473,250.00 in funding from COPS from 1994-2002. In addition, eight
    officers have been funded through COPS. However, the Village of
    Chickaloon is not a sovereign entity and the State Troopers monitor the
    Village. Please describe each grant proposal submitted by the Village
    of Chickaloon and explain how each grant proposal meets the
    requirements for funding under the COPS program.
        Answer. The Village of Chickaloon and the Chickaloon Village of
    Forestry Department have received a total of 8 grant awards, totaling
    $1,723,238, from the COPS Office.
        The first award to the Village of Chickaloon, in 1995, was awarded
    through COPS FAST program. The FAST program provided jurisdictions
    serving fewer than 150,000 persons to hire new officers to engage in
    community policing. The Village of Chickaloon was eligible to apply
    under the FAST program, along with other state, local, and tribal law
    enforcement agencies serving populations less than 150,000.
        The following seven awards, to the Village of Chickaloon and the
    Chickaloon Village of Forestry Department, were awarded through COPS
    Tribal Resources Grant Program. Under this program federally recognized
    tribes may apply to receive funding for training and equipment for new
    and existing officers as well as salary and benefits for new community
    policing officers. As a federally recognized tribe, Chickaloon was
    eligible to apply for federal assistance through COPS Tribal Resources
    Grant Program.
        Details of the eight grants are provided in the following answers
    as well as in the supplemental documentation provided.
        Question. For each grant given to the Village of Chickaloon under
    the COPS program, detail the funds given for each year and describe the
    purpose of each grant.
        Answer. The Village of Chickaloon and the Chickaloon Village of
    Forestry Department have received a total of 8 grant awards, totaling
    $1,723,238, from the COPS Office.

        1. The Village of Chickaloon was awarded one full-time position
    through the COPS FAST grant program (COPSFAST). COPSFAST provided
    funding to jurisdictions serving populations of less than 50,000. The
    program provided funding for the payment of salaries and approved
    fringe benefits for sworn entry-level officers, lateral transfers, or
    rehired officers. The FAST grant provided a maximum federal
    contribution of 75 percent of the salary and benefits for each officer
    position over three years, up to $75,000 per officer. Chickaloon's FAST
    grant, which began March 1, 1995, and expired August 31, 1998, totaled
    $75,000.

        2. The Village of Chickaloon was awarded two full-time positions
    through the Universal Hiring Program (UHP). The UHP grant provided
    funding for the payment of salaries and approved fringe benefits for
    newly hired entry-level officer positions with a maximum federal
    contribution of 75 percent of the salary and benefits for each officer
    position over three year, up to $75,000 per officer position, unless a
    waiver of the matching local funds was granted. Chickaloon's UHP grant,
    which began December 1, 1995, and expired December 31, 2000, totaled
    $252,084--the grantee received a full waiver of the local match.

        3. The Village of Chickaloon was awarded equipment and training
    through the Tribal Resources Grant Program 1999 (TRGP99), the specifics
    of the departments's award are detailed in the attached Final Funding
    Memo. The TRGP99 grant provided funding to federally recognized tribes
    for salaries and benefits for newly hired entry-level officer
    positions, and training and equipment for new and existing with a
    maximum federal contribution of 75 percent of the approved costs,
    unless a waiver of the local matching funds is granted, up to $75,000
    per officer for salary and benefits, $3,000 for background
    investigations, $1,200 to $6,000 per type of training, $3,000 per
    officer for basic equipment, $75,000 per department for technology,
    and/or $20,000 per vehicle. Chickaloon's TRGP99 grant, which began
    September 1, 1999, and expired May 31, 2001, totaled $90,810--the
    grantee received a full waiver of the local match.

        4. The Village of Chickaloon was awarded equipment and training
    through the Tribal Resources Grant Program 2000 (TRGP00), the specifics
    of the department's award are detailed in the attached Final Funding
    Memo. The TRGP00 grant provided funding to federally recognized tribes
    for salaries and benefits for newly hired entry-level officers
    positions, and training and equipment for new and existing officers.
    The TRGP00 grant provided a maximum federal contribution of 75 percent
    of the approved costs, unless a waiver of the local matching funds is
    granted, up to $75,000 per officer for salary and benefits, $3,000 for
    background investigations, $1,200 to $6,000 per type of training,
    $3,000 per officer for basic equipment, $75,000 per department for
    technology, and/or $20,000 per vehicle. Chickaloon's TRGP00 grant,
    which began August 1, 2000, and expired on July 31, 2003, totaled
    $14,251--the grantee received a full waiver of the local match.

        5. The Village of Chickaloon was awarded two full-time positions
    through the Tribal Resources Grant Program 2000 (TRGP00). The TRGP00
    program parameters are detailed in the above paragraph (#4).
    Chickaloon's TRGP00 grant, which began August 1, 2000, and is scheduled
    to expire January 31, 2005, totals $281,172--the grantee received a
    full waiver of the local match.

        6. The Chickaloon Village Forestry Department was awarded equipment
    and training through the Tribal Resources Grant Program 2000 (TRGP00),
    the specifics of the department's award are detailed in the attached
    Final Funding Memo. The TRGP00 grant provided funding to federally
    recognized tribes for salaries and benefits for newly hired entry-level
    officer positions, and training and equipment for new and existing
    officers. The TRGP00 grant provided a maximum federal contribution of
    75 percent of the approved costs, unless a waiver of the local matching
    funds is granted, up to $75,000 per officer for salary and benefits,
    $3,000 for background investigations, $1,200 to $6,000 per type of
    training, $3,000 per officer for basic equipment, $75,000 per
    department for technology, and/or $20,000 per vehicle. Chickaloon
    Village Forestry Department's TRGP00 grant, which began August 1, 2000,
    and is scheduled to expire July 31, 2003, totaled $207,177--the grantee
    received a full waiver of the local match.

        7. The Chickaloon Village Forestry Department was awarded two full-
    time positions through the Tribal Resources Grant Program 2000
    (TRGP00). The TRGP00 program parameters are detailed in the above
    paragraph (#6). Chickaloon Village Forestry Department's TRGP00 grant,
    which began August 1, 2000, and is scheduled to expire January 31,
    2005, totals $421,756--the grantee received a full waiver of the local
    match.

        8. The Village of Chickaloon received funding through the Tribal
    Hiring Renewal Grant Program (THRGP) to renew two full-time positions.
    The THRGP grant provides funding to federally recognized tribes that
    were unable to retain the previously awarded COPS-funded positions with
    tribal, state, or BIA funding and have received an exemption from the
    COPS Office's retention requirement. The THRGP grant is a two-year
    grant, which funds fourth and fifth year salaries and benefits for the
    renewal of COPS-funded police officer positions, there is not a local
    match requirement for this program. Chickaloon's grant, which began
    September 1, 2002, and is scheduled to expire August 31, 2004, totals
    $249,988.
        Question. Has the Village of Chickaloon submitted any periodic
    reports to the COPS office in Washington regarding the use of the grant
    funds and/or the effectiveness of the grant funds? If so, detail the
    results of said studies?
        Answer. All COPS grantees, including the Village of Chickaloon, are
    required to submit programmatic progress reports and quarterly
    financial status reports. The COPS Office has not conducted an on site
    visit to the Village of Chickaloon, however COPS is aware of their
    program progress through the grantee's submission of programmatic
    progress reports and quarterly financial status reports.
        Question. Has the DOJ conducted any studies regarding the effects
    of the COPS programs in Alaskan communities? If so, detail the results
    of said reports.
        Answer. The COPS Office has not funded a study to evaluate the
    effect of COPS grants specifically in Alaskan communities. However,
    independent evaluations of COPS programs have been conducted by the
    University of Nebraska and the Urban Institute to evaluate the effect
    of COPS funding.
        Question. Please submit a copy of each application received from
    Chickaloon or its Forestry Department.
        Answer. The COPS Office has submitted a binder containing grant
    information received from the Village of Chickaloon and the Chickaloon
    Village Forestry Department.
        Question. Have any official (or officials) of your Department
    visited Chickaloon?
        Answer. No, the COPS Office has not conducted a formal site visit
    to the Village of Chickaloon.
        Question. Did your office receive any letters of support for the
    applications of Chickaloon or the Department of Forestry pertaining to
    any applications?
        Answer. The COPS Office did not receive any letters of support for
    the Chickaloon or the Department of Forestry applications.
        Question. Please provide a copy of any report pertaining to
    Chickaloon received by your office from any official source Federal or
    state pertaining to Chickaloon's eligibility for these grants, or the
    need for the grants, or the use of these grants.
        Answer. The need for federal funding is demonstrated in each of the
    eight applications requesting federal assistance. Under COPS statutory
    authority and programmatic guidelines, the Village of Chickaloon and
    the Chickaloon Village Forestry Department were eligible for the grant
    funding received from the COPS Office. The Village of Chickaloon is a
    federally recognized tribe according to the Department of the Interior
    Bureau of Indian Affairs.

                                     ______

                 Questions Submitted by Senator Robert C. Byrd

                              SAFE EXPLOSIVES ACT

        Question. It is my understanding that the Safe Explosives Act,
    enacted last year, requires tighter security for explosives materials
    and increased security measures for purchasers and possessors of
    explosives and that this new law will assist the Bureau of Alcohol,
    Tobacco, and Firearms (ATF) in helping to ensure that terrorists and
    criminals do not have access to explosives.
        In testimony before the House Appropriations Subcommittee on the
    Departments of Commerce, Justice and State, the Judiciary and Related
    Agencies on March 20, 2003, Acting ATF Director Bradley Buckles stated
    that the Safe Explosives Act represents a significant additional
    workload for ATF.
        I understand that, currently, the initial processing and issuance
    or denial of explosive licenses or permits is handled out of ATF's
    National Licensing Center in Atlanta, Georgia, which also handles the
    processing of Federal Firearms Licenses and is, consequently,
    overburdened, as well as overcrowded.
        In addition, Mr. Buckles stated in his testimony that the fiscal
    year 2004 budget request of $10,000,000 for the continuation of the
    implementation of the Safe Explosives Act ``* * * would continue the
    implementation of the Act and specifically, would be used to create the
    National Explosives Licensing Center (NELC) in an existing ATF facility
    in Martinsburg, West Virginia * * *.''
        I fully support the establishment of the NELC at the ATF facility
    in Martinsburg, West Virginia.
        Can you provide more details regarding the creation of the National
    Explosives Licensing Center (NELC) in West Virginia, including a
    detailed timeframe and cost estimate, including the costs of
    renovations needed to accommodate the NELC at the Martinsburg ATF
    facility, space and equipment needs, as well as the number of federal
    and contractor personnel that would be employed at the center?
        Answer. The requirements of the Safe Explosives Act (SEA) became
    fully effective on May 24, 2003. In part, the SEA increased the number
    of entities required to obtain an explosives permit from ATF. Also, the
    SEA enhanced the license/permit qualification requirements to include
    the submission of additional documentation (fingerprints and
    photographs) of individuals responsible for explosives operations and
    additional identifying information for employee possessors of
    explosives. This additional information is needed so that ATF can
    conduct, with the assistance of the FBI, more thorough background
    checks of these individuals. This increase in responsibility resulted
    in a need for a National Explosives Licensing Center (NELC). Since ATF
    currently houses the National Tracing Center in West Virginia and space
    was available at this location, the proposal was made to also house the
    NELC at the same location in Martinsburg, West Virginia.
        Renovations needed at the West Virginia site would not start any
    earlier than fiscal year 2004 and span into fiscal year 2005 due to
    other renovations taking place at the site. A minimal amount of funds
    (approximately $268,000) have been allocated in fiscal year 2003 for
    this purpose of filling two full time positions. Approximately $4
    million is estimated to establish the NELC in West Virginia. The
    following is a breakdown of the $4 million:

    ------------------------------------------------------------------------
    Computer system development/enhancement.................        $545,000
    15 contractors..........................................         771,680
    16 full time positions..................................       1,258,151
    2 pc moves..............................................         144,000
    Space buildout/renovations/furniture....................   \1\ 1,000,000
    Annualization of 2 positions funded 2003................         268,246
                                                             ---------------
          Grand total.......................................       3,987,077
    ------------------------------------------------------------------------
    \1\ Recently revised to reflect current costs.

        The NELC in West Virginia would employ 18 federal employees and 15
    contractors.
        Question. Does the President's fiscal year 2004 budget request
    provide sufficient funding to establish a fully operational NELC? If
    not, what additional funds would be needed in fiscal year 2004 for this
    purpose?
        Answer. The President's fiscal year 2004 budget request includes
    $10 million for implementing the provisions of the Safe Explosives Act.
    A portion of this funding will be used to establish the NELC in West
    Virginia.

                                     ______

                Questions Submitted by Senator Patrick J. Leahy

                                USA PATRIOT ACT

        Question. Last month, when you testified before the Judiciary
    Committee, you were asked about a secret bill entitled the ``Domestic
    Security Enhancement Act of 2003,'' which was leaked to the press as a
    sequel to the USA PATRIOT Act. You responded, ``there has been no bill
    decided on, no proposal decided on.'' That was on March 4th. Three
    weeks later, a Department spokesperson told the Village Voice that the
    bill was coming soon, and that it ``will be filling in the holes'' of
    the PATRIOT Act.
        When will the Department share a draft of this bill with Congress?
        Answer. The primary mission of the Department of Justice is to
    protect the American people from the threat of terrorist attacks, while
    respecting the constitutional rights and liberties that the birthright
    of every American. Department staff constantly are thinking about new
    ways to detect and prevent terrorism. In that process, Department staff
    continually ask our prosecutors and investigators in the field what
    tools they need in the fight against terrorism. That process of
    considering ideas is continuing. It would be inappropriate to comment
    on the status of the internal deliberations or to speculate about any
    future decisions. However, if the Administration moves forward with
    such a proposal, the Department will consult with Members of Congress
    and their staff at an appropriate time. If and when a final proposal is
    approved by the Administration, we will work closely with Members of
    the Congress and their staff in their review of the proposal.
        Question. What legislative ``holes'' can we expect this bill to
    address?
        Answer. Please see the answer above.

                             PRIVACY ACT EXEMPTIONS

        Question. Please provide a detailed description of each of the
    three databases affected by the new rule, i.e., the National Crime
    Information Center (NCIC), Central Records System (CRS), and National
    Center for the Analysis of Violent Crime (NCAVC), including the types
    of records they contain and where these records originate.
        Answer. These databases are described in the following notices,
    published by the FBI in accordance with the Privacy Act, 5 U.S.C.
    552a(e)(4)(B) and (C). Each notice details the organization and
    categorization of the individuals and information in the database.
      --National Crime Information Center (NCIC), 64 Federal Register 52343
            (Sept. 28, 1999);
      --Central Records System (CRS), 63 Federal Register 8659 (Feb. 20,
            1998) and 66 Federal Register 17200 (March 29, 2001);
      --National Center for the Analysis of Violent Crime (NCAVC), 58
            Federal Register 51887 (Oct. 5, 1993);
      --Blanket Routine Uses (BRU) Applicable to More Than One FBI Privacy
            Act System of Records (JUSTICE/FBI-BRU), 66 Federal Register
            33558 (June 22, 2001).
        Each database is summarized below. Copies of the Privacy Act
    notices are enclosed.
        The NCIC system of records provides a computerized database for
    ready access by a criminal justice agency making an inquiry. It
    includes information on fugitives, missing persons, members of violent
    criminal gangs, members of terrorist organizations, and other persons
    of interest to law enforcement. The database also includes records on
    stolen property, vehicles, and guns. The attached Privacy Act notice
    provides an exhaustive list of the available data. The NCIC system
    provides prompt disclosure of information in the system from other
    criminal justice agencies about crimes and criminals.
        The CRS maintains the FBI's investigative, personnel, applicant,
    and administrative case files. This system consists of one numerical
    sequence of subject matter files and an alphabetical index to the case
    files. The case file classifications used by the FBI in its basic
    filing system pertain primarily to Federal violations over which the
    FBI has investigative jurisdiction. The case file classifications
    include personnel, applicant, and administrative matters to facilitate
    information retrieval. As a part of the NCAVC, the Violent Crime
    Apprehensive Program (VICAP) maintains investigation reports on all
    forms of solved and unsolved violent crimes. These violent crimes
    include, but are not limited to, acts or attempted acts of murder,
    kidnapping, incendiary arson or bombing, rape, physical torture, sexual
    trauma, or evidence of violent forms of death. VICAP records include,
    but are not limited to, crime scene descriptions, victim and offender
    descriptive data, laboratory reports, criminal history records, court
    records, news media references, crime scene photographs, and
    statements. The data in the system consists of homicide, missing
    person, unidentified dead, sexual assault, and other criminal cases.
    State and local law enforcement agencies enter their case information,
    consisting primarily of victim information, offender information, and a
    description of the event, into the national database. In addition to
    entering data, law enforcement personnel can retrieve their own cases,
    run reports using their own data, and request query against the
    national database.
        Copies of the Privacy Act system notices listed above for the NCIC,
    CRS, and NCAVC are attached.

       [From the Federal Register, Vol. 64, No. 187, September 28, 1999]

                             DEPARTMENT OF JUSTICE
    [AAG/A Order No. 170-99]

    Privacy Act of 1974; Notice of Modified Systems of Records

        Pursuant to the Privacy Act of 1974 (5 U.S.C. 552a) and Office of
    Management and Budget (OMB) Circular No. A-130, notice is given that
    the Department of Justice, Federal Bureau of Investigation (FBI), is
    modifying the following system of records which was last published in
    the Federal Register on April 20, 1995 (60 FR 19775):
        National Crime Information Center (NCIC), JUSTICE/FBI-001.
        Also being modified is the following system of records which was
    last published in the Federal Register on February 20, 1996 (61 FR
    6386):
        Fingerprint Identification Records Systems (FIRS), JUSTICE/FBI-009.
        The FBI has made revisions to these systems of records to update
    information about these systems, make editorial adjustments to existing
    language, confirm in clearer language the categories of agencies that
    participate in the exchange of records through these systems, and add
    three new routine uses for both systems. A brief description of these
    changes is provided below.
        The two systems of records are being modified to update the
    location of the systems and denote the exact street address of the
    system manager. Both notices are also being revised to clarify existing
    language through minor editorial adjustments and to confirm in clearer
    language the authorized participation in these systems, and the
    availability of system records, to tribal, foreign, and international
    agencies, in addition to local, state, and federal agencies. Three
    routine uses have been added to allow disclosure of information
    maintained in these systems: To criminal justice agencies to conduct
    background checks under the National Instant Criminal Background Check
    System (NICS); to noncriminal justice government agencies, subject to
    appropriate controls, performing criminal justice dispatching functions
    or data processing/information services for a criminal justice
    dispatching functions or data processing/information services for a
    criminal justice agency; and to a private entity, subject to
    appropriate controls and under a specific agreement with an authorized
    governmental agency to perform an administration of criminal justice
    function (privatization). (In addition to the above changes, the FBI is
    currently reviewing additional changes to better describe new
    capabilities and practices, to be promulgated in a future notice.)
    Revisions to 28 CFR parts 0, 16, 20 and 50 which underlie these changes
    are being implemented in the Rules section of today's Federal Register.
        The Privacy Act (5 U.S.C. 552a (e)(4) and (11)) requires that the
    public be given 30 days in which to comment on any new or intended uses
    of information in a system of records. In addition, OMB, which has
    oversight responsibilities under the Act, requires that OMB and the
    Congress be given 40 days in which to review major changes to the
    system.
        Therefore, the public, OMB, and the Congress are invited to submit
    written comments to Mary E. Cahill, Management Analyst, Management and
    Planning Staff, Justice Management Division, Department of Justice,
    1400 National Place, Washington, DC 20530.
        In accordance with Privacy Act requirements (5 U.S.C. 552a(r)), the
    Department of Justice has provided a report on the modified system to
    OMB and the Congress.

        Dated: July 27, 1999.

    Stephen R. Colgate,
    Assistant Attorney General for Administration.
    JUSTICE/FBI 001
                System name:
        National Crime Information Center (NCIC).
                System location:
        Federal Bureau of Investigation, Criminal Justice Information
    Services (CJIS) Division, 1000 Custer Hollow Road, Clarksburg, WV
    26306.
                Categories of individuals covered by the system:
        A. Wanted Persons:
        1. Individuals for whom federal warrants are outstanding.
        2. Individuals who have committed or have been identified with an
    offense which is classified as a felony or serious misdemeanor under
    the existing penal statutes of the jurisdiction originating the entry
    and for whom a felony or misdemeanor warrant has been issued with
    respect to the offense which was the basis of the entry. Probation and
    parole violators meeting the foregoing criteria.
        3. A ``Temporary Felony Want'' may be entered when a law
    enforcement agency has need to take prompt action to establish a
    ``want'' entry for the apprehension of a person who has committed, or
    the officer has reasonable grounds to believe has committed, a felony
    and who may seek refuge by fleeing across jurisdictional boundaries and
    circumstances preclude the immediate procurement of a felony warrant. A
    ``Temporary Felony Want'' shall be specifically identified as such and
    subject to verification and support by a proper warrant within 48 hours
    following the entry of a temporary want. The agency originating the
    ``Temporary Felony Want'' shall be responsible for subsequent
    verification or re-entry of a permanent want.
        4. Juveniles who have been adjudicated delinquent and who have
    escaped or absconded from custody, even though no arrest warrants were
    issued. Juveniles who have been charged with the commission of a
    delinquent act that would be a crime if committed by an adult, and who
    have fled from the state where the act was committed.
        5. Individuals who have committed or have been identified with an
    offense committed in a foreign country, which would be a felony if
    committed in the United States, and for whom a warrant of arrest is
    outstanding and for which act an extradition treaty exists between the
    United States and that country.
        6. Individuals who have committed or have been identified with an
    offense committed in Canada and for whom a Canada-Wide Warrant has been
    issued which meets the requirements of the Canada-U.S. Extradition
    Treaty, 18 U.S.C. 3184.
        B. Individuals who have been charged with serious and/or
    significant offenses:
        1. Individuals who have been fingerprinted and whose criminal
    history record information has been obtained.
        2. Violent Felons: Persons with three or more convictions for a
    violent felony or serious drug offense as defined by 18 U.S.C. 924(e).
        C. Missing Persons:
        1. A person of any age who is missing and who is under proven
    physical/mental disability or is senile, thereby subjecting that person
    or others to personal and immediate danger.
        2. A person of any age who is missing under circumstances
    indicating that the disappearance was not voluntary.
        3. A person of any age who is missing under circumstances
    indicating that that person's physical safety may be in danger.
        4. A person of any age who is missing after a catastrophe.
        5. A person who is missing and declared unemancipated as defined by
    the laws of the person's state of residence and does not meet any of
    the entry criteria set forth in 1-4 above.
        D. Individuals designed by the U.S. Secret Service as posing a
    potential danger to the President and/or other authorized protectees.
        E. Members of Violent Criminal Gangs: Individuals about whom
    investigation has developed sufficient information to establish
    membership in a particular violent criminal gang by either:
        1. Self admission at the time of arrest or incarceration, or
        2. Any two of the following criteria:
        a. Identified as a gang member by a reliable informant;
        b. Identified as a gang member by an informant whose information
    has been corroborated;
        c. Frequents a gang's area, associates with known members, and/or
    affects gang dress, tattoos, or hand signals;
        d. Has been arrested multiple times with known gang members for
    offenses consistent with gang activity; or
        e. Self admission (other than at the time of arrest or
    incarceration).
        F. Members of Terrorist Organizations: Individuals about whom
    investigation has developed sufficient information to establish
    membership in a particular terrorist organization using the same
    criteria listed above in paragraph E, items 1 and 2 a-e, as they apply
    to members of terrorist organizations rather than members of violent
    criminal gangs.
        G. Unidentified Persons:
        1. Any unidentified deceased person.
        2. Any person who is living, but whose identify has not been
    ascertained (e.g., infant, amnesia victim).
        3. Any unidentified catastrophe victim.
        4. Body parts when a body has been dismembered.
                Categories of records in the system:
        A. Stolen Vehicle File:
        1. Stolen vehicles.
        2. Vehicles wanted in conjunction with felonies or serious
    misdemeanors.
        3. Stolen vehicle parts including certificates of origin or title.
        B. Stolen License Plate File.
        C. Stolen Boat File.
        D. Stolen Gun File:
        1. Stolen guns.
        2. Recovered guns, when ownership of which has not been
    established.
        E. Stolen Article File.
        F. Securities File:
        1. Serially numbered stolen, embezzled, or counterfeited
    securities.
        2. ``Securities'' for present purposes of this file are currency
    (e.g., bills, bank notes) and those documents or certificates which
    generally are considered to be evidence of debt (e.g., bonds,
    debentures, notes) or ownership of property (e.g., common stock,
    preferred stock), and documents which represent subscription rights,
    warrants and which are of the types traded in the securities exchanges
    in the United States, except for commodities futures. Also included are
    warehouse receipts, travelers checks and money orders.
        G. Wanted Person File: Described in ``Categories of individuals
    covered by the system: A. Wanted Persons, 1-4.''
        H. Foreign Fugitive File: Identification data regarding persons who
    are fugitives from foreign countries, who are described in ``Categories
    of individuals covered by the system: A. Wanted Persons, 5 and 6.''
        I. Interstate Identification Index File: A cooperative federal-
    state program for the interstate exchange of criminal history record
    information for the purpose of facilitating the interstate exchange of
    such information among criminal justice agencies: Described in
    ``Categories of individuals covered by the system: B. 1.''
        J. Identification records regarding persons enrolled in the United
    States Marshals Service Witness Security Program who have been charged
    with serious and/or significant offenses. Described in ``Categories of
    individuals covered by the system: B.''
        K. Bureau of Alcohol, Tobacco, and Firearms (BATF) Violent Felon
    File: Described in ``Categories of individuals covered by the system:
    B.2.''
        L. Missing Person File: Described in ``Categories of individuals
    covered by the system: C. Missing Persons.''
        M. U.S. Secret Service Protective File: Described in ``Categories
    of individuals covered by the system: D.''
        N. Violent Criminal Gang File: A cooperative federal-state program
    for the interstate exchange of criminal gang information. For the
    purpose of this file, a ``gang'' is defined as a group of three or more
    persons with a common interest, bond, or activity characterized by
    criminal delinquent conduct. Described in ``Categories of individuals
    covered by the system: E. Members of Violent Criminal Gangs.''
        O. Terrorist File: A cooperative federal-state program for the
    exchange of information about terrorist organizations and individuals.
    For the purposes of this file, ``terrorism'' is defined as activities
    that involve violent acts or acts dangerous to human life that are a
    violation of the criminal laws of the United States or any state or
    would be a criminal violation if committed within the jurisdiction of
    the United States or any states, which appear to be intended to:
        1. Intimidate or coerce a civilian population,
        2. Influence the policy of a government by intimidation or
    coercion, or
        3. Affect the conduct of a government by crimes or kidnaping.
    Described in ``Categories of individuals covered by the system: F.
    Members of Terrorist Organizations.''
        P. Unidentified Person File: Described in ``Categories of
    individuals covered by the system: G. Unidentified Persons.''
                Authority for maintenance of the system:
        The system is established and maintained in accordance with 28
    U.S.C. 534; 28 CFR part 20; Department of Justice Appropriation Act,
    1973, Pub. L. 92-544, 86 Stat. 1115; Securities Acts Amendment of 1975,
    Pub. L. 94-29, 89 Stat. 97; and 18 U.S.C. 924 (e). Exec. Order No.
    10450, 3 CFR (1974).
                Purpose(s):
        The purpose for maintaining the NCIC system of records is to
    provide a computerized data base for ready access by a criminal justice
    agency making an inquiry and for prompt disclosure of information in
    the system from other criminal justice agencies about crimes and
    criminals. This information assists authorized agencies in criminal
    justice objectives, such as apprehending fugitives, locating missing
    persons, locating and returning stolen property, as well as in the
    protection of the law enforcement officers encountering the individuals
    described in the system.
                Routine uses of records maintained in the system, including
                        categories of users and the purposes of such uses:
        Data in NCIC files is exchanged with and for the official use of
    authorized officials of the federal government, the states, cities,
    penal and other institutions, and certain foreign governments. The data
    is exchanged most frequently, but not exclusively, through NCIC lines
    to federal criminal justice agencies, criminal justice agencies in the
    50 states, the District of Columbia, Puerto Rico, U.S. Possessions,
    U.S. Territories, and certain authorized foreign and international
    criminal justice agencies. Criminal history data is disseminated to
    non-criminal justice agencies for use in connection with licensing for
    local/state employment or other uses, but only where such dissemination
    is authorized by federal or state statute and approved by the Attorney
    General of the United States.
        Data in NCIC files, other than the information described in
    ``Categories of records in the system: I, J, K, M, N, and O'' is
    disseminated to:
        (1) A nongovernmental agency or subunit thereof which allocates a
    substantial part of its annual budget to the administration of criminal
    justice, whose regularly employed peace officers have full police
    powers pursuant to state law and have complied with the minimum
    employment standards of governmentally employed police officers as
    specified by state statute;
        (2) A noncriminal justice governmental department of motor vehicle
    or driver's license registry established by a statute, which provides
    vehicle registration and driver record information to criminal justice
    agencies;
        (3) A governmental regional dispatch center, established by a state
    statute, resolution, ordinance or Executive order, which provides
    communications services to criminal justice agencies; and
        (4) The National Insurance Crime Bureau (NICB), a nongovernmental
    nonprofit agency which acts as a national clearinghouse for information
    on stolen vehicles and offers free assistance to law enforcement
    agencies concerning automobile thefts, identification and recovery of
    stolen vehicles.
        Disclosures of information from this system, as described in (1)
    through (4) above, are for the purpose of providing information to
    authorized agencies to facilitate the apprehension of fugitives, the
    location of missing persons, the location and/or return of stolen
    property, or similar criminal justice objectives.
        Information on missing children, missing adults who were reported
    missing while children, and unidentified living and deceased persons
    may be disclosed to the National Center for Missing and Exploited
    Children (NCMEC). The NCMEC is a nongovernmental, nonprofit, federally
    funded corporation, serving as a national resource and technical
    assistance clearinghouse focusing on missing and exploited children.
    Information is disclosed to NCMEC to assist it in its efforts to
    provide technical assistance and education to parents and local
    governments regarding the problems of missing and exploited children,
    and to operate a nationwide missing children hotline to permit members
    of the public to telephone the Center from anywhere in the United
    States with information about a missing child.
        System records may be disclosed to criminal justice agencies for
    the conduct of background checks under the National Instant Criminal
    Background Check System (NICS).
        System records may be disclosed to noncriminal justice governmental
    agencies performing criminal justice dispatching functions or data
    processing/information services for criminal justice agencies.
        System records may be disclosed to private contractors pursuant to
    a specific agreement with a criminal justice agency or a noncriminal
    justice governmental agency performing criminal justice dispatching
    functions or data processing/information services for criminal justice
    agencies to provide services for the administration of criminal justice
    pursuant to that agreement. The agreement must incorporate a security
    addendum approved by the Attorney General of the United States, which
    shall specifically authorize access to criminal history record
    information, limit the use of the information to the purposes for which
    it is provided, ensure the security and confidentiality of the
    information, provide for sanctions, and contain such other provisions
    as the Attorney General may require. The power and authority of the
    Attorney General hereunder shall be exercised by the FBI Director (or
    the Director's designee).
        In addition, information may be released to the news media and the
    public pursuant to 28 CFR 50.2, unless it is determined that release of
    the specific information in the context of a particular case would
    constitute an unwarranted invasion of personal privacy;
        System records may be disclosed to a Member of Congress or staff
    acting on the member's behalf when the member or staff requests the
    information on behalf of and at the request of the individual who is
    the subject of the record; and,
        System records may be disclosed to the National Archives and
    Records Administration and the General Services Administration for
    records management inspections conducted under the authority of 44
    U.S.C. 2904 and 2906.
                Policies and practices for storing, retrieving, accessing,
                        retaining, and disposing of records in the system:
                Storage:
        Information maintained in the NCIC system is stored electronically
    for use in a computer environment.
                Retrievability:
        On line access to data in NCIC is achieved by using the following
    search descriptors:
        A. Stolen Vehicle File:
        1. Vehicle identification number;
        2. Owner applied number;
        3. License plate number;
        4. NCIC number (unique number assigned by NCIC computer to each
    NCIC record.)
        B. Stolen License Plate File:
        1. License plate number;
        2. NCIC number.
        C. Stolen Boat File:
        1. Registration document number;
        2. Hull serial number;
        3. Owner applied number;
        4. NCIC number.
        D. Stolen Gun File:
        1. Serial number of gun;
        2. NCIC number.
        E. Stolen Article File:
        1. Serial number of article;
        2. Owner applied number;
        3. NCIC number.
        F. Securities File:
        1. Type, serial number, denomination of security, and issuer for
    other than U.S. Treasury issues and currency;
        2. Type of security and name of owner of security;
        3. Social Security number of owner of security (it is noted the
    requirements of the Privacy Act with regard to the solicitation of
    Social Security numbers have been brought to the attention of the
    members of the NCIC system);
        4. NCIC number.
        G. Wanted Person File:
        1. Name and one of the following numerical identifiers:
        a. Date of birth;
        b. FBI number (number assigned by the Federal Bureau of
    Investigation to an arrest fingerprint record);
        c. Social Security number (it is noted the requirements of the
    Privacy Act with regard to the solicitation of Social Security numbers
    have been brought to the attention of the members of the NCIC system);
        d. Operator's license number (driver's number);
        e. Miscellaneous identifying number (military number or number
    assigned by federal, state, or local authorities to an individual's
    record);
        f. Originating agency case number;
        2. Vehicle or license plate known to be in the possession of the
    wanted person;
        3. NCIC number.
        H. Foreign Fugitive File: See G, above.
        I. Interstate Identification Index File:
        1. Name, sex, race, and date of birth;
        2. FBI number;
        3. State identification number;
        4. Social Security number;
        5. Miscellaneous identifying number.
        J. Witness Security Program File: See G, above.
        K. BATF Violent Felon File: See G, above.
        L. Missing Person file: See G, above, plus the age, sex, race,
    height and weight, eye and hair color of the missing person.
        M. U.S. Secret Service Protective File: See G, above.
        N. Violent Criminal Gang File: See G, above.
        O. Terrorist File: See G, above.
        P. Unidentified Person File: The age, sex, race, height and weight,
    eye and hair color of the unidentified person.
                Safeguards:
        Data stored in the NCIC is documented criminal justice agency
    information and access to that data is restricted to duly authorized
    users. The following security measures are the minimum to be adopted by
    all authorized users having access to the NCIC.
        Interstate Identification Index (III) File. These measures are
    designed to prevent unauthorized access to the system data and/or
    unauthorized use of data obtained from the computerized file.
        1. Computer Center.
        a. The authorized user's computer site must have adequate physical
    security to protect against any unauthorized personnel gaining access
    to the computer equipment or to any of the stored data.
        b. Since personnel at these computer centers can have access to
    data stored in the system, they must be screened thoroughly under the
    authority and supervision of an NCIC control terminal agency. (This
    authority and supervision may be delegated to responsible criminal
    justice agency personnel in the case of a satellite computer center
    being serviced through a state control terminal agency.) This screening
    will also apply to non-criminal justice maintenance or technical
    personnel.
        c. All visitors to these computer centers must be accompanied by
    staff personnel at all times.
        d. Computers having access to the NCIC must have the proper
    computer instructions written and other built-in controls to prevent
    criminal history data from being accessible to any terminals other than
    authorized terminals.
        e. Computers having access to the NCIC must maintain a record of
    all transactions against the criminal history file in the same manner
    the NCIC computer logs all transactions. The NCIC identifies each
    specific agency entering or receiving information and maintains a
    record of those transactions. This transaction record must be monitored
    and reviewed on a regular basis to detect any possible misuse of
    criminal history data.
        f. Each State Control terminal shall build its data system around a
    central computer, through which each inquiry must pass for screening
    and verification. The configuration and operation of the center shall
    provide for the integrity of the data base.
        2. Communications:
        a. Lines/channels being used to transmit criminal history
    information must be dedicated solely to criminal justice, i.e., there
    must be no terminals belonging to agencies outside the criminal justice
    system sharing these lines/channels.
        b. Physical security of the lines/channels must be protected to
    guard against clandestine devices being utilized to intercept or inject
    system traffic.
        3. Terminal Devices Having Access to NCIC:
        a. All authorized users having terminal on this system must be
    required to physically place theses terminals in secure locations
    within the authorized agency.
        b. The authorized users having terminals with access to criminal
    history must screen terminal operators and restrict access to the
    terminal to a minimum number of authorized employees.
        c. Copies of criminal history data obtained from terminal devices
    must be afforded security to prevent any unauthorized access to or use
    of the data.
        d. All remote terminals on NCIS III will maintain a manual or
    automatedlog of computerized criminal history inquiries with notations
    of individuals making requests for records for a minimum of one year.
                Retention and disposal:
        Unless otherwise removed, records will be retained in files as
    follows:
        A. Vehicle File:
        a. Unrecovered stolen vehicle records (including snowmobile
    records) which do not contain vehicle identification numbers (VIN) or
    Owner-applied number (OAN) therein, will be purged from file 90 days
    after date of entry. Unrecovered stolen vehicle records (including
    snowmobile records) which contain VINS or OANs will remain in file for
    the year of entry plus 4.
        b. Unrecovered vehicles wanted in conjunction with a felony will
    remain in file for 90 days after entry. In the event a longer retention
    period is desired, the vehicle must be reentered.
        c. Unrecovered stolen VIN plates, certificates of origin or title,
    and serially numbered stolen vehicle engines or transmissions will
    remain in file for the year of entry plus 4. (Job No. NC1-65-82-4, Part
    E. 13 h.(12 )
        B. License Plate File: Unrecovered stolen license plates will
    remain in file for one year after the end of the plate's expiration
    year as shown in the record. (Job no. NC1-65-82-4, Part E. 13 h. (2) )
        C. Boat file: Unrecovered stolen boat records, which contain a hull
    serial number or an OAN, will be retained in file for the balance of
    the year entered plus 4. Unrecovered stolen boat records which do not
    contain a hull serial number or an OAN will be purged from file 90 days
    after date of entry. (Job No. NC1-65-82-4, Part E. 13 h. (6))
        D. Gun File:
        a. Unrecovered weapons will be retained in file for an indefinite
    period until action is taken by the originating agency to clear the
    record.
        b. Weapons entered in file as ``recovered'' weapons will remain in
    file for the balance of the year entered plus 2. (Job No. NC1-65-82-4,
    Part E. 13 h. (3))
        E. Article File: Unrecovered stolen articles will be retained for
    the balance of the year entered plus one year. (Job No. NC1-65-82-4,
    Part E. 13 h. (4))
        F. Securities File: Unrecovered stolen, embezzled or counterfeited
    securities will be retained for the balance of the year entered plus 4,
    except for travelers checks and money orders, which will be retained
    for the balance of the year entered plus 2. (Job No. NC1-65-82-4, Part
    E. 13 h. (5))
        G. Wanted Person File: Person not located will remain in file
    indefinitely until action is taken by the originating agency to clear
    the record (except ``Temporary Felony Wants'', which will be
    automatically removed from the file after 48 hours''. (Job No. NC1-65-
    87-114, Part E. 13 h. (7))
        H. Foreign Fugitive File: Person not located will remain in file
    indefinitely until action is taken by the originating agency to clear
    the record.
        I. Interstate Identification Index File: When an individual reaches
    age of 99. (Job No. N1-65-95-03)
        J. Witness Security Program File: Will remain in file until action
    is taken by the U.S. Marshals Service to clear or cancel the records.
        K. BATF Violent Felon File: Will remain in file until action is
    taken by the BATF to clear or cancel the records.
        L. Missing Persons File: Will remain in the file until the
    individual is located or action is taken by the originating agency to
    clear the record. (Job No. NC1-65-87-11, Part E 13h (8))
        M.U.S. Secret Service Protective File: Will be retained until names
    are removed by the U.S. Secret Service.
        N. Violent Criminal Gang File: Records will be subject to mandatory
    purge if inactive for five years.
        O. Terrorist File: Records will be subject to mandatory purge if
    inactive for five years.
        P. Unidentified Person File: Will be retained for the remainder of
    the year of entry plus 9.
                System manager(s) and address:
        Director, Federal Bureau of investigation, J. Edgar Hoover
    Building, 935 Pennsylvania Avenue, NW., Washington, DC 20535-0001.
                Notification procedure:
        Same as the above.
                Record access procedures:
        It is noted the Attorney General has exempted this system from the
    access and contest procedures of the Privacy Act. However, the
    following alternative procedures are available to a requester. The
    procedures by which an individual may obtain a copy of his or her
    criminal history record from a state or local criminal justice agency
    are detailed in 28 CFR 20.34 appendix and are essentially as follows:
        If an individual has a criminal record supported by fingerprints
    and that record has been entered in the III System, it is available to
    that individual for review, upon presentation of appropriate
    identification and in accordance with applicable state and federal
    administrative and statutory regulations.
        Appropriate identification includes being fingerprinted for the
    purpose of insuring that the individual is who the individual purports
    to be. The record on file will then be verified through comparison of
    fingerprints.
        Procedure:
        1. All requests for review must be made by the subject of the
    record through a law enforcement agency which has access to the III
    System. That agency within statutory or regulatory limits can require
    additional identification to assist in securing a positive
    identification.
        2. If the cooperating law enforcement agency can make an
    identification with fingerprints previously taken which are on file
    locally and if the FBI identification number of the individual's record
    is available to that agency, it can make an on-line inquiry through
    NCIC to obtain the III System record or, if it does not have suitable
    equipment to obtain an on-line response, obtain the record from
    Clarksburg, West Virginia, by mail. The individual will then be
    afforded the opportunity to see that record.
        3. Should the cooperating law enforcement agency not have the
    individual's fingerprints on file locally, it is necessary for that
    agency to relate the prints to an existing record by having the
    identification prints compared with those already on file in the FBI,
    or, possibly, in the state's central identification agency.
        The procedures by which an individual may obtain a copy of his or
    her criminal history record from the FBI are set forth in 28 CFR 16.30-
    16.34.
                Contesting record procedures:
        The Attorney General has exempted this system from the contest
    procedures of the Privacy Act. Under the alternative procedures
    described above under ``Record Access Procedures,'' the subject of the
    requested record shall request the appropriate arresting agency, court,
    or correctional agency to initiate action necessary to correct any
    stated inaccuracy in subject's record or provide the information needed
    to make the record complete. The subject of a record may also direct
    his/her challenge as to the accuracy or completeness of any entry on
    his/her record to the FBI, Criminal Justice Information Services (CJIS)
    Division, ATTN: SCU, Mod. D-2, 1000 Custer Hollow Road, Clarksburg, WV
    26306. The FBI will then forward the challenge to the agency which
    submitted the data requesting that agency to verify or correct the
    challenged entry. Upon the receipt of an official communication
    directly from the agency which contributed the original information,
    the FBI CJIS Division will make any changes necessary in accordance
    with the information supplied by that agency.
                Record source categories:
        Information contained in the NCIC system is obtained from local,
    state, tribal, federal, foreign, and international criminal justice
    agencies.
                Systems exempted from certain provisions of the act:
        The Attorney General has exempted this system from subsection
    (c)(3) and (4); (d); (e)(1), (2), and (3); (e)(4)(G) and (H), (e)(8)
    and (g) of the Privacy Act pursuant to 5 U.S.C. 552a(j)(2) and (k)(3).
    Rules have been promulgated in accordance with the requirements of 5
    U.S.C. 553(b), (c) and (e) and have been published in the Federal
    Register.
                                     ______

        [From the Federal Register, Vol. 63, No. 34, February 20, 1998]

                             DEPARTMENT OF JUSTICE
    [AAG/A Order No. 146-97]

    Privacy Act of 1974; Notice of Modified Systems of Records

        Pursuant to the Privacy Act of 1974 (5 U.S.C. 552a), the Department
    proposes to modify the following Privacy Act systems of records:

        Antitrust Information Management System (AMIS)--Matter Report,
    Justice/ATR-006 (previously published on October 17, 1988 at 53 FR
    40502)
        Central Civil Rights Division Index File and Associated Records,
    Justice/CRT-001 (previously published on May 17, 1993 at 58 FR 28896)
        Central Criminal Division Index File and Associated Records,
    Justice/CRM-001 (previously published on December 11, 1987 at 53 FR
    47186)
        Civil Division Case File System, Justice/CIV-001 (previously
    published on October 17, 1988 at 53 FR 40504)
        Civil Case Files, Justice/USA-005 (previously published on January
    22, 1988 at 53 FR 1864)
        Criminal Case Files, Justice/USA-007 (previously published on
    January 22, 1988 at 53 FR 1861)
        FBI Central Records System, Justice/FBI-002 (previously published
    on October 5, 1993 at 58 FR 51858)
        Tax Division Central Classification Cards, Index Docket Cards, and
    Associated Records--Criminal Tax Cases, Justice/TAX-001 (previously
    published on September 30, 1977 at 42 FR 53389)
        Tax Division Central Classification Cards, Index Docket Cards, and
    Associated Records--Civil Tax Cases, Justice/TAX-002 (previously
    published on September 30, 1977 at 42 FR 53390)

        The Department proposes to add a new routine use disclosure to all
    of the above-named systems of records. The routine use will permit
    disclosure of health care-related information obtained during health-
    care related investigations. In addition, the Department proposes to
    add an additional routine use disclosure to the Central Civil Rights
    Division Index File and Associated Records system to permit the
    disclosure of information regarding the progress and results of
    investigations to the complainants and/or victims involved. The
    proposed disclosures have been italicized for the reader's convenience.
    The modified systems of records are printed below.
        Title 5 U.S.C. 552a(e)(4) and (11) provide that the public be given
    a 30-day period in which to comment on proposed new routine use
    disclosures. The Office of Management and Budget (OMB), which has
    oversight responsibilities under the Act, requires a 40-day period in
    which to conclude its review of the new routine uses.
        Therefore, please submit any comments by March 23, 1998. The
    public, OMB, and the Congress are invited to send written comments to
    Patricia E. Neely, Program Analyst, Information Management and Security
    Staff, Justice Management Division, Department of Justice, Washington,
    DC 20530 (Room 850, WCTR Building).
        In accordance with 5 U.S.C. 552a(r), the Department has provided a
    report to OMB and the Congress on the proposed modification.

        Dated: December 31, 1997.

    Stephen R. Colgate,
    Assistant Attorney General for Administration.
              * * * * * * *
    JUSTICE/FBI-002
                System name:
        The FBI Central Records System.
                System location:
        a. Federal Bureau of Investigation, J. Edgar Hoover Building, 10th
    and Pennsylvania Avenue, NW, Washington DC 20535; b. 56 field divisions
    (see Appendix); c. 16 Legal Attache (see Appendix).
                Categories of individuals covered by the system:
        a. Individuals who relate in any manner to official FBI
    investigations including, but not limited to subjects, suspects,
    victims, witnesses, and close relatives and associates who are relevant
    to an investigation.
        b. Applicants for and current and former personnel of the FBI and
    persons related thereto who are considered relevant to an applicant
    investigation, personnel inquiry, or other personnel matters.
        c. Applicants for and appointees to sensitive positions in the
    United States Government and persons related thereto who are considered
    relevant to the investigation.
        d. Individuals who are the subject of unsolicited information, who
    offer unsolicited information, request assistance, and make inquiries
    concerning record material, including general correspondence, and
    contacts with other agencies, businesses, institutions, clubs; the
    public and the news media.
        e. Individuals associated with administrative operations or
    services including pertinent functions, contractors and pertinent
    persons related thereto. (All manner of information concerning
    individuals may be acquired in connection with and relating to the
    varied investigative responsibilities of the FBI which are further
    described in ``CATEGORIES OF RECORDS IN THE SYSTEM.'' Depending on the
    nature and scope of the investigation this information may include,
    among other things, personal habits and conduct, financial information,
    travel and organizational affiliation of individuals. The information
    collected is made a matter of record and placed in FBI files.)
                Categories of records in the system:
        The FBI Central Records Systems--The FBI utilizes a central records
    system of maintaining its investigative, personnel, applicant,
    administrative, and general files. This system consists of one
    numerical sequence of subject matter files, an alphabetical index to
    the files, and a supporting abstract system to facilitate processing
    and accountability of all important mail placed in files. This abstract
    system is both a textual and an automated capability for locating mail.
    Files kept in FBI field offices are also structured in the same manner,
    except they do not utilize an abstract system.
        The 281 classifications used by the FBI in its basic filing system
    pertain primarily to Federal violations over which the FBI has
    investigative jurisdiction. However, included in the 281
    classifications are personnel, applicant, and administrative matters to
    facilitate the overall filing scheme. These classifications are as
    follows (the word ``obsolete'' following the name of the classification
    indicates the FBI is no longer initiating investigative cases in these
    matters, although the material is retained for reference purposes):
        1. Training Schools; National Academy Matters: FBI National Academy
    Applicants. Covers general information concerning the FBI National
    Academy, including background investigations of individual candidates.
        2. Neutrality Matters. Title 18, United States Code, Sections 956
    and 958 962; Title 22, United States Code, Sections 1934 and 401.
        3. Overthrow or Destruction of the Government. Title 18, United
    States Code, Section 2385.
        4. National Firearms Act, Federal Firearms Act; State Firearms
    Control Assistance Act; Unlawful Possession or Receipt of Firearms.
    Title 26, United States Code, Sections 5801-5812; Title 18, United
    States Code, Sections 921-928; Title 18, United States Code, Sections
    1201-1203.
        5. Income Tax. Covers violations of Federal income tax laws
    reported to the FBI. Complaints are forwarded to the Commissioner of
    the Internal Revenue Service.
        6. Interstate Transportation of Strikebreakers. Title 18, United
    States Code, Section 1231.
        7. Kidnapping. Title 28, United States Code, Sections 1201 and
    1202.
        8. Migratory Bird Act. Title 18, United States Code, Section 43;
    Title 16, United States Code, Section 703 through 718.
        9. Extortion. Title 18, United States Code, Sections 876, 877, 875,
    and 873.
        10. Red Cross Act. Title 18, United States Code, Sections 706 and
    917.
        11. Tax (Other than Income). This classification covers complaints
    concerning violations of Internal Revenue law as they apply to other
    than alcohol, social security and income and profits taxes, which are
    forwarded to the Internal Revenue Service.
        12. Narcotics. This classification covers complaints received by
    the FBI concerning alleged violations of Federal drug laws. Complaints
    are forwarded to the headquarters of the Drug Enforcement
    Administration (DEA), or the nearest district office of DEA.
        13. Miscellaneous. Section 125, National Defense Act, Prostitution;
    Selling Whiskey Within Five Miles of An Army Camp, 1920 only. Subjects
    were alleged violators of abuse of U.S. flag, fraudulent enlistment,
    selling liquor and operating houses of prostitution within restricted
    bounds of military reservations. Violations of Section 13 of the
    Selective Service Act (Conscription Act) were enforced by the
    Department of Justice as a war emergency measure with the Bureau
    exercising jurisdiction in the detection and prosecution of cases
    within the purview of that Section.
        14. Sedition. Title 18, United States Code, Sections 2387, 2388,
    and 2391.
        15. Theft from Interest Shipment. Title 18, United States Code,
    Section 859; Title 18, United States Code, Section 660; Title 18 United
    States Code, Section 2117.
        16. Violations of Federal Injunction (obsolete). Consolidated into
    Classification 69, ``Contempt of Court''.
        17. Fraud Against the Government, Department of Veterans Affairs,
    Department of Veterans Affairs Matters. Title 18, United States Code,
    Section 287, 289, 290, 371, or 1001, and Title 38, United States Code,
    Sections 787(a), 787(b), 3405, 3501, and 3502.
        18. May Act. Title 18, United States Code, Section 1384.
        19. Censorship Matter (obsolete). Pub. L. 77th Congress.
        20. Federal Grain Standards Act (obsolete) 1920 only. Subjects were
    alleged violators of contracts for sale. Shipment of Interstate
    Commerce, Section 5, U.S. Grain Standards Act.
        21. Food and Drugs. This classification covers complaints received
    concerning alleged violations of the Food, Drug and Cosmetic Act; Tea
    Act; Import Milk Act; Caustic Poison Act; and Filled Milk Act. These
    complaints are referred to the Commissioner of the Food and Drug
    Administration of the field component of that Agency.
        22. National Motor Vehicle Traffic Act, 1922-27 (obsolete).
    Subjects were possible violators of the National Motor Vehicle Theft
    Act, Automobiles seized by Prohibitions Agents.
        23. Prohibition. This classification covers complaints received
    concerning bootlegging activities and other violations of the alcohol
    tax laws. Such complaints are referred to the Bureau of Alcohol,
    Tobacco and Firearms, Department of the Treasury, or field
    representatives of the Agency.
        24. Profiteering 1920-42 (obsolete). Subjects are possible
    violators of the Lever Act--Profiteering in food and clothing or
    accused company was subject of file. Bureau conducted investigations to
    ascertain profits.
        25. Selective Service Act; Selective Training and Service Act.
    Title 50, United States Code, Section 462; Title 50, United States
    Code, Section 459.
        26. Interstate Transportation of Stolen Motor Vehicle; Interstate
    Transportation of Stolen Aircraft. Title 18, United States Code,
    Sections 2311 (in part), 2312, and 2313.
        27. Patent Matter. Title 35, United States Code, Sections 104 and
    105.
        28. Copyright Matter. Title 17, United States Code, Sections 104
    and 105.
        29. Bank Fraud and Embezzlement. Title 18, United States Code,
    Sections 212, 213, 215, 334, 655-657, 1004-1006, 1008, 1009, 1014, and
    1306; Title 12, United States Code, Section 1725(g).
        30. Interstate Quarantine Law, 1922-25 (obsolete). Subjects alleged
    violators of Act of February 15, 1893, as amended, regarding interstate
    travel of persons afflicted with infectious diseases. Cases also
    involved unlawful transportation of animals, Act of February 2, 1903.
    Referrals were made to Public Health Service and the Department of
    Agriculture.
        31. White Slave Traffic Act. Title 18, United States Code, Section
    2421-2424.
        32. Identification (Fingerprint) Matters. This classification
    covers general information concerning Identification (fingerprint)
    matters.
        33. Uniform Crime Reporting. This classification covers general
    information concerning the Uniform Crime Reports, a periodic
    compilation of statistics of criminal violations throughout the United
    States.
        34. Violation of Lacy Act. 1922-43. (obsolete) Unlawful
    Transportation and shipment of black bass and fur seal skins.
        35. Civil Service. This classification covers complaints received
    by the FBI concerning Civil Service matters which are referred to the
    Office of Personnel Management in Washington or regional offices of
    that Agency.
        36. Mail Fraud. Title 18, United States Code, Section 1341.
        37. False Claims Against the Government. 1921-22 (obsolete).
    Subjects submitted claims for allotment, vocational training,
    compensation as veterans under the Sweet Bill. Letters were generally
    referred elsewhere (Veterans Bureau). Violators apprehended for
    violation of Article No. 1, War Risk Insurance Act.
        38. Application for Pardon to Restore Civil Rights. 1921-35
    (obsolete). Subjects allegedly obtained their naturalization papers by
    fraudulent means. Cases later referred to Immigration and
    Naturalization Service.
        39. Falsely Claiming Citizenship (obsolete). Title 18, United
    States Code, Sections 911 and 1015(a)(b).
        40. Passport and Visa Matter. Title 18, United States Code,
    Sections 1451-1546.
        41. Explosives (obsolete). Title 50, United States Code, Sections
    121 through 144.
        42. Deserter; Deserter, Harboring. Title 10, United States Code,
    Sections 808 and 885.
        43. Illegal Wearing of Uniforms; False Advertising or Misuse of
    Names, Words, Emblems or Insignia; Illegal Manufacturer, Use,
    Possession, or Sale of Emblems and Insignia; Illegal Manufacture,
    Possession, or Wearing of Civil Defense Insignia; Miscellaneous,
    Forging or Using Forged Certificate of Discharge from Military or Naval
    Service; Miscellaneous, Falsely Making or Forging Naval, Military, or
    Official Pass; Miscellaneous, Forging or Counterfeiting Seal of
    Department or Agency of the United States, Misuse of the Great Seal of
    the United States or of the Seals of the President or the Vice
    President of the United States; Unauthorized Use of ``Johnny Horizon''
    Symbol; Unauthorized Use of Smokey Bear Symbol. Title 18, United States
    Code, Sections 702, 703, and 704; Title 18, United States Code,
    Sections 701, 705, 707, and 710; Title 36, United States Code, Section
    182; Title 50, Appendix, United States Code, Section 2284; Title 46,
    United States Code, Section 249; Title 18, United States Code, Sections
    498, 499, 506, 709, 711, 711a, 712, 713, and 714; Title 12, United
    States Code, Sections 1457 and 1723a; Title 22, United States Code,
    Section 2518.
        44. Civil Rights; Civil Rights, Election Laws, Voting Rights Act,
    1965, Title 18, United States Code, Sections 241, 242, and 245; Title
    42, United States Code, Section 1973; Title 18, United States Code,
    Section 243; Title 18, United States Code, Section 244, Civil Rights
    Act--Federally Protected Activities; Civil Rights Act--Overseas
    Citizens Voting Rights Act of 1975.
        45. Crime on the High Seas (includes stowaways on boats and
    aircraft). Title 18, United States Code, Sections 7, 13, 1243, and
    2199.
        46. Fraud Against the Government (includes Department of Health,
    Education and Welfare; Department of Labor (CETA), and Miscellaneous
    Government Agencies), Anti-Kickback Statute; Department Assistance Act
    of 1950; False Claims, Civil; Federal-Aid Road Act; Lead and Zinc Act;
    Public Works and Economic Development Act of 1965; Renegotiation Act,
    Criminal; Renegotiation Act, Civil; Trade Expansion Act of 1962;
    Unemployment Compensation Statutes; Economic Opportunity Act, Title 50,
    United States Code, Section 1211 et seq.; Title 31, United States Code,
    Section 231; Title 41, United States Code, Section 119; Title 40,
    United States Code, Section 489.
        47. Impersonation. Title 18, United States Code, Sections 912, 913,
    915, and 916.
        48. Postal. Violation (Except Mail Fraud). This classification
    covers inquiries concerning the Postal Service and complaints
    pertaining to the theft of mail. Such complaints are either forwarded
    to the Postmaster General or the nearest Postal Inspector.
        49. Bankruptcy Fraud. Title 18, United States Code, Sections 151-
    155.
        50. Involuntary Servitude and Slavery. U.S. Constitution, 13th
    Amendment; Title 18, United States Code, Sections 1581-1588, 241, and
    242.
        51. Jury Panel Investigations. This classification covers jury
    panel investigations which are requested by the appropriate Assistant
    Attorney General as authorized by 28 U.S.C. 533 and AG memorandum 781,
    dated November 9, 1972. These investigations can be conducted only upon
    such request and consist of an indices and arrest check, and only in
    limited important trials where defendant could have influence over a
    juror.
        52. Theft, Robbery, Embezzlement, Illegal Possession or Destruction
    of Government Property. Title 18, United States Code, Sections 641,
    1024, 1660, 2112, and 2114. Interference With Government
    Communications, Title 18, United States Code, Section 1632.
        53. Excess Profits on Wool. 1918 (obsolete). Subjects possible
    violators of Government Control of Wool Clip Act of 1918.
        54. Customs Laws and Smuggling. This classification covers
    complaints received concerning smuggling and other matters involving
    importation and entry of merchandise into and the exportation of
    merchandise from the United States. Complaints are referred to the
    nearest district office of the U.S. Customs Service or the Commissioner
    of Customs, Washington, DC.
        55. Counterfeiting. This classification covers complaints received
    concerning alleged violations of counterfeiting of U.S. coins, notes,
    and other obligations and securities of the Government. These
    complaints are referred to either the Director, U.S. Secret Service, or
    the nearest office of that Agency.
        56. Election Laws. Title 18, United States Code, Sections 241, 242,
    245, and 591-607; Title 42, United States Code, Section 1973; Title 26,
    United States Code, Sections 9012 and 9042; Title 2, United States
    Code, Sections 431-437, 439, and 441.
        57. War Labor Dispute Act (obsolete). Pub. L. 89--77th Congress.
        58. Corruption of Federal Public Officials. Title 18, United States
    Code, Sections 201-203, 205-211; Public Law 89-4 and 89-136.
        59. World War Adjusted Compensation Act of 1924-44 (obsolete).
    Bureau of Investigation was charged with the duty of investigating
    alleged violations of all sections of the World War Adjusted
    Compensation Act (Pub. L. 472, 69th Congress (H.R. 10277)) with the
    exception of Section 704.
        60. Anti-Trust, Title 15, United States Code, Sections 1-7, 12-27,
    and 13.
        61. Treason or Misprision of Treason. Title 18, United States Code,
    Sections 2381, 2382, 2389, 2390, 756, and 757.
        62. Administrative Inquiries. Misconduct Investigations of Officers
    and Employees of the Department of Justice and Federal Judiciary;
    Census Matters (Title 13, United States Code, Sections 211-214, 221-
    224, 304, and 305) Domestic Police Cooperation; Eight-Hour-Day Law
    (Title 40, United States Code, Sections 321, 332, 325a, 326); Fair
    Credit Reporting Act (Title 15, United States Code, Sections 1681q and
    1681r); Federal Cigarette Labeling and Advertising Act (Title 15,
    United States Code, Section 1333); Federal Judiciary Investigations;
    Kickback Racket Act (Title 18, United States Code, Section 874); Lands
    Division Matter, other Violations and/or Matters; Civil Suits--
    Miscellaneous; Soldiers' and Sailors' Civil Relief Act of 1940 (Title
    50, Appendix, United States Code, Sections 510-590); Tariff Act of 1930
    (Title 19, United States Code, Section 1304); Unreported Interstate
    Shipment of Cigarettes (Title 15, United States Code, Sections 375 and
    376); Fair Labor Standards Act of 1938 (Wages and Hours Law) (Title 29,
    United States Code, Sections 201-219); Conspiracy (Title 18, United
    States Code, Section 371 (formerly Section 88, Title 18, United States
    Code); effective September 1, 1948).
        63. Miscellaneous--Nonsubversive. This classification concerns
    correspondence from the public which does not relate to matters within
    FBI jurisdiction.
        64. Foreign Miscellaneous. This classification is a control file
    utilized as a repository for intelligence information of value
    identified by country. More specific categories are placed in
    classification 108-113.
        65. Espionage. Attorney General Guidelines on Foreign
    Counterintelligence; Internal Security Act of 1950; Executive Order
    11905.
        66. Administrative Matters. This classification covers such items
    as supplies, automobiles, salary matters and vouchers.
        67. Personnel Matters. This classification concerns background
    investigations of applicants for employment with the FBI and folders
    for current and former employees.
        68. Alaskan matters (obsolete). This classification concerns FBI
    investigations in the Territory of Alaska prior to its becoming a
    State.
        69. Contempt of Court. Title 18, United States Code, Sections 401,
    402, 3285, 3691, 3692; Title 10, United States Code. Section 847; and
    Rule 42, Federal Rules of Criminal Procedure.
        70. Crime on Government Reservation. Title 18, United States Code,
    Sections 7 and 13.
        71. Bills of Lading Act, Title 49, United States Code, Section 121.
        72. Obstruction of Criminal Investigations: Obstruction of Justice,
    Obstruction of Court Orders. Title 18, United States Code. Sections
    1503 through 1510.
        73. Application for Pardon After Completion of Sentence and
    Application for Executive Clemency. This classification concerns the
    FBI's background investigation in connection with pardon applications
    and request for executive clemency.
        74. Perjury. Title 18, United States Code, Sections 1621, 1622, and
    1623.
        75. Bondsmen and Sureties. Title 18, United States Code, Section
    1506.
        76. Escaped Federal Prisoner. Escape and Rescue; Probation
    Violator, Parole Violator, Mandatory, Release Violator. Title 18,
    United States Code, Sections 751-757, 1072; Title 18, United States
    Code. Sections 3651-3656; and Title 18, United States Code. Sections
    4202-4207, 5037, and 4161-4166.
        77. Applicants (Special Inquiry, Departmental and Other Government
    Agencies, except those having special classifications). This
    classification covers the background investigations conducted by the
    FBI in connection with the aforementioned positions.
        78. Illegal Use of Government Transportation Requests. Title 18,
    United States Code, Section 287, 495, 508, 641, 1001 and 1002.
        79. Missing Persons. This classification covers the FBI's
    Identification Division's assistance in the locating of missing
    persons.
        80. Laboratory Research Matters. At FBI Headquarters this
    classification is used for Laboratory research matters. In field office
    files this classification covers the FBI's public affairs matters and
    involves contact by the FBI with the general public, Federal and State
    agencies, the Armed Forces, Corporations, the news media and other
    outside organizations.
        81. Gold Hoarding. 1933-45. (obsolete) Gold Hoarding investigations
    conducted in accordance with an Act of March 9, 1933 and Executive
    Order issued August 28, 1933. Bureau instructed by Department to
    conduct no further investigations in 1935 under the Gold Reserve Act of
    1934. Thereafter, all correspondence referred to Secret Service.
        82. War Risk Insurance (National Life Insurance (obsolete)). This
    classification covers investigations conducted by the FBI in connection
    with civil suits filed under this statute.
        83. Court of Claims. This classification covers requests for
    investigations of cases pending in the Court of Claims from the
    Assistant Attorney General in charge of the Civil Division of the
    Department of Justice.
        84. Reconstruction Finance Corporation Act (obsolete). Title 15,
    United States Code, Chapter 14.
        85. Home Owner Loan Corporation (obsolete). This classification
    concerned complaints received by the FBI about alleged violations of
    the Home Owners Loan Act, which were referred to the Home Owners Loan
    Corporation. Title 12, United States Code, Section 1464.
        86. Fraud Against the Government--Small Business Administration.
    Title 15, United States Code, Section 645; Title 18, United States
    Code, Sections 212, 213, 215, 216, 217, 657, 658, 1006, 1011, 1013,
    1014, 1906, 1907, and 1909.
        87. Interstate Transportation of Stolen Property (Heavy Equipment--
    Commercialized Theft). Title 18, United States Code, Sections 2311,
    2314, 2315 and 2318.
        88. Unlawful Flight to Avoid Prosecution, Custody, or Confinement;
    Unlawful Flight to Avoid Giving Testimony. Title 18, United States
    Code, Sections 1073 and 1074.
        89. Assaulting or Killing a Federal Officer, Crimes Against Family
    Members, Congressional Assassination Statute, Title 18, United States
    Code, Sections 1111, 1114, 2232.
        90. Irregularities in Federal Penal Institutions. Title 18, United
    States Code, Sections 1791 and 1792.
        91. Bank Burglary, Bank Larceny; Bank Robbery. Title 18, United
    States Code, Section 2113.
        92. Racketeer Enterprise Investigations. Title 18, United States
    Code. Section 3237.
        93. Ascertaining Financial Ability. This classification concerns
    requests by the Department of Justice for the FBI to ascertain a
    person's ability to pay a claim, fine or judgment obtained against him
    by the United States Government.
        94. Research matters. This classification concerns all general
    correspondence of the FBI with private individuals which does not
    involve any substantive violation of Federal law.
        95. Laboratory Cases (Examination of Evidence in Other Than
    Bureau's Cases). The classification concerns non-FBI cases where a duly
    constituted State, county or a municipal law enforcement agency in a
    criminal matter has requested an examination of evidence by the FBI
    Laboratory.
        96. Alien Applicant (obsolete). Title 10, United States Code,
    Section 310.
        97. Foreign Agents Registration Act. Title 18, United States Code,
    Section 951; Title 22, United States Code, Sections 611-621; Title 50,
    United States Code, Sections 851-857.
        98. Sabotage. Title 18, United States Code, Sections 2151-2156;
    Title 50, United States Code, Section 797.
        99. Plant Survey (obsolete). This classification covers a program
    wherein the FBI inspected industrial plants for the purpose of making
    suggestions to the operations of those plants to prevent espionage and
    sabotage.
        100. Domestic Security. This classification covers investigations
    by the FBI in the domestic security field, e.g., Smith Act violations.
        101. Hatch Act (obsolete). Public Law 252, 76th Congress.
        102. Voorhis Act, Title 18, United States Code, Section 1386.
        103. Interstate Transportation of Stolen Livestock, Title 18,
    United States Code, Sections 667, 2311, 2316 and 2317.
        104. Servicemen's Dependents Allowance Act of 1942 (obsolete).
    Public Law 625, 77th Congress, Sections 115-119.
        105. Foreign Counterintelligence Matters. Attorney General
    Guidelines on Foreign Counterintelligence. Executive Order 11905.
        106. Alien Enemy Control; Escaped Prisoners of War and Internees,
    1944-55 (obsolete). Suspects were generally suspected escaped prisoners
    of war, members of foreign organizations, failed to register under the
    Alien Registration Act. Cases ordered closed by Attorney General after
    alien enemies returned to their respective countries upon termination
    of hostilities.
        107. Denaturalization Proceedings (obsolete). This classification
    covers investigation concerning allegations that an individual
    fraudulently swore allegiance to the United States or in some other
    manner illegally obtained citizenship to the U.S. Title 8, United
    States Code, Section 738.
        108. Foreign Travel Control (obsolete). This classification
    concerns security-type investigations wherein the subject is involved
    in foreign travel.
        109. Foreign Political Matters. This classification is a control
    file utilized as a repository for intelligence information concerning
    foreign political matters broken down by country.
        110. Foreign Economic Matters. This classification is a control
    file utilized as a repository for intelligence information concerning
    foreign economic matters broken down by country.
        111. Foreign Social Conditions. This classification is a control
    file utilized as a repository for intelligence information concerning
    foreign social conditions broken down by county.
        112. Foreign Funds. This classification is a control file utilized
    as a repository for intelligence information concerning foreign funds
    broken down by country.
        113. Foreign Military and Naval Matters. This classification is a
    control file utilized as a repository for intelligence information
    concerning foreign military and naval matters broken down by country.
        114. Alien Property Custodian Matter (obsolete). Title 50, United
    States Code, Sections 1 through 38. This classification covers
    investigations concerning ownership and control of property subject to
    claims and litigation under this statute.
        115. Bond Default; Bail Jumper. Title 18, United States Code,
    Sections 3146-3152.
        116. Department of Energy Applicant; Department of Energy,
    Employee. This classification concerns background investigations
    conducted in connection with employment with the Department of Energy.
        117. Department of Energy, Criminal. Title 42, United States Code,
    Sections 2011-2281; Public Law 93-438.
        118. Applicant, Intelligence Agency (obsolete). This classification
    covers applicant background investigations conducted of persons under
    consideration for employment by the Central Intelligence Group.
        119. Federal Regulation of Lobbying Act. Title 2, United States
    Code, ections 261-270.
        120. Federal Tort Claims Act, Title 28, United States Code,
    Sections 2671 to 2680. Investigations are conducted pursuant to
    specific request from the Department of Justice in connection with
    cases in which the Department of Justice represents agencies sued under
    the Act.
        121. Loyalty of Government Employees (obsolete). Executive Order
    9835.
        122. Labor Management Relations Act, 1947. Title 29, United States
    Code, Sections 161, 162, 176-178 and 186.
        123. Section inquiry, State Department, Voice of America (U.S.
    Information Center) (Public Law 402, 80th Congress) (obsolete). This
    classification covers loyalty and security investigations on personnel
    employed by or under consideration for employment for Voice of America.
        124. European Recovery Program Administration, formerly Foreign
    Operations Administration, Economic Cooperation Administration or
    E.R.P., European Recovery Programs; A.I.D. Agency for International
    Development (obsolete). This classification covers security and loyalty
    investigation of personnel employed by or under consideration for
    employment with the European Recovery Program, Public Law 472, 80th
    Congress.
        125. Railway Labor Act; Railway Labor Act--Employer's Liability Act
    Title 45, United States Code, Sections 151-163 and 181-188.
        126. National Security Resources Board, Special Inquiry (obsolete).
    This classification covers loyalty investigations on employees and
    applicants of the National Security Resources Board.
        127. Sensitive Positions in the United States Government, Public
    Law 266 (obsolete). Public Law 81st Congress.
        128. International Development Program (Foreign Operations
    Administration) (obsolete). This classification covers background
    investigations conducted on individuals who are to be assigned to
    duties under the International Development Program.
        129. Evacuation Claims (obsolete). Public Law 886, 80th Congress.
        130. Special Inquiry. Armed Forces Security Act (obsolete). This
    classification covers applicant-type investigations conducted for the
    Armed Forces security agencies.
        131. Admiralty Matter. Title 46, United States Code, Sections 741-
    752 and 781-799.
        132. Special Inquiry, Office of Defense Mobilization (obsolete).
    This classification covers applicant-type investigations of individuals
    associated with the Office of Defense Mobilization.
        133. National Science Foundation Act, Applicant (obsolete). Public
    Law 507, 81st Congress.
        134. Foreign Counterintelligence Assets. This classification
    concerns individuals who provide information to the FBI concerning
    Foreign Counterintelligence matters.
        135. PROSAB (Protection of Strategic Air Command Bases of the U.S.
    Air Force (obsolete). This classification covered contacts with
    individuals with the aim to develop information useful to protect bases
    of the Strategic Air Command.
        136. American Legion Contact (obsolete). This classification
    covered liaison contracts with American Legion offices.
        137. Informants. Other than Foreign Counterintelligence Assets.
    This classification concerns individuals who furnish information to the
    FBI concerning criminal violations on a continuing and confidential
    basis.
        138. Loyalty of Employees of the United Nations and Other Public
    International Organizations. This classification concerns FBI
    investigations based on referrals from the Office of Personnel
    Management wherein a question or allegation has been received regarding
    the applicant's loyalty to the U.S. Government as described in
    Executive Order 10422.
        139. Interception of Communications (Formerly, Unauthorized
    Publication or Use of Communications). Title 47, United States Code,
    Section 605; Title 47, United States Code, Section 501; Title 18,
    United States Code, Sections 2510-2513.
        140. Security of Government Employees; Fraud Against the
    Government, Executive Order 10450.
        141. False Entries in Records of Interstate Carriers. Title 47,
    United States Code, Section 220; Title 49, United States Code, Section
    20.
        142. Illegal Use of Railroad Pass. Title 49, United States Code,
    Section 1.
        143. Interstate Transport of Gambling Devices. Title 15, United
    States Code, Sections 1171 through 1180.
        144. Interstate Transportation of Lottery Tickets. Title 18, United
    States Code, Section 1301.
        145. Interstate Transportation of Obscene Materials. Title 18,
    United States Code, Sections 1462, 1464, and 1465.
        146. Interstate Transportation of Prison-Made Goods. Title 18,
    United States Code, Sections 1761 and 1762.
        147. Fraud Against the Government--Department of Housing and Urban
    Development, Matters. Title 18, United States Code, Sections 657, 709,
    1006, and 1010; Title 12, United States Code, Sections 1709 and 1715.
        148. Interstate Transportation of Fireworks. Title 18, United
    States Code, Section 836.
        149. Destruction of Aircraft or Motor Vehicles. Title 18, United
    States Code, Section 31-35.
        150. Harboring of Federal Fugitives, Statistics (obsolete).
        151. (Referral cases received from the Office of Personnel
    Management under Pub. L. 298). Agency for International Development;
    Department of Energy; National Aeronautics and Space Administration;
    National Science Foundation; Peace Corps; Action; U.S. Arms Control and
    Disarmament Agency; World Health Organization; International Labor
    Organization; International Communications Agency. This classification
    covers referrals from the Office of Personnel Management where an
    allegation has been received regarding an applicant's loyalty to the
    U.S. Government. These referrals refer to applicants from Peace Corps;
    Department of Energy, National Aeronautics and Space Administration,
    Nuclear Regulatory Commission, United States Arms Control and
    Disarmament Agency and the International Communications Agency.
        152. Switchblade Knife Act. Title 15, United States Code, Sections
    1241-1244.
        153. Automobile Information Disclosure Act. Title 15, United States
    Code, Sections 1231-1233.
        154. Interstate Transportation of Unsafe Refrigerators. Title 15,
    United States Code, Sections 1211-1214.
        155. National Aeronautics and Space Act of 1958. Title 18, United
    States Code, Section 799.
        156. Employee Retirement Income Security Act. Title 29, United
    States Code, Sections 1021-1029, 1111, 1131, and 1141; Title 18, United
    States Code, Sections 644, 1027, and 1954.
        157. Civil Unrest. This classification concerns FBI responsibility
    for reporting information on civil disturbances or demonstrations. The
    FBI's investigative responsibility is based on the Attorney General's
    Guidelines for Reporting on Civil Disorders and Demonstrations
    Involving a Federal Interest which became effective April 5, 1976.
        158. Labor-Management Reporting and Disclosure Act of 1959
    (Security Matter) (obsolete). Public Law 86-257, Section 504.
        159. Labor-Management Reporting and Disclosure Act of 1959
    (Investigative Matter). Title 29, United States Code, Sections 501,
    504, 522, and 530.
        160. Federal Train Wreck Statute. Title 18, United States Code,
    Section 1992.
        161. Special Inquiries for White House, Congressional Committee and
    Other Government Agencies. This classification covers investigations
    requested by the White House. Congressional committees or other
    Government agencies.
        162. Interstate Gambling Activities. This classification covers
    information acquired concerning the nature and scope of illegal
    gambling activities in each field office.
        163. Foreign Police Cooperation. This classification covers
    requests by foreign police for the FBI to render investigative
    assistance to such agencies.
        164. Crime Aboard Aircraft. Title 49, United States Code, Sections
    1472 and 1473.
        165. Interstate Transmission of Wagering Information. Title 18,
    United States Code, Section 1065.
        166. Interstate Transportation in Aid of Racketeering. Title 18,
    United States Code, Section 1952.
        167. Destruction of Interstate Property. Title 15, United States
    Code, Sections 1281 and 1282.
        168. Interstate Transportation of Wagering Paraphernalia. Title 18,
    United States Code, Section 1953.
        169. Hydraulic Brake Fluid Act (obsolete); 76 Stat. 437, Public Law
    87-637.
        170. Extremist Informants (obsolete). This classification concerns
    individuals who provided information on a continuing basis on various
    extremist elements.
        171. Motor Vehicle Seat Belt Act (obsolete). Pub. L. 88-201, 80th
    Congress.
        172. Sports Bribery. Title 18, United States Code, Section 244.
        173. Public Accommodations. Civil Rights Act of 1964 Public
    Facilities; Civil Rights Act of 1964 Public Education; Civil Rights Act
    of 1964 Employment; Civil Rights Act of 1964. Title 42, United States
    Code, Section 2000; Title 18, United States Code, Section 245.
        174. Explosives and Incendiary Devices; Bomb Threats (Formerly
    Bombing Matters; Bombing Matters, Threats). Title 18, United States
    Code, Section 844.
        175. Assaulting, Kidnapping or Killing the President (or Vice
    President) of the United States. Title 18, United States Code, Section
    1751.
        176. Anti-riot Laws. Title 18, United States Code, Section 245.
        177. Discrimination in Housing. Title 42, United States Code,
    Sections 3601-3619 and 3631.
        178. Interstate Obscene or Harassing Telephone Calls. Title 47,
    United States Code, Section 223.
        179. Extortionate Credit Transactions. Title 18, United States
    Code, Sections 891-896.
        180. Desecration of the Flag. Title 18, United States Code, Section
    700.
        181. Consumer Credit Protection Act. Title 15, United States Code,
    Section 1611.
        182. Illegal Gambling Business: Illegal Gambling Business,
    Obstruction; Illegal Gambling Business Forfeiture. Title 18, United
    States Code, Section 1955; Title 18, United States Code, Section 1511.
        183. Racketeer, Influence and Corrupt Organizations. Title 18,
    United States Code, Sections 1961-1968.
        184. Police Killings. This classification concerns investigations
    conducted by the FBI upon written request from local Chief of Police or
    duty constituted head of the local agency to actively participate in
    the investigation of the killing of a police officer. These
    investigations are based on a Presidential Directive dated June 3,
    1971.
        185. Protection of Foreign Officials and Officials Guests of the
    United States. Title 18, United States Code, Sections 112, 970, 1116,
    1117, and 1201.
        186. Real Estate Settlement Procedures Act of 1974. Title 12,
    United States Code, Section 2602; Title 12, United States Code, Section
    2606, and Title 12, United States Code, Section 2607.
        187. Privacy Act of 1974, Criminal. Title 5, United States Code,
    Section 552a.
        188. Crime Resistance. This classification covers FBI efforts to
    develop new or improved approaches, techniques, systems, equipment and
    devices to improve and strengthen law enforcement as mandated by the
    Omnibus Crime Control and Safe Streets Action of 1968.
        189. Equal Credit Opportunity Act. Title 15, United States Code,
    Section 1691.
        190. Freedom of Information/Privacy Acts. This classification
    covers the creation of a correspondence file to preserve and maintain
    accurate records concerning the handling of requests for records
    submitted pursuant to the Freedom of Information--Privacy Acts.
        191. False Identity Matters. (obsolete) This classification covers
    the FBI's study and examination of criminal elements' efforts to create
    false identities.
        192. Hobbs Act--Financial Institutions; Commercial Institutions
    Armored Carrier. Title 18, United States Code, Section 1951.
        193. Hobbs Act--Commercial Institutions (obsolete). Title 18,
    United States Code, Section 1951; Title 47, United States Code, Section
    506.
        194. Hobbs Act--Corruption of Public Officials. Title 18, United
    States Code, Section 1951.
        195. Hobbs Act--Labor Related. Title 18, United States Code,
    Section 1951.
        196. Fraud by Wire. Title 18, United States Code, Section 1343.
        197. Civil Actions or Claims Against the Government. This
    classification covers all civil suits involving FBI matters and most
    administrative claims filed under the Federal Tort Claims Act arising
    from FBI activities.
        198. Crime on Indian Reservations. Title 18, United States Code,
    Sections 1151, 1152, and 1153.
        199. Foreign Counterintelligence--Terrorism. Attorney General
    Guidelines on Foreign Counterintelligence. Executive Order 11905.
        200. Foreign Counterintelligence Matters. Attorney General
    Guidelines on Foreign Counterintelligence. Executive Order 11905.
        201. Foreign Counterintelligence Matters. Attorney General
    Guidelines on Foreign Counterintelligence. Executive Order 11905.
        202. Foreign Counterintelligence Matters. Attorney General
    Guidelines on Foreign Counterintelligence. Executive Order 11905.
        203. Foreign Counterintelligence Matters. Attorney General
    Guidelines on Foreign Counterintelligence. Executive Order 11905.
        204. Federal Revenue Sharing. This classification covers FBI
    investigations conducted where the Attorney General has been authorized
    to bring civil action whenever he has reason to believe that a pattern
    or practice of discrimination in disbursement of funds under the
    Federal Revenue Sharing status exists.
        205. Foreign Corrupt Practices Act of 1977. Title 15, United States
    Code, Section 78.
        206. Fraud Against the Government--Department of Defense,
    Department of Agriculture, Department of Commerce, Community Services
    Organization, Department of Transportation. (See classification 46
    (supra) for a statutory authority for this and the four following
    classifications.)
        207. Fraud Against the Government--Environmental Protection Agency,
    National Aeronautics and Space Administration, Department of Energy,
    Department of Transportation.
        208. Fraud Against the Government--General Services Administration.
        209. Fraud Against the Government--Department of Health and Human
    Services (Formerly Department of Health, Education, and Welfare).
        210. Fraud Against the Government--Department of Labor.
        211. Ethics in Government Act of 1978, Title VI (Title 28, Sections
    591-596).
        212. Foreign Counterintelligence--Intelligence Community Support.
    This is an administrative classification for the FBI's operational and
    technical support to other Intelligence Community agencies.
        213. Fraud Against the Government--Department of Education.
        214. Civil Rights of Institutionalized Persons Act (Title 42,
    United States Code, Section 1997).
        215. Foreign Counterintelligence Matters. Attorney General
    Guidelines on Foreign Counterintelligence. Executive Order 11905.
        216. thru 229. Foreign Counterintelligence Matters. (Same authority
    as 215.)
        230. thru 240. FBI Training Matters.
        241. DEA Applicant Investigations.
        242. Automation Matters.
        243. Intelligence Identities Protection Act of 1982.
        244. Hostage Rescue Team.
        245. Drug Investigative Task Force.
        246 thru 248. Foreign Counterintelligence Matters. (Same authority
    as 215.)
        249. Environmental Crimes--Investigations involving toxic or
    hazardous waste violations.
        250. Tampering With Consumer Products (Title 18, U.S. Code, Section
    1395).
        251. Controlled Substance--Robbery;--Burglary (Title 18, U.S. Code,
    section 2118).
        252. Violent Crime Apprehension Program (VICAP). Case folders
    containing records relevant to the VICAP Program, in conjunction with
    the National Center for the Analysis of Violent Crime Record System at
    the FBI Academy; Quantico, Virginia.
        253. False Identification Crime Control Act of 1982 (Title 18, U.S.
    Code, Section 1028--Fraud and Related Activity in Connection With
    Identification Documents, and Section 1738--Mailing Private
    Identification Documents Without a Disclaimer).
        254. Destruction of Energy Facilities (Title 18, U.S. Code, Section
    1365) relates to the destruction of property of nonnuclear energy
    facilities.
        255. Counterfeiting of State and Corporate Securities (Title 18,
    U.S. Code, Section 511) covers counterfeiting and forgery of all forms
    of what is loosely interpreted as securities.
        256. Hostage Taking--Terrorism (Title 18, U.S. Code, Section 1203)
    prohibits taking of hostage(s) to compel third party to do or refrain
    from doing any act.
        257. Trademark Counterfeiting Act (Title 18, United States Code,
    section 2320) covers the international trafficking in goods which bear
    a counterfeited trademark.
        258. Credit Card Fraud Act of 1984 (Title 18, United States Code,
    section 1029) covers fraud and related activities in connection with
    access devices (credit and debit cards).
        259. Security Clearance Investigations Program. (Same authority as
    215.)
        260. Industrial Security Program. (Same authority as 215.)
        261. Security Officer Matters. (Same authority as 215.)
        262. Overseas Homicide (Attempted Homicide--International
    Terrorism). Title 18, United States Code, Section 2331.
        263. Office of Professional Responsibility Matters.
        264. Computer Fraud and Abuse Act of 1986. Electronic
    Communications Privacy Act of 1986. Title 18, United States Code,
    Section 1030; Title 18, United States Code, Section 2701.
        265. Acts of Terrorism in the United States--International
    Terrorist. (Followed by predicate offense from other classification.)
        266. Acts of Terrorism in the United States--Domestic Terrorist.
    (Followed by predicate offense from other classification.)
        267. Drug-Related Homicide. Title 21, U.S. Code, Section 848(e).
        268. Engineering Technical Matters--FCI.
        269. Engineering Technical Matters--Non-FCI.
        270. Cooperative Witnesses.
        271. Foreign Counterintelligence Matters. Attorney General
    Guidelines on Foreign Counterintelligence. Executive Order 11905.
        272. Money Laundering. Title 18, U.S. Code, Sections 1956 and 1957.
        273. Adoptive Forfeiture Matter--Drug. Forfeiture based on seizure
    of property by state, local or other Federal authority.
        274. Adoptive Forfeiture Matter--Organized Crime. (Same explanation
    as 273.)
        275. Adoptive Forfeiture Matter--White Collar Crime. (Same
    explanation as 273.)
        276. Adoptive Forfeiture Matter--Violent Crime/Major Offenders
    Program. (Same explanation as 273.)
        277. Adoptive Forfeiture Matter--Counterterrorism Program. (Same
    explanation as 273.)
        278. Presidents Intelligence Oversight Board. Executive Order
    12334.
        279. Biological Weapons Anti-Terrorism Act of 1989. (Title 18, U.S.
    Code, Sections 175-179).
        280. Equal Employment Opportunity Investigations.
        281. Organized Crime Drug Investigations. Records Maintained in FBI
    Field Divisions--FBI field divisions maintain for limited periods of
    time investigative, administrative and correspondence records,
    including files, index cards and related material, some of which are
    duplicated copies of reports and similar documents forwarded to FBI
    Headquarters. Most investigative activities conducted by FBI field
    divisions are reported to FBI Headquarters at one or more stages of the
    investigation. There are, however, investigative activities wherein no
    reporting was made to FBI Headquarters, e.g., pending cases not as yet
    reported and cases which were closed in the field division for any of a
    number of reasons without reporting to FBI Headquarters.
        Duplicate records and records which extract information reported in
    the main files are also kept in the various divisions of the FBI to
    assist them in their day-to-day operation. These records are lists of
    individuals which contain certain biographic data, including physical
    description and photograph. They may also contain information
    concerning activities of the individual as reported to FBIHQ by the
    various field offices. The establishment of these lists is necessitated
    by the needs of the Division to have immediate access to pertinent
    information duplicative of data found in the central records without
    the delay caused by a time-consuming manual search of central indices.
    The manner of segregating these individuals varies depending on the
    particular needs of the FBI Division. The information pertaining to
    individuals who are a part of the list is derivative of information
    contained in the Central Records System. These duplicative records fall
    into the following categories:
        (1) Listings of individuals used to assist in the location and
    apprehension of individuals for whom legal process is outstanding
    (fugitives):
        (2) Listings of individuals used in the identification of
    particular offenders in cases where the FBI has jurisdiction. These
    listings include various photograph albums and background data
    concerning persons who have been formerly charged with a particular
    crime and who may be suspect in similar criminal activities; and
    photographs of individuals who are unknown but suspected of involvement
    in a particular criminal activity, for example, bank surveillance
    photographs:
        (3) Listings of individuals as part of an overall criminal
    intelligence effort by the FBI. This would include photograph albums,
    lists of individuals known to be involved in criminal activity,
    including theft from interstate shipment, interstate transportation of
    stolen property, and individuals in the upper echelon of organized
    crime:
        (4) Listings of individuals in connection with the FBI's mandate to
    carry out Presidential directives on January 8, 1943, July 24, 1950,
    December 15, 1953, and February 18, 1976, which designated the FBI to
    carry out investigative work in matters relating to espionage,
    sabotage, and foreign counterintelligence. These listings may include
    photograph albums and other listings containing biographic data
    regarding individuals. This would include lists of identified and
    suspected foreign intelligence agents and informants:
        (5) Special indices duplicative of the central indices used to
    access the Central Records System have been created from time to time
    in conjunction with the administration and investigation of major
    cases. This duplication and segregation facilitates access to documents
    prepared in connection with major cases.
        In recent years, as the emphasis on the investigation of white
    collar crime, organized crime, and hostile foreign intelligence
    operations has increased, the FBI has been confronted with increasingly
    complicated cases, which require more intricate information processing
    capabilities. Since these complicated investigations frequently involve
    massive volumes of evidence and other investigative information, the
    FBI uses its computers, when necessary to collate, analyze, and
    retrieve investigative information in the most accurate and expeditious
    manner possible. It should be noted that this computerized
    investigative information, which is extracted from the main files or
    other commercial or governmental sources, is only maintained as
    necessary to support the FBI's investigative activities. Information
    from these internal computerized subsystems of the ``Central Records
    System'' is not accessed by any other agency. All disclosures of
    computerized information are made in printed form or other appropriate
    format, in accordance with the routine uses which are set forth below
    and in compliance with applicable security requirements.
        Records also are maintained on a temporary basis relevant to the
    FBI's domestic police cooperating program, where assistance in
    obtaining information is provided to state and local police agencies.
    Also, personnel type information, dealing with such matters as
    attendance and production and accuracy requirements is maintained by
    some divisions.

    (The following chart identifies various listings or indexes maintained
    by the FBI which have been or are being used by various divisions of
    the FBI in their day-to-day operations. The chart identifies the list
    by name, description and use, and where maintained, i.e., FBI
    Headquarters and/or Field Office. The number of field offices which
    maintain these indices is also indicated. The list indicates those
    indexes which are in current use (designated by the word ``active'')
    and those which are no longer being used, although maintained
    (designated by the word ``inactive''). There are 27 separate indices
    which are classified in accordance with existing regulations and are
    not included in this list. The following indices are no longer being
    used by the FBI and are being maintained at FBIHQ pending receipt of
    authority to destroy: Black Panther Party Photo Index; Black United
    Front Index; Security Index; and Wounded Knee Album.)
        1. Administrative Index (ADEX). Consists of cards with descriptive
    data on individuals who were subject to investigation in a national
    emergency because they were believed to constitute a potential or
    active threat to the internal security of the United States. When ADEX
    was started in 1971, it was made up of people who were formerly on the
    Security Index, Reserve Index, and Agitator Index. This index is
    maintained in two separate locations in FBI Headquarters. ADEX was
    discontinued in January 1978. This list is inactive at FBI Headquarters
    and 29 Field Offices.
        2. Anonymous Letter File. Consists of photographs of anonymous
    communications and extortionate credit transactions, kidnapping,
    extortion and threatening letters. It is active at FBI Headquarters.
        3. Associates of DEA Class I Narcotics Violators Listing. Consists
    of a computer listing of individuals whom DEA has identified as
    associates of Class I Narcotics Violators. It is active at FBI
    Headquarters and 56 Field Offices.
        4. Background Investigation Index--Department of Justice. Consists
    of cards on persons who have been the subject of a full field
    investigation in connection with their consideration of employment in
    sensitive positions with Department of Justice, such as U.S. Attorney,
    Federal judges, or a high level Department position. It is active at
    FBI Headquarters.
        5. Background Investigation Index--White House, Other Executive
    Agencies, and Congress. Consists of cards on persons who have been the
    subject of a full field investigation in connection with their
    consideration for employment in sensitive positions with the White
    House, Executive agencies (other than the Department of Justice) and
    the Congress. Active at FBI Headquarters.
        6. Bank Fraud and Embezzlement Index. Consists of individuals who
    have been the subject of ``Bank Fraud and Embezzlement'' investigation.
    This file is used as an investigative aid. It is active in one Field
    Office.
        7. Bank Robbery Album. Consists of photos of bank robbers,
    burglars, and larceny subjects. In some field offices it will also
    contain pictures obtained from local police departments of known armed
    robbers and thus potential bank robbers. The index is used to develop
    investigative leads in bank robbery cases and may also be used to show
    to witnesses of bank robberies. It is usually filed by race, height,
    and age. This index is also maintained in one resident agency (a
    suboffice of a field office). Active in 47 Field Offices.
        8. Bank Robbery Nickname Index. Consists of nicknames used by known
    bank robbers. The index cards on each would contain the real name and
    method of operation and are filed in alphabetical order. Active in one
    Field Office.
        9. Bank Robbery Note File. Consists of photographs of notes used in
    bank robberies in which the suspect has been identified. This index is
    used to help solve robberies in which the subject has not been
    identified but a note was left. The role is compared with the index to
    try to match the sentence structure and handwriting for the purpose of
    identifying possible suspects. Active at FBI Headquarters.
        10. Bank Robbery Suspect Index. Consists of a control file or index
    cards with photos, if available, of bank robbers or burglars. In some
    field offices these people may be part of a bank robbery album. This
    index is generally maintained and used in the same manner as the bank
    robbery album. Active in 33 Field Offices.
        11. Car Ring Case Photo Album. Consists of photos of subjects and
    suspects involved in a large car theft ring investigation. It is used
    as an investigative aid. Active in one Field Office.
        12. Car Ring Case Photo Album and Index. Consists of photos of
    subjects and suspects involved in a large car theft ring investigation.
    The card index maintained in addition to the photo album contains the
    names and addresses appearing on fraudulent title histories for stolen
    vehicles. Most of these names appearing on these titles are fictitious.
    But the photo album and card indexes are used as an investigative aid.
    Active in one Field Office.
        13. Car Ring Case Toll Call Index. Consists of cards with
    information on persons who subscribe to telephone numbers to which toll
    calls have been placed by the major subjects of a large car theft ring
    investigation. It is maintained numerically by telephone number. It is
    used to facilitate the development of probable cause for a court-
    approved wiretap. Active in two Field Offices.
        14. Car Ring Theft Working Index. Contains cards on individuals
    involved in car ring theft cases on which the FBI Laboratory is doing
    examination work. Active at FBI Headquarters.
        15. Cartage Album. Consists of photos with descriptive data of
    individuals who have been convicted of theft from interstate shipment
    or interstate transportation of stolen property where there is a reason
    to believe they may request the offense. It is used in investigating
    the above violations. Active in three Field Offices.
        16. Channelizing Index. Consists of cards with the names and case
    file numbers of people who are frequently mentioned in information
    reports. The index is used to facilitate the distributing or channeling
    of information reports to appropriate files. Active in nine Field
    Offices.
        17. Check Circular File. Consists of fliers numerically in a
    control file on fugitives who are notorious fraudulent check passers
    and who are engaged in a continuing operation of passing checks. The
    fliers, which include the subject's name, photo, a summary of the
    subject's method of operation and other identifying data, are used to
    alert other FBI field offices and business establishments which may be
    the victims of bad checks.
        18. Computerized Telephone Number File (CTNF) Intelligence.
    Consists of a computer listing of telephone numbers (and) subscribers'
    names and addresses) utilized by subjects and/or certain individuals
    which come to the FBI's attention during major investigations. During
    subsequent investigations, telephone numbers, obtained through
    subpoena, are matched with the telephone numbers on file to determine
    connections or associations. Active at FBI Headquarters.
        19. Con Man Index. Consists of computerized names of individuals,
    along with company affiliation, who travel nationally and
    internationally while participating in large-dollar-value financial
    swindles. Active in four Field Offices.
        20. Confidence Game (Flim Flam) Album. Consists of photos with
    descriptive information on individuals who have been arrested for
    confidence games and related activities. It is used as an investigative
    aid. Active in one Field Office.
        21. Copyright Matters Index. Consists of cards of individuals who
    are film collectors and film titles. It is used as a reference in the
    investigation of copyright matters. Active in one Field Office.
        22. Criminal Intelligence Index. Consists of cards with name and
    file number of individuals who have become the subject of an
    antiracketeering investigation. The index is used as a quick way to
    ascertain file numbers and the correct spelling of names. This index is
    active in two Field Offices and one Resident Agency.
        23. Criminal Informant Index. Consists of cards containing identity
    and brief background information on all active and inactive informants
    furnishing information in the criminal area. Active at FBI
    Headquarters.
        24. DEA Class 1 Narcotics Violators Listing. Consists of a computer
    listing of narcotic violators--persons known to manufacture, supply, or
    distribute large quantities of illicit drugs--with background data. It
    is used by the FBI in their role of assisting DEA in disseminating
    intelligence data concerning illicit drug trafficking. This index is
    also maintained in two resident agencies.
        25. Deserter Index. Contains cards with the names of individuals
    who are known military deserters. It is used as an investigative aid.
    Active in four Field Offices.
        26. False Identities Index. Contains cards with the names of
    deceased individuals whose birth certificates have been obtained by
    other persons for possible false identification uses and in connection
    with which the FBI laboratory has been requested to perform
    examinations. Inactive at FBI Headquarters.
        27. False Identities List. Consists of a listing of names of
    deceased individuals whose birth certificates have been obtained after
    the person's death, and thus whose names are possibly being used for
    false identification purposes. The listing is maintained as part of the
    FBI's program to find persons using false identities for illegal
    purposes. Inactive at 31 Field Offices.
        28. False Identity Photo Album. Consists of names and photos of
    people who have been positively identified as using a false
    identification. This is used as an investigative aid in the FBI's
    investigation of false identities. Inactive in two Field Offices.
        29. FBI/Inspector General (IG) Case Pointer System (FICPS).
    Consists of a computerized listing of individual names of organizations
    which are the subject of active and inactive fraud investigations,
    along with the name of the agency conducting the investigation. Data is
    available to IG offices throughout the federal government to prevent
    duplication of investigative activity. Active at FBI Headquarters.
        30. FBI Wanted Persons Index. Consists of cards on persons being
    sought on the basis of Federal warrants covering violations which fall
    under the jurisdiction of the FBI. It is used as a ready reference to
    identify those fugitives. Active at FBI Headquarters.
        31. Foreign Counterintelligence (FCI). Consists of cards with
    identity background data on all active and inactive operational and
    informational assets in the foreign counterintelligence field. It is
    used as a reference aid on the FCI Asset program. Active at FBI
    Headquarters.
        32. Fraud Against the Government Index. Consists of individuals who
    have been the subject of a ``fraud against the
    Government''investigation. It is used as an investigative aid. Active
    in one Field Office.
        33. Fugitive Bank Robbers File. Consists of fliers on bank robbery
    fugitives filed sequentially in a control file. FBI Headquarters
    distributes to the field offices fliers on bank robbers in a fugitive
    status for 15 or more days to facilitate their location. Active at FBI
    Headquarters and in 43 Field Offices.
        34. General Security Index. Contains cards on all persons that have
    been the subject of a security classification investigation by the FBI
    field office. These cards are used for general reference purposes.
    Active in one Field Office.
        35. Hoodlum License Plate Index. Consists of cards with the license
    plate numbers and descriptive data on known hoodlums and cars observed
    in the vicinity of hoodlum homes. It is used for quick identification
    of such person in the course of investigation. The one index which is
    not fully retrievable is maintained by a resident agency. Active in
    three Field Offices.
        36. Identification Order Fugitive Flier File. Consists of fliers
    numerically in a control file. When immediate leads have been exhausted
    in fugitive investigations and a crime of considerable public interest
    has been committed, the fliers are given wide circulation among law
    enforcement agencies throughout the United States and are posted in
    post offices. The fliers contain the fugitive's photograph,
    fingerprints, and description. Active at FBI Headquarters and in 49
    Field Offices.
        37. Informant Index. Consists of cards with the name, symbol
    numbers, and brief background information on the following categories
    of active and inactive informants, top echelon criminal informants,
    security informants, criminal information, operational and
    informational assets, extremist informants (discontinued), plant
    informant--informants on and about certain military basis
    (discontinued), and potential criminal informants. Active in 56 Field
    Offices.
        38. Informants in Other Field Offices, Index of. Consist of cards
    with names and/or symbol numbers of informants in other FBI field
    offices that are in a position to furnish information that would also
    be included on the index card. Active in 15 Field Offices.
        39. Interstate Transportation of Stolen Aircraft Photo Album.
    Consists of photos and descriptive data on individuals who are suspects
    known to have been involved in interstate transportation of stolen
    aircraft. It is used as an investigative aid. Active in one Field
    Office.
        40. IRS Wanted List. Consists of one-page fliers from IRS on
    individuals with background information who are wanted by IRS for tax
    purposes. It is used in the identification of persons wanted by IRS.
    Active in 11 Field Offices.
        41. Kidnapping Book. Consists of data, filed chronologically, on
    kidnappings that have occurred since the early fifties. The victims'
    names and the suspects, if known, would be listed with a brief
    description of the circumstances surrounding the kidnapping. The file
    is used as a reference aid in matching up prior methods of operation in
    unsolved kidnapping cases. Active at FBI Headquarters and inactive in
    four Field Offices.
        42. Known Check Passers Album. Consists of photos with descriptive
    data of persons known to pass stolen, forged, or counterfeit checks. It
    is used as an investigative aid. Active in four Field Offices.
        43. Known Gambler Index. Consists of cards with names, descriptive
    data, and sometimes photos of individuals who are known bookmakers and
    gamblers. The index is used in organized crime and gambling
    investigations. Subsequent to GAO's review, and at the recommendation
    of the inspection team at one of the two field offices where the index
    was destroyed and thus is not included in the total. Active in five
    Field Offices.
        44. La Cosa Nostra (LCN) Membership Index. Contains cards on
    individuals having been identified as members of the LCN index. The
    cards contain personal data and pictures. The index is used solely by
    FBI agents for assistance in investigating organized crime matters.
    Active at FBI Headquarters and 55 Field Offices.
        45. Leased Line Letter Request Index. Contains cards on individuals
    and organizations who are or have been the subject of a national
    security electronic surveillance where a leased line letter was
    necessary. It is used as an administrative and statistical aid. Active
    at FBI Headquarters.
        46. Mail Cover Index. Consists of cards containing a record of all
    mail covers conducted on individuals and group since about January
    1973. It is used for reference in preparing mail cover requests. Active
    at FBIHQ.
        47. Military Deserter Index. Consists of cards containing the names
    of all military deserters where the various military branches have
    requested FBI assistance in locating. It is used as an administrative
    aid. Active at FBI Headquarters.
        48. National Bank Robbery Album. Consists of fliers on bank robbery
    suspects held sequentially in a control file. When an identifiable bank
    camera photograph is available and the case has been under
    investigation for 30 days without identifying the subject, FBIHQ sends
    a flier to the field offices to help identify the subject. Active at
    FBI Headquarters and in 42 Field Offices.
        49. National Fraudulent Check File. Contains photographs of the
    signature on stolen and counterfeit checks. It is filed alphabetically
    but there is no way of knowing the names are real or fictitious. The
    index is used to help solve stolen check cases by matching checks
    obtained in such cases against the index to identify a possible
    suspect. Active at FBI Headquarters.
        50. National Security Electronic Surveillance Card File. Contains
    cards recording electronic surveillances previously authorized by the
    Attorney General and previously and currently authorized by the FISC;
    current and previous assets in the foreign counterintelligence field;
    and a historical, inactive section which contains cards believed to
    record nonconsented physical entries in national security cases,
    previously toll billings, mail covers and leased lines. The inactive
    section also contains cards Attorney General approvals and denials for
    warrantless electronic surveillance in the national security cases.
    Inactive at FBI Headquarters.
        51. Night Depository Trap Index. Contains cards with the names of
    persons who have been involved in the theft of deposits made in bank
    night depository boxes. Since these thefts have involved various
    methods, the FBI uses the index to solve such cases by matching up
    similar methods to identify possible suspects. Active at FBI
    Headquarters.
        52. Organized Crime Photo Album. Consists of photos and background
    information on individuals involved in organized crime activities. The
    index is used as a ready reference in identifying organized crime
    figures within the field offices' jurisdiction. Active in 13 Field
    Offices.
        53. Photospread Identification Elimination File. Consists of photos
    of individuals who have been subjects and suspects in FBI
    investigations. It also includes photos received from other law
    enforcement agencies. These pictures can be used to show witnesses of
    certain crimes. Active in 14 Field Offices.
        54. Prostitute Photo Album. Consists of photos with background data
    on prostitutes who have prior local or Federal arrests for
    prostitution. It is used to identify prostitutes in connection with
    investigations under the White Slave Traffic Act. Active in four Field
    Offices.
        55. Royal Canadian Mounted Policy (RCMP) Wanted Circular File.
    Consists of a control file of individuals with background information
    of persons wanted by the RCMP. It is used to notify the RCMP if an
    individual is located. Active in 17 Field Offices.
        56. Security Informant Index. Consists of cards containing identity
    and brief background information on all active and inactive informants
    furnishing information in the criminal area. Active at FBI
    Headquarters.
        57. Security Subjects Control Index. Consists of cards containing
    the names and case file numbers of individuals who have been subject to
    security investigations check. It is used as a reference source. Active
    in one Field Office.
        58. Security Telephone Number Index. Contains cards with telephone
    subscriber information subpoenaed from the telephone company in any
    security investigation. It is maintained numerically by the last three
    digits in the telephone number. It is used for general reference
    purposes in security investigations. Active in one Field Office.
        59. Selective Service Violators Index. Contains cards on
    individuals being sought on the basis of Federal warrants for violation
    of the Selective Service Act. Active at FBI Headquarters.
        60. Sources of Information Index. Consists of cards on individuals
    and organizations such as banks, motels, local government that are
    willing to furnish information to the FBI with sufficient frequency to
    justify listing for the benefit of all agents. It is maintained to
    facilitate the use of such sources. Active in 10 Field Offices.
        61. Special Services Index. Contains cards of prominent individuals
    who are in a position to furnish assistance in connection with FBI
    investigative responsibility. Active in 28 Field Offices.
        62. Stolen Checks and Fraud by Wire Index. Consists of cards on
    individuals involved in check and fraud by wire violations. It is used
    as an investigative aid. Active in one Field Office.
        63. Stop Notices Index. Consists of cards on names of subjects or
    property where the field office has placed a stop at another law
    enforcement agency or private business such as pawn shops in the event
    information comes to the attention of that agency concerning the
    subject or property. This is filed numerically by investigative
    classification. It is used to insure that the agency where the stop is
    placed is notified when the subject is apprehended or the property is
    located or recovered. Active in 43 Field Offices.
        64. Surveillance Locator Index. Consists of cards with basic data
    on individuals and businesses which have come under physical
    surveillance in the city in which the field office is located. It is
    used for general reference purposes in antiracketeering investigations.
    Active in two Field Offices.
        65. Telephone Number Index--Gamblers. Contains information on
    persons identified usually as a result of a subpoena for the names of
    subscribers to particular telephone numbers or toll records for a
    particular phone number of area gamblers and bookmakers. The index
    cards are filed by the last three digits of the telephone number. The
    index is used in gambling investigations. Active in two Field Offices.
        66. Telephone Subscriber and Toll Records Check Index. Contains
    cards with information on persons identified as the result of a formal
    request or subpoena to the phone company for the identity of
    subscribers to particular telephone numbers. The index cards are filed
    by telephone number and would also include identity of the subscriber,
    billing party's identity, subscriber's address, date of request from
    the telephone company, and file number. Active in one Field Office.
        67. Thieves, Couriers and Fences Photo Index. Consists of photos
    and background information on individuals who are or are suspected of
    being thieves, couriers, or fences based on their past activity in the
    area of interstate transportation of stolen property. It is used as an
    investigative aid. Active in four Field Offices.
        68. Toll Record Request Index. Contains cards on individuals and
    organizations on whom toll records have been obtained in national
    security related cases and with respect to which FBIHQ had to prepare a
    request letter. It is used primarily to facilitate the handling of
    repeat requests on individuals listed. Active at FBIHQ.
        69. Top Burglar Album. Consists of photos and background data of
    known and suspect top burglars involved in the area of interstate
    transportation of stolen property. It is used as an investigative aid.
    Active in four Field Offices.
        70. Top Echelon Criminal Informer Program (TECIP) Index. Consists
    of cards containing identity and brief background information on
    individuals who are either furnishing high level information in the
    organized crime area or are under development to furnish such
    information. The index is used primarily to evaluate, corroborate, and
    coordinate informant information and to develop prosecutive data
    against racket figures under Federal, State, and local statutes. Active
    at FBI Headquarters.
        71. Top Ten Program File. Consists of fliers, filed numerically in
    a control file, on fugitives considered by the FBI to be 1 of the 10
    most wanted. Including a fugitive of the top 10 usually assures a
    greater national news coverage as well as nation-wide circulation of
    the flier. Active at FBI Headquarters and in 44 Field Offices.
        72. Top Thief Program Index. Consists of cards of individuals who
    are professional burglars, robbers, or fences dealing in items likely
    to be passed in interstate commerce or who travel interstate to commit
    the crime. Usually photographs and background information would also be
    obtained on the index card. The index is used as an investigative aid.
    Active in 27 Field Offices.
        73. Truck Hijack Photo Album. Contains photos and descriptive data
    of individuals who are suspected truck hijackers. It is used as an
    investigative aid and for displaying photos to witnesses and/or victims
    to identify unknown subjects in hijacking cases. Active in four Field
    Offices.
        74. Truck Thief Suspect Photo Album. Consists of photos and
    background data on individuals previously arrested or are currently
    suspects regarding vehicle theft. The index is used as an investigative
    aid. Active in one Field Office.
        75. Traveling Criminal Photo Album. Consists of photos with
    identifying data of individuals convicted of various criminal offenses
    and may be suspects in other offenses. It is used as an investigative
    aid. Active in one Field Office.
        76. Veterans Administrative (VA)/Federal Housing Administration
    (FHA) Matters Index. Consists of cards of individuals who have been
    subject of an investigation relative to VA and FHA matters. It is used
    as an investigative aid. Active in one Field Office.
        77. Wanted Fliers File. Consists of fliers, filed numerically in a
    control file, on badly wanted fugitives whose apprehension may be
    facilitated by a flier. The flier contains the names, photographs,
    aliases, previous convictions, and a caution notice. Active at FBI
    Headquarters and in 46 Field Offices.
        78. Wheeldex. Contains the nicknames and the case file numbers of
    organized crime members. It is used in organized crime investigations.
    Active in one Field Office.
        79. White House Special Index. Contains cards on all potential
    White House appointees, staff members, guests, and visitors that have
    been referred to the FBI by the White House security office for a
    records check to identify any adverse or derogatory information. This
    index is used to expedite such check in view of the tight timeframe
    usually required. Active at FBI Headquarters.
        80. Witness Protection Program Index. Contains cards on individuals
    who have been furnished a new identity by the U.S. Justice Department
    because of their testimony in organized crime trials. It is used
    primarily to notify the U.S. Marshals Service when information related
    to the safety of a protected witness comes to the FBI's attention.
    Active at FBI Headquarters.
                Authority for maintenance of the system:
        Federal Records Act of 1950, Title 44, United States Code, chapter
    31, section 3101; and title 36, Code of Federal Regulations, chapter
    XII, require Federal agencies to insure that adequate and proper
    records are made and preserved to document the organization, functions,
    policies, decisions, procedures and transactions and to protect the
    legal and financial rights of the Federal Government, title 28, United
    States Code, section 534, delegates authority to the Attorney General
    to acquire, collect, classify, and preserve identification, criminal
    identification, crime and other records.
                Routine uses of records maintained in the system, including
                        categories of users and the purposes of such uses:
        Records, both investigative and administrative, are maintained in
    this system in order to permit the FBI to function efficiently as an
    authorized, responsive component of the Department of Justice.
    Therefore, information in this system is disclosed to officials and
    employees of the Department of Justice, and/or all components thereof,
    who have need of the information in the performance of their official
    duties.
        Personal information from this system may be disclosed as a routine
    use to any Federal agency where the purpose in making the disclosure is
    compatible with the law enforcement purpose for which it was collected,
    e.g., to assist the recipient agency in conducting a lawful criminal or
    intelligence investigation, to assist the recipient agency in making a
    determination concerning an individual's suitability for employment
    and/or trustworthiness for employment and/or trustworthiness for access
    clearance purposes, or to assist the recipient agency in the
    performance of any authorized function where access to records in this
    system is declared by the recipient agency to be relevant to that
    function.
        In addition, personal information may be disclosed from this system
    to members of the Judicial Branch of the Federal Government in response
    to a specific request, or at the initiation of the FBI, where
    disclosure appears relevant to the authorized function of the recipient
    judicial office or court system. An example would be where an
    individual is being considered for employment by a Federal judge.
    Information in this system may be disclosed as a routine use to any
    state or local government agency directly engaged in the criminal
    justice process, e.g., police, prosecution, penal, probation and
    parole, and the judiciary, where access is directly related to a law
    enforcement function of the recipient agency, e.g., in connection with
    a lawful criminal or intelligence investigation, or making a
    determination concerning an individual's suitability for employment as
    a state or local law enforcement employee or concerning a victim's
    compensation under a state statute. Disclosure to a state or local
    government agency, (a) not directly engaged in the criminal justice
    process or (b) for a licensing or regulatory function, is considered on
    an individual basis only under exceptional circumstances, as determined
    by the FBI.
        Information in this system pertaining to the use, abuse or traffic
    of controlled substances may be disclosed as a routine use to federal,
    state or local law enforcement agencies and to licensing or regulatory
    agencies empowered to engage in the institution and prosecution of
    cases before courts and licensing boards in matters relating to
    controlled substances, including courts and licensing boards
    responsible for the licensing or certification of individuals in the
    fields of pharmacy and medicine.
        In any health care-related civil or criminal case, investigation,
    or matter, information indicating patient harm, neglect, or abuse, or
    poor or inadequate quality of care, at a health care facility or by a
    health care provider, may be disclosed as a routine use to any Federal,
    State, local, tribal, foreign, joint, international, or private entity
    that is responsible for regulating, licensing, registering, or
    accrediting any health care provider or health care facility, or
    enforcing any health care-related laws or regulations. Further,
    information indicating an ongoing quality of care problem by a health
    care provider or at a health care facility may be disclosed to the
    appropriate health plan. Additionally, unless otherwise prohibited by
    applicable law, information indicating patient harm, neglect, abuse, or
    poor or inadequate quality of care may be disclosed to the affected
    patient or his or her representative or guardian at the discretion of
    and in the manner determined by the agency in possession of the
    information. Information in this system may be disclosed as a routine
    use in a proceeding before a court of adjudicative body, e.g., the
    Equal Employment Opportunity Commission and the Merit Systems
    Protection Board, before which the FBI is authorized to appear, when
    (a) the FBI or any employee thereof in his or her official capacity, or
    (b) any employee in his or her individual capacity where the Department
    of Justice has agreed to represent the employee, or (c) the United
    States, where the FBI determines it is likely to be affected by the
    litigation, is a party to litigation or has an interest in litigation
    and such records are determined by the FBI to be relevant to the
    litigation.
        Information in this system may be disclosed as a routine use to an
    organization or individual in both the public or private sector if
    deemed necessary to elicit information or cooperation from the
    recipient for use by the FBI in the performance of an authorized
    activity. An example would be where the activities of an individual are
    disclosed to a member of the public in order to elicit his/her
    assistance in our apprehension or detection efforts.
        Information in this system may be disclosed as a routine use to an
    organization or individual in both the public or private sector where
    there is reason to believe the recipient is or could become the target
    of a particular criminal activity or conspiracy, to the extent the
    information is relevant to the protection of life or property.
        Information in this system may be disclosed to legitimate agency of
    a foreign government where the FBI determines that the information is
    relevant to that agency's responsibilities, and dissemination serves
    the best interests of the U.S. Government, and where the purpose in
    making the disclosure is compatible with the purpose for which the
    information was collected.
        Relevant information may be disclosed from this system to the news
    media and general public where there exists a legitimate public
    interest, e.g., to assist in the location of Federal fugitives, to
    provide notification of arrests, and where necessary for protection
    from imminent threat of life or property. This would include releases
    of information in accordance with 28 CFR 50.2.
        A record relating to an actual or potential civil or criminal
    violation of the copyright statute, Title 17, United States Code, or
    the trademark statutes. Titles 15 and 17, U.S. Code, may be
    disseminated to a person injured by such violation to assist him/her in
    the institution or maintenance of a suit brought under such titles. The
    FBI has received inquiries from private citizens and Congressional
    offices on behalf of constituents seeking assistance in locating
    individuals such as missing children and heirs to estates. Where the
    need is acute, and where it appears FBI files may be the only lead in
    locating the individual, consideration will be given to furnishing
    relevant information to the requester. Information will be provided
    only in those instances where there are reasonable grounds to conclude
    from available information the individual being sought would want the
    information to be furnished, e.g., an heir to a large estate.
    Information with regard to missing children will not be provided where
    they have reached their majority.
        Information contained in this system, may be made available to a
    Member of Congress or staff acting upon the member's behalf when the
    member of staff requests the information in behalf of and at the
    request of the individual who is the subject of the record.
        A record from this system of records may be disclosed as a routine
    use to the National Archives and Records Administration and General
    Services Administration in records management inspections conducted
    under the authority of 44 U.S.C. 2904 and 2906, to the extent that
    legislation governing the records permits.
                Policies and practices for storing, retrieving, accessing,
                        retaining, and disposing of records in the system:
                Storage:
        The active main files are maintained in hard copy form and some
    inactive records are maintained on microfilm. Investigative information
    which is maintained in computerized form may be stored in memory, on
    disk storage, on computer tape, or on a computer printed listing.
                Retrievability:
        The FBI General Index must be searched to determine what
    information, if any, the FBI may have in its files. Index records, or
    pointers to specific FBI files, are created on all manner of subject
    matters, but the predominant type record is the name index record. It
    should be noted the FBI does not index all individuals who furnish
    information or all names developed during the course of an
    investigation. Only that information considered pertinent, relevant, or
    essential for future retrieval, is indexed. In certain major cases,
    individuals interviewed may be indexed to facilitate the administration
    of the investigation. The FBI has automated that portion of its index
    containing the most recent information--15 years for criminal related
    matters and 30 years for intelligence and other type matters.
        Automation will not change the ``Central Records System''; it will
    only facilitate more economic and expeditious access to the main files.
    Searches against the automated records are accomplished on a ``batch
    off-line'' basis for certain submitting agencies where the name search
    requests conform to FBI specified formats and also in an ``on-line''
    mode with the use of video display terminals for other requests. The
    FBI will not permit any organization, public or private, outside the
    FBI to have direct access to the FBI indices system. All searches
    against the indices data base will be performed on site within FBI
    space by FBI personnel with the assistance of the automated procedures,
    where feasible. Automation of the various FBI field office indices was
    completed in 1989. This automation initiative has been on a ``day-one''
    basis. This indices system points to specific files within a given
    field office. Additionally, certain complicated investigative matters
    may be supported by specialized computer systems or by individual
    microcomputers. Indices created in these environments are maintained as
    part of the particular computer system and accessible only through the
    system or through printed listings of the indices. Full text retrieval
    is used in a limited number of cases as an investigative technique. It
    is not part of the normal search process and is not used as a
    substitute for the General Index or computer indices mentioned above.
        The FBI will transfer historical records to the National Archives
    consistent with 44 U.S.C. 2103. No record of individuals or subject
    matter will be retained for transferred files; however, a record of the
    file numbers will be retained to provide full accountability of FBI
    files and thus preserve the integrity of the filing system.
                Safeguards:
        Records are maintained in a restricted area and are accessed only
    by agency personnel. All FBI employees receive a complete background
    investigation prior to being hired. All employees are cautioned about
    divulging confidential information or any information contained in FBI
    files. Failure to abide by this provision violates Department of
    Justice regulations and may violate certain statutes providing maximum
    severe penalties of a ten thousand dollar fine or 10 years imprisonment
    or both. Employees who resign or retire are also cautioned about
    divulging information acquired in the jobs. Registered mail is used to
    transmit routine hard copy records between field offices. Highly
    classified records are hand carried by Special Agents or personnel of
    the Armed Forces Courier Service. Highly classified or sensitive
    privacy information, which is electronically transmitted between field
    offices, is transmitted in encrypted form to prevent interception and
    interpretation. Information transmitted in teletype form is placed in
    the main files of both the receiving and transmitting field offices.
    Field offices involved in certain complicated investigative matters may
    be provided with on-line access to the duplicative computerized
    information which is maintained for them on disk storage in the FBI
    Computer Center in Washington, DC, and this computerized data is also
    transmitted in encrypted form.
                Retention and disposal:
        As the result of an extensive review of FBI records conducted by
    NARA, records evaluated as historical and permanent will be transferred
    to the National Archives after established retention periods and
    administrative needs of the FBI have elapsed. As deemed necessary,
    certain records may be subject to restricted examination and usage, as
    provided by 44 U.S.C. section 2104.
        FBI record disposition programs relevant to this System are
    conducted in accordance with the FBI Records Retention Plan and
    Disposition Schedule which was approved by the Archivist of the United
    States and the U.S. District Court, District of Columbia.
    Investigative, applicant and administrative records which meet the
    destruction criteria will be destroyed after 20 or 30 years at FBI
    Headquarters and after 1, 5, 10 or 20 years in FBI Field Offices.
    Historical records will be transferred to the National Archives after
    30 or 50 years, contingent upon investigative and administrative needs.
    The administrative indices and listings described within this System
    were appraised separately and disposition authority established. (Job
    No. NC1-65-82-4 and amendments)
                System manager(s) and address:
        Director, Federal Bureau of Investigation, Washington, DC 20535.
                Notification procedure:
        Same as above.
                Record access procedures:
        A request for access to a record from the system shall be made in
    writing with the envelope and the letter clearly marked ``Privacy
    Access Request''. Include in the request your full name, complete
    address, date of birth, place of birth, notarized signature, and other
    identifying data you may wish to furnish to assist in making a proper
    search of our records. Also include the general subject matter of the
    document of its file number. The requester will also provide a return
    address for transmitting the information. Requests for access to
    information maintained at FBI Headquarters must be addressed to the
    Director, Federal Bureau of Investigation, Washington, DC 20535.
    Requests for information maintained at FBI field divisions or Legal
    Attaches must be made separately and addressed to the specific field
    division or Legal Attache listed in the appendix to this system notice.
                Contesting record procedures:
        Individuals desiring to contest or amend information maintained in
    the system should also direct their request to the Director, Federal
    Bureau of Investigation, Washington, DC 20535, stating clearly and
    concisely what information is being contested, the reasons for
    contesting it, and the proposed amendment to the information sought.
                Record source categories:
        The FBI, by the very nature and requirement to investigate
    violations of law within its investigative jurisdiction and its
    responsibility for the internal security of the United States, collects
    information from a wide variety of sources. Basically, it is the result
    of investigative efforts and information furnished by other Government
    agencies, law enforcement agencies, and the general public, informants,
    witnesses, and public source material.
                Systems exempted from certain provisions of the act:
        The Attorney General has exempted this system from subsections
    (c)(3), (d), (e) (1), (2) and (3), (e)(4) (G) and (H), (e)(8) (f), (g),
    of the Privacy Act pursuant to 5 U.S.C. 552a (j) and (k). Rules have
    been promulgated in accordance with the requirements of 5 U.S.C. 553
    (b), (c) and (e).

     Appendix of Field Divisions and Legal Attaches for the Federal Bureau
               of Investigation Field Divisions; Justice/FBI-999

        5th Floor, 445 Broadway, Albany, NY 12201.
        POB 25186, Albuquerque, NM 87125.
        POB 100560, Anchorage, AK 99510.
        POB 1683, Atlanta, GA 30370.
        7142 Ambassador Road, Baltimore, MD 21207.
        2122 Building, Birmingham, AL 35203.
        One Center Plaza, Suite 600, Boston, MA 02108.
        111 West Huron Street, Buffalo, NY 14202.
        6010 Kenley Lane, Charlotte, NC 28217.
        219 S. Dearborn St., Chicago, IL 60604.
        POB 1277, Cincinnati, OH 45201.
        1240 E. 9th St., Cleveland, OH 44199.
        POB 137, Columbia, SC 29202.
        1801 W. Lamar, Dallas, TX 75202.
        POB 1229, Denver, CO 80201.
        POB 2118, Detroit, MI 48231.
        700 E. San Antonio Ave., El Paso, TX 79901.
        POB 50164, Honolulu, HI 96850.
        POB 61369, Houston, TX 77208.
        POB 1186, Indianapolis, IN 45206.
        100 W. Capitol St., Jackson, MS 39269.
        POB 8928, Jacksonville, FL 32239.
        POB 2449, Kansas City, MO 64142.
        POB 10368, Knoxville, TN 37919.
        POB 16032, Las Vegas, NV 89101.
        POB 21470, Little Rock, AR 72221-1470.
        11000 Wilshire Blvd., Los Angeles, CA 90024.
        POB 2467, Louisville, KY 40201.
        167 N. Main St., Memphis, TN 38103.
        POB 592418, Miami, FL 33159.
        POB 2058, Milwaukee, WI 53201.
        111 Washington Ave. South S-1100, Minneapolis, MN 55401.
        POB 2128, Mobile, AL 36652.
        POB 1158, Newark, NJ 07101.
        POB 2058, New Haven, CT 06521.
        POB 51930, New Orleans, LA 70151.
        POB 1425, New York, NY 10008.
        POB 3828, Norfolk, VA 23514.
        POB 54511, Oklahoma City, OK 73154.
        POB 548, Omaha, NE 68101.
        600 Arch St., Philadelphia, PA 19106.
        201 E. Indianola, Phoenix, AZ 85012.
        POB 1315, Pittsburgh, PA 15230.
        POB 709, Portland, OR 97207.
        POB 12325, Richmond, VA 23241.
        POB 13130, Sacramento, CA 95813.
        POB 7251, St. Louis, MO 63177.
        125 S. State St., Salt Lake City, UT 84138.
        POB 1630, San Antonio, TX 78296.
        880 Front St., San Diego, CA 92188.
        POB 36015, San Francisco, CA 94102.
        POB BT, San Juan, PR 00936.
        915 2nd Ave., Seattle, WA 98174.
        POB 3646, Springfield, IL 62708.
        POB 172177, Tampa, FL 33602.
        Washington Field Office, Washington, DC 20535.
        Federal Bureau of Investigation Academy, Quantico, VA 22135.
        Legal Attaches: (Send c/o the American Embassy for the Cities
    indicated).
        Athens, Greece (PSC 108, Box 45, APO AE 09842)
        Bangkok, Thailand (Box 67, APO AP 96546).
        Bern, Switzerland.
        Bogota, Columbia (APO, Miami 34038).
        Bonn, Germany (Box 310, APO, New York 09080).
        Bridgetown, Barbados (Box B, FPO, Miami 34054).
        Brussels, Belgium (APO, New York 09667).
        Canberra, Australia (APO, San Francisco 96404-0001).
        Caracas, Venezuela (Unit 4966, APO AA 34037).
        Hong Kong, B.C.C. (FPO, San Francisco 96659-0002).
        London, England (Box 2, FPO, New York 09509).
        Madrid, Spain (PSC 61, Box 0001, APO AE 09642).
        Manila, Philippines (APO, San Francisco 96528).
        Mexico City, Mexico (POB 3087, Laredo, TX 78044-3087).
        Montevideo, Uruguay (APO, Miami 34035).
        Ottawa, Canada.
        Panama City, Panama (Box E, APO, Miami 34002).
        Paris, France (APO, New York 09777).
        Rome, Italy (APO, New York 09794).
        Tokyo, Japan (APO, San Francisco 96503).
        Vienna, Austria (Unit 27937, Box 37, APO AE 09222).
                                     ______

          [From the Federal Register, Vol. 66, No. 61, March 29, 2001]

                             DEPARTMENT OF JUSTICE
    [AAG/A Order No. 223-2001]

    Privacy Act of 1974; Systems of Records

        Pursuant to the provisions of the Privacy Act of 1974, 5 U.S.C.
    552a, notice is given that the Department of Justice proposes to modify
    the following systems of records:

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

    ------------------------------------------------------------------------
    ATR-006  Antitrust Information          2-20-98  63 FR 8660.
     Management System (AMIS)--Matter
     Report.
    CIV-001  Civil Division Case File       2-20-98  63 FR 8665.
     System.
    CRM-001  Central Criminal               2-20-98  63 FR 8663.
     Division Index File and
     Associated Records.
    CRM-012  Organized Crime and           11-26-90  55 FR 49147.
     Racketeering Section, General
     Index File and Associated
     Records.
    CRT-001  Central Civil Rights           2-20-98  63 FR 8661.
     Division Index File and
     Associated Records.
    FBI-002  The FBI Central Records        2-20-98  63 FR 8671.
     System.
    TAX-001  Tax Division Central           2-20-98  63 FR 8684.
     Classification Cards, Index
     Docket Cards, and Associated
     Records--Criminal Tax Cases.
    TAX-002  Tax Division Central           2-20-98  63 FR 8685.
     Classification Cards, Index
     Docket Cards, and Associated
     Records--Civil Tax Cases.
    USA-005  Civil Case Files........       2-20-98  63 FR 8666.
    USA-007  Criminal Case Files.....      12-21-99  64 FR 71499.
    ------------------------------------------------------------------------

        The Department has modified the above systems of records to include
    a new routine use that allows disclosure of information relating to
    health care fraud to private health plans, associations of private
    health plans, health insurers, and associations of health insurers, for
    the following purposes: To promote the coordination of efforts to
    prevent, detect, investigate, and prosecute health care fraud; to
    assist victims of such fraud to obtain restitution; to enable private
    health plans to participate in health care fraud task force activities;
    and to assist tribunals having jurisdiction over claims against private
    health plans. It should be noted that with regard to taxpayer
    information, the addition of this routine use is not intended to affect
    the confidentiality of such taxpayer information as provided for in 26
    U.S.C. 6103.
        In accordance with 5 U.S.C. 552a(e)(4) and (11), the public is
    given a 30-day period in which to comment; and the Office of Management
    and Budget (OMB), which has oversight responsibility under the Privacy
    Act, requires a 40-day period in which to conclude its review of the
    system. Therefore, please submit any comments by [30 days after
    publication in the Federal Register]. The public, OMB, and the Congress
    are invited to submit any comments to Mary E. Cahill, Management and
    Planning Staff, Justice Management Division, United States Department
    of Justice, Washington, DC 20530-0001 (Room 1400, National Place
    Building).
        A description of the modification to the Department's systems of
    records is provided below. In accordance with 5 U.S.C. 552a(r), the
    Department has provided a report to OMB and the Congress.

        Dated: March 19, 2001.

    Stephen R. Colgate,
    Assistant Attorney General for Administration.
    DOJ Privacy Act Systems of Records
        ATR-006  Antitrust Information Management System (AMIS)--Matter
    Report.
        CIV-001  Civil Division Case File System.
        CRM-001  Central Criminal Division Index File and Associated
    Records.
        CRM-012  Organized Crime and Racketeering Section, General Index
    File and Associated Records.
        CRT-001  Central Civil Rights Division Index File and Associated
    Records.
        FBI-002  The FBI Central Records System.
        TAX-001  Tax Division Central Classification Cards, Index Docket
    Cards, and Associated Records--Criminal Tax Cases.
        TAX-002  Tax Division Central Classification Cards, Index Docket
    Cards, and Associated Records--Civil Tax Cases.
        USA-005  Civil Case Files.
        USA-007  Criminal Case Files.
              * * * * * * *
                Routine Uses of Records Maintained in the System, Including
                        Categories of Users and the Purposes of Such Uses:
        Information relating to health care fraud may be disclosed to
    private health plans, or associations of private health plans, and
    health insurers, or associations of health insurers, for the following
    purposes: to promote the coordination of efforts to prevent, detect,
    investigate, and prosecute health care fraud; to assist efforts by
    victims of health care fraud to obtain restitution; to enable private
    health plans to participate in local, regional, and national health
    care fraud task force activities; and to assist tribunals having
    jurisdiction over claims against private health plans.
              * * * * * * *
    [FR Doc. 01-7676 Filed 3-28-01; 8:45 am]

    BILLING CODE 4410-14-M
                                     ______

         [From the Federal Register, Vol. 58, No. 191, October 5, 1993]

                             DEPARTMENT OF JUSTICE
    [AAG/A Order No. 79-93]
              * * * * * * *
    JUSTICE/FBI-015
                System name:
        National Center for the Analysis of Violent Crime (NCAVC).
                System location:
        Federal Bureau of Investigation, Training Division, FBI Academy,
    Behavioral Science Unit, Quantico, Virginia 22135.
                Categories of individuals covered by the system:
        A. Individuals who relate in any manner to official FBI
    investigations into violent crimes including, but not limited to,
    subjects, suspects, victims, witnesses, close relatives, medical
    personnel, and associates who are relevant to an investigation.
        B. Individuals who are the subject of unsolicited information or
    who offer unsolicited information, and law enforcement personnel who
    request assistance and/or make inquiries concerning records.
        C. Individuals who are the subject of violent crime research
    studies including, but not limited to, criminal personality profiles,
    scholarly journals, and news media references.
                Categories of records in the system:
        The National Center for the Analysis of Violent Crime will maintain
    in both manual and automated formats case investigation reports on all
    forms of solved and unsolved violent crimes. These violent crimes
    include, but are not limited to, acts or attempted acts of murder,
    kidnapping, incendiary arson or bombing, rape, physical torture, sexual
    trauma, or evidence of violent forms of death. Less than ten percent of
    the records which are analyzed may not be directly related to violent
    activities.
        A. Violent Criminal Apprehension Program (VICAP) case reports
    submitted to the FBI by a duly constituted Federal, State, county,
    municipal, or foreign law enforcement agency in any violent criminal
    matter. VICAP reports include, but are not limited to, crime scene
    descriptions, victim and offender descriptive data, laboratory reports,
    criminal history records, court records, news media references, crime
    scene photographs, and statements.
        B. Violent crime case reports submitted by FBI headquarters or
    field offices, and case reports submitted to the FBI by a duly
    constituted Federal, State, county, municipal, or foreign law
    enforcement agency in any violent criminal matter.
        C. Violent crime research studies, scholarly journal articles,
    textbooks, training materials, and news media references of interest to
    NCAVC personnel.
        D. An index of all detected trends, patterns, profiles and methods
    of operation of known and unknown violent criminals whose records are
    maintained in the system.
        E. An index of the names, addresses, and contact telephone numbers
    of professional individuals and organizations who are in a position to
    furnish assistance to the FBI's NCAVC operation.
        F. An index of public record sources for historical, statistical
    and demographic data collected by the U.S. Bureau of the Census.
        G. An alphabetical name index pertaining to all individuals whose
    records are maintained in the system.
                Authority for maintenance of the system:
        44 U.S.C. Section 3101; 41 CFR subpart 101-11.2 and 28 U.S.C.
    Section 534.
                Routine uses of records maintained in the system, including
                        categories of users and the purposes of such uses:
        Currently, the NCAVC is administered by the FBI through its
    Training Division, located at the FBI Academy, Quantico, Virginia. Its
    primary mission is to consolidate research, training, and operational
    support activities for the express purposes of providing expertise to
    any legitimate law enforcement agency confronted with unusual, bizarre,
    and/or particularly vicious or repetitive violent crimes.
        Records described above are maintained in this system to permit the
    FBI to function efficiently as an authorized, responsive component of
    the Department of Justice. Therefore, the information in this system is
    disclosed to officials and employees of the Department of Justice, and/
    or all components thereof, who need the information to perform their
    official duties.
        Information in this system may be disclosed as a routine use to any
    Federal, State, local, or foreign government agency directly engaged in
    the criminal justice process where access is directly related to a law
    enforcement function of the recipient agency in connection with the
    tracking identification, and apprehension of persons believed to be
    engaged in repeated or exceptionally violent acts of criminal behavior.
        Information in this system may be disclosed as a routine use in a
    proceeding before a court or adjudicative body, e.g., the Equal
    Employment Opportunity Commission and the Merit Systems Protection
    Board, before which the FBI is authorized to appear, when (a) the FBI
    or any employee thereof in his or her official capacity, or (b) any
    employee in his or her individual capacity where the Department of
    Justice has agreed to represent the employee, or (c) the United States,
    where the FBI determines it is likely to be affected by the litigation,
    is a party to litigation or has an interest in litigation and such
    records are determined by the FBI to be relevant to the litigation.
        Information in this system may be disclosed as a routine use to an
    organization or individual in both the public or private sector
    pursuant to an appropriate legal proceeding or, if deemed necessary, to
    elicit information or cooperation from the recipient for use by the FBI
    in the performance of an authorized activity. An example could be where
    the activities of an individual are disclosed to a member of the public
    to elicit his/her assistance in FBI apprehension or detection efforts.
        Information in this system may be disclosed as a routine use to an
    organization or individual in the public or private sector where there
    is reason to believe the recipient is or could become the target of a
    particular criminal activity or conspiracy and to the extent the
    information is relevant to the protection of life or property.
        Relevant information may be disclosed from this system to the news
    media and general public where there exists a legitimate public
    interest. Examples would include: To obtain public or media assistance
    in the tracking, identifying, and apprehending of persons believed to
    be engaged in repeated acts of violent criminal behavior; to notify the
    public and/or media of arrests; to protect the public from imminent
    threat to life or property where necessary; and to disseminate
    information to the public and/or media to obtain cooperation with
    violent crime research, evaluation, and statistical programs.
        Information in this system may be disclosed as is necessary to
    appropriately respond to congressional inquiries on behalf of
    constituents.
        A record from a system of records may be disclosed as a routine use
    to the National Archives and Records Administration (NARA) in records
    management inspections conducted under the authority of 44 U.S.C. 2904
    and 2906 to the extent that legislation governing the record permits.
                Policies and practices for storing, retrieving, accessing,
                        retaining, and disposing of records in the system:
                Storage:
        Information in the system is stored manually in locked file
    cabinets, either in its natural state or on microfilm, at the NCAVC in
    Quantico, Virginia. The active main files are maintained in hard copy
    form and some inactive records are maintained on microfilm.
        In addition, some of the information is stored in computerized data
    storage devices at the NCAVC and FBI Computer Center in Washington, DC.
    Investigative information which is maintained in computerized form may
    be stored in memory on disk storage on computer tape, or on computer
    printed listings.
                Retrievability:
        On-line computer access to NCAVC files is achieved by using the
    following search descriptors:
        A. A data base which contains the names of individuals, their birth
    dates, physical descriptions, and other identification numbers such as
    FBI numbers, if such have been assigned.
        B. Summary variables contained on VICAP reports submitted to the
    NCAVC as previously described.
        C. Key words citations to violent crime research studies. scholarly
    journal articles, textbooks, training materials, and media references.
                Safeguards:
        Records are maintained in restricted areas and accessed only by FBI
    employees. All FBI employees receive a complete pre-employment
    background investigation. All employees are cautioned about divulging
    confidential information or any information contained in FBI files.
    Failure to abide by this provision violates Department of Justice
    regulations and may violate certain statutes providing maximum severe
    penalties of a ten thousand dollar fine or 10 years' imprisonment or
    both. Employees who resign or retire are also cautioned about divulging
    information acquired in the job.
        Registered mail is used to transmit routine hard copy records
    between field offices. Highly classified records are hand carried by
    Special Agents or personnel of the Armed Forces Courier Service. Highly
    classified or sensitive privacy information, which is electronically
    transmitted between field offices and to and from FBI Headquarters, is
    transmitted in encrypted form to prevent interception and
    interpretation.
        Information transmitted in teletype form between the NCAVC in
    Quantico, Virginia and the FBI Computer Center in Washington, DC, is
    encrypted prior to transmission at both places to ensure
    confidentiality and security of the data.
        FBI field offices involved in certain complicated, investigative
    matters may be provided with on-line access to the computerized
    information which is maintained for them on disc storage in the FBI
    Computer Center in Washington, DC. This computerized data is also
    transmitted in encrypted form.
                Retention and disposal:
        Records are proposed for destruction after 50 years or upon
    termination of the program, whichever is earlier. The disposition
    schedule is pending with NARA as Job No. N1-65-88-13.
                System manager(s) and address:
        Director, Federal Bureau of Investigation, 10th and Pennsylvania
    Avenue NW., Washington, DC 20535.
                Notification procedure:
        Address inquiries to the System Manager.
                Record access procedures:
        Requests for access to records in this system shall be made in
    writing with the envelope and the letter clearly marked ``Privacy
    Access Request.'' The request must provide the full name, complete
    address, date of birth, place of birth, and notarized signature of the
    individual who is the subject of the record requested. The request
    should also include the general subject matter of the document or its
    file number--along with any other known information which may assist in
    making a search of the records. The request must also provide a return
    addressing for transmitting the information. Access requests should be
    addressed to the Director, Federal Bureau of Investigation, Washington,
    DC 20535.
                Contesting record procedures:
        Individuals desiring to contest or amend information maintained in
    the system should also direct their request to the Director, Federal
    Bureau of Investigation, Washington, DC 20535. The request should state
    clearly and concisely (1) the reasons for contesting the information,
    and (2) the proposed amendment to the information.
                Record source categories:
        The FBI, by the very nature of its responsibilities to investigate
    violations of law within its investigative jurisdiction and ensure the
    internal security of the United States, collects information from a
    wide variety of sources. Basically, information is obtained, as a
    result of investigative efforts, from other Government agencies, law
    enforcement agencies, the general public, informants, witnesses, and
    public source material.
                Systems exempted from certain provisions of the act:
        The Attorney General has exempted this system from subsections
    (c)(3), (d), (e)(1), (e)(4) (G) and (H), (f) and (g) of the Privacy Act
    pursuant to 5 U.S.C. 552a (j)(2) and (k)(2). Rules have been
    promulgated in accordance with the requirements of 5 U.S.C. 553 (b),
    (c), and (e).
                                     ______

          [From the Federal Register, Vol. 66, No. 121, June 22, 2001]

                             DEPARTMENT OF JUSTICE
    [AAG/A Order No. 233-2001]

    Privacy Act of 1974; System of Records

    AGENCY: Federal Bureau of Investigation, DOJ.

    ACTION: Notice.

    SUMMARY: Pursuant to the Privacy Act of 1974 (5 U.S.C. 552a), and
    Office of Management and Budget (OMB) Circular No. A-130, notice is
    hereby given that the Department of Justice, Federal Bureau of
    Investigation (FBI), is establishing ten ``blanket'' routine uses to be
    applicable to more than one FBI system of records. Further, the FBI is
    modifying the following systems of records:
        Bureau Mailing Lists, Justice/FBI-003 (previously published on
    October 5, 1993, at 58 FR 51846); and
        Electronic Surveillance (ELSUR) Indices, Justice/FBI-006
    (previously published on March 10, 1992, at 57 FR 8473).
        Opportunity for Comment: The Privacy Act (5 U.S.C. 552a(e)(r) and
    (11)) requires that the public be given 30 days in which to comment on
    any new or amended uses of information in a system of records. In
    addition, in accordance with Privacy Act requirements (5 U.S.C.
    552a(r)), the Department of Justice has provided a report on these
    modifications to OMB and the Congress. OMB, which has oversight
    responsibilities under the Act, requires that OMB and the Congress be
    given 40 days in which to review major changes to Privacy Act systems.
    Therefore, the public, OMB, and the Congress are invited to submit
    written comments on this modification.
        Address Comments or Request for Further Information to: Mary E.
    Cahill, Management Analyst, Management and Planning Staff, Justice
    Management Division, Department of Justice, 1400 National Place,
    Washington, DC 20530.

    EFFECTIVE DATE: These proposed changes will be effective August 1,
    2001, unless comments are received that result in a contrary
    determination.

    SUPPLEMENTARY INFORMATION: The FBI is proposing to establish ten
    blanket routine uses in order to: (1) Foster greater public
    understanding by simplifying and consolidating FBI Privacy Act
    issuances; (2) minimize through use of standardized wording the
    potential for misunderstanding or misinterpretation which might arise
    from unintended variations in different versions of common routine
    uses; and (3) reduce costs and duplication of effort in the publication
    and maintenance of FBI Privacy Act issuances. Unless this or other
    published notice expressly provides otherwise, these blanket routine
    uses will apply to existing FBI systems of records as indicated below
    and to all FBI systems of records created or modified hereafter.
    However, the FBI is not at this time applying blanket routine uses to
    the National DNA Index System (NDIS) (Justice/FBI-017) or to the
    National Instant Criminal Background Check System (NICS) (Justice/FBI-
    018). (Any blanket routine uses which the FBI may in the future propose
    to apply to these two systems will be implemented by express reference
    in revisions to the respective systems notices.)
        In large part these blanket routine uses standardize wording of
    routine uses already promulgated for one or more FBI or DOJ systems.
    The wording of a blanket use may differ somewhat from the existing
    counterpart(s). These differences generally do not reflect
    substantially different uses; however, some uses are clarified or
    broadened as to when and to whom disclosures may be made. Furthermore,
    Blanket Routine Use 9 is a new use not now reflected in any FBI system.
        Upon taking effect, these blanket routine uses will apply to the
    FBI systems indicated below:
        National Crime Information Center (NCIC), JUSTICE/FBI-001 (last
    published in the Federal Register on September 28, 1999, at 64 FR
    52343);
        FBI Central Records System, JUSTICE/FBI-002 (last published in the
    Federal Register on February 20, 1998, at 63 FR 8671);
        Bureau Mailing Lists, JUSTICE/FBI-003 (published in today's Federal
    Register);
        Electronic Surveillance (ELSUR) Indices, JUSTICE/FBI-006 (published
    in today's Federal Register);
        FBI Automated Payroll System, JUSTICE/FBI-007 (last published in
    the Federal Register on October 5, 1993, at 58 FR 51874);
        Bureau Personnel Management System (BPMS), JUSTICE/FBI-008 (last
    published in the Federal Register on October 5, 1993, at 58 FR 51875);
        Fingerprint Identification Records System (FIRS), JUSTICE/FBI-009
    (last published in the Federal Register on September 28, 1999, at 64 FR
    52347);
        Employee Travel Vouchers and Individual Earning Records, JUSTICE/
    FBI-010 (last published in the Federal Register on December 11, 1987,
    at 52 FR 47248);
        Employee Health Records, JUSTICE/FBI-011 (last published in the
    Federal Register on October 5, 1993, at 58 FR 51875);
        Time Utilization Record/Keeping (TURK) System, JUSTICE/FBI-012
    (last published in the Federal Register on October 5, 1993, at 58 FR
    51876);
        Security Access Control System (SACS), JUSTICE/FBI-013 (last
    published in the Federal Register on October 5, 1993, at 58 FR 51877);
        FBI Alcoholism Program, JUSTICE/FBI-014 (last published in the
    Federal Register on December 11, 1987, at 52 FR 47251);
        National Center for the Analysis of Violent Crime (NCAVC), JUSTICE/
    FBI-015 (last published in the Federal Register on October 5, 1993, at
    58 FR 51877);
        FBI/Counterdrug Information Indices Systems (CIIS), JUSTICE/FBI-016
    (last published in the Federal Register on June 9, 1994, at 59 FR
    29824);
        The routine uses currently published for each system will also
    continue to apply to that system. As individual FBI system notices are
    hereafter revised, we will eliminate individual system routine uses
    which duplicate blanket routine uses and add express reference to the
    applicability of the blanket routine uses.
        The Department is also modifying the Bureau Mailing Lists and the
    ELSUR systems of records in order to clarify and more accurately
    describe them. The Bureau Mailing Lists system notice is being modified
    to clarify the categories of individuals covered by the system, the
    categories of records in the system, and the record access procedures.
    The existing routine uses are modified to include a system specific
    routine use which permits the disclosure of system records to public
    and/or private entities where such disclosures may promote, assist, or
    otherwise serve law enforcement interests. The notice also provides
    that records can be disclosed in accordance with the blanket routine
    uses that are concurrently being established for FBI records systems.
        The ELSUR notice is being modified to include a new category of
    records in the system, ``reference records.'' Additionally, the ELSUR
    notice clarifies the record access procedures. The routine uses for the
    ELSUR system were also modified to reflect three additional system
    specific routine uses which permit the disclosure of system records to
    public and/or private entities where: (1) Such disclosures may promote,
    assist, or otherwise serve law enforcement interests; (2) the FBI deems
    it reasonable and helpful in eliciting information or cooperation from
    the recipient for use by the FBI in the performance of an authorized
    function; or (3) there is reason to believe that a person or entity
    could become the target of a particular criminal activity or
    conspiracy. In addition, the notice provides that records may be
    disclosed pursuant to the proposed blanket routine uses being published
    simultaneously herein.
        Both the Bureau Mailing Lists and the ELSUR systems are being
    republished to reflect these and other minor changes, including the
    addition of a ``Purpose'' section to both notices.
        A description of the proposed ten blanket routine uses and the
    modification to the Bureau Mailing Lists and the ELSUR systems of
    records is provided below.

        Dated: June 11, 2001.

    Janis A. Sposato,
    Acting Assistant Attorney General for Administration.
    JUSTICE/FBI-BRU
                SUBJECT:
        Blanket Routine Uses (BRU) Applicable to More Than One FBI Privacy
    Act System of Records.
                APPLICABILITY:
        The following routine uses describe those types of disclosures
    which are common to more than one FBI Privacy Act system of records and
    which the FBI is establishing as ``blanket'' routine uses. Unless this
    or other published notice expressly provides otherwise, these blanket
    routine uses shall apply, without need of further implementation, to
    every existing FBI Privacy Act system of records and to all FBI systems
    of records created or modified hereafter. These blanket routine uses
    supplement but do not replace any routine uses that are separately
    published in the notices of individual record systems to which the
    blanket routine uses apply.
                ROUTINE USES OF RECORDS MAINTAINED IN FBI SYSTEMS,
                        INCLUDING CATEGORIES OF USERS AND THE PURPOSES OF
                        SUCH USES:
        System records may be disclosed to the following persons or
    entities under the circumstances or for the purposes described below,
    to the extent such disclosures are compatible with the purpose for
    which the information was collected. (These routine uses are not meant
    to be mutually exclusive and may overlap in some cases.)
        BRU-1. Violations of Law, Regulation, Rule, Order, or Contract. If
    any system record, on its face or in conjunction with other
    information, indicates a violation or potential violation of law
    (whether civil or criminal), regulation, rule, order, or contract, the
    pertinent record may be disclosed to the appropriate entity (whether
    federal, state, local, joint, tribal, foreign, or international), that
    is charged with the responsibility of investigating, prosecuting, and/
    or enforcing such law, regulation, rule, order, or contract.
        BRU-2. Non-FBI Employees. To contractors, grantees, experts,
    consultants, students, or other performing or working on a contract,
    service, grant, cooperative agreement, or other assignment for the
    Federal Government, when necessary to accomplish an agency function.
        BRU-3. Appropriate Disclosures to the Public. To the news media or
    members of the general public in furtherance of a legitimate law
    enforcement or public safety function as determined by the FBI, e.g.,
    to assist in locating fugitives; to provide notifications of arrests;
    to provide alerts, assessments, or similar information on potential
    threats to life, health, or property; or to keep the public
    appropriately informed of other law enforcement or FBI matters or other
    matters of legitimate public interest where disclosure could not
    reasonably be expected to constitute an unwarranted invasion of
    personal privacy. (The availability of information in pending criminal
    or civil cases will be governed by the provisions of 28 CFR 50.2.)
        BRU-4. Courts or Adjudicative Bodies. To a court or adjudicative
    body, in matters in which (a) the FBI or any FBI employee in his or her
    official capacity, (b) any FBI employee in his or her individual
    capacity where the Department of Justice has agreed to represent the
    employee, or (c) the United States, is or could be a party to the
    litigation, is likely to be affected by the litigation, or has an
    official interest in the litigation, and disclosure of system records
    has been determined by the FBI to be arguably relevant to the
    litigation. Similar disclosures may be made in analogous situations
    related to assistance provided to the Federal Government by non-FBI
    employees (see BRU-2).
        BRU-5. Parties. To an actual or potential party or his or her
    attorney for the purpose of negotiating or discussing such matters as
    settlement of the case or matter, or informal discovery proceedings, in
    matters in which the FBI has an official interest and in which the FBI
    determines records in the system to be arguably relevant.
        BRU-6. As Mandated by Law. To such recipients and under such
    circumstances and procedures as are mandated by Federal statute or
    treaty.
        BRU-7. Members of Congress. To a Member of Congress or a person on
    his or her staff acting on the Member's behalf when the request is made
    on behalf and at the request of the individual who is the subject of
    the record.
        BRU-8. NARA/GSA Records Management. To the National Archives and
    Records Administration and the General Services Administration for
    records management inspections and such other purposes conducted under
    the authority of 44 U.S.C. 2904 and 2906.
        BRU-9. Auditors. To any agency, organization, or individual for the
    purposes of performing authorized audit or oversight operations of the
    FBI and meeting related reporting requirements.
        BRU-10. Former Employees. The DOJ may disclose relevant and
    necessary information to a former employee of the Department for
    purposes of: responding to an official inquiry by a federal, state, or
    local government entity or professional licensing authority, in
    accordance with applicable Department regulations; or facilitating
    communications with a former employee that may be necessary for
    personnel-related or other official purposes where the Department
    requires information and/or consultation assistance from the former
    employee regarding a matter within that person's former area of
    responsibility. (Such disclosures will be effected under procedures
    established in title 28, Code of Federal Regulations, sections 16.300-
    301 and DOJ Order 2710.8C, including any future revisions.)
                FBI RECORDS SYSTEMS TO WHICH THESE BLANKET ROUTINE USES DO
                        NOT APPLY:
        These blanket routine uses shall not apply to the following FBI
    Privacy Act systems of records (to which shall apply only those routine
    uses established in the records system notice for the particular
    system):
        JUSTICE/FBI-017, National DNA Index System (NDIS) (last published
    in the Federal Register on July 18, 1996, at 61 FR 37495); and
        JUSTICE/FBI-018, National Instant Criminal Background Check System
    (NICS) (last published in the Federal Register on November 25, 1998, at
    63 FR 65,223).
    JUSTICE/FBI-003
                SYSTEM NAME:
        Bureau Mailing Lists.
                SYSTEM LOCATION:
        Records may be maintained at all locations at which the Federal
    Bureau of Investigation (FBI) operates, including: J. Edgar Hoover
    Bldg., 935 Pennsylvania Ave., NW., Washington, DC 20535; FBI Academy,
    Quantico, VA 22135; FBI Criminal Justice Information Services (CJIS)
    Division, 1000 Custer Hollow Rd., Clarksburg, WV 26306; and FBI field
    offices, legal attaches, and information technology centers as listed
    on the FBI's Internet website, http://www.fbi.gov, including any future
    revisions to the website.
                CATEGORIES OF INDIVIDUALS COVERED BY THE SYSTEM:
        All persons appearing on mailing lists maintained throughout the
    FBI to facilitate mailings to multiple addressees in furtherance of FBI
    activities. These include persons who have requested Bureau material,
    persons who are routinely forwarded unsolicited Bureau material and who
    meet established criteria (generally law enforcement or closely related
    interests), and persons who may be in a position to furnish assistance
    in furtherance of the FBI's mission. These do not include persons on
    mailing lists not encompassed within this system as described in the
    section titled ``Categories of Records in the System.''
                CATEGORIES OF RECORDS IN THE SYSTEM:
        Records may include name, address, business affiliation, and
    supplemental information related to addressees and relevant to a list's
    purpose. These do not, however, include mailing lists which have been
    incorporated into some other FBI records system, such as a mailing list
    supporting a particular investigation maintained as an investigative
    record within the FBI's Central Records System.
                AUTHORITY FOR MAINTENANCE OF THE SYSTEM:
        Title 5, United States Code, section 301; title 44, United States
    Code, section 3101; title 28, United States Code, section 533; and
    title 28, Code of Federal Regulations, section 0.85.
                PURPOSE(S):
        System records are used for mailing FBI material to multiple
    addressees, via hard copy, e-mail, or other means of distribution, in
    furtherance of FBI activities. For example, various fugitive alerts are
    furnished to local law enforcement agencies, investigations periodicals
    are provided to law enforcement professionals, and information on local
    law enforcement issues may be provided to community leaders.
                ROUTINE USES OF RECORDS MAINTAINED IN THE SYSTEM, INCLUDING
                        CATEGORIES OF USERS AND THE PURPOSES OF SUCH USES:
        The FBI may disclose relevant system records in accordance with any
    blanket routine uses established for FBI records systems. See Blanket
    Routine Uses Applicable for FBI records systems. See Blanket Routine
    Uses Applicable to More Than One FBI Privacy Act System of Records,
    Justice/FBI-BRU, as published today in the Federal Register (and any
    future revisions).
        In addition, as a routine use specific to this system, the FBI may
    disclose relevant system records to the following persons or entities
    under the circumstances or for the purposes described below, to the
    extent such disclosures are comptiable with the purpose for which the
    information was collected. (Routine uses are not meant to be mutually
    exclusive and may overlap in some cases.)
        A. To a federal, state, local, joint, tribal, foreign,
    international, or other public agency/organization, or to any person or
    entity in either the public or private sector, domestic or entity in
    either the public or private sector, domestic or foreign, where such
    disclosure may promote, assist, or otherwise serve law enforcement
    interests. By way of example and not limitation, such disclosures may
    for instance include: Sharing names of law enforcement professionals
    receiving FBI periodicals with law enforcement agencies interested in
    reaching a similar audience; sharing information of intelligence value
    with other law enforcement on intelligence agencies to whose lawful
    responsibilities the information may be germane; or sharing information
    pertinent to victim/witness assistance with local government entities
    in furtherance of such assistance.
                POLICIES AND PRACTICES FOR STORING, RETRIEVING, ACCESSING,
                        RETAINING, AND DISPOSING OF RECORDS IN THE SYSTEM:
                STORAGE:
        Most information is maintained in computerized form and stored in
    memory, on disk storage, on computer tape, or other computer media.
    However, some information may also be maintained in hard copy (paper)
    or other form.
                RETRIEVABILITY:
        Information typically will be retrieved by an ID number assigned by
    computer or by name of person or organization.
                SAFEGUARDS:
        System records are maintained in limited access space in FBI
    facilities and offices. Computerized data is password protected. All
    FBI personnel are required to pass an extensive background
    investigation. The information is accessed only by authorized FBI
    personnel or by non-FBI personnel properly authorized to assist in the
    conduct of an agency function related to these records.
                RETENTION AND DISPOSAL:
        FBI offices revised the lists as necessary. The records are
    destroyed, under authority granted by the National Archives and Records
    Administration, when administrative needs are satisfied (Job. No. NC1-
    65-82-4, part E, item 13 (I)).
                SYSTEM MANAGER(S) AND ADDRESS:
        Director, FBI, 935 Pennsylvania Ave., NW, Washington, DC 20535-
    0001.
                NOTIFICATION PROCEDURES:
        Same as Record Access Procedures.
                RECORD ACCESS PROCEDURES:
        A request for access to a record from the system shall be made in
    writing with the envelope and the letter clearly market ``Privacy Act
    Request''. Include in the request your full name and complete address.
    The requester must sign the request; and, to verify it, the signature
    must be notarized or submitted under 28 U.S.C. 1746, a law that permits
    statements to be made under penalty of perjury as a substitute for
    notarization. You may submit any other identifying data you wish to
    furnish to assist in making a proper search of the system. Requests for
    access to information maintained at FBI Headquarters must be addressed
    to the Director, Federal Bureau of Investigation, 935 Pennsylvania
    Ave., NW, Washington, DC 20535-0001. Requests for information
    maintained at FBI field offices, legal attaches, information technology
    centers, or other locations must be made separately and addressed to
    the specific field office, legal attache, information technology
    center, or other location as listed on the FBI's Internet website,
    http://www.fbi.gov, including any future revisions to the website.
                CONTESTING RECORD PROCEDURES:
        Individuals desiring to contest or amend information maintained in
    the system should also direct their request to the appropriate FBI
    office, stating clearly and concisely what information is being
    contested, the reasons for contesting it, and the proposed amendment to
    the information sought.
                RECORD SOURCE CATEGORIES:
        The mailing list information is based on information supplied by
    affected individuals/organizations, public source data, and/or
    information already in other FBI records systems.
                SYSTEMS EXEMPTED FROM CERTAIN PROVISIONS OF THE ACT:
        None.
    JUSTICE/FBI 006
                SYSTEM NAME:
        Electronic Surveillance (ELSUR) Indices.
                SYSTEM LOCATION:
        Records may be maintained at all locations at which the Federal
    Bureau of Investigation (FBI) operates, including: J. Edgar Hoover
    Bldg., 935 Pennsylvania Ave., NW, Washington, DC 20535; and FBI field
    offices and information technology centers as listed on the FBI's
    Internet website, http://www.fbi.gov, including any future revisions to
    the website.
                CATEGORIES OF INDIVIDUALS COVERED BY THE SYSTEM:
        Individuals and entities who have been the targets of electronic
    surveillance coverage sought, conducted, or administered by the FBI
    pursuant to a court order or other authority; those who have been a
    party to a communication monitored/recorded electronically pursuant to
    a court order, consensual monitoring, or other authorized monitoring
    sought, conducted, or administered by the FBI; and those who own,
    lease, license, hold a possessor interest in, or commonly use the
    location subjected to electronic surveillance.
                CATEGORIES OF RECORDS IN THE SYSTEM:
        The ELSUR Indices are comprised of four types of records:
        1. Principal records identify, by true name or best known name, all
    persons, entities, and facilities who have been the targets of
    electronic surveillance coverage sought, conducted, or administered by
    the FBI pursuant to a court order or other authority. These records
    include, but are not limited to, persons, entities, and facilities
    named in an application filed by the FBI in support of an affidavit
    seeking a court order to conduct or administer an electronic
    surveillance. Principal records may also include descriptive data
    associated with the name appearing on the record.
        2. Proprietary-interest records identify entities and/or
    individuals who own, lease, license, hold a possessory interest in, or
    commonly use the location subjected to an electronic surveillance.
    Proprietary-interest records may also include descriptive data
    associated with the name appearing on the record.
        3. Intercept records identify, by true name or best known name,
    individuals who have been reasonably identified by a first name or
    initial and a last name as being a party to a communication monitored/
    recorded electronically by the FBI pursuant to an electronic
    surveillance. Intercept records also identify entities that have been a
    party to a communication monitored/recorded electronically by the FBI
    pursuant to an electronic surveillance. Intercept records may include
    descriptive data associated with the name appearing on the record.
        4. Reference records identify, by partial name, such as a first
    name only, last name only, code name, nickname, or alias those
    individuals who have been a party to a communication monitored/recorded
    electronically by the FBI pursuant to an electronic surveillance, and
    may include descriptive data associated with the individual. If the
    individual is later identified by a more complete name, e.g., through
    further monitoring or normal investigative procedures, the reference
    record is re-entered as an intercept record.
                AUTHORITY FOR MAINTENANCE OF THE SYSTEM:
        The ELSUR Indices were initiated in October, 1966, at the
    recommendation of the Department of Justice and relate to electronic
    surveillance sought, administered, and/or conducted by the FBI since
    January 1, 1960. The authority for the maintenance of these records is
    title 5, United States Code, section 301; title 44, United States Code,
    section 3101; title 18, United States Code, section 2510, et seq.;
    title 18, United States Code, section 3504; title 28, United States
    Code, section 533, title 50, United States Code 1801, et seq.; and
    title 28, Code of Federal Regulations, section 0.85.
                PURPOSE(S):
        These records are used by the FBI to maintain certain information
    regarding electronic surveillance sought, conducted or administered by
    the FBI in order to permit the agency to respond to judicial inquiries
    about possible electronic surveillance coverage of any individual or
    entity involved in Federal court proceedings and to enable the
    Government to certify, as requested by federal, state or local law
    enforcement agencies, whether or not an individual, entity, facility,
    or place on whom a court ordered authority is being sought for
    electronic surveillance coverage has ever been subjected to electronic
    surveillance coverage in the past.
                ROUTINE USES OF RECORDS MAINTAINED IN THE SYSTEM, INCLUDING
                        CATEGORIES OF USERS AND THE PURPOSES OF SUCH USES:
        The FBI may disclose relevant system records in accordance with any
    blanket routine uses established for FBI records systems. See Blanket
    Routine Uses Applicable to More Than One FBI Privacy Act System of
    Records, Justice/FBI-BRU, as published today in the Federal Register
    (and any future revisions).
        In addition, as routine uses specific to this system, the FBI may
    disclose relevant system records to the following persons or entities
    under the circumstances or for the purposes described below, to the
    extent such disclosures are compatible with the purpose for which the
    information was collected. (Routine uses are not meant to be mutually
    exclusive and may overlap in some cases.)
        A. To the judiciary in response to inquiries about possible
    electronic surveillance coverage of any individual or entity involved
    in Federal court proceedings.
        B. To federal, state, and local law enforcement officers to enable
    the government to certify whether or not an individual, entity,
    facility, or place on whom a court ordered authority is being sought
    for electronic surveillance coverage has ever been subjected to
    electronic surveillance coverage in the past.
        C. To a federal, state, local, joint, tribal, foreign,
    international, or other public agency/organization, or to any person or
    entity in either the public or private sector, domestic or foreign,
    where such disclosure may promote, assist, or otherwise serve law
    enforcement interests. By way of example and not limitation, such
    disclosures may for instance include: Sharing information of
    intelligence value with other law enforcement or intelligence agencies
    to whose lawful responsibilities the information may be germane;
    disclosing information to another law enforcement or intelligence
    agency which may bear on the suitability of a person for employment or
    continued employment with that agency; disclosing information to a
    cognizant employer or clearance-granting authority which may bear on
    the trustworthiness of a person to obtain or retain a security
    clearance; or sharing information pertinent to victim/witness
    assistance with local government entities in furtherance of such
    assistance.
        D. To any person or entity in either the public or private sector,
    domestic or foreign, if deemed by the FBI to be reasonable and helpful
    in eliciting information or cooperation from the recipient for use by
    the FBI in the performance of an authorized function, e.g., disclosure
    of personal information to a member of the public in order to elicit
    his/her assistance/cooperation in a criminal, security, or employment
    background investigation.
        E. To any person or entity in either the public or private sector,
    domestic or foreign, where there is reason to believe that a person or
    entity could become the target of a particular criminal activity or
    conspiracy, to the extent the disclosure of information is deemed by
    the FBI to be reasonable and relevant to the protection of life,
    health, or property of such target.
                POLICIES AND PRACTICES FOR STORING, RETRIEVING, ACCESSING,
                        RETAINING, AND DISPOSING OR RECORDS IN THE SYSTEM:
                STORAGE:
        The majority of the records are maintained in an automated data
    base. Some records are maintained in hard-copy (paper) format or other
    form.
                RETRIEVABILITY:
        Information typically will be retrieved by the name of the
    individual or entity. Telephone numbers and other such serial or
    identification numbers are retrievable numerically. Locations targeted
    are retrievable by street name.
                SAFEGUARDS:
        System records are maintained in limited access space in FBI
    facilities and offices. Computerized data is password protected. All
    FBI personnel are required to pass an extensive background
    investigation. The information is accessed only by authorized FBI
    personnel or by non-FBI personnel properly authorized to assist in the
    conduct of an agency function related to these records.
                RETENTION AND DISPOSAL:
        A reference record is purged if the individual is later identified
    by a more complete name and re-entered as an intercept record.
    Remaining reference records are purged from the system as follows:
    Those relating to court ordered electronic surveillance are purged six
    months from the date the corresponding authorization for the
    surveillance expires. Reference records relating to consensual
    intercepts are purged one year from the last intercept date shown on
    the record. Until advised to the contrary by the Department, the
    courts, or the Congress, all other indices records will be maintained
    indefinitely and have been declared permanent by the National Archives
    and Records Administration (NARA) (Job No. NC1-65-82-4, Part E, item 2
    (t)).
                SYSTEM MANAGER(S) AND ADDRESS:
        Director, Federal Bureau of Investigation, 935 Pennsylvania Avenue,
    NW, Washington, DC 20535.
                NOTIFICATION PROCEDURE:
        Same as Record Access Procedures.
                RECORD ACCESS PROCEDURES:
        A request for notification as to whether a record about an
    individual exists in the system and/or for access to a record from the
    system shall be made in writing with the envelope and the letter
    clearly marked ``Privacy Act Request.'' Include in the request your
    full name and complete address. The requests must sign the request;
    and, to verify it, the signature must be notarized or submitted under
    28 U.S.C. 1746, a law that permits statements to be made under penalty
    of perjury as a substitute for notarization. You may submit any other
    identifying data you wish to furnish to assist in making a proper
    search of the system. Requests for access to information maintained at
    FBI Headquarters must be addressed to the Director, Federal Bureau of
    Investigation, 935 Pennsylvania Avenue, NW, Washington, DC 20535-0001.
    Requests for information maintained at FBI field offices, information
    technology centers, or other locations must be made separately and
    addressed to the specific field office, information technology center,
    or other location as listed on the FBI's Internet website, http://
    www.fbi.gov, including any future revisions to the website.
        Some information may be exempt from notification and/or access
    procedures as described in the section titled ``Systems Exempted from
    Certain Provisions of the Act.'' An individual who is the subject of
    one or more records in this system may be notified of records that are
    not exempt from notification and may access those records that are not
    exempt from disclosure. A determination on notification and access will
    be made at the time a request is received.
                CONTESTING RECORD PROCEDURES:
        If you desire to contest or amend information maintained in the
    system, you should also direct your request to the appropriate FBI
    office, stating clearly and concisely what information is being
    contested, the reasons for contesting it, and the proposed amendment to
    the information sought.
        Some information may be exempt from contesting record procedures as
    described in the section titled ``Systems Exempted from Certain
    Provisions of the Act.'' An individual who is the subject of one or
    more records in this system may contest and pursue amendment of those
    records that are not exempt. A determination whether a record may be
    subject to amendment will be made at the time a request is received.
                RECORD SOURCE CATEGORIES:
        Information in the indices is derived from electronic surveillance,
    public source information, and other FBI record systems.
                SYSTEMS EXEMPTED FROM CERTAIN PROVISIONS OF THE ACT:
        The Attorney General has exempted this system from subsections
    (c)(3) and (4), (d), (e)(1), (2) and (3), (e)(4)(G) and(H), (e)(5)
    and(8), (f), (g) and (m) of the Privacy Act pursuant to 5 U.S.C.
    552a(j). Rules have been promulgated in accordance with the
    requirements of 5 U.S.C. 553(b), (c) and (e) and have been published in
    the Federal Register.

    [FR Doc. 01-15675 Filed 6-21-01; 8:45 am]

    BILLING CODE 4410-02-M

    DEPARTMENT OF JUSTICE
    Antitrust Division

    Notice Pursuant to the National Cooperative Research and Production Act
    of 1993--National Center for Manufacturing Sciences (NCMS): Advanced
    Embedded Passives Technology

        Notice is hereby given that, on May 23, 2001, pursuant to section
    6(a) of the National Cooperative Research and Production Act of 1993,
    15 U.S.C. 4301 et seq. (``the Act''), National Center for Manufacturing
    Sciences (NCMS): Advanced Embedded Passives Technology has filed
    written notifications simultaneously with the Attorney General and the
    Federal Trade Commission disclosing changes in its membership status.
    The notifications were filed for the purpose of extending the Act's
    provisions limiting the recovery of antitrust plaintiffs to actual
    damages under specified circumstances. Specifically, SAS Circuits,
    Inc., Littleton, CO has been added as a party to this venture. Also,
    HADCO Corporation, Salem, NH and Ormet Corporation, Carlsbad, CA have
    been dropped as parties to this venture.
        No other changes have been made in either the membership or planned
    activity of the group research project. Membership in this group
    research project remains open, and National Center for Manufacturing
    Sciences (NCMS): Advanced Embedded Passives Technology intends to file
    additional written notification disclosing all changes in membership.
        On October 7, 1998, National Center for Manufacturing Sciences
    (NCMS): Advanced Embedded Passives Technology filed its original
    notification pursuant to section 6(a) of the Act. The Department of
    justice published a notice in the Federal Register pursuant to section
    6(b) of the Act on January 22, 1999 (64 FR 3571).
        The last notification was filed with the Department on August 5,
    1999. A notice was published in the Federal Register pursuant to
    section 6(b) of the Act on March 21, 2000 (65 FR 15176).

    Constance K. Robinson,
    Director of Operations, Antitrust Division.

    [FR Doc. 01-15672 Filed 6-21-01; 8:45 am]

    BILLING CODE 4410-11-M
    DEPARTMENT OF JUSTICE
    Antitrust Division

    Notice Pursuant to the National Cooperative Research and Production Act
    of 1933--The National Center for Manufacturing Sciences, Inc.

        Notice is hereby given that, on May 15, 2001, pursuant to section
    6(a) of the National Cooperative Research and Production Act of 1993,
    15 U.S.C. 4301 et seq. (``the Act''), the National Center for
    Manufacturing Sciences, Inc. has filed written notifications
    simultaneously with the Attorney General and the Federal Trade
    Commission disclosing changes in its membership status. The
    notifications were filed for the purpose of extending the Act's
    provisions limiting the recovery of antitrust plaintiffs to actual
    damages under specified circumstances.
        Specifically, Automated Precision Inc., Gaithersburg, MD;
    Cincinnati Machine Division of Unova, Inc., Cincinnati, OH; CoCreate
    Software, Inc., Fort Collins, CO; ComauPico, Inc., Southfield, MI;
    Defense Modeling and Simulation Office of the U.S. Department of
    Defense, Alexandria, VA; Electronic Data Systems, Inc, Troy, MI;
    Holagent Corporation, Gilroy, CA; Hydrogen Technology Applications,
    Inc, Clearwater, FL; Johann A. Krause Inc., Auburn Hills, MI; Johnson
    Controls, Inc., Plymouth, MI; LFX Technologies LLC, Bloom field Hills,
    MI; Manufacturing Resources, Inc., Cleveland, OH; Michigan
    Technological University, Houghton, MI; Sulzer Metco Inc., Westbury,
    NY; and Tecumseh Products Company, Tecumseh, MI have been added as
    parties to this venture.
        Also, Aesop, Inc., Concord, NH; American Induction Heating
    Corporation, Fraser, MI; Ascent Logic Corporation, Northville, MI;
    Auto-Air Composites, Inc., Lansing, MI; Bencyn West LLC, North
    Highlands, CA; Center for Clean Industrial and Treatment Technologies
    (CenCITT), Houghton, MI; Corning, Inc., NY; Dow-United Technologies
    Composite Products, Inc., Wallingford, CT; Eaton Corporation,
    Cleveland, OH; FileNET Corporation, Denver, CO; The Federal Trchnology
    Center, North Highlands, CA; Flame Spray Industries, Inc., Port
    Wahington, NY; Gensym Corporation, Cambridge, MA; Hewlett-Packard
    Company, Kirkland, Quebec, CANADA; IBD, Inc., Winnetka, IL; Indium
    Corporation of America, Utica, NY; Information Transport Associates,
    Inc., Annapolis, MD; Iowa State University, Ames, IA; Michigan Virtual
    Automotive College, Ann Arbor, MI; Midwest Manufacturing Technology
    Corporation, St. Louis, MO; Minnesota Technology, Inc., St. Cloud, MN;
    MSC Software Corporation, Costa Mesa, CA; MSE Technology Applications,
    Inc., Butte, MT; Progressive Tool & Industries Company, Southfield, MI;
    Remmele Engineering, Inc., Big Lake, MN; Schafer Corporation,
    Albuquerque, NM; Setco Industries, Inc., Cincinnati, OH; Teknowledge
    Corporation, Palo Alto, CA; Trellis Software and Controls, Inc.,
    Rochester Hills, MI; Trust Data Solutions, San Jose, CA; TRW Integrated
    SupplyChain Solutions, Reston, VA; University of New Hampshire, Durham,
    NH; and UNOVA-Industrial Automation Systems, Cincinnati, OH have been
    dropped as parties to this venture.
        No other changes have been made in either the membership or planned
    activity of the group research project. Membership in this group
    research project remains open, and the National Center for
    Manufacturing Sciences, Inc. intends to file additional written
    notification disclosing all changes in membership.
        On February 20, 1987, the National Center for Manufacturing
    Sciences, Inc. filed its original notification pursuant to section 6(a)
    of the Act. The Department of Justice published a notice in the Federal
    Register pursuant to section 6(b) of the Act on March 17, 1987 (52 FR
    8375).
        The last notification was filed with the Department on December 20,
    2000. A notice has not yet been published in the Federal Register.

    Constance K. Robinson,
    Director of Operations, Antitrust Division.

    [FR Doc. 01-15673 Filed 6-21-01; 8:45 am]

    BILLING CODE 4410-11-M

        Question. With respect to each of the three databases, please
    explain how the timeliness requirement--which sought to ensure that
    computer records were as current as possible--interfered with effective
    law enforcement. Don't we want our records to be as current as
    possible, and don't we want to create incentives for agencies like the
    FBI to meet that standard?
        Answer. As to each of these databases, the FBI continuously strives
    to keep all records as current as feasible. The exemption allows the
    FBI the necessary leeway to collect information that may be crucial to
    the successful conduct of the FBI's mission.
        In the collection of information for law enforcement purposes it
    may be impossible to determine in advance what information may still be
    of current utility. With the passage of time, seemingly irrelevant or
    untimely information may acquire new significance as further
    investigation brings new details to light. The restrictions imposed by
    paragraph (e)(5) of the Privacy Act would limit the ability of
    investigators to exercise their judgment in acquiring and exploiting
    potentially significant information (during which information quality
    can be validated through links, relationships and other evidence
    discovered during investigative efforts.) Assessing the investigative
    utility of retention and use of even very old information should thus
    be left to the investigative discretion of the FBI.
        Additionally, many records in the systems come from other federal,
    state, local, joint, foreign, tribal, and international agencies, and
    it is administratively impossible for the FBI to guarantee the records
    comply with paragraph (e)(5).
        Because NCIC functions almost exclusively as a medium for
    information exchange, additional quality assurance procedures are in
    place. The exemption has not changed NCIC's program requirements for
    entry, audit, validation, and hit confirmation of NCIC records that are
    applicable to NCIC users. For instance, the NCIC 2000 manual explains
    the requirements of ``timely entry'' for NCIC 2000 files and explains
    records should be complete and include all information available on a
    person or property at the time of entry.
        For CRS and NCAVC, in the course of an investigation, retained
    information is reviewed at reasonable intervals to determine its
    relevance. Analysts, case agents, task force members, supervisors, and
    legal counsel may perform reviews as necessary.
        Specific to NCAVC's VICAP, there is no federal statute requiring
    reports of homicide or other, serial, violent crime to be sent to a
    central location or clearinghouse. On their own initiative, several
    states have enacted mandatory reporting laws requiring timely
    submission of homicide or violent crime data to a central state
    authority. Thus, submission of a case in the VICAP database is
    voluntary on the part of the law enforcement entity with original
    jurisdiction for the offense under investigation. Once submitted, cases
    are subject to initial quality control. Reports of additional
    investigation, including laboratory results, inclusion or elimination
    of suspects, or arrest and conviction of an offender, are forwarded to
    VICAP upon the initiative of the investigator. Periodically, VICAP
    staff members may contact submitting agencies or investigators and
    request updated information.
        VICAP has demonstrated that prompt submission of cases produces
    valuable investigative results. An example is the Rafael Resendez-
    Ramirez investigation. Before Mr. Resendez was identified, and when
    only three of his offenses in Texas were linked to him (there would be
    a total of six murders allegedly committed in Texas by Mr. Resendez),
    the command post in Texas notified VICAP. A murder and sexual assault
    committed in Kentucky were located in the VICAP database, and
    information concerning them was relayed to the command post. DNA
    evidence linked the Texas murders and the Kentucky murder before Mr.
    Resendez was identified.
        Question. With respect to each of the three databases, please
    explain how the other requirements that were lifted by the new rule--
    that is; accuracy, relevance, and completeness--interfered with the
    legitimate collection of information for law enforcement purposes.
        Answer. See preceding response.
        Question. The new rule states that the Justice Department is
    currently reviewing additional changes to 28 CFR Part 16 for possible
    promulgation in future rulemaking. Please describe the changes the
    Department is considering.
        Answer. The FBI periodically reviews all systems and proposes
    amendments to the rule, as necessary, to further important FBI mission
    interests, implement clerical improvements, etc. For example, for ease
    of reference, the FBI may consider reorganizing the format of the rule,
    placing systems in a more logical order and eliminating the frequent
    cross-references within the rule.
                                 dna initiative
        Question. Last month, the Administration unveiled a proposal to
    spend more than $1 billion over five years on forensic DNA programs.
    This proposal is overdue, but it is welcome, and it will make a
    difference. For two years, I have been urging the Administration and
    House Republicans to fully fund existing programs aimed at eliminating
    the DNA backlog crisis and, in particular, the inexcusable backlog of
    untested rape kits. Across the country, untested critical evidence has
    been piling up while rapists and killers remain at large, victims
    continue to anguish, and statutes of limitation expire. It is about
    time that we made this a national priority.
        The President's DNA Initiative includes $5 million a year for post-
    conviction DNA tests that can be used by inmates to prove their
    innocence. This proposal is also long overdue. Post-conviction DNA
    testing has already been used to exonerate more than 120 prisoners
    nationwide, including 12 awaiting execution. Last year the Justice
    Department cancelled plans to spend $750,000 on a post-conviction DNA
    testing initiative, and diverted the money to another program. When I
    wrote the Department about this development, I was informed--in a
    letter dated May 8, 2002--that ``the Department does not plan to
    undertake a national effort to promote and fund post-conviction DNA
    testing.'' I am pleased that the Department has changed its position.
        The Administration proposes spending $232.6 million in federal
    funding for fiscal year 2004, which includes $100.7 million in new
    funding. Are these amounts reflected in the President's official budget
    request for fiscal year 2004?
        Answer. The President's DNA Initiative--Advancing Justice Through
    DNA Technology--calls for $232.6 million in federal funding for fiscal
    year 2004. This includes $100.7 million in new funding. Of the $232.6
    million, $177 million is proposed for DNA initiatives to be
    administered by the Office of Justice Programs (OJP) and $42.1 million
    is to be administered by the Federal Bureau of Investigation. In
    addition, the $232.6 million includes $13.5 million in training
    resources from existing programs within OJP and the Community Oriented
    Policing Services that have been identified as complementary and
    supportive of the larger DNA Initiative.
        The bulk of the $177 million proposed for OJP in the fiscal year
    2004 DNA Initiative will be administered by the National Institute of
    Justice (NIJ), and will be used to assist state and local governments
    in eliminating their backlogs of crime scene and offender DNA samples,
    and to increase state and local forensic laboratory capacity to carry
    out DNA analysis. Rape kits and other crime scene evidence that sit for
    years in storage and cannot be analyzed because of inadequate resources
    or capacity are not solving crimes. The perpetrators may remain at
    large, free to commit more crimes, and the victims continue to live in
    fear.
        By addressing these problems, the DNA backlog reduction and
    laboratory capacity programs will directly result in major benefits for
    law enforcement and increased security of the public against sexually
    violent crimes, homicides, and other offenses. In addition, the Justice
    Department expects to commit substantial funds through OJP for other
    measures to strengthen the DNA identification system, such as improved
    training in the collection and handling of DNA evidence, and DNA
    technology research and development.
        The following chart displays a detailed funding breakdown of the
    fiscal year 2004 DNA Initiative.

                            [In millions of dollars]
    ------------------------------------------------------------------------
                                                                2004 Budget
                  Element of the DNA Initiative                   Request
    ------------------------------------------------------------------------
    Using DNA To Solve Crimes:
        Eliminating Backlogs................................            92.9
            State Casework Backlogs.........................            76.0
            State Convicted Offender Backlogs...............            15.0
            Funding the Federal Convicted Offender Program..             1.9
        Strengthening Crime Lab Capacity....................            90.4
            Increasing the Analysis Capacity of Public Crime            60.0
             Labs...........................................
            Funding FBI Forensic Analysis Programs..........            20.5
            Funding the Combined DNA Index System...........             9.9
        Stimulating Research and Development................            24.8
            Improving DNA Technology........................            10.0
            FBI Research and Development....................             9.8
            DNA Demonstration Projects......................             4.5
            The National Forensic Science Commission........             0.5
        Training the Criminal Justice Community.............            17.5
            Law Enforcement.................................             3.5
            Prosecutors, Defense Attorneys, and Judges......             2.5
            Probation & Parole Officers, Corrections                     1.0
             Personnel......................................
            Forensic Scientists.............................             3.0
            Medical Personnel...............................             5.0
            Victim Service Providers........................             2.5
    Using DNA To Protect the Innocent.......................             5.0
    Using DNA To Identify Missing Persons...................             2.0
                                                             ---------------
          Total Funding.....................................           232.6
    ------------------------------------------------------------------------

        Question. With respect to the proposal to spend $5 million a year
    for post-conviction DNA testing, how did the Department arrive at this
    amount? Will it cover the costs of post-conviction DNA testing
    nationwide?
        Answer. The President's Initiative on DNA evidence, ``Advancing
    Justice Through DNA Technology'' calls for the appropriation to the
    Department of $5 million annually to be used by the Attorney General to
    establish a grant program to help states defray the costs of post-
    conviction DNA testing and, therefore, encourage states to adopt
    procedures that authorize post-conviction DNA testing in appropriate
    cases.
        The President's Initiative was developed, in part, from the
    recommendations of a task force convened by the Department's National
    Institute of Justice (NIJ) at the request of Attorney General Ashcroft
    to assess existing DNA analysis delays and develop recommendations for
    eliminating those delays. In developing this aspect of the Initiative,
    the Department conferred with members of the NIJ task force, as well as
    other public and private laboratory directors across the United States,
    to ascertain the extent and cost of the post-conviction DNA testing
    currently on-going in those states that provide for convicted offenders
    to seek such testing.
        Based on these discussions, the Department estimates that the cost
    of post-conviction DNA analysis in those states that have, or soon will
    authorize, a post-conviction DNA testing procedure will not exceed $5
    million annually for at least the next five years. This estimate
    relates to the actual cost of testing the biological evidence at issue
    in those cases, as this program is not intended to pay for the
    operational costs of law enforcement personnel in locating any evidence
    that an offender requests or that a court orders be tested.
        Question. In your remarks announcing the DNA initiative, you said
    that you looked forward to working with the ``Chairmen'' of the House
    and Senate Judiciary Committees to develop post-conviction DNA testing
    legislation. But at your confirmation hearing, you assured me that you
    would work on such legislation with ``the Congress''--not just the
    Republican Chairmen. Are you willing to honor that commitment today by
    working with me to refine and pass the Innocence Protection Act, which
    has already garnered overwhelming bipartisan support?
        Answer. The Department is committed to working with the Chairmen of
    the House and Senate Judiciary Committees, ranking minority members,
    and all of the members of the respective authorizing and Appropriations
    Committees in developing any legislation necessary to implement all
    aspects of the President's DNA Initiative, including the recommendation
    that ``Federal law also should provide for post-conviction DNA testing
    in appropriate cases,'' and in appropriating the funds necessary to
    enable the Attorney General to establish a grant program to ``help
    states defray the costs of post-conviction DNA testing.''
                      fbi enforcement of immigration laws
        Question. Traditionally, we have not had the FBI enforce our civil
    immigration laws because we wanted to encourage maximum cooperation
    between illegal immigrants and the officers looking to prevent and
    solve crimes and acts of terrorism. Do you disagree with that logic?
        Answer. Following the transfer of the Immigration and
    Naturalization Service from the Department of Justice, the new
    Department of Homeland Security is the primary immigration law
    enforcement agency. However, the safety of the American people is the
    primary concern for both the Department of Justice and the Department
    of Homeland Security.
        Pursuant to the Attorney General's longstanding authority under the
    immigration laws, last year the Attorney General delegated immigration
    law enforcement authority to officers of the Federal Bureau of
    Investigation (FBI) and the United States Marshals Service (USMS).
    Under this delegation, in certain limited circumstances, the FBI may in
    the course of its counterterrorism investigations discover that an
    alien who poses a potential threat to national security is illegally
    present in the United States and find that DHS is unable to take
    custody immediately because agents are not available.
        The FBI has issued field guidance to implement the delegation of
    authority in a manner that ensures that it is used only in appropriate
    situations, such as when DHS immigration officials are not available or
    when the public safety requires prompt action without DHS.
        As of April 15, 2003, in connection with Operation Liberty Shield,
    the FBI had interviewed 9,383 individuals and while there were 31
    arrests for immigration violations, all arrests were made by BICE
    agents. The Department of Justice and the Department of Homeland
    Security have discussed this delegation and will continue to do so.
        Question. At the same time that the FBI is now policing immigration
    violations, it is depending upon Iraqis in the United States to provide
    information of value to the U.S. war effort. Do you have any fear that
    this expansion of FBI authority will have a chilling effect on Iraqi
    cooperation?
        Answer. Because the FBI has been mindful of the constitutional
    rights and sensitivities of the Iraqi population in the United States
    in the course of our interview program, we do not believe that the
    expansion of Department of Justice (DOJ) authority will have a chilling
    effect on future efforts to reach out to the Iraqi population.
        From the beginning of the hostilities in Iraq, the FBI conducted
    approximately 10,000 interviews of Iraqis who might have knowledge of
    the Iraqi leadership, military facilities, or Iraqi activities in
    support of terrorism. These interviews were strictly voluntary and
    conducted within the confines of the Constitution:
      --FBI agents were trained and given sensitivity training for
            conducting these interviews, and Iraqis being interviewed were
            informed of their civil rights.
      --High-level FBI officials met with Arab-American civic leaders to
            explain the interview process and to enhance communication
            between the FBI and the Arab-American community.
        The response of the interviewees and the Arab-American community
    was overwhelmingly positive, and the DOJ and the FBI would like to
    thank community leaders and those interviewed for their cooperation. As
    a result of the information derived from the interviews, the FBI
    disseminated over 250 reports to assist the military in conducting the
    war and locating Saddam Hussein's weapons of mass destruction. The
    military consumers of these reports, including CENTCOM, have indicated
    that the reports were highly useful.
        Question. Considering this committee's obvious interest in both the
    FBI and the enforcement of our immigration laws, why did you fail to
    notify us of this regulation?
        Answer. The Department appreciates the Committee's interest in its
    programs. The preceding answer explains the rationale and limited use
    of this delegation.
        Question. According to the Washington Post, the FBI has drafted
    guidelines on how this new authority should be used. Would you provide
    a copy of those guidelines to the committee?
        Answer. The information follows.
                               Federal Bureau of Investigation,
                                                            02/26/2003.
        To: All FBIHQ Divisions, All Field Offices
        Attn: Assistant Director, ADIC, SAC, CDC
        From: Office of the General Counsel, Investigative Law Unit
        Contact: UC Elaine N. Lammert (202) 324-5640
        Approved By: Mueller Robert S. III, Gebhardt Bruce J., Wainstein
    Kenneth L.
        Drafted By: Rowan Patrick
        Case ID #: 66F-HQ-A1085154-MISC Serial 85
        Title: Delegation of Authority to the FBI to Exercise the Powers
    and Duties of Immigration Officers
        Enclosure.--Memorandum summarizing the power to arrest under the
    Immigration and Naturalization Act (INA) and listing a number of INA
    violations the FBI may enforce pursuant to the delegation and guidance
    contained in this communication.
        Synopsis.--This communication advises the receiving offices that
    the Attorney General has authorized Agents to exercise the functions of
    immigration officers in some circumstances and provides guidance on the
    implementation of this authority. This guidance was prepared in
    consultation with the Department of Justice, the SAC Advisory Committee
    and FBIHQ operational components.
        Details.--The Attorney General recently issued an Order delegating
    authority to exercise the powers and duties of Immigration Officers to
    the FBI. The Order, which is no in effect, grants powers that will be
    particularly useful in the FBI's counterterrorism investigations. In
    pertinent part, the Order states as follows:

        ``I authorize the Director of the Federal Bureau of Investigation
    (``FBI'') and, under this direction Special Agents of the FBI, to
    exercise the functions of immigration officers for the purposes of (1)
    investigating, determining the location of, and apprehending, any alien
    who is in the United States in violation of the Immigration and
    Nationality Act of 1952, as amended, or any other law or regulation
    relating to visas or the conditions of visas, admission of aliens or
    the conditions of admission, or the maintenance of status as an
    immigrant or nonimmigrant or in any category of nonimmigrant; or (2)
    enforcing any requirements of such statutes or regulations, including,
    but not limited to, nonimmigrant aliens subject to special registration
    under 8 C.F.R. Sec. 264.1(f).

        This communication is to provide guidance on the implementation of
    this Order.
        Even prior to the issuance of the Attorney General's Order the FBI
    possessed broad authority to investigate criminal violations related to
    immigration offenses under both Title 18 and Title 8 of the United
    States Code and to arrest those who commit such criminal violations.
    There will be no change in the handling or the classification of those
    investigations. The Attorney General's Order expands the FBI's
    authority to include the investigation and arrest of aliens who have
    committed or are committing non-criminal, i.e., civil violations of the
    Immigration and Nationality Act of 1952 (INA) and related statutes.
    This guidance addresses the handling of aliens who are non-criminal
    violators.
        At the outset, it should be understood that the Immigration and
    Naturalization Service and its successor within the Department of
    Homeland Security (referred to hereafter collectively as the ``INS'')
    will retain primary jurisdiction over the enforcement of immigration
    statutes, including both criminal and civil violations of the INA. the
    FBI will not create a separate investigative program to cover
    violations of the INA, as these violations will ordinarily be addressed
    only in support of existing investigative programs. Individuals
    detained or arrested for immigration violations should be turned over
    to INS' custody as soon as possible. The Attorney General's Order
    provides authority in those circumstances when agents of the INS are
    not immediately available to take custody of an alien violator. It also
    provides a basis for the apprehension of alien violators encountered in
    the course of the FBI's counterterrorism investigations.
        In all instances, the Order should be employed in a manner that
    strengthens the FBI's ability to address its priorities, rather than
    diverting from them. Accordingly, as a general rule, when, during the
    course of an investigation, agents encounter an alien who is reasonably
    believed to be in violation of the INA, they should exercise their
    authority under the Order to detain, question, and, if justified,
    arrest the alien if the exercise of these powers will serve the
    objectives of the investigation. Conversely, if the exercise of these
    powers will harm or undermine the investigation, agents are under no
    obligation to do so. Even in the absence of an ongoing investigation,
    agents should exercise all appropriate authority under this Order when
    necessary to prevent serious bodily injury or destruction of property.
    With respect to counterterrorism investigations in particular, and
    keeping in mind the FBI's primary mission of preventing acts of
    terrorism against American interests, agents should not hesitate to
    exercise any or all of their lawful authority under the Order as
    appropriate to serve this vital mission, or to refrain from exercising
    these powers if, in the judgment of the agent, the FBI's investigative
    interests are best served by doing so.\1\
    ---------------------------------------------------------------------------
        \1\ In furtherance of its mission to prevent acts of terrorism, the
    FBI has at its disposal the National Security Entry-Exit Registration
    System (NSEERS) database, maintained by the INS. This database contains
    comprehensive information on temporary visitors to the United States
    who are from countries designated by the Attorney General or who meet
    pre-existing criteria related to national security. Any NSEERS
    registrant who violates his requirements (e.g., by overstaying his
    visa, or by failing to verify his address and activities with the INS
    after violations are immediately identified by NSEERS, and, like other
    violations of the INA, the NSEERS violation may serve as a basic for
    arrest when arrest of the violator will advance an investigation and
    the FBI's operation priorities. In such cases, the INS should be
    notified and consulted as soon as possible. In addition, FBI personnel
    supervising counterterrorism investigations should regularly consult
    the NSEERS database to determine if aliens who have violated their
    requirements have any connection to terrorist suspects already under
    FBI investigation.
    ---------------------------------------------------------------------------
        There may be instances, unrelated to ongoing investigations, in
    which the FBI will receive requests for assistance from state or local
    law enforcement who have detained aliens for immigration violations.
    Such requests should ordinarily be referred to the INS. In those
    instances in which the INS is unable to respond to the request, each
    ADIC or SAC should exercise his or her discretion, based on resources
    and other relevant considerations, as to whether to provide the
    requested assistance and, if so, to what extent.
        The Order grants FBI agents the authority to exercise the powers to
    arrest an alien without warrant set forth in Title 8, U.S. Code,
    Section 1357. Under that section, agents may arrest an alien when they
    have reason to believe the alien is present in the United States in
    violation of an immigration provision of the INA, a standard that can
    be met by an admission from the alien, a review of immigration records,
    or other reliable information. In many cases, agents will be unable to
    make a determination that an alien is in violation without the
    assistance of the INS. Each Field Office should consult with their
    local INS office to develop a procedure for obtaining such assistance
    on a local level. In addition, the INS maintains a Law Enforcement
    Support Center that is staffed around the clock and can perform record
    checks and provide other assistance.
        Each Field Office should also consult with their local INS office
    to formulate procedures for the prompt transfer to INS' custody of any
    alien arrested by the FBI under the authority of the Attorney General's
    Order. Any arrest made under the authority of this Order should be
    properly documented in an FD-302.
        Attached hereto is a memorandum, prepared by the Office of General
    Counsel, summarizing a number of the commonly-encountered INA
    violations. In the near future, Headquarters personnel will be working
    with their counterparts at the INS and then the Department of Homeland
    Security to resolve issues arising from this Order. Training materials
    on immigration enforcement will soon be disseminated through the Chief
    Division Counsel of each Field Office, and additional training will be
    provided in the course of the upcoming counterterrorism training
    ordered by the Deputy Attorney General.
                national security entry-exit registration system
        Question. Under the National Security Entry-Exit Registration
    System (NSEERS), male nationals from 25 countries, all but one of which
    are overwhelmingly Muslim, must register with the government if they
    meet certain criteria. As of one week ago, more than 7,000 men who
    presented themselves for registration had been notified of the
    government's intention to deport them for various violations of our
    immigration laws. Many of those 7,000 are nationals of Pakistan, a U.S.
    ally in the war on terror that has informed the United States of its
    objections to NSEERS. Earlier this year, the Senate included language
    to end the NSEERS program in our omnibus appropriations bill, but
    agreed in conference instead to demand a report about the program, from
    you, by March 1. That deadline has come and gone, even though this
    report will be critical in determining whether we continue to fund
    NSEERS, and despite the serious domestic and international
    ramifications of this program. When will you submit this report?
        Answer. The Department is continuing to assemble the materials
    required by Section 112 of Title I of Division B of Public Law 108-7.
    The material will be submitted to the Committee.
                        crime-free rural states program
        Question. Congress created the Crime-free Rural States program last
    year in the 21st Century Department of Justice Appropriations
    Authorization Act. This program authorizes $10 million for rural states
    to combat drug abuse and other crimes that increasingly affect rural
    states and have put mounting stress on rural law enforcement officers.
    Senator Hatch and I have written to the Chairman and Ranking Member of
    the subcommittee to request full funding for this program. Do you
    support our request for full funding?
        Answer. In developing the fiscal year 2004 President's Budget, the
    Department faced the challenge of managing multiple competing
    priorities with limited resources. As a result, no resources were
    specifically requested for the Crime-free Rural States program.
        However, I do appreciate the problems faced by rural law
    enforcement. In fact, the Department currently provides substantial
    resources to rural communities. For example, the Office of Justice
    Programs' (OJP) fiscal year 2004 President's Budget included $599.724
    million for the Justice Assistance Grants program, a formula program
    designed to address a wide array of criminal justice issues that would
    provide resources directly to our nation's state and local
    jurisdictions, including those in rural areas. Other OJP programs
    included in the fiscal year 2004 President's Budget that provide
    resources to rural communities across the country include: $39.460
    million for the Rural Domestic Violence program, which specifically
    targets rural communities, $47.683 million for the State and Local Gun
    Violence Assistance program, which will continue to support projects in
    rural communities; $49.387 million for the Southwest Border Initiative,
    which provides assistance to many rural prosecutors in the Southwest
    dealing with drug cases; and a total of $25.339 million in programs
    specifically requested for Tribal governments and communities, almost
    all of which are in rural areas.
                          oig oversight of dea and fbi
        Question. I have repeatedly expressed concern that the DOJ
    Inspector General's Office be as independent and strong as possible.
    Without accountability, which the Inspector General brings to the
    Department, our law enforcers will not be as efficient and as effective
    as they can be. For that reason, I sponsored bipartisan legislation,
    which was enacted as part of the landmark DOJ Authorization Act last
    Congress, that expanded the jurisdiction of the IG by statute to cover
    the FBI and DEA. In light of these important additions--and in light of
    the growth of the FBI itself as it fulfills its stated mission of
    protecting against terrorist attacks--we need to ensure that the IG's
    budget grows to meet its new responsibilities. The IG needs to have the
    resources required to examine an FBI that is retooling its computer
    systems and its entire culture. Unfortunately, however, I note that the
    President's budget request ``flat lines'' the IG's office even though
    the Republican-controlled Congress did not grant the President's entire
    requested increase for the IG in last year's Omnibus Appropriations
    bill. Please explain why the Administration is not seeking to provide
    the IG with the new resources it will need to oversee the FBI's efforts
    to modernize itself.
        Answer. The Office of the Inspector General (OIG) received
    $5,000,000 and 63 positions in fiscal year 2002 to expand the Inspector
    General's authorities in investigating employee misconduct within the
    Federal Bureau of Investigation and the Drug Enforcement
    Administration, this allowed for an 18 percent increase in staff. In
    fiscal year 2003, the OIG received an additional $2.0 million and 17
    positions, in part to address the FBI's growth in personnel and
    counterterrorism programs. These funds, coupled with the recent
    supplemental of $2,500,000 for fiscal year 2003/2004, provide
    sufficient funding for the OIG through fiscal year 2004.
     implementation of usa patriot act and other issues related to war on
                                   terrorism
        Question. In a letter dated April 1, 2003, the Chairman and Ranking
    Member of the House Judiciary Committee requested extensive information
    from the Justice Department regarding the Department's implementation
    of the USA PATRIOT Act and other issues related to the war on
    terrorism. Please provide your responses to the 38 questions posed in
    that letter, a copy of which is attached. (Attachment 1)
        Answer. In response to your letter of September 4, 2003, co-signed
    by Senate Judiciary Committee Chairman Hatch, the Department provided a
    copy of the Department's May 13, 2003, response to the April 1, 2003,
    letter from the Ranking Member of the House Judiciary Committee on
    September 9, 2003. As noted in our transmittal letter, while we made
    every effort to answer each question thoroughly and in an unclassified
    format, four of the questions required the submission of classified
    information. The answer to a portion of question 16(a), and questions
    30 and 37 are classified and were delivered to the Senate Security
    Office for the Senate Judiciary Committee under separate cover. In
    accordance with longstanding Executive branch practices on the sharing
    of operational intelligence information with the Congress, the
    classified answers to question 1(c), and a further portion of question
    16(a), were delivered to the Senate Select Committee on Intelligence.
                                     ______

                    Questions Submitted by Senator Herb Kohl
             juvenile accountability incentive block grant program
        Question. Mr. Attorney General, even in a time of great domestic
    instability, we cannot forget about the important law enforcement
    functions of the DOJ. Among these responsibilities is juvenile
    delinquency prevention and enforcement. However, the fiscal year 2004
    Department of Justice budget proposal eliminates the Juvenile
    Accountability Incentive Block Grant Program (JAIBG) a program that was
    funded at $140 million last year, and more than $200 million two years
    ago. The budget justification cites that the program was found
    ``ineffective'' by OMB.
        However, when we reauthorized the Department of Justice last fall,
    we also reauthorized the JAIBG program at $350 million per year. More
    importantly, we dramatically improved the program. The program purpose
    areas have been significantly expanded to provide additional services
    and treatment for troubled youth, including graduated sanctions,
    substance abuse and mental health counseling, restitution, community
    service, and supervised probation.
        Nonetheless, JAIBG has been zeroed out. The new and improved JAIBG
    has not even been given a chance by this Administration--the same
    Administration that reauthorized JAIBG just last year. I am aware that
    the Justice budget retains some funding for juvenile justice programs.
    However, a new $43 million ``Juvenile Delinquency Block Grant Program''
    still represents almost a $100 million cut from last year's JAIBG
    program--a program authorized at $350 million. Moreover, Title V
    juvenile crime prevention programs--cut in half in the fiscal year 2003
    appropriation B are also under-funded and overly earmarked in this
    year's budget proposal.
        Why are these programs being cut at a time when the latest
    statistics suggest an up tick in juvenile crime after a steady decrease
    throughout the nineties? Now is not the time to give up juvenile
    justice programs.
        Answer. The fiscal year 2004 President's Budget request for
    juvenile justice delinquency and prevention programs focuses on those
    programs that work and provide states and local governments maximum
    flexibility. These programs include the $93.768 million Part B Formula
    Grants, the new $42.881 million Juvenile Justice Delinquency Prevention
    Block Grant Program created by the 21st Century Department of Justice
    Reauthorization Act, and the $82.255 million Title V Incentive Grants
    for Local Delinquency Prevention Program, which represents an increase
    of $36.1 million above the fiscal year 2003 enacted level. The request
    includes funding for two major activities: $69.755 million for Title V
    Delinquency Prevention Program Incentive Grants; and $12.5 million for
    the Tribal Youth Program, which awards grants directly to American
    Indian and Alaska Native communities for prevention, control, and
    juvenile justice system improvement. This is essentially the same level
    as requested in fiscal year 2001 through fiscal year 2003.
        The Juvenile Accountability Block Grant Program (JABG) was
    reauthorized under the 21st Century Department of Justice
    Reauthorization Act, which was signed into law on November 2, 2002.
    Funding for the JABG, formerly the Juvenile Accountability Incentive
    Block Grant (JAIBG) Program, was not requested because in its recent
    Program Assessment Rating Tool (PART) evaluation, OMB ranked JAIBG as
    ``ineffective.'' As OMB indicated in the evaluation, program managers
    have little information on the activities and outcomes of JABG, and
    cannot verify the need for or the results of this program.
        According to the initial statutory guidance for JABG, the ultimate
    purpose of the block grants is to make juvenile offenders more
    accountable for their actions and to make the justice system more
    accountable for juveniles' safety. These stated goals make it difficult
    for managers to develop clear, outcome-based performance measures.
    Other than anecdotal evidence, the program has not demonstrated any
    measurable impact on either juvenile crime or the juvenile justice
    system to date.
        There are purpose areas in the Juvenile Delinquency Block Grant
    program that overlap with JABG purpose areas. In addition, funds under
    the proposed $599.724 million Justice Assistance Grants (JAG) program
    can be used by state and local governments to address the areas funded
    through JABG. Thus, resources will still be available to address
    juvenile offender accountability.
                              imported explosives
        Question. Federal explosives regulations require domestically
    manufactured explosives to include identifying information such as
    manufacturer, location, date, and shift of manufacture. This
    information is vital to criminal investigations when law enforcement
    authorities recover explosives. ATF can trace the purchase of
    explosives in much the same way that it traces firearms. Yet, imported
    explosives are not required to have any identification information.
        How many pounds of unmarked imported explosives enter the country--
    say annually? I understand that millions of pounds of these unmarked
    explosives enter this country each year. If this is the case, should we
    not take immediate legislative action to close this loophole? Do you
    pledge to work with me on this?
        Answer. Currently there are no regulations requiring the marking of
    explosive materials imported into the United States. Federal
    regulations at 27 CFR part 555, Commerce in Explosives, administered by
    the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), require
    that licensed domestic manufacturers of explosive materials legibly
    identify all explosive materials manufactured for sale or distribution
    by placing the identity of the manufacturer and the location, date, and
    shift of manufacture on each cartridge, bag, or other immediate
    container. ATF; the Institute of Explosives Makers (IME); and the
    International Association of Bomb Technicians and Investigators (IABTI)
    recognized that these regulations do not extend similar requirements on
    importers of explosive materials. ATF; the IME; and the IABTI
    recognized that this loophole creates a major obstacle for tracing
    foreign manufactured recovered explosives, as well as results in an
    economic disadvantage by placing the marking requirement only on
    domestic producers. To that end, both the IME and IABTI petitioned ATF
    to pursue rulemaking to close this loophole. On October 16, 2002, ATF
    issued a notice of proposed rulemaking to require the marking of all
    explosive materials imported into the United States. The notice comment
    period ended January 14, 2003 and is in the final stages of review.
        There is no federal requirement for reporting the amount of
    explosives materials imported into the United States. ATF is working
    with the U.S. Customs Service to obtain a reliable figure. However,
    information from the IME indicates that there are approximately 6
    billion pounds of explosive materials used in the United States
    annually. Of that amount, approximately 2 million pounds of boosters (a
    high explosive) are imported into the United States annually.
    Additionally, industry sources have advised ATF that approximately 165
    million pounds of Chinese fireworks enter the United States annually.
                  fisa (foreign intelligence surveillance act)
        Question. Press reports indicate that for the first time since FISA
    became law, surveillance requests under FISA outnumbered all of those
    under domestic law--the Washington Post reported last week that you
    personally signed more than 170 ``emergency foreign intelligence
    warrants''--this is three times the number authorized in the preceding
    23 years.
        Mr. Attorney General, can you comment on whether that is true? In
    addition, given the much greater powers granted to the government under
    FISA, can you tell us whether we should be disturbed by this trend.
    After all, the secrecy that surrounds FISA provides very little
    accountability and oversight. Are we in danger of living in a country
    where secret wiretaps and extended surveillance are the norm?
        Answer. While I cannot speak to the accuracy of press reports, as I
    have said previously, in 2002, using Foreign Intelligence Surveillance
    Act (FISA) tools, we targeted more than 1,000 international terrorists,
    spies and foreign powers who threaten our country's security. We
    requested 170 emergency FISAs. This is more than three times the total
    number of emergency FISAs obtained in the 23 years prior to September
    11.
        This is a reflection, in part, of the imminent need to protect the
    United States from potential acts of terrorism or other grave hostile
    acts from foreign powers or agents of foreign powers. I would disagree
    that the FISA provides little accountability and oversight. Every
    application that is presented to the Foreign Intelligence Surveillance
    Court (the Court) goes through a rigorous review on many levels. Before
    presenting an application to the Court, the Attorney General must
    approve the application based upon his finding that the application
    satisfies the criteria and requirements for such applications set forth
    in the FISA, including the requirement that the target of the
    surveillance or search is a foreign power or an agent of a foreign
    power. In addition, the application is certified by an appropriately
    designated official. Among other things, the official certifies that a
    significant purpose of the surveillance or search is to obtain foreign
    intelligence information. Finally, the application is presented to the
    Court for its independent judicial review. In the event that an
    application is denied by the Court, the Foreign Intelligence
    Surveillance Court of Review has jurisdiction to review such a case.
        In addition, Congress plays an important role in oversight of the
    FISA process. The Attorney General submits, on a semi-annual basis,
    detailed reports concerning activities conducted pursuant to the FISA
    to the Senate Select Committee on Intelligence, the House Permanent
    Select Committee on Intelligence, and both the House and Senate
    Judiciary Committees.
        In all cases, strict adherence to the Constitution, and observation
    of the responsibility of this government to safeguard the rights of all
    individuals regarding the Constitution, is the highest priority of the
    Department of Justice. Any surveillance or search conducted pursuant to
    the FISA is done in strict accordance with the law, and is conducted in
    ways which I believe fully respect the Constitution.
                               antitrust--telecom
        Question. A priority of the Antitrust Subcommittee has been
    promoting competition in the local and long distance phone markets. For
    many years, the Antitrust Division has had a task force--the
    Telecommunications and Media Section--devoted to monitoring competition
    in the telecom industry. Its principal responsibility has been to
    determine whether the local telephone market is open to competition
    when the incumbent Bell company applies for permission to provide long
    distance service. As you know, this is known as the Section 271
    process. The 271 process has been conducted on a state-by-state basis
    and is now nearly complete.
        With this process winding up, some observers wonder if the
    Telecommunications and Media Section is as active as it should be, and
    whether the Antitrust Division will continue to aggressively police
    anti-competitive practices in local phone markets. We must ensure that
    the markets deemed open to competition remain open, rather than
    backsliding into a monopoly environment.
        What do you see as the role of the Antitrust Division in ensuring
    competitive local phone markets in the future? Would you favor giving,
    by statute, the Telecommunications and Media Section clearly
    established periodic responsibilities to examine local phone
    competition?
        Answer. The Antitrust Division has played an important role in
    protecting competition in the telecommunications industry for decades
    and fully intends to continue doing so through vigorous antitrust
    enforcement. Following enactment of the Telecommunications Act of 1996,
    the Division has provided guidance to the FCC and the state regulatory
    agencies on the Section 271 process and has provided the FCC with an
    evaluation of each Section 271 application. Before that, the Division
    spent 14 years enforcing the 1982 antitrust consent decree that settled
    the enforcement action the Division brought against AT&T in 1974. Along
    with these responsibilities, the Division aggressively investigates
    proposed mergers and potentially anticompetitive conduct in a wide
    variety of communications and media markets.
        With the Section 271 initial application process approaching
    completion, the Division intends to continue monitoring activities in
    the telecommunications industry across the country. In states where the
    Bell Operating Company has been granted Section 271 authority, the
    Division will continue to play its traditional roles of enforcing the
    antitrust laws against Sherman Act violations and anticompetitive
    mergers, as well as engaging in competition advocacy through
    participation in FCC and state regulatory proceedings where we can
    provide competitive analysis that would assist these agencies in
    promoting and maintaining the development of local competition.
        The FCC will continue to have authority to enforce compliance with
    the specific market-opening provisions of the 1996 Act. The antitrust
    laws give the Antitrust Division sufficient authority to perform its
    broader role in protecting competition in this important marketplace,
    and the 1996 Act contains a savings clause that explicitly preserves
    the Division's antitrust enforcement authority in this area. Given our
    enforcement history and accumulated experience in telecommunications
    markets, we plan to remain fully engaged in monitoring these markets
    for possible antitrust violations. Additional authority is not needed
    in order for us to perform this role.
                                 sleeper cells
        Question. What is the current status of the investigation to root
    out more terrorist sleeper cells in this country? Are we on the right
    track or do we have a long way to go?
        Answer. With the cooperation of the Joint Terrorism Task Force
    Program, the FBI successfully identified cells in Buffalo, Detroit, and
    Portland, Oregon. These investigations have resulted in convictions of
    subjects charged with offenses ranging from providing material support
    to terrorist organizations to misuse of identification documents.
        The FBI is currently working jointly with all members of the
    Intelligence Community to identify additional terrorist sleeper cells
    within the United States. Although we have identified new cells within
    the United States, and we are on the right track, the war on terrorism
    is ongoing.

                              SUBCOMMITTEE RECESS

        Senator Gregg. The next hearing will be on Tuesday, April
    8, at 10 a.m., in the Dirksen Building at 124. The subcommittee
    will be hearing testimony of SEC Chairman William Donaldson.
    This is going to be in the Senate Office Building--we are going
    to hold it over in the Capitol.
        Thank you.
        [Whereupon, at 11:25 a.m., Tuesday, April 1, the
    subcommittee was recessed, to reconvene at 10 a.m., Tuesday,
    April 8.]

    DEPARTMENTS OF COMMERCE, JUSTICE, AND STATE, THE JUDICIARY, AND RELATED
                  AGENCIES APPROPRIATIONS FOR FISCAL YEAR 2004

                                  ----------

                             TUESDAY, APRIL 8, 2003

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 10 a.m., in room S-146, the
    Capitol, Hon. Judd Gregg (chairman) presiding.
        Present: Senators Gregg and Hollings.

                       SECURITIES AND EXCHANGE COMMISSION

    STATEMENT OF WILLIAM H. DONALDSON, CHAIRMAN

                    OPENING STATEMENT OF SENATOR JUDD GREGG

        Senator Gregg. The committee will come to order. It is
    great to have the Chairman of the SEC here today, William
    Donaldson.
        First, I want to thank you on behalf of the Congress and
    the American people for being willing to come out of the
    private sector, with your tremendous experience and expertise,
    and take over this job. I consider it to be one of the most
    significant jobs we have in the Federal Government because it
    is the job which makes capital markets vibrant and reliable,
    and capital markets which are transparent and properly
    regulated are critical to the well-being of the American
    economy.
        International confidence in our markets is essential to the
    survival of our Nation and our free market system, so having
    your leadership at the SEC is crucial, and we are excited you
    are there.
        Senator, did you have any opening comments?
        Senator Hollings. I am equally excited and grateful that he
    would take this assignment. Thank you.
        Senator Gregg. We would be happy to hear any thoughts you
    have to add. You can summarize your statement or read it,
    however you wish to proceed.

                                OPENING REMARKS

        Mr. Donaldson. Thank you for your comments, Senator. I am
    honored to be here and to be in the position I'm in. Let me
    just make a couple of brief comments, and then we can do
    whatever you would like in terms of carrying on from there.
        I appreciate the chance to speak. Our request is for $841.5
    million. That's the largest amount that's ever been requested
    for the SEC, and it comes on the heels of last year's
    appropriation, which was the largest single year percentage
    increase ever provided the Commission. I want to thank you and
    the subcommittee for the tremendous support and leadership
    you've shown in ensuring that the Commission receives the
    resources that are necessary to fulfill our mission.
        Thanks to your efforts, the Commission has been
    appropriated $716.4 million to fund its operations this fiscal
    year as part of the omnibus appropriation. These funds will
    enable us to meet the remaining deadline for the Sarbanes-Oxley
    Act, hire over 800 new staff and advance the initial startup
    funds to the Public Company Accounting Oversight Board, improve
    our training efforts, and address our most pressing information
    technology needs.
        Ensuring that our new resources are used to promote the
    effectiveness and support the modern mission of the SEC, rather
    than simply increasing our numbers, is one of my most important
    responsibilities as Chairman. During the next several weeks and
    months I intend to get more deeply into each program area to
    verify personally that this is the best, most effective and
    efficient use of our new staffing. I would therefore like to
    reserve my option to make changes. I have been at the
    Commission I think a total of almost 8 weeks now, and my staff
    and I hope to (a) examine our budgets carefully and (b) work
    closely with the subcommittee as we finalize our resource
    allocations.

                               PREPARED STATEMENT

        As I said at the beginning, I'm honored to be Chairman of
    the SEC. I think it is the most important time in the history
    of the country to have this job, and I will be delighted to
    answer any questions you might have. Thank you.
        [The statement follows:]
                   Prepared Statement of William H. Donaldson
        Chairman Gregg, Ranking Member Hollings, and Members of the
    Subcommittee: Thank you for inviting me to testify today on behalf of
    the Securities and Exchange Commission in support of the President's
    fiscal 2004 budget request. The fiscal 2004 budget request of $841.5
    million is the largest amount ever requested for the SEC and comes on
    the heels of last year's appropriation, which was the largest single-
    year percentage increase ever provided to the Commission.
        At the outset, I would like to take this opportunity to thank you
    for the tremendous support and leadership you have shown in ensuring
    that the Commission receives the resources and staff necessary to
    fulfill its mission. Your backing, along with the strong support of our
    authorizing committees, demonstrates convincingly that the Congress is
    dedicated to ensuring the financial integrity and vitality of our
    markets. While recent events have shaken investor confidence in the
    financial reporting by public companies and the integrity of our
    securities markets, your support of the SEC in both fiscal 2003 and
    2004, and the landmark Sarbanes-Oxley Act, will help reinforce the
    foundations of our markets and demonstrate their resiliency.
        Although I have been at the Commission only since February 18th, I
    look forward to continuing and building on the strong and cooperative
    relationship that our Agency has developed with you in the past as we
    work together on the SEC's resource needs to implement the Sarbanes-
    Oxley Act and fulfill all of our statutory duties. This is a critical
    time for the agency and the way we address the challenges before us
    will determine not only where we go tomorrow, but for years to come.
        In many ways, it may be time for the SEC to go through a
    transition--much like the transition that the U.S. military has
    experienced in recent years--and evolve into a much more efficient
    force, becoming quicker, more agile, and more pro-active. I am now
    reviewing with senior staff the Agency's operations and resource needs
    to determine appropriate changes to address both our internal and
    external needs. My hope is that the SEC can develop a new approach to
    our mission, as the military has done, so that we can play offense more
    often, be more pro-active, and anticipate the problems we may face.
                                  fiscal 2003
        Although this hearing is for the Commission's 2004 appropriations
    request, I believe it is necessary to put this request in the context
    of our fiscal 2003 funding level. Thanks to your efforts, the
    Commission was appropriated $716.4 million to fund its operations this
    year as part of the recent omnibus appropriation. These funds will
    enable us to meet the remaining fast-approaching deadlines of the
    Sarbanes-Oxley Act, hire over 800 new staff, advance initial start-up
    funds to the Public Company Accounting Oversight Board, improve our
    training efforts, and address our most pressing information technology
    needs. We will continue each of these activities in fiscal 2004 and for
    that reason I would like to discuss them now.
    Additional Staff
        The new staff provided in fiscal 2003 will focus equally on the
    complex issues that we currently face and on the fundamentals upon
    which the Commission was built: full disclosure, fairness,
    transparency, and investor protection. Investor confidence is
    predicated on ``minding our knitting'' in these core areas. I believe
    that any budget increases we receive must be targeted to the programs
    and activities that will have the largest impact on our mission. In
    this regard, the budget that was prepared prior to my arrival calls for
    the following staffing increases in our major program areas:

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

    ------------------------------------------------------------------------
    Prevention and Suppression of Fraud........................        188
    Full Disclosure............................................        204
    Investment Management Regulation...........................        178
    Regulation of Securities Markets...........................        201
    Legal and Economic Services................................         22
    Program Direction..........................................         49
    ------------------------------------------------------------------------

        My initial review of these numbers suggests that overall this level
    of increase is warranted. However, during the next several weeks and
    months I intend to delve more deeply into each program area to verify
    personally that this is the best and most effective and efficient use
    of our new staffing. I would therefore like to reserve my option to
    make changes.
        As discussed below, we will hire aggressively but thoughtfully, not
    just to increase head-count. As a result, these hiring targets may only
    be met over a longer period of time, but they will be met with people
    that we are sure can perform the vital tasks that we assign to them.
    And we are committed to train and integrate new staff as we bring them
    on. We are grateful that legislation has been introduced in both the
    House and Senate to help the Commission expedite and streamline the
    hiring process so that we can bring on additional, mission-critical
    securities industry accountants, compliance examiners and economists as
    quickly as possible to get on with the business of protecting America's
    investors.\1\ The Commission strongly supports this legislation and
    hopes that it will be adopted at the soonest possible time and signed
    into law by the President. Without this expedited hiring authority, the
    Commission will not be able to hire the additional staff it needs--and
    which the Sarbanes/Oxley Act contemplates--in any responsive time
    frame.
    ---------------------------------------------------------------------------
        \1\ See H.R. 658/S. 496, ``The Accountant, Compliance, and
    Enforcement Staffing Act of 2003''.
    ---------------------------------------------------------------------------
        Today, over half of all U.S. households are invested in our capital
    markets. Twenty years ago, that rate was less than 20 percent. Just to
    use one example: mutual fund investments today exceed by more than $2
    trillion the amount on deposit at commercial banks and are approaching
    the approximately $7 trillion in total financial assets in the
    commercial banking system. The SEC has only 354 examiners to oversee
    these mutual funds and investment advisers. In addition, while there
    are over 7,800 registered broker-dealers--with more than 88,200 broker-
    dealer branch offices--in the United States, the SEC's broker-dealer
    examination program has only 218 staff to conduct inspections of these
    institutions. These facts, along with the accounting scandals that have
    plagued us, reinforce what we all know: our markets have changed, and
    grown, dramatically, investor confidence has been shaken, and the SEC
    must act decisively to deal with these challenges.
        Equally important, I believe that the efficient functioning of the
    SEC is as much a part of investor protection as ushering in new rules
    and regulations. I have presided over similar management challenges
    while in the private sector and seen first hand what it takes to grow
    rapidly and responsibly and improve performance. The organizational and
    cultural changes that accompany the opportunity you have provided me
    are significant and require regular attention. Toward this end, the
    yardstick for measuring our success will be based both on the number
    and quality of immediate program improvements and on meeting the
    agency's long-term goals of investor protection and market strength.
    Two operational areas that play a significant role in this regard are
    staff training and management accountability.
    Training and Management
        New staff and the need for regular training go hand-in-hand. For
    this reason, the Commission will increase significantly its emphasis on
    frequent, in-depth staff training. Given the challenges we face, we
    need to ensure that staff continue to have the tools and skills
    necessary to fulfill their duties effectively. We cannot afford to have
    our most skilled employees leave the agency or be underutilized. Pay
    parity and the downturn in the economy have helped attract top talent,
    but there is more that we can do.
        Management accountability is also central to our ability to perform
    our duties. I intend to enhance the Commission's operations by
    establishing a system to better train, evaluate, develop, and mentor
    managers and supervisors. This effort is consistent with the goals of
    the President's management agenda and is the right thing to do. We
    cannot expect SEC staff to successfully fulfill their duties if they do
    not have supervisors with the skills and tools to lead them. We must
    set expectations and reward our managers and staff accordingly.
    Information Technology
        The Commission's operational challenges also extend to our
    information technology program. Prior to enactment of our fiscal 2003
    appropriation, our Office of Information Technology had been structured
    to maintain our existing information technology systems, undertake a
    few smaller projects each year, and complete only one large-scale
    initiative at a time. We have accomplished this level of activity
    primarily by developing a robust information technology capital
    planning program and relying heavily on contractors and outsourcing.
    This approach has been essential given past resource constraints, but
    it has left us with badly outdated IT capabilities. We must now be
    critically introspective, bring in broad IT expertise to evaluate our
    needs and further increase the involvement of our agency's divisions
    and offices in our information technology decisions. To meet our needs,
    program staff must work side-by-side with a reinforced information
    technology staff, and we must increase the number of information
    technology program managers we have available to assist the program
    offices in developing major applications to improve our effectiveness.
    While these hiring and cultural changes may not appear revolutionary,
    they are nonetheless significant and multi-year in nature, especially
    when viewed against our current inventory of major information
    technology needs.
        The fiscal 2003 funding level allows the SEC to undertake three new
    major, multi-year information technology projects. The first one
    addresses the Commission's need to move away from paper documents. It
    is the development of a robust document management and imaging system
    that will make it easier for our attorneys, examiners, and others to
    cull through the tremendous volumes of information that they review and
    file as part of their investigative, inspection, and enforcement
    activities. This system will provide agency-wide electronic capture,
    search, and retrieval of all investigative and examination materials
    and will be designed to meet the demands of our document-intensive
    litigation program, and to assist our examination staff in analyzing
    the content of documents more effectively.
        As an aside, one of the first things I noticed when I arrived at
    the Commission's headquarters and walked around was the extent to which
    the SEC is physically drowning in paper files. We need to make it
    easier for staff to do their jobs and to share information with each
    other. Document management and imaging are key components of this and,
    while it will be a multi-year effort, it is long overdue.
        The second project holds equal potential to improve the efficiency
    and effectiveness of the Commission: a comprehensive change in our
    filing and disclosure processes, especially regarding financial
    reporting. The effort to improve the filing and transparency of public
    company disclosures is expected to lead to significant business process
    changes that will result in the elimination of confusing forms, the
    collection of uniform data from filers, and internal operations
    improvements that will allow staff to conduct more rigorous financial,
    industry-specific, and comparative analyses. Although this project will
    be carried out by issuers, their accountants and their other advisors,
    under the leadership of the SEC, the principal beneficiaries of this
    initiative ultimately will be the nation's investors, who will have
    more understandable and reliable financial information upon which to
    base their investment decisions. This will result in a fundamental
    improvement in the transparency and comparability of firms' financial
    statements, which should significantly increase investor confidence.
        When the agency's electronic filing system (EDGAR) was originally
    created, it did a terrific job of converting paper disclosures and
    filings into electronic documents and making more information available
    to the public. We now need to take the next step. As part of a
    comprehensive review of our business processes, we need to change how
    we work and alter EDGAR accordingly. We need to revisit what
    information staff must have readily available to conduct more intensive
    and robust disclosure reviews. For instance, while we receive and
    archive the EDGAR data, we cannot immediately analyze them. Instead, we
    depend on outside vendors to transfer the numbers in the text of the
    filings to machine-readable form that we can then analyze. We are in
    the process of designing tags for EDGAR filings that would allow
    anybody to extract machine-readable data from them. These initiatives
    will allow us to conduct analyses and monitor trends in real-time.
        Our third major information technology requirement is to enhance
    our disaster recovery program. The SEC learned first-hand from the
    events of 9/11 and the experiences of its Northeast Regional Office, in
    New York, of the importance of keeping its data even more secure than
    it already is. In addition, we need to have the capacity to store and
    move large amounts of data from one regional or district office to
    another without first going through Washington. We need to move to a
    true ``point to point'' information technology system that allows us to
    mitigate the loss of data and to recover quickly in the event that we
    need to implement our continuity of operations plan. When this project
    is complete, the agency's critical files and information systems will
    be backed up daily and in multiple locations.
    Sarbanes-Oxley Act
        Since enactment of the landmark Sarbanes-Oxley Act last summer, the
    Commission has worked vigilantly to meet the Act's timeline and
    mandates. Within 30 days of the Act's signing, we adopted rules
    requiring CEOs and CFOs to certify their financial statements and
    accelerating insider transaction reporting to two days.
        This past January was the busiest month of rulemaking in the
    history of the SEC. We adopted nine other Sarbanes-Oxley mandated rules
    relating to: Pro-forma financial information, codes of ethics for
    senior executives, financial experts on audit committees, trading
    during pension fund blackout periods, disclosure of material off-
    balance sheet transactions, retention of audit records, independence
    standards for public company auditors, standards of conduct for
    corporate attorneys, and the application of certain Sarbanes-Oxley
    certification and disclosure requirements to registered investment
    companies.
        In addition, we sent four separate studies to Congress related to:
    Penalties and disgorgements in our enforcement cases, securities
    professionals who have ``aided and abetted'' federal securities law
    violations, commission enforcement actions involving reporting
    violations and restatements, and the role and function of credit rating
    agencies.
        We met these deadlines without sacrificing our other work or
    obligations--including our robust enforcement program and numerous
    regulatory initiatives unrelated to Sarbanes-Oxley. For example, in
    January we also adopted rules regarding proxy voting by investment
    companies and investment advisers, and in February we adopted rules
    regarding analyst certification of research reports. And we're hard at
    work on other rules and studies, including rules related to: Improper
    influence on auditors, listing standards related to audit committees,
    governance of the Public Company Accounting Oversight Board, investment
    adviser and investment company compliance policies, public company
    internal control reports, critical accounting policies, and expanded
    current reporting.
    Public Company Accounting Oversight Board
                Selection of a new chairman
        The Commission recently announced that it adopted a plan to select
    a Chairman of the Public Company Accounting Oversight Board established
    pursuant to the Sarbanes-Oxley Act of 2002.\2\ The plan calls for the
    Chairman, the Commissioners, and the staff to reach out and solicit
    input from a variety of sources, including key members of Congress,
    investor advocates, academics, and members of the business community.
    ---------------------------------------------------------------------------
        \2\ See ``Statement of the Commission Regarding Selection Process
    for Chairperson of the Public Company Accounting Oversight Board
    (PCAOB)'' March 4, 2003, http://www.sec.gov/news/press/2003-28.htm.
    ---------------------------------------------------------------------------
        As I said in my confirmation hearing before the Senate Banking
    Committee, the selection of a Chairperson for the Public Company
    Accounting Oversight Board is my number one priority, and I am pleased
    that the Commission has been able to build upon the recommendations of
    the General Accounting Office and quickly devise a thorough and
    expeditious process to identify and vet potential candidates.
        The SEC staff will incorporate new suggestions, update the list of
    qualified candidates and circulate it to the members of the Commission.
    The Chairman and the Commissioners will narrow that list based on the
    criteria in the Sarbanes-Oxley legislation, additional criteria that
    the Commission finds desirable, but not mandatory, and the individual's
    willingness to serve.
        Each candidate on the narrowed list will undergo a preliminary
    vetting process. Upon completion, each member of the Commission will
    interview the leading candidates and a thorough background review will
    be completed. Following this review and consultation with the Chairman
    of the Federal Reserve and Secretary of the Treasury, as required, the
    Commission will vote to approve the appointment of a Chairperson.
        The Commission will be looking for an individual who has experience
    running a dynamic and innovative organization; is well recognized by
    those participating in the financial markets and possesses a keen
    understanding of those markets; is independent from any particular
    constituency; has experience that demonstrates an understanding of the
    role of auditors in the Commission's financial accounting and
    disclosure system; has no known impediments or controversies that might
    impair his or her ability to lead, or the public's ability to rely on
    the individual to lead; and is willing and able to serve a five-year
    term.
        In addition, we are seeking a person who has the ability to
    consider impartially ideas, information, and data from all sources, to
    seek additional input whenever it appears necessary, and to make timely
    decisions, as well as the ability to absorb complex information,
    analyze it objectively, and make rational decisions. Of course, we want
    someone who has the ability to communicate effectively, has a
    demonstrated commitment to public service and to the PCAOB's mission,
    as well as an awareness of the financial reporting and auditing
    environment. The individual we choose should have a demonstrated
    ability to create a collegial working environment and instill public
    trust.
        My hope and expectation is that the Commission will move
    expeditiously and select a new chairman for the PCAOB as quickly as the
    process allows.
                Funding advance
        The fiscal 2003 budget provides the resources necessary for the
    Commission to advance start-up funds to the Board. The Commission
    initially advanced $1.9 million to the Board on January 15, 2003. On
    March 28, the Commission approved a more substantial second advance of
    $13.5 million that will fund the Board's operations through May and
    allow them to begin the development of state-of-the-art information
    systems to be used in their registration, billing and collection, and
    professional oversight programs. The Board has stated its intention to
    repay all of these funds to the Commission by the end the current
    fiscal year.
                Commission Oversight
        The Commission has significant responsibilities related to the
    oversight of the Board, including approving the Board's budget and
    rules and adjudicating appeals from the Board's decisions on
    registration, inspection, and disciplinary matters. We have developed
    close communications and a good working relationship. For example, the
    Board and the Commission recently participated in a roundtable on
    issues related the Board's registration and oversight of foreign
    accounting firms.
    Utilization of Commission Resources
        We have tremendous needs for the new resources made available in
    2003 and have plans in place to meet these needs. However, I want to be
    sure--and I am committed to making sure--that every penny of that new
    money is spent wisely. I am determined that we take an aggressive but
    thoughtful approach to resource allocation. We will bring on the people
    we need to help us fulfill our mission, and not simply increase our
    head-count. I view this allocation of resources and renewed commitment
    to the SEC's needs as a multi-year effort to ensure that we make long-
    lasting and substantial improvements in the SEC's programs that will
    restore confidence and benefit our nation's investors.
                                  fiscal 2004
        The President's request for $841.5 million in fiscal 2004
    recognizes that the Commission's needs are growing and ongoing. As I
    stated earlier, this request is the largest amount the Commission has
    ever received and will allow us to continue all of the efforts that we
    are undertaking in fiscal 2003. In particular, it will allow us to
    focus further on financial frauds, review of public company filings,
    our new risk-based examination program, and the ongoing requirements of
    the Sarbanes-Oxley Act.
    Enforcement Activities
        The Commission has played, and will continue to play, a vital role
    in protecting our markets from fraud, manipulation and other practices
    that continually threaten to undermine their integrity. To meet the
    challenges facing us--including the unprecedented number of significant
    financial frauds and accounting failures, new securities products,
    technologies, and globalization--the Commission's enforcement program
    will continue to add personnel, including investigative attorneys,
    accountants, and market surveillance specialists.
        The Commission has responded swiftly to the recent rash of
    accounting failures. In fiscal 2002, approximately 27 percent of all
    filed enforcement actions involved financial disclosure and issuer
    reporting violations. Financial reporting and accounting cases remain
    our number one enforcement priority, and numerous financial fraud
    investigations are currently underway. These types of investigations
    require a significant commitment of staff resources because they are
    fact- and document-intensive and include reviews of the conduct of a
    variety of individuals and entities. The Commission's enforcement
    program will continue to need additional attorneys and accountants to
    assist in these complex financial fraud investigations.
        As the Commission seeks to aggressively investigate and punish
    corporate fraud, an increasing number of defendants are choosing to
    litigate. Even many cases that are ultimately settled are the subject
    of protracted litigation prior to settlement. Commission litigators are
    now actively involved in nearly one-half of recently filed cases. In
    addition, our litigation and investigative staff are increasingly
    involved in emergency court actions in an attempt to secure investor
    funds before they are lost forever and to alert the investing public to
    false and misleading disclosures being made by issuers. It is critical
    that the Commission maintain a strong litigation capability because it
    is the credible threat of litigation that allows us to pursue
    wrongdoers effectively and win our cases or settle them on favorable
    terms.
        Additionally, the growing internationalization of the securities
    industry and the securities markets has added new challenges for the
    Commission in combating securities fraud. An increasing number of the
    SEC's enforcement cases have substantial international dimensions that
    make it more important for the Commission to work closely with its
    international counterparts in enforcement and inspection activities.
    Our staff devotes much time and resources to tracking down assets that
    have been sent abroad.
        And finally, the Commission's enforcement staff works closely with
    U.S. Attorneys' Offices and the Department of Justice to obtain
    criminal sanctions as appropriate. This association was recently
    institutionalized by President Bush when he created Corporate Fraud
    Task Force, of which the Commission is a member and the Department of
    Justice heads. We also will continue to detail enforcement staff, in
    appropriate situations, to U.S. Attorneys' Offices around the country
    to support criminal prosecution of securities fraud.
    Market Structure Issues
        The rules governing trading within equity markets and the
    relationship among competing equity markets is another area that the
    Commission will focus on this year. Aware that such issues were coming
    to a head, the Commission organized two full days of market structure
    hearings in October and November 2002. Participants at the hearings
    included senior staff members of the New York Stock Exchange, Nasdaq,
    American Stock Exchange, and Chicago Stock Exchange; market makers,
    specialists, Electronic Communication Networks, and agency brokers;
    buy-side traders; representatives of individual investors; and
    respected academics. In the remainder of this fiscal year, the
    Commission will devote significant resources to the development,
    proposal, adoption, and enforcement of the policy actions that will be
    necessary in this area.
    Review of Filings of Public Companies
        The Division of Corporation Finance has been enhancing its
    selective review program to target issuers whose review would most
    protect investors--large companies, companies in critical sectors,
    companies that present particular perceived financial or disclosure
    risks. This targeted approach is consistent with the directives
    contained in the Sarbanes-Oxley Act. The review of the Fortune 500
    companies undertaken last year is an example of this approach. As
    review resources and technological enhancements that will assist in the
    assessment of risk are added to the Division, the review process will
    become more robust. While the review process cannot eliminate or
    identify all financial fraud or identify those who are determined to
    commit fraud, the review process will better fulfill its objectives of
    improving disclosure and deterring fraud.
        The review process is increasingly focusing on financial reporting
    and financial disclosure because these are the areas where defective
    disclosure puts investors at most risk. To permit this focus,
    recruiting and hiring of review staff will emphasize accountants and
    those who are able to perform financial reviews.
        The Sarbanes-Oxley Act also requires review of each reporting
    company at least once every three years. We are in the process of
    developing review processes that will permit us to meet that goal. Here
    too, the additional resources that we are adding to the Division are an
    essential element and will allow us to satisfy that mandate over a
    multi-year period. We will also use those resources to meet that review
    requirement in an efficient and effective way, and we intend to do so
    in a manner that does not undercut our investor protection objective.
    Risk-Based Examinations
        With the additional staffing provided in fiscal 2003, the
    Commission's examination and inspection staff will be able to implement
    our new enhanced risk-based inspection program. For investment advisers
    and mutual funds, this enhanced program will allow examiners to
    recognize the different levels of risk inherent in the operations,
    management, and compliance processes of investment advisers and funds.
    In particular, those registrants that have relatively higher risk
    profiles will be examined every two years, while all remaining firms
    will be examined no less frequently than every four years. New firms
    will be inspected within the first year of their operation. These more
    frequent inspections are a substantial improvement over the five-year
    inspection cycle used to schedule inspections prior to fiscal 2003. For
    broker-dealers, the new staffing levels will allow us to increase
    substantially our oversight of the risk management and internal
    controls of the largest broker-dealers that have the most customer
    accounts, and also to increase the small number of broker-dealer branch
    office inspections that we are currently able to conduct.
    Other Sarbanes-Oxley Act Requirements
        While the Commission has made tremendous progress in implementing
    many of the critical components of the Sarbanes-Oxley Act and has met
    each of its statutory deadlines, important initiatives and additional
    rulemaking pursuant to this historic legislation will continue to be a
    top priority for the SEC. In addition to the numerous substantive rules
    already adopted, a number of Commission actions are still mandated by
    deadlines set within the Sarbanes-Oxley Act. These forthcoming SEC
    actions include: the ratification of key rules and procedures for the
    Public Company Accounting Oversight Board; the adoption of rules on
    analyst conflicts of interest; the recognition of generally accepted
    accounting standards; as well as studies and reports relating to both
    principles-based accounting and off-balance sheet transactions and
    special purpose entities. I am confident that the Commission and its
    dedicated staff will continue to work tirelessly to implement these
    remaining provisions of the Sarbanes-Oxley Act.
        Other rulemakings under the Sarbanes-Oxley Act, although not
    limited to a statutory deadline, also will play an important role in
    improving investor confidence in the credibility of reported financial
    information. For example, management and auditor reports on an issuer's
    quality controls over its accounting and financial reporting systems
    may enhance the quality and implementation of those controls, which, in
    turn, should improve the quality of financial reports and audits.
        Another important area that will require the use of more Commission
    resources is international affairs. The development of international
    accounting, auditing, disclosure and enforcement standards is gaining
    momentum and will require more monitoring of and participation in
    international bodies that are promulgating and interpreting standards
    that could impact the credibility of information used by American
    investors.
                                   conclusion
        In closing, let me reiterate how honored I am to serve as Chairman
    of the Commission at this time of great opportunity. Thank you again
    for inviting me today to speak on behalf of the needs of the investing
    public. I would be happy to answer any questions that you may have.

                                   PAY PARITY

        Senator Gregg. Well, thank you, Chairman Donaldson. I have
    a couple of questions. First, after considerable effort we were
    able to get pay parity in place for the SEC. I'm wondering how
    it is working, whether you think it is going to allow you to
    attract the types of individuals you need and keep the
    individuals who are there and who are critical. You are in a
    business which, up until a few years ago at least, was
    extremely competitive for staff, although now you may be able
    to find staff with a little more ease. Our concern is that the
    SEC retain its caliber staff. Is there something further we
    should do, or is pay parity working?
        Mr. Donaldson. Well, I think, bottom line, pay parity is
    working. We probably have had too short a period of time to
    measure, but just to give you some numbers, our attrition rate
    before pay parity was averaging around 14 percent, and our
    latest figures indicate that it's 4 percent or less right now,
    so so far, so good. There are other items associated with the
    hiring of professionals which maybe we can get into, but as far
    as pay parity, it seems to be working. It's a tremendous help.

                                  HEDGE FUNDS

        Senator Gregg. A question in another area, hedge funds are
    sort of viewed as the Wild West of the investing community
    these days, especially Wall Street. I'm wondering if the SEC
    has any concerns about whether or not we need additional, or
    whether or not you intend to propose additional, regulatory
    activity in the area of hedge funds and accounting disclosures
    and activities there.
        Mr. Donaldson. Clearly, the whole area of hedge funds is
    one in which we need to have more information. The latest
    numbers indicate that there are some 6,000 hedge funds in
    operation right now, with some $600 billion under management.
    The money is flowing in. The growth in hedge funds over the
    last decade has been considerable.
        I would stop and say that I think there's a slight misnomer
    that the name hedge fund implies. Many of the funds that are
    classified as hedge funds are not hedged at all, they're simply
    investment pools, but let's use that term.
        I think our posture on this is that the SEC has been,
    before I got to the SEC, attempting to get information about
    hedge funds, and since I've arrived we have initiated what will
    be a roundtable discussion in May for 2 days in which we're
    inviting a broad cross section of people associated with hedge
    funds and so forth to come in and tell us about what they're
    doing. So by the end of May we'll have a lot more information.
        I would say generally that we just need to know more about
    the techniques that are being used by hedge funds. We need to
    know more than we know now about who is investing in these
    funds. By and large they are unregulated by the SEC. Some are
    regulated under the Investment Advisors Act. We see some trends
    in terms of what I would call the retailization of hedge funds,
    that is, the putting together of groups of smaller investors,
    which is something I think we have to examine.
        Up until now, by and large, you've had to have certain
    investable assets and certain income levels in order to be
    invested in these funds, and in order for the funds to maintain
    their nonreporting status, and I think that game has shifted.
    So I think it's too early for us to make a judgment, but we're
    going to put some resources into looking at that so the next
    time you ask that question we can give you a good answer.
        Senator Gregg. Well, following up on that, from what you
    said I understand you are still early into this issue, but what
    do you see is the basic risk that you would be concerned about
    from the standpoint of protecting the public relative to hedge
    funds?
        Mr. Donaldson. Well, as you well know, there was a serious
    risk that almost caused a financial collapse in the case of
    Long-Term Capital Management, which was a particular kind of
    hedge fund that employed macroinvestment decisions and heavy
    leverage. That was a great concern when the markets turned
    against them, and I think the U.S. Government did a terrific
    job of stepping in with the Treasury Department and the Federal
    Reserve, and basically avoiding a collapse that could have been
    very damaging to other people.
        Right now, I think that area has been well covered. The
    area of potential risk now is the new entrants into the field
    that we see as Wall Street has had its problems here in the
    last 3 or 4 years. We see a lot of people breaking off from
    Wall Street firms, from investment counseling firms, and
    setting up hedge funds--one or two people raising money for
    those hedge funds--so you have a lot of potential here for
    inexperienced people with a totally unregulated vehicle getting
    themselves in trouble.
        We don't know how much leverage is being used in some of
    these funds. We need to know more about that. We need to know
    more about some of the trading techniques, so that I think
    right now all I can say is that we need to know more about
    what's going on.
        Senator Gregg. Senator Hollings.

                              STATUS OF ENRON CASE

        Senator Hollings. Chairman Donaldson, we are very lucky, in
    my opinion, to have you take this particular assignment,
    because everyone has confidence in you.
        I want to ask about two touchy things, one on the Kenneth
    Lay case. The reason I ask is, we had the Attorney General just
    the other day, and he appears before us and he relates all of
    the hard-charging comedown on corporate corruption, we've
    cleaned up corporate corruption in this Government of ours and
    everything else, and he listed the cases and what-have-you, and
    then when you ask about the leading case that we all know
    about, Kenneth Lay, he said, wait a minute, I've recused
    myself, I don't know anything about it. Do you?
        I mean, they've made reports to the Securities and Exchange
    Commission, and you're the Chairman. I hope you haven't recused
    yourself. Kenny boy didn't give you a contribution, did he?
        Mr. Donaldson. Let me say what I can say.
        Senator Hollings. The reason we're interested in this is,
    right to the point, we as good lawyers know how you can bring--
    we've defended the charges and we've brought charges and
    assisted in the prosecution. Before the Commerce Committee the
    entire California crowd appeared, and the authorities just
    listed out the fraud and how it was conducted, whereby they
    would ask for way more than their allocation in energy
    shortages and then take the excess of that allocation and ship
    it out, ship it back in and get it at the higher price because
    it was imported and what-have-you.
        So I said, well, wait a minute now, referring to Mr. Lay
    and Enron knowing about it, I said, I remember specifically
    earlier this morning Ms. Lay appeared on my TV and said her
    husband didn't know anything about it, and Mr. Freeman was the
    witness. He said, the dickens he didn't, he knew everything
    about it. He was running it. He was in charge.
        So you know, there are a lot of things about knowledge and
    what-have-you, but here you've got testimony before the
    Congress that they knew it, and it was a fraud, and California
    now has brought suit for $7 billion or $8 billion, whatever it
    is, for reimbursement, but we don't ever hear anything, and
    1\1/2\ years has passed, and we all are proud about how we have
    come down hard on corporate corruption, but all of a sudden
    this case disappears.
        In the meantime, back at the ranch, they said, wait a
    minute, you know, the fellow in charge of corporate corruption
    was out of the law firm that represented Enron, namely Mr.
    Larry Thompson, so what gives here? I mean, I'm trying to find
    out the status of that case.
        Mr. Donaldson. Well, you bring up a number of issues; there
    is the criminal case, and there is the civil case. Just to give
    you a little background, the Enron criminal investigation is
    being led by the Enron Task Force, and that was formed in
    January of 2002 to investigate all the matters related to
    Enron, and it is overseen by President Bush's Corporate Fraud
    Task Force which includes us, the SEC, and the Department of
    Justice. It is a team of federal prosecutors supervised by the
    Criminal Division and agents of the FBI and the IRS Criminal
    Division.
        That task force also has coordinated with and received
    considerable assistance from the Securities and Exchange
    Commission. Now, as far as the civil case is concerned, last
    August the SEC filed a case against Michael Kopper, who is a
    former top Enron official accused of violating antifraud
    provisions, and then in October we filed a case against Andrew
    Fastow, who is Enron's former CFO, alleging violations of the
    antifraud, periodic reporting, books and records provisions and
    so forth.
        Most recently, last month the Commission charged Kevin A.
    Howard, the former chief financial officer, and Michael W.
    Krautz, the former senior director of accounting of Enron
    Broadband Services, and also March 17, charged Merrill Lynch &
    Company and four of its former senior executives with aiding
    and abetting Enron securities fraud. Now, that is the first
    time that the SEC has brought an aider and abettor action
    against a bank.
        Now, as far as a general comment on your question
    specifically referring to Lay----
        Senator Hollings. He was the chief executive officer.
        Mr. Donaldson. He was the chief executive officer, and I
    think I can say that the coordination of the criminal and civil
    action requires a lot of very careful building blocks, if I can
    put it that way.
        Senator Hollings. You are building a case, is what you're
    saying?
        Mr. Donaldson. The building blocks have to do with the way
    the criminal justice system works. It has to do with the way
    information is received. Information can be received by the
    Justice Department a little more completely than it can by us.
    I guess what I'm saying is, without commenting specifically on
    that case, that we're on the case of all the Enron activities.

                            EXPENSING STOCK OPTIONS

        Senator Hollings. If Mr. Donaldson says you're on the case,
    that's sufficient for me. Let me ask this, and go to another
    thing that Arthur Levitt, when he was the Chairman, he tried to
    get these stock options expensed. We tried to, Senator Levin
    from Michigan, he put in an amendment. We were all ready to
    vote on the amendment, then all of a sudden the majority leader
    and the minority leader said no, we are not going to take--
    we're going to take it up later, and later is 1 year ago I
    think, and we haven't ever taken it up.
        I got right to the point with WorldCom, and one of the
    officials I'm asking, I'm saying how in the Lord's world did
    you give Ebbers a $400 million loan, and the answer was, we had
    to. I said, you had to? He said, yeah, he had all of these
    options and he had built them up and built them up, and he had
    them, and he was going to cash them in twofold. He was going to
    ruin the financing we had on course for WorldCom-MCI on the one
    hand and of course destroy the value of the stock, so we had to
    give it.
        Corporate governance shouldn't work itself into that kind
    of cul-de-sac, and we're ready to do it, and I have heard, I
    believe, your comment that they should be expensed. You can't
    do it both ways. They are an expense, but they're not one. What
    is the position that the Securities and Exchange Commission has
    taken? What is being done? Do you want us to write it into this
    bill? I would be glad to try to write it in here that we
    expensed the stock options so we can really get corporate
    governance back. That was the real thing, and it's still
    bothering us, these excessive executive salaries.
        We had to write on the bill just the day before yesterday,
    or last week I guess it was, Friday, that here we were
    financing the airlines $3.5 billion. All the airlines' stock,
    net worth of all the airlines does not come up to $3.5 billion.
    We've given them more money than they are all worth if you put
    them all together, and we said well, that's pretty bad, but
    even worse is, look at these bonuses they are giving, these
    millions and millions of dollars of bonuses as they all go
    broke, rewards for going broke. This is what's ruining--nobody
    wants to invest in a stock market that's got those kind of
    stock options on the one hand and financing companies giving
    excessive bonuses and everything else like that on the other
    hand for going broke. That's the problem that you have.
        Mr. Donaldson. Well, let me make just a couple of comments.
    I have made, as you allude to, comments on this subject during
    my confirmation hearing, and I will state again unequivocally
    that I believe that stock options are an expense and that that
    expense needs to be reflected. That is point number one.
        Point number two, and the more difficult question, is how
    to do it? How do you come up with a value? In a complex
    situation in terms of valuing those options over differing
    periods of years and so forth, and different markets, what is
    the value that should be reflected on the day that those
    options are given? A lot of them expire with no value. A lot of
    them are tremendously valuable. How do you rate that? How do
    you do it?
        The FASB has committed themselves now to come up with a
    formula for expensing those options and an accounting standard
    for doing so, and I'm going to be very interested to see that
    standard. It is not an easy calculation, but they have
    committed themselves.
        Senator Hollings. Will that be a rule of the Commission,
    then, once they make that recommendation?
        Mr. Donaldson. As you know, under the new arrangement with
    the Public Accounting Board, we will both be very much
    listening to the rules proposed by FASB. I think we are going
    to see that your desires are fulfilled here.
        Senator Hollings. And your desires.
        Mr. Donaldson. And my desires, absolutely.
        Senator Hollings. Thank you very much, Mr. Chairman.
        Senator Gregg. That will have a tax effect too. Will the
    Treasury be included in that exercise?
        Mr. Donaldson. The final rule will be an accounting rule,
    and our new oversight board with the primary responsibility at
    the first level will be there, but of course their rulings and
    so forth come through us and have to be approved by us, so we
    will have the ultimate responsibility.

                   PUBLIC COMPANY ACCOUNTING OVERSIGHT BOARD

        Senator Gregg. How about this accounting board? How are you
    doing in getting that going, and especially what are we going
    to pay these people, talking about pay?
        Mr. Donaldson. As to the status of the Board, as I've said
    publicly, it is a number one priority for me as the new SEC
    Chairman to get the right person to be Chairman of the
    Accounting Board. Although I'm saying me, it ultimately is our
    Commission that will appoint that chairman.
        We instituted a process within 1 week of my arrival, a
    process for searching for that person. I will not bore you with
    all the details of the process, except to say that we reached
    out in a broad and public way to add to our list. We talked to
    anybody and everybody that would talk to us about making
    suggestions. We brought in a tremendous number of names. We
    then had a time-phased process that boiled that down.
        We have boiled it down. We are in an advanced stage now,
    and I think that what I would say is that for anybody that has
    been in the recruiting business, if you will, we don't want to
    make a mistake on this. We want to get the right person, and
    generally speaking, the right person is not always readily
    available.
        Again, my experience has been that oftentimes the right
    person is happily doing something else, and so it is a
    recruiting effort to get the right person to come. But I am
    encouraged by the work to date, and I think presently we will
    have somebody, sooner, I hope, than later.
        Senator Gregg. Not to be parochial about this, but you're
    the right person for the SEC. You would probably be the right
    person for this board also, and obviously in taking the SEC job
    you're not getting paid a lot of money compared to what you
    made in the private sector. Yet the salary for this accounting
    board is being set at like $500,000, which is about twice what
    we pay the President.
        Mr. Donaldson. I can tell you what the relationship is to
    my salary.
        Senator Gregg. Your salary and my salary. The Chief Justice
    of the Supreme Court is paid about $160,000, I think. I'm not
    sure that it is understandable why we need to pay so much. I
    mean, isn't the person who takes this job going to be mostly
    doing it as a public service, as you are doing your job, as the
    President does his, and we hopefully do ours, and as the Chief
    Justice of the Supreme Court does his?
        Mr. Donaldson. Well, I understand exactly what you're
    saying, and I think you have to go into the history, which you
    probably know better than I do, of the Sarbanes-Oxley
    legislation and what went into the status of the Public Company
    Accounting Oversight Board, and it is not a Government agency.
    It was set up as an independent privately incorporated agency.
        Senator Hollings. Why?
        Mr. Donaldson. The reason for that, and again I'm
    speculating on this because I had nothing to do with
    establishing it, was that there are a lot of other entities out
    there in the private sector such as the FASB and other entities
    like that, which are attracting people to work there with
    private sector compensation. And I think the intention of
    Sarbanes-Oxley was to be able to go out and get not only the
    members of the Board, but also to get staff members, who were
    competitive with the best people available out there. So the
    Oversight Board was ordered to set a salary level that was
    comparable to what would exist, not in total private sector
    America, but comparable organizations.
        They did that and came up with that salary level. Actually
    it is slightly over $500,000 for the Chairman and $450,000, I
    think, for the members of the Board, and that received the kind
    of negative comments which you've expressed here.
        I will stop there, except to say that they are doing what
    they were ordered to do. Whether they could have modified it or
    presented it in a better way remains to be seen.
        Senator Gregg. I suspect the right person to do it won't do
    it just to make money.
        Mr. Donaldson. Excuse me, not to interrupt you, but I think
    you just don't know--I mean, you just don't know. You're
    absolutely right that certain people are not going to do it,
    but certain other people maybe will.

                               SARBANES-OXLEY ACT

        Senator Gregg. On Sarbanes-Oxley, how is it working? It's 8
    months into it. I hear grumbling. Maybe that's because it's
    working. Do you see issues out there that we're going to need
    to revisit?
        Mr. Donaldson. As you know, the SEC has been in an
    extensive rulemaking mode here, and we're coming to the end of
    that.
        I think that so far, so good. I think that the system is
    working the way it should work, which is that a law is passed
    and the rulemaking based on public comment and so forth can
    address some of the unintended consequences of the law,
    maintaining the spirit of the law, but being practical about
    the unintended consequences.
        I think it is working quite well. If you go out into
    corporate America, particularly in the audit committee
    function, which is where some of the rules are most advanced, I
    think there's a heightened awareness of the responsibility of
    the audit committee.
        There are still some issues that we have to cover by
    rulemaking, but I think it's working pretty well. I say pretty
    well because there's a lot of nervousness out in corporate
    America about just exactly what these rules mean. There's a lot
    of tentativeness, and that creates a kind of a distraction in
    my view for people running companies. They can become so tied
    up in trying to conform to the letter of the law that the risk
    here is that they lose flexibility and lose sight of what's
    needed to run an entrepreneurial company. That is a risk.
        My own feeling in this is that--and I probably shouldn't
    say this--but I feel very strongly that we can pass all the
    laws that we want to, but we need the atmosphere inside the
    company to be moral. The philosophy of running the company
    should be that the chief executive and the board says this is
    the kind of company we want to be, and we're not going to skate
    right up to the minimum required by the letter of the law.
    We're going to stop well short of that because that's the kind
    of company we want to run, and until companies do that and have
    a code of ethics that is more than just written on paper, I
    think we will not have solved our problems.
        I might go on to say that I think that there is a shift
    here, largely as a result of Sarbanes-Oxley, of the power, if
    you will, and authority to the board away from the chief
    executive who operates as he or she wants to. Gradually the
    boards of directors are recognizing that it is their
    responsibility to the shareholders to set that tone, and then
    to hire management that has the same feelings about the ethics
    of doing business.

                EFFECT OF SARBANES-OXLEY ON CORPORATE DIRECTORS

        Senator Gregg. I couldn't agree more with your explanation
    of the philosophy and how it should work. I'm wondering,
    however, if, with Sarbanes-Oxley and the litigation atmosphere,
    we haven't created a situation where the traditional director
    no longer wishes to serve on a board of directors. In that
    case, you're going to create an environment where you basically
    end up with professional directors who are willing to take
    risks. Taking risks is the way they make their money. This is,
    I think, one of the strengths of corporate America, which is
    that you get Main Street on your board of directors, and it may
    be a well-heeled Main Street, but at least it's Main Street.
    You talk to folks who serve as directors now and they're all
    scared, and many of them won't serve.
        Mr. Donaldson. This is a real problem, and I think there
    are two solutions to it at least. One is that the corporate
    directors themselves, the existing body of corporate directors
    are going to have to figure out how many boards they can be on
    to discharge their new obligations under Sarbanes-Oxley.
    They're going to have to think through, and the boards are
    going to have to think through as they recruit, that there is
    an enhanced responsibility here and an enhanced risk, as you
    say, and I think potential directors and existing directors are
    going to have to look at that carefully.
        Beyond that, I believe we're going to have to bring a whole
    new cadre of directors into the game. It's been a relatively
    small group of people who serve on many boards. That's been the
    tradition, a lot of CEOs serving on other CEOs' boards. There
    is a tremendous wealth of talent out there, out in corporate
    America and elsewhere, who can be very good corporate
    directors, and who have the time, and who will learn by doing
    it and bring new dimensions.
        This makes me feel that we have to organize the training of
    these people, and searching for them, and we hope to be very
    active in that. I commend the number of business schools and
    law schools in the country, and the New York Stock Exchange,
    who are all moving toward director education, if you will. And
    we want to help them do that and intend to help them do that,
    so I think you are going to find a lot of, I'll say young
    people, but maybe older people who have not had a crack at it,
    who have something to offer and are willing to take that
    challenge. But we'll see.
        Senator Hollings. Along that line, just as an aside, when I
    was a young Governor from 1958 to 1962, that is what I had. My
    Bible was right there, Dun & Brad, and I could just pick out
    those corporate directors, and there wasn't any training. They
    were just drinking buddies. I mean, the GE served on the IBM,
    served on the General Motors, served on the Dupont. I mean, you
    could find them all. I wove them into what we called the
    plantation society. We've got over 100 plantations in the low
    country of South Carolina, and each Sunday at 11 o'clock they
    would have a brunch and go from one to the other, and I was
    always at those brunches to meet those folks and everything
    else, and then talk to them and try to get them to move their
    industry, try to carpetbag New Hampshire.
        Senator Gregg. You did a good job of it, too.
        Senator Hollings. We had a good time doing it, but those
    corporate--they were good. They were good. I found all the CEOs
    and everything else very good, but it's gotten to the extreme.
    The quarterly reports and the life of a CEO is what, 3 years or
    something. He's got to get the stock up or they get him out, or
    whatever it is. They just take the money and run, all kind of
    bonuses, everything else like that. You've got a tough job
    trying to change that with the stock exchange and everything
    else and the business schools, as you indicate, working on it.
    You do a lot of good work. Thank you.

                                   CONCLUSION

        Senator Gregg. Do you have anything else you wish to add?
        Mr. Donaldson. Again, I'm delighted to be here.
        Senator Gregg. The check is in the mail.
        Mr. Donaldson. I might just add one thing, if I can, which
    relates to the hiring of the people that we have to hire, we
    can hire lawyers quite easily because they don't have to go
    through the Civil Service posting and all of the competitive
    service requirements.
        We are having real problems hiring accountants and
    economists and examiners. It is hard for us to compete out
    there under existing hiring regulations; therefore we have been
    working hard to see if we can't get those laws changed, and the
    House is ready to vote out an excepted service exception for
    us. By the way, our union has agreed with this, and we have
    sent a letter from myself and the head of the union, who
    cooperated with us. So--you asked if there was anything else
    you could do.
        Senator Gregg. Well, we have been known to put authorizing
    language in our bill, so if you want to get us the language,
    and if we can get the agreement of Senator Shelby----
        Senator Hollings. That might help move it along. Any need
    like that, just contact the chairman.
        Mr. Donaldson. Well, I know it is not the direct
    jurisdiction of this committee, but it helps us.
        Senator Gregg. Well, everything is in the jurisdiction of
    this committee. This is the Appropriations Committee.
        Mr. Donaldson. Okay.
        Senator Hollings. That's the way I was taught.

                              SUBCOMMITTEE RECESS

        Senator Gregg. Thank you very much.
        The next hearing is scheduled on Thursday, April 10, at 10
    o'clock in this room, and at that time we will hear from the
    Director of the FBI.
        [Whereupon, at 10:40 a.m., Tuesday, April 8, the
    subcommittee was recessed to reconvene subject to the call of
    the Chair.]

    DEPARTMENTS OF COMMERCE, JUSTICE, AND STATE, THE JUDICIARY, AND RELATED
                  AGENCIES APPROPRIATIONS FOR FISCAL YEAR 2004

                                  ----------

                            THURSDAY, APRIL 10, 2003

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 10:03 a.m., in room S-146, the
    Capitol, Hon. Judd Gregg (chairman) presiding.
        Present: Senators Gregg, Hollings and Kohl.

                             DEPARTMENT OF JUSTICE

                        Federal Bureau of Investigation

    STATEMENT OF ROBERT S. MUELLER, III, DIRECTOR

                    OPENING STATEMENT OF SENATOR JUDD GREGG

        Senator Gregg. The hearing will come to order.
        We appreciate Director Mueller taking time out of his very
    busy schedule at the FBI, which is obviously one of the premier
    agencies in this country for protecting our Nation in this time
    of heightened concern. The FBI has taken, I think, a dramatic
    role in the area of leading this effort and has a huge
    portfolio and, thus, it is nice to have the Director here to
    talk to us about his budget and about his game plan.
        And, Senator Hollings, do you have an opening statement?
        Senator Hollings. No. Thank you.
        Senator Gregg. So we will turn to you, Director.
        Mr. Mueller. Thank you, Mr. Chairman, Senator Hollings. I
    beg your indulgence for a short statement.
        Senator Gregg. Certainly.

                     OPENING STATEMENT OF ROBERT S. MUELLER

        Mr. Mueller. Let me just start by saying as I think you
    have pointed out, and due in no small part to the support we
    have had from this committee, the FBI is undergoing
    extraordinary and, I believe, positive changes. I believe we
    are more prepared today than we ever have been to meet the
    threats posed by terrorists, foreign intelligence services and
    criminal enterprises. The changes we have made in the past 18
    months, and many others that are ongoing, will ensure that the
    FBI stays on top of current and future threats well into the
    21st century.
        I believe that our fiscal year 2004 budget request will
    give us the resources we need to continue our positive
    momentum. As you are well aware, our total request is $4.6
    billion, and we are requesting program changes totaling $513
    million including 2,346 new positions, 503 of which will be for
    special agents.
        I would like to spend a moment walking you through some of
    our progress to date in certain areas, the assessment of the
    threats that we still face in this country, and the changes
    that we are making to align our resources to the threats we
    confront.

                                COUNTERTERRORISM

        As I know you are aware, our top three priorities currently
    are counterterrorism, counterintelligence and cyber crime. In
    turning first to counterterrorism, since the attacks of
    September 11th, the FBI has made the prevention of terrorist
    attacks our number one priority. I am pleased to report our
    efforts have yielded major successes over the last 18 months.
    As you are aware, we have disrupted suspected terrorist cells
    in Buffalo, Detroit, and Portland. And the recent apprehension
    in Pakistan of Khalid Shaikh Mohammed, a key planner and the
    mastermind of the September 11th attack, is also a significant
    achievement in the war on terrorism.
        We also have been successful in choking off terrorists'
    ability to fund their acts of terror. We have frozen $125
    million from more than 600 accounts around the world, and
    conducted 70 financial investigations with 23 convictions to
    date.
        Also in Pakistan, last month the Pakistanis apprehended
    Mustafa Ahmed al-Hawsawi, a major financial planner for Al-
    Qaeda.
        As Al-Qaeda and other terrorist organizations change
    tactics, the FBI must be equally agile. We, too, must evolve,
    and we are evolving. We have dramatically increased our
    intelligence analysis and dissemination capabilities and are
    now focusing on long-term strategies to upgrade these
    capabilities.
        Our fiscal year 2004 request includes approximately $1
    billion in direct support for counterterrorism. Understandably,
    the number of counterterrorism cases has risen dramatically
    since September 11, 2001, and the recent capture of high-
    ranking Al-Qaeda operatives and the information we have gleaned
    from their debriefings suggests that those numbers will
    continue to climb.
        We need to have the resources to handle those increased
    numbers of counterterrorism cases. Nearly 50 percent of all of
    our requested program changes in 2004, or $250 million,
    supports our counterterrorism mission. In particular, the 430
    positions proposed in the budget will strengthen investigative
    support in the field and improve counterterrorism management
    and coordination at Headquarters.
        Additionally, the requested amounts would support 66 of--
    the 66 Joint Terrorism Task Forces we have nationwide, which
    are critical to facilitate information sharing and act as a
    first line of defense against terrorist attacks.

                              COUNTERINTELLIGENCE

        The second priority for us is counterintelligence. We
    have--we look at our counterintelligence mission in four
    sectors. First and most significant is the potential for an
    agent of a hostile group or Nation to produce or use weapons of
    mass destruction. Second is the potential for a foreign power
    to penetrate the intelligence community. Third is the targeting
    of Government-supported research and development. And finally,
    the fourth is the potential compromise of certain critical
    national assets spread across the United States.
        Just as we are transforming our counterterrorism program,
    we are also transforming our counterintelligence. We have
    reorganized the program and realigned our resources to
    concentrate on emerging threats. We now have full-time
    counterintelligence squads in 48 of the 56 field offices
    dedicated to investigating hostile foreign intelligence
    services. In the 2004 budget, we are requesting $63 million and
    599 positions of which 94 would be for agents.
        Let me turn for a second to briefly discuss the events that
    occurred yesterday in Los Angeles. As you are aware, I believe,
    yesterday in Los Angeles a retired FBI supervisor, Special
    Agent James J. Smith, was arrested along with a former
    intelligence asset, Katrina Leung. For many years, Smith, who
    had recruited Leung, served as her primary handler. The
    allegations against Smith and Leung are contained in criminal
    complaints which were unsealed yesterday. And because the
    matter is pending in Federal Court, I really cannot comment on
    the merits of these cases or on the strength of the evidence
    against Smith and Leung.
        I do want to point out, however, that when I learned of
    these--of this possibility in January of this year, we
    immediately took steps to address this issue. I brought in a
    person by the name of Randy Bellows who had done the report on
    Wen Ho Lee in the Justice Department, an experienced prosecutor
    from the Eastern District of Virginia, to go out to Los Angeles
    and review what had occurred in those cases and to come back
    and give me recommendations.
        Based on his recommendation, I appointed an Inspector in
    Charge, and it was the individual who was the lead agent in the
    Aldrich Ames case, to conduct a thorough covert investigation
    of the charges in Los Angeles. We gave him a task force in
    excess of 30 individuals who were separate and apart from the
    Los Angeles field office. And he conducted that investigation
    leading to the charges yesterday.
        I have also asked the Inspector General to look at the
    performance of the Bureau with regard to this and other cases
    out there. And I am not content to wait for the Inspector
    General's review. I have asked the Inspection Division to look
    at the managers who may have had some responsibility and
    immediately get back to me a report on their responsibility for
    what happened out there.
        I also want to point out that it is--we have, since January
    of last year, instituted a number of reforms out at the FBI
    Headquarters to ensure that these types of problems are
    corrected, not only out there, but throughout the FBI. In June
    of this last year, we established a rigorous Asset Validation
    Review Program to strengthen agent accountability and
    management oversight, and made significant changes in the
    senior management within the Counterintelligence Division. And
    as I have said before, we have promulgated a national
    counterintelligence strategy with centralized program
    management.
        We cannot minimize the problems in the Los Angeles program,
    but we have moved firmly to correct those problems. And quite
    obviously, I believe that to be an isolated event and I remain
    proud of the work of the many thousands of men and women of the
    FBI for the service they render every day to the United States.
    But we, as an organization, must learn from the mistakes of the
    past so that we do not repeat them in the future.

                                  CYBER CRIME

        Leaving counterintelligence, the third priority is cyber
    crime. We, as just about everybody else in the United States,
    continue to see an explosive growth in cyber crimes. Last year
    we established a consolidated new Cyber Division at
    Headquarters to manage these investigations and to help us
    coordinate our public and private sector partners.
        In our 2004 budget request, we are requesting $234.4
    million to protect the United States against these attacks. We
    are seeking 194 positions, of which 77 would be for agents.
        In addition to the traditional cyber crimes, over the past
    6 years, we have seen cases involving child sexual exploitation
    grow in number from 113 to over 2,300. The requested resources
    for 2004 will help us to keep pace with this burgeoning
    caseload.
        Lastly in the cyber area, 6 out of 10 of our investigations
    currently require some level of computer forensic support.
    History tells us that the number of cases requiring this
    support will grow. These resources would allow us--the 2004
    resources which we request would allow us to expand our ability
    to conduct computer forensics examinations.

                              TECHNOLOGY PROGRESS

        A last moment on our technology progress. We have made
    substantial progress in the last 18 months. On March 28, we
    completed the Trilogy Wide Area Network. It was completed 3
    days ahead of schedule. There were some that said that we could
    not do it, much less do it on time. That wide area network has
    been deployed to 622 FBI locations. Over the last 18 months, we
    have also installed 21,000 new desktop computers and nearly
    5,000 printers and scanners.
        We are now focused on implementing the data warehousing
    capability that will bring together our information into a
    database or databases that can be accessed by agents throughout
    the world, as well as our analysts, as soon as that piece of
    information is developed.
        In today's world, we cannot afford to allow our technology
    to become obsolete. And it is essential that we preserve these
    investments by ensuring there is sufficient funding for life
    cycle operations and maintenance of systems and for technology
    refreshment, and the 2004 budget request includes a request for
    $82 million for this purpose.
        Mr. Chairman, in addition to the priorities I outlined
    today, the FBI is also requesting funding to continue
    restructuring our security programs, to augment nuclear DNA
    efforts, and to support our ongoing crackdown on corporate
    corruption.

                               PREPARED STATEMENT

        I believe that my Bureau is in the process of turning a
    corner in its history. We have made substantial changes to
    better equip us to protect America over the last 18 months. We
    must continue to evolve. We must continue to grow. And with
    your support, we can give our agents the resources and tools
    they need to carry out their mission of protecting America.
        Thank you for the opportunity to give a brief statement.
        Senator Gregg. Thank you, Director. We appreciate that.
        [The statement follows:]

                  Prepared Statement of Robert S. Mueller, III

                                  INTRODUCTION

        Good morning. Chairman Gregg, Senator Hollings and members of the
    Subcommittee, I welcome the opportunity to appear before you to discuss
    the FBI's fiscal year 2004 budget request. The FBI is undergoing
    extraordinary, positive change, to better meet the threats posed by
    terrorists, foreign intelligence services, and criminal enterprises. We
    have changed our organizational structure to address the greatest
    threats facing our country, to be more dynamic and flexible, and to
    ensure accountability. And we are dramatically upgrading our
    information technology. These changes, and many others that are
    ongoing, will ensure that the FBI stays on top of current and future
    threats well into the 21st century.
        The FBI's fiscal year 2004 budget request will give us the
    resources we need to keep this positive momentum. Our total request is
    $4.6 billion. We are requesting program changes totaling $513 million,
    including 2,346 new positions, 503 of which are Special Agents. This
    morning, I would like to briefly walk you through our progress to date,
    our assessment of the threat and the changes we are making to align our
    organization and resources to address the threat.
        Before beginning, let me make one caveat to my testimony. We are
    still analyzing the impact of the 2003 Omnibus Appropriations Act on
    our 2004 request. It is possible that some changes to the request may
    be required to reflect the 2003 enacted level. We will be working with
    the Appropriations Committee on this analysis.

                           COUNTERTERRORISM PROGRESS

        The prevention of another terrorist attack remains the FBI's top
    priority. We are thoroughly committed to identifying and dismantling
    terrorist networks, and I am pleased to report that our efforts have
    yielded major successes over the past 18 months. Over 228 suspected
    terrorists have been charged with crimes, 113 of whom have been
    convicted to date. Some are well-known--including John Walker Lindh and
    Richard Reid. But, let me give you just a few recent examples:
      --In March, Khalid Shaikh Mohammed was located by Pakistani officials
            and is in custody of the United States at an undisclosed
            location. Mr. Mohammed was a key planner and the mastermind of
            the September 11th attack. Since the arrest, the FBI worked
            with other agencies to disrupt his financial network in the UAE
            and Pakistan and we are continuing to get extremely valuable
            information from him.
      --On March 16, Abdullah al-Kidd, a U.S. native and former University
            of Idaho football player, was arrested by the FBI at Dulles
            International Airport en route to Saudi Arabia. The FBI
            arrested three other men in the Idaho probe in recent weeks.
            And the FBI is examining links between the Idaho men and
            purported charities and individuals in six other jurisdictions
            across the country.
      --In February, members of the Palestinian Islamic Jihad, including
            Professor Sami Al-Arian, were arrested by the FBI and charged
            under Racketeering Influence and Corrupt Organizations with
            operating a racketeering enterprise from 1984 until the present
            that engaged in violent activities.
      --Six individuals in Portland, Oregon, were arrested by the FBI and
            charged with conspiracy to join al Qaeda and Taliban forces
            fighting against U.S. and allied soldiers in Afghanistan. All
            six have entered plea negotiations.
      --And, in Buffalo, the FBI arrested seven al-Qaeda associates and
            sympathizers. These individuals, members of a suspected sleeper
            cell, were indicted in September 2002 for providing material
            support to terrorism.
        In addition, we are successfully disrupting the sources of
    terrorist financing, including freezing $125 million from 62
    organizations and conducting 70 financial investigations, 23 of which
    have resulted in convictions.

                            COUNTERTERRORISM THREAT

        Despite these successes, tangible terrorist threats remain. During
    this period, we are clearly focused on immediate threats to the nation
    because of the war in Iraq. In order to respond to potential threats,
    our Strategic Information and Operations Center at FBI Headquarters and
    our field special command posts are operating on a 24 hour basis. We
    established an Iraqi Task Force. And, our agents have interviewed over
    9,000 individuals and are obtaining important information to help
    protect the American public.
        But, even as we guard against this potential Iraqi threat, we
    believe that for the foreseeable future, the al-Qaeda network will
    remain one of the most serious threats facing this country. While the
    United States has made progress in disrupting al-Qaeda at home and
    overseas, the organization maintains the ability and the intent to
    inflict significant casualties in the United States with little
    warning.

                       CHANGING TO MEET TERRORIST THREATS

        As al-Qaeda and other terrorist organizations change their tactics,
    the FBI, too, must evolve. And we are evolving.
        Our new Analysis Branch in the Counterterrorism Division has
    produced 30 in-depth analytical assessments, including a comprehensive
    assessment of the terrorist threat to the homeland. We have also
    improved analyst training and dramatically beefed up our language
    translation capabilities.
        I am now focusing on long-term strategies to enhance our ability to
    collect, analyze, and disseminate intelligence. I have put in place a
    new, formal structure that will enable the FBI to assess gaps and to
    establish formal policies and strategic plans for intelligence
    collection. A new Executive Assistant Director for Intelligence (EAD/I)
    will have direct authority for the FBI's national intelligence program,
    and will ensure that we have optimum intelligence strategies,
    structure, and policies in place.
        We are establishing, in every field office, Intelligence units
    staffed with Reports Officers. These specially-trained individuals
    collect and extract intelligence from FBI investigations and share that
    information with our law enforcement and intelligence partners.

                   FISCAL YEAR 2004 COUNTERTERRORISM REQUEST

        Our fiscal year 2004 request includes approximately $1 billion in
    direct support for counterterrorism. Nearly 50 percent of all requested
    program changes, or $250 million, supports counterterrorism. In
    particular, the 430 positions proposed in the fiscal year 2004 budget
    will strengthen operational support around the country and improve CT
    management and coordination at FBI Headquarters. New personnel would
    provide an increased level of guidance, legal advice, and operational
    support to investigators on the front line of the war on terrorism. We
    must also continue to grow our cadre of strategic analysts. The number
    of FBI counterterrorism cases more than doubled last year, and with the
    recent capture of high-ranking al-Qaeda operatives, the number of cases
    will continue to climb.
        The requested amounts would support 66 JTTFs--critical multi-agency
    task forces that facilitate cooperation and information sharing, and
    act as a ``first line'' for preventing terrorist attacks. It would
    expand vital international partnerships by adding new FBI Legal
    Attaches in Sarajevo, Bosnia; Kuwait City, Kuwait; Tashkent,
    Uzbekistan; Kabul, Afghanistan; and Belgrade, Serbia, and by enhancing
    our presence in several existing locations to handle a growing
    workload.
        Approval of this budget request would also improve FBI crisis
    response capabilities, so we are prepared to respond to the scene of a
    terrorist attack at home or abroad quickly and effectively, with the
    equipment we need.

                          COUNTERINTELLIGENCE PROGRESS

        Mr. Chairman, so far this morning I have focused on the terrorist
    threats facing this country. Our counterintelligence efforts are also
    vital to national security. I want to emphasize that the FBI is
    thoroughly engaged in fighting the serious threat from foreign
    intelligence services and their assets. The FBI had several successful
    investigations in this area. Last month, Brian Regan agreed to accept a
    life sentence for attempted espionage and unlawful gathering of defense
    information. In October 2002, Ana Montes was sentenced to 25 years in
    prison following her plea of guilty to one count conspiracy to commit
    espionage on behalf of Cuba.

                          COUNTERINTELLIGENCE THREATS

        Intelligence threats fall into four general categories. The most
    significant--and our top counterintelligence priority--is the potential
    for an agent of a hostile group or nation to enhance its capability to
    produce or use weapons of mass destruction. A second threat is the
    potential for a foreign power to penetrate the U.S. Intelligence
    Community. A third threat is the targeting of government supported
    research and development. The individuals awarded research and
    development contracts in support of ongoing operations and war-making
    capabilities constitute the highest risk. The fourth threat is the
    potential compromise of Critical National Assets (CNAs). The nation's
    CNAs are those persons, information, assets, activity, R&D technology,
    infrastructure, economic security or interests whose compromise would
    do damage to the survival of the United States.

                     CHANGING TO MEET INTELLIGENCE THREATS

        Just as we have worked to transform ourselves within the
    counterterrorism program, we have made significant changes to the FBI's
    counterintelligence program. Last May, when I announced the second
    phase of the FBI reorganization, I indicated that we would be
    refocusing our counterintelligence program to focus on the four threats
    I outlined. That effort is progressing with a centralized, nationally
    directed program. We established a Counterespionage Section responsible
    for overseeing all of the FBI's counterespionage efforts, including
    economic espionage, and we clarified our priorities and objectives in a
    ``National Strategy for Counterintelligence.''
        With your support, we reprogrammed 216 positions from criminal
    investigations to counterintelligence, and we now have full-time
    counterintelligence squads in 48 of the 56 field offices.

              FISCAL YEAR 2004 COUNTERINTELLIGENCE BUDGET REQUEST

        For fiscal year 2004, we ask your support for program changes
    totaling $63 million and 599 positions, including 94 agents, to further
    our counterintelligence strategy. These resources would provide the
    necessary investigators, analysts, and surveillance capabilities needed
    to address emerging global threats, bolster both our fixed and mobile
    surveillance capabilities, and improve our ability to detect espionage
    activities targeting national assets and universities.

                              CYBER CRIME PROGRESS

        Next, I would like to discuss our third priority--cyber. We have
    created a consolidated new Cyber Division at Headquarters to manage
    investigations into Internet-facilitated crimes, to support
    investigations throughout the Bureau that call for technical expertise,
    and to help us coordinate with public and private sector partners.
        This strategy is proving successful. Our computer intrusion
    program, for example, has identified over 5,000 compromised computers,
    and resulted in 320 convictions and $20.4 million in restitutions.
    During 2002, Innocent Images National Initiative investigations
    resulted in 692 arrests, 648 indictments/informations, and 646
    convictions. And despite using only 5 percent of all FBI resources, the
    Cyber Program is facilitating investigative activities across all
    Bureau programs.

                               CYBER CRIME THREAT

        Unfortunately, we are seeing explosive growth in cyber crime--both
    traditional crimes such as fraud and copyright infringement that have
    migrated on-line, and new crimes like computer intrusions and denial of
    service attacks.
        To date, terrorists have posed only low-level cyber threats, but
    some organizations are increasingly using information technology for
    communication. Terrorist groups are increasingly computer savvy, and
    with publicly available hacker tools, many have the capability to
    launch nuisance attacks against Internet-connected systems. As
    terrorists become more computer savvy, their attack options will
    increase.

                         CHANGING TO MEET CYBER THREATS

        Looking forward, our Cyber Program will focus on identifying and
    neutralizing: (1) individuals or groups conducting computer intrusions
    and spreading malicious code; (2) intellectual property thieves; (3)
    Internet fraudsters; and (4) on-line predators that sexually exploit or
    endanger children. Our success will depend on maintaining state-of-the-
    art technical capabilities to handle complex investigations and forming
    and maintaining public/private alliances.

                        FISCAL YEAR 2004 BUDGET REQUEST

        For fiscal year 2004, the FBI is requesting $234.4 million to
    protect the United States against cyber-based attacks and high-
    technology crimes. This request represents program changes of $62
    million and 194 positions, including 77 agents. These resources will
    enable the FBI to staff computer intrusion squads in field offices,
    enhance technical capacities to identify persons illegally accessing
    networks, and provide funding for the training and equipment we need to
    more aggressively investigate cyber incidents. The requested resources
    will enable the FBI to increase its efforts to detect the sexual
    exploitation of children on the Internet. Over the past six years we
    have seen these cases grow in number from 113 to over 2,300. We must
    increase our commitment here. Finally, the resources would allow us to
    expand our ability to conduct computer forensics examinations. Right
    now, 6 out of 10 investigations require some level of computer
    forensics support. History tells us that the number of cases requiring
    this support will continue to grow and that the number of forensic
    examinations required per investigation will also continue to grow.

                              TECHNOLOGY PROGRESS

        I would like to touch on our efforts to upgrade FBI technology.
    Over the past two years the FBI has made significant progress in
    modernizing our information technology infrastructure to better support
    our investigative needs. On March 28, we completed the Trilogy Wide
    Area Network--three days ahead of schedule. High-speed local area
    networks have been deployed to 622 FBI locations. Over 21,000 new
    desktop computers and nearly 5,000 printers and scanners have been
    provided. The Enterprise Operations Center, which will manage our
    computer networks, becomes operational early this spring.
        We are now focused on implementing a corporate data warehousing
    capability that is key to FBI intelligence, investigative, and
    information sharing initiatives as well as to our records management
    system.
        Trilogy will change the FBI culture from paper to electronic. It
    will replace redundant searches of stove-piped systems. Agents will
    search multiple databases--linking thousands of data points of
    evidence, leads and suspects--through a single portal. Trilogy is the
    base for a modern computer architecture. Trilogy computers, servers,
    and networks will support state-of-the-art applications. Using Trilogy
    to transport, the Integrated Data Warehouse will link 31 FBI databases
    for single-portal searches and data mining. The Collaborative
    Capabilities program will allow electronic data sharing with other
    agencies.

                        FISCAL YEAR 2004 BUDGET REQUEST

        We are now at the point in our information technology upgrade where
    it is essential that we preserve these investments by ensuring there is
    sufficient funding for life-cycle operations and maintenance of systems
    and for technology refreshment. The fiscal year 2004 request includes
    increases of $82 million to fund technology refreshment and operations
    and maintenance. These resources will ensure that the equipment we have
    deployed stays in good working order, and that it is replaced in an
    orderly manner. The FBI can never again allow its equipment to become
    obsolete.

                                 OTHER PROGRAMS

        We are completely restructuring our internal security programs and
    processes. We have created a dedicated Security Division and are
    consolidating security functions under a single management structure.
    As we implement these changes to improve security, we are addressing
    recommendations in the Webster and Rand reports. The fiscal year 2004
    request includes increases of $37 million and 126 positions, including
    32 agents. These resources will fund polygraph examinations, guard
    services, and other security expenses.
        The FBI Laboratory's R&D efforts generated more than 120 projects,
    providing more than 100 deliverable products to the operational units,
    58 technical publications, and 126 scientific presentations, in the
    last three years. The FBI's Combined DNA Index System software is used
    by 185 domestic and 23 foreign laboratories. The fiscal year 2004
    request includes $3.28 million and 32 positions funding nuclear DNA and
    the Federal Convicted Offender Program.
        I will conclude with the FBI's Criminal Program. We have opened
    more than 85 major corporate fraud investigations. At the end of fiscal
    year 2002, the FBI had five corporate fraud investigations with losses
    in excess of $1 billion. Currently, this number has increased to eight.
    Forty-five FBI field offices are participating in multi-agency
    corporate fraud working groups. The fiscal year 2004 request includes
    $16 million and 164 positions, including 54 agents. The request will
    fund additional investigators to support this initiative.

                                    CLOSING

        The FBI has turned a corner in its history. With the support of
    Congress, we have been able to make dramatic and substantive changes.
    Our transformation continues because the threats facing the U.S.
    homeland continue to evolve. I want to reassure you that we are
    committed to protecting this country from those who seek to harm us
    through acts of terror, espionage, cyber attacks, or criminal acts.
    Every citizen must be able to enjoy the basic freedoms this great
    nation provides. The men and women of the FBI understand their roles in
    these challenging and uncertain times. With your support, we can give
    them the resources and tools they need to carry out our mission.
        Thank you.

                                COUNTERTERRORISM

        Senator Gregg. Maybe you could give us your thoughts on
    where we stand in fighting terrorism.
        Mr. Mueller. Looking at it from our perspective alone, the
    FBI is responsible for understanding the terrorist threats
    within the United States. Each month as we reorient our work
    force, as we increase our information technology (IT)
    capability, as we grow analytical capability, as we bring on
    more translators, as we focus on addressing counterterrorism as
    our number one priority and, as everyone in the organization
    comes to understand that, I think we have grown in our
    capability of understanding the threats within our borders.
        That does not mean that we could not still face individuals
    coming into the United States, sleepers who come in
    individually under our radar screen and, pursuant to some plot
    originated and directed overseas, contemplate a terrorist
    attack. But each month I believe that we have moved to better
    our capabilities and understanding of the terrorist threats
    within our borders.
        And if you couple that with the successes overseas, the
    arrest of Abu Zabaydah, the arrest of Ramzi Binalshibh, the
    detention of Khalid Shaikh Mohammed, the detention of Mustafa
    Ahmed al-Husawi, and our continuing debriefings of these
    individuals, our view of the capabilities of Al-Qaeda becomes
    more transparent and it gives us more confidence that we have
    an understanding of plots in the past, plots that were on the
    table as future possibilities.
        We still face a substantial threat, principally from Al-
    Qaeda and their desire, willingness, capabilities, and unity of
    mission to kill Americans. So on the one hand, I think we are
    doing a much better job both here and overseas. On the other
    hand, we still face a substantial threat.
        Senator Gregg. What percentage of the agents are now
    involved in counterterrorism?
        Mr. Mueller. I believe it is up to--let me just check for a
    second if I could.
        Senator Gregg. Yes.
        Mr. Mueller. Yes, it is 23 percent. I had to check my
    figures.
        Senator Gregg. And what percentage are involved in the
    counterintelligence? And is that an overlapping number?
        Mr. Mueller. It is not an overlapping number, although--let
    me just--let me see if I can give you the figures, the
    percentage.
        I was just informed that we generally do not--I would be
    happy to provide the number of counterintelligence in closed
    session. Generally we do not give out the percentages or the
    numbers in open session.
        I will tell you that it is not an overlap. However, the--
    since September 11th, my directions to the SACs, Special Agents
    in Charge, around the country is that their first priority is
    counterterrorism. There should be no counterterrorism lead that
    goes unaddressed. And consequently, we have overburned, as you
    would say, in counterterrorism substantially in the wake of
    September 11th, and that continues to drop until October of
    this year. And then as we ginned up for the response to the, at
    that time, probable incursion into Iraq, the numbers that were
    dedicated to counterterrorism ramped up again.
        And so there will be and there has been in the wake of
    September 11th, and there has been in anticipation and during
    the war in Iraq, a number of individuals who have been taken
    from other programs, including counterintelligence, to meet the
    short-term needs of addressing the September 11th
    investigation, and then the responsibility for protecting the
    United States from terrorist attacks which might have been
    associated with the war in Iraq.

                              CHICAGO FIELD OFFICE

        Senator Gregg. Let us take the field office, arbitrarily
    choosing Chicago as a large one. How many agents approximately
    do you think you have there? Do you know?
        Mr. Mueller. I just do not have that off the top of my
    head.
        Senator Gregg. Let us say it is 500. What----
        Mr. Mueller. I would say----
        Senator Gregg. What percentage----
        Mr. Mueller [continuing]. Yes, probably 500 or 600 in
    Chicago.
        [The information follows:]

                    Number of Agents in Chicago Field Office

        As of April 10, 2003, the Chicago Field Office had a Funded
    Staffing Level of 422 agents.

        Senator Gregg. What percentage would be doing
    counterterrorism, and what percentage would be doing
    counterintelligence, and what percentage would be doing what
    they have always done in Chicago, chasing city officials?
        Mr. Mueller. I would be happy to get you those figures, but
    I can tell you in the wake of September 11th, there would have
    been a ramp up, a substantial ramp up in which probably 50 to
    60 percent of the agents in the months from October 2001 to
    April, May or June 2002, were addressing counterterrorism.
        As you got further away from September 11th, the numbers
    would drop back and be addressing the other programs, so that I
    would venture to say in a place like Chicago, 30 percent would
    be doing counterterrorism at the low point, August, September,
    before we started ramping up for Iraq. Now it is probably
    higher. And it certainly has been higher in the last several
    weeks because we completed, around the country, interviews in
    excess of 9,000 individual Iraqis who have provided us with
    tremendous information helpful to the forces overseas. But we
    have undertaken and completed 9,400 interviews around the
    country and we had to use agents from different programs.
        So if you look at it today, the percentage who would be
    working on what we say is counterterrorism would be a lot
    higher. If you looked at it back in August, I would say
    probably 20 to 30 percent of the Chicago office was working on
    counterterrorism. A lesser percent would be working on
    counterintelligence. A lesser percent would be working on
    cyber. And then a substantial number in the overall criminal
    programs, probably close to 40 percent, 30 to 40 percent, would
    be on all of the criminal programs. That would be public
    corruption, violent crime, gangs, organized crime, all lumped
    together under the criminal programs.
        [The information follows:]

     Clarification: Percentage Increase of Agents in Chicago Field Office
    Focusing on Counterterrorism Prior to September 11 to May/June of 2002,
                            and During War With Iraq

        ``In the wake of September 11, there would have been a ramp
    up, a substantial ramp up in which probably 50 to 60 percent of
    the agents in the months from October of 2001 to April, May or
    June of 2002, were addressing counterterrorism.''
        In fiscal year 2001 (October 1, 2000-September 30, 2001)
    12.1 percent of all FBI field agents Bureau-wide were working
    counterterrorism. In the Chicago field office, 14.1 percent of
    agents were working counterterrorism.
        From October 1, 2001 through December 31, 2001, 52.4
    percent of all FBI field agents were working counterterrorism.
    In the Chicago field office, 34.7 percent of agents were
    working counterterrorism.
        From October 1, 2001 through June 30, 2002, 34.5 percent of
    all FBI field agents were working counterterrorism. In the
    Chicago field office, 26.7 percent of agents were working
    counterterrorism.
        ``As you got further away from September 11th, the numbers
    would drop back and be addressing the other programs, so that I
    would venture to say in a place like Chicago 30 percent would
    be doing counterterrorism I would say at the low point, August,
    September, before we started ramping up for Iraq. Now it is
    probably higher.''
        From October 1, 2002 through December 31, 2002, 22.3
    percent of all FBI field agents were working counterterrorism.
    In the Chicago field office, 19.2 percent of agents were
    working counterterrorism.
        From October 1, 2002 through March 31, 2003, 24.4 percent
    of all FBI field agents were working counterterrorism. In the
    Chicago field office, 19.6 percent of agents were working
    counterterrorism.
        The chart below illustrates these figures.
        The number of FBI agents involved in counterintelligence in
    the Chicago office is classified. The classified response is
    provided in a separate document.

                 SUMMARY CHART OF AVERAGE FIELD AGENT ONBOARD FOR TOTAL FBI AND THE CHICAGO FIELD OFFICE
    ----------------------------------------------------------------------------------------------------------------
                                                                   Bureau \1\                    Chicago \1\
                                                         -----------------------------------------------------------
                         Time Period                        Avg.     Avg. CT   Percent    Avg.     Avg. CT   Percent
                                                           Agents    Agents   of Total   Agents    Agents   of Total
                                                           Onboard   Onboard   Agents    Onboard   Onboard   Agents
    ----------------------------------------------------------------------------------------------------------------
    Fiscal year 2001: 10/1/00-9/30/01...................     9,048     1,092      12.1       384        54      14.1
    Fiscal year 2002, 1st Qtr: 10/1/01-12/31/01.........     8,904     4,666      52.4       377       131      34.7
    Fiscal year 2002, 3rd Qtr: 10/1/01-6/30/02..........     8,791     3,029      34.5       371        99      26.7
    Fiscal year 2003, 1st Qtr: 10/1/02-12/31/02.........     8,826     1,964      22.3       381        73      19.2
    Fiscal year 2003, 2nd Qtr: 10/1/02-3/31/03..........     8,884     2,172      24.4       378        74      19.6
    ----------------------------------------------------------------------------------------------------------------
    \1\ These number do not include Supervisory Special Agents.

                           COUNTERTERRORISM TRAINING

        Senator Gregg. What percentage of the curriculum at
    Quantico is dedicated to counterterrorism?
        Mr. Mueller. I can tell you that it has increased. I do not
    know the exact percentages. The basic skills, and by that I
    mean the skills that cut across all of the various substantive
    programs of the Bureau, probably take up 50 or 60 percent--and
    this is off the top of my head, and I would have to get you the
    exact figures. It is probably 50 to 60 percent.
        Thank you. For a percentage--I can tell you that since
    September 11th, we have added 32 hours of counterterrorism and
    counterintelligence training to the--on the counterterrorism
    and counterintelligence curriculum for the new agents. We also
    are putting in a separate training session specifically for
    counterintelligence.
        [The information follows:]

    Percentage of Curriculum at Quantico Dedicated to Counterterrorism (CT)

        Currently, New Agents receive 116 hours of Investigative
    Training. Of these, 55 hours (approximately 47 percent) are
    dedicated directly to counterterrorism and counterintelligence
    training. Because these two training initiatives are extremely
    inter-related, singling out CT-exclusive training is difficult.
    All other training, such as Legal, Forensics, and Firearms, is
    an integral part of New Agent Training, but is not program-
    specific. Additionally, CT analysts are also trained at
    Quantico in the College of Analytical Studies. The training
    includes a basic six-week course. Several advanced analyst
    courses have been developed as well.

                                  FBI CULTURE

        Senator Gregg. I guess my question goes to this: How much
    has the culture changed? I mean, does the agent in the field
    today think that he is primarily a counterintelligence,
    counterterrorism agent? Or does he still think he is a super
    police officer----
        Mr. Mueller. I think the----
        Senator Gregg [continuing]. Or she?
        Mr. Mueller. No, I think that there are a couple of ways of
    looking at it. At the outset I would say when we talk about
    culture and when you think on it, if you looked at your FBI
    agent, the FBI agent is patriotic needless to say, dedicated,
    honorable, wants to do the job that is set by their country, in
    the same way that the military is. When a person joins the
    military, they do what the President directs for the military,
    to be one place one day and the next place the next day.
        In the past, we have been focused on cases with the
    expectation that a case would go to court. I believe since
    September 11th, almost everyone in the organization understands
    that you have to look at a piece of information as a piece of
    information, whether it is a piece of information for purposes
    of intelligence or a piece of information that can be used all
    the way into a courtroom. But it is very important for that
    piece of intelligence, that piece of information available to
    be looked at in a larger context of the intelligence mission of
    the Bureau.
        I have heard and believe that around the country, agents
    who want to do counterterrorism find that the skills that they
    have developed on the criminal side lend themselves to
    counterterrorism investigations, and that the mix of
    counterintelligence or counterterrorism experience is ideal.
    There are those around the country, and there probably always
    will be, who prefer doing drug investigations or white collar
    crime investigations. But I believe that the Bureau has shifted
    remarkably since September 11th to address and understand the
    importance of the intelligence function.
        I also have to give them the tools to do it. I have to give
    them the analysts. I have to give them the information
    technology. I have to develop the reports officers, and strip
    off the sources and methods so that we become a greater part of
    the intelligence community. I have to develop a cadre not just
    of reports officers, but intelligence officers who will look at
    things not just from the case perspective but also from the
    perspective of a particular strategic target, and adopt that
    which MI5 does well in certain areas in order to be successful.
        And the last point I would make is the--I have looked at
    MI5. I have looked at other intelligence areas, and I believe
    that the combination we have of intelligence capability and law
    enforcement capability under one roof is by far the best way to
    go, and avoids the stovepiping that we see elsewhere.
        Senator Gregg. I have a lot of other thoughts and
    questions. But I will turn to Senator Hollings.
        Senator Hollings. Thank you, Mr. Chairman.
        I first observe, Director Mueller, that you are not in any
    trouble. Otherwise, this table would be filled up, you know.
        It is not all of us here, just us chickens.

                                   TERRORISM

        With respect to the status of terrorist that the chairman
    asked about, of course the real question is: Are they creating
    them faster than you get rid of them? You meet every morning
    and brief the President I believe.
        Mr. Mueller. Yes, sir.
        Senator Hollings. I wonder about the statement made by
    Mubarak in Cairo to the effect that we are creating 100 bin
    Ladens. That is what we have really got to worry about. We have
    got to make sure that we bring, as we are doing now, a quick
    end to Saddam. Otherwise, when we get that government going,
    but more particularly get the President's roadmap for peace in
    the Middle East ongoing--I notice that Chirac has announced a
    different roadmap. Tell the President to stick to his roadmap
    because--that is the creation of the terrorism.
        I mean, you can put on all of these numbers of agents,
    dedicate so many more agents to terrorism rather than to drugs
    or to crime or white collar, this or that, but unless and until
    we get to the source of the creation of them, they are creating
    them fast. That was the whole--but we have got our fingers
    crossed right now about the victory in Iraq. We have hit the
    bowl. The question is whether the follow-through is going to
    really work. And it is going to be extremely difficult to get
    all of these religious sects and get a democratic government.
    It is going to be tough.
        But that is the answer to the question of the status of
    terrorism, because it could be that we are creating them faster
    than you can get rid of them.
        Otherwise, on the culture, that is another difficult job
    that you have. And you talk about the agent out there, and
    you--it is a question of how do you get them so that they
    believe they are beyond the law or they can out-trick the law
    or they devolve into corruption or that kind, where they swap
    sides. We have had Miller and Hanssen, for one thing. I would
    have burned Hanssen. I do not know where you all get this that
    you can get more--I mean that was one clear-cut case and the
    files got him. So we had all the more that we could have gotten
    out of him.
        And if you do not really treat it as treason they will
    continue to say, ``Well, the jail is not so bad.'' I know we
    have built one down in South Carolina. I went to see it, and
    they had better rooms in the jail than they had the Citadel
    when I went to school. They have TV there. They have exercises,
    you know, and you can play ball in the afternoon and all of
    that kind of stuff. So the fellow who is hungry and out there--
    I have worked on jails--if he does not have a pretty good go at
    it, he said he can get three squares and a warm place, and they
    get into crime.
        Similarly, if there is no real penalty and they get just
    wonderful security and three squares, what is the risk? You
    know what I mean.
        Mr. Mueller. Yes, sir.

                              COUNTERINTELLIGENCE

        Senator Hollings. Otherwise, we and the State Department
    swap around our ambassadors and chiefs of stations. We find--is
    there a swap-around system particularly in counterintelligence,
    where they just do not stay there and get corrupted in that
    sense? The Methodist ministry does that. I know we do that with
    Circuit judges in South Carolina.
        Somehow we have got to give polygraphs to everyone in
    counterintelligence. Every 3 years, I think, is the practice.
    When last did J.J. Smith get a polygraph?
        Mr. Mueller. I am not certain, Senator, on J.J. Smith. I
    can tell you that on the--on Ms. Leung, the other individual,
    she was polygraphed back in the 1980s but not more recently
    than that. I have to----
        Senator Hollings. Well, now----
        Mr. Mueller [continuing]. Tell you that we have changed our
    policy in the wake of----
        Senator Hollings. You have changed your policy?
        Mr. Mueller. We have changed our----
        Senator Hollings. Thank goodness.
        Mr. Mueller. We have dramatically improved our----
        Senator Hollings. I asked Judge Freeh about Hanssen----
        Mr. Mueller [continuing]. Use of polygraphs.
        Senator Hollings [continuing]. And he had not had one in 20
    years.
        Mr. Mueller. I also took one before my confirmation.
        Senator Hollings. Yes, sir.
        Mr. Mueller. So I have been through it along with everybody
    else, and it was an experience.
        [The information follows:]

       Most Recent Polygraph of Special Agent James J. Smith, Subject of
                   Espionage Case in Los Angeles, California

        Operating under previous policies, Agent Smith never
    received a polygraph examination, as he retired prior to the
    Hanssen case. Under the current polygraph policies, an agent in
    a similar position would be subject to periodic 5-year
    reinvestigations requiring a counterintelligence-specific
    polygraph, and would also be subject to random testing. In
    addition, all new employees are subjected to a pre-employment
    polygraph.

        Senator Hollings. I was on the Intelligence Committee, and
    we knew good and well where the leaks were in the staff, and so
    you never ask a man to do something that you are not going to
    do yourself. We learned that in the war. So I went over to the
    Capitol Police; it was a 2-hour thing. And the first question,
    I started my answer, I said, ``Well, in my humble opinion,''
    and the damn needle just went right straight across.
        Senator Gregg. I am not sure a polygraph has been designed
    that would be able to handle your answers----
        Senator Hollings. But in any event----
        Senator Gregg [continuing]. Or understand them.

                             DOMESTIC INTELLIGENCE

        Senator Hollings. When 9/11 occurred, it was like--it is
    like that, ``When in danger, when in doubt, run in circles,
    scream and shout.'' And one of the screams was, ``We need a
    whole new division of domestic intelligence rather than the
    FBI. I think you are handling it. You are reorganizing it, but
    it has sort of been top secret in that sense that--I have
    explained to colleagues what you have been doing. Somehow you
    have a PR man. That is all J. Edgar had. Find out his
    descendant and get him.
        And tell what is going on, that can be told, because they
    do not realize the tremendous effort you have made on domestic
    intelligence.

                                    TRILOGY

        With respect to the Trilogy, as I understand you said you
    were going to have a cost overrun of $137.9 million. And we
    asked you to take it out of the hide of the budget, and that
    was going to require a reprogramming.
        Mr. Mueller. Yes, sir.
        Senator Hollings. Have you got that reprogramming request
    before us?
        Mr. Mueller. I have the--it is over at the Department of
    Justice at this point.
        [The information follows:]

                  Status of the Trilogy Reprogramming Request

        As of April 10, 2003, the Trilogy reprogramming request was
    at the Department of Justice. The request was forwarded to the
    Office of Management and Budget (OMB) on April 17, 2003, and
    approved by OMB on April 25, 2003. On May 21, 2003, the request
    was transmitted to Congress.

        Senator Hollings. I see. What about keeping, now, that
    Trilogy up to date? If we get all of this stuff and everything
    else like that, but do we have an ongoing plan to keep it
    moving and going?
        Mr. Mueller. Yes, absolutely. Yes. Let me back up a second
    and say that----
        Senator Hollings. Yes.
        Mr. Mueller [continuing]. I would take responsibility for
    the cost overruns.
        Senator Hollings. Yes.
        Mr. Mueller. When I came in, it took me a while to
    understand the information technology or lack thereof in the
    Bureau, and the current plans to upgrade it. And it takes a
    while to get it into my head because I am not a computer
    programmer at all. But as we went along, it seemed to me that
    our plans and what we had budgeted for and what Congress had
    given us would be inadequate to the mission that we had, in the
    sense that it was not upgrading our essential databases, giving
    and putting it into a new, upgraded database architecture that
    would be a platform for the future. And as has been described
    to me by others in the Bureau, what we were doing in the
    previous budget was putting lipstick on a pig.
        Senator Hollings. Yes.
        Mr. Mueller. In other words, the pig is our old databases
    and we are putting a GUI, Graphical User Interface, on it that
    would make everybody happier in terms of input and output, but
    would not enable us to use the analytical tools that we needed.
    So I had them go back to scratch. And in going back to scratch
    and developing the database structure that I believe will be
    the foundation for the future, it ended up costing more. That,
    coupled with the fact that we had two contractors and we need
    an integrator, is principally responsible for the overruns.
        Now, I believe that those changes that we have made are
    absolutely indispensable to our ability to continue to refresh
    our information technology down the road. It makes no sense for
    us to have and put into place that which will be obsolete in 2
    years. And we are increasingly looking at and focusing on what
    we do in-house as a foundation for the future, whether it be 5
    or 10 years down the road, and enhancing our capability to get
    commercial-off-the-shelf, COTS, products in to augment what we
    are doing, as those COTS products get developed by the various
    contractors out in the field.
        So we have asked for, I believe, something in the range
    of--what is it? $82 million, is it? Yes, $82 million in the
    2004 budget, principally directed at enhancing our information
    technology.
        [The information follows:]

     Clarification: Amount Requested for Information Technology in Fiscal
                                   Year 2004

        In fiscal year 2004, the requested increase for information
    technology is $82 million. The FBI requests $80 million for
    Trilogy operations and maintenance (O&M) and technology
    refreshment and $2 million for the Top Secret/Sensitive
    Compartmented Local Area Network O&M.

        Mr. Mueller. As to the $137.9 million, you are right. You
    did say take it out of our base funding, and we are taking it
    out of our base funding. We have the reprogramming over at the
    Department of Justice. And I am looking at the information
    technology dollars with a view to making certain that every one
    of those dollars is spent wisely.

                  CRIMINAL JUSTICE INFORMATION SERVICES (CJIS)

        While I am on this subject, because it is important to the
    future of the Bureau----
        Senator Hollings. Yes.
        Mr. Mueller [continuing]. I will tell you that we have
    tremendous capabilities out at CJIS, for instance, Integrated
    Automated Fingerprint Identification System, or IAFIS, the
    fingerprint databases, NICS, National Instant Criminal
    Background Check System----
        Senator Hollings. How long does it take with the
    fingerprint thing? If I am----
        Mr. Mueller. Seconds.
        Senator Hollings [continuing]. The highway patrol and I
    take a fellow and I have his fingerprints----
        Mr. Mueller. Seconds.
        Senator Hollings. Seconds?
        Mr. Mueller. Seconds.
        Senator Hollings. It used to take 1 month or 2 months.
        Mr. Mueller. Seconds.
        Senator Hollings. Yes, good.
        Mr. Mueller. And with the expansion of our database, we
    have a number of cases now where we have gone back 20 or 30 or
    40 years and provided fingerprint matches to State and local
    law enforcement entities that have enabled them to solve
    homicides in ways they had not been able to solve them in the
    past.
        There were two officers who were killed out in Los Angeles,
    something like 30 years ago. And with our enhanced
    capabilities, fingerprint capability--they still have not
    forgotten about that case in that police department out there.
    They sent the fingerprints in from the crime scene, and it was
    matched with an individual who lived down in--it may have been
    South Carolina, but one of the Carolinas. I do not know which
    one, or Georgia. And it turned out he had been living there for
    a number of years, married, had a family, but he was
    responsible for killing these two police officers 30 years ago,
    and they brought him back and he pled guilty last week. That is
    the kind of work that is done out at CJIS.
        Now as we grow as an organization, what we have to do is
    enhance our information technology capabilities there and
    better integrate it in to what we do in the Bureau overall.
        [The information follows:]

                    Clarification: IAFIS Case in Los Angeles

        More than 45 years ago, two California police officers were
    shot and killed. A latent fingerprint was developed from a
    vehicle involved in the case, but searches of that print met
    with negative results. Last year, detectives in the Los Angeles
    County Sheriff's Office initiated a search of the latent
    fingerprint against the database of the Integrated Automated
    Fingerprint Identification System (IAFIS). The search resulted
    in the identification and arrest of Mr. Gerald Mason, who was
    in the database because of a 1956 burglary arrest. The FBI
    notified the Los Angeles County Sheriff's Office. Mr. Mason was
    located and arrested at his residence in South Carolina on
    January 29, 2003.

        Mr. Mueller. I do not mean to get on my hobbyhorse on that,
    but----

                           DRUGS/TERRORISM FINANCING

        Senator Hollings. Oh, no, it is better to know that you
    have a grasp of it, and that was really the question. And you
    really know more about it than I do.
        But I am a little concerned--of course, I am--sometimes I
    get our chairman and so forth and we find out what we are going
    to do on drugs. I started 30-some years ago right at this table
    and we were burning the poppy fields in Turkey, and then we
    went to Marseilles and broke up the factories, went down into
    Paraguay and up to Colombia and over to the triangle at Chiang
    Mai, up in Laos, and I met with the Japanese and the
    Australians and everybody else. I said, ``Let us go into Burma
    now and look.'' But they said, ``Oh, no, they have armies over
    there. You would get killed.'' They were shipping in 50,000
    pounds of heroine out through Bangkok every week, that kind of
    thing.
        And now, I pick up the morning paper, and the drug war in
    Colombia has spilled over into Venezuela. However, the--you
    keep telling us, you folks in law enforcement, that this
    terrorism is financed by drug money. And I looked and see where
    you moved 567 agents from drugs to counterterrorism. Can we not
    ask for just more and get them--have them keep going, not
    necessarily on the ordinary drugs and everything, but at least
    the money part? Because that is what finances the terrorism.
        Mr. Mueller. Well, we are--whenever we have--as I said,
    terrorism is our first priority.
        Senator Hollings. Yes.
        Mr. Mueller. If it relates in some way to----
        Senator Hollings. And the money part----
        Mr. Mueller [continuing]. Financing by narcotics----
        Senator Hollings [continuing]. Is the first priority of the
    first priority.
        Mr. Mueller. First is--we take that as a priority. We
    recently did a case in New York where we found that heroin from
    Afghanistan was being sold in the United States, distributed in
    the United States, and the monies were going back to
    Afghanistan to the Taliban and Al-Qaeda. And so we address
    cases like that, and we have done a number of cases involving
    the FARC out of Colombia, where it looks like cocaine monies
    were being used to purchase weapons and the like.
        I took 400 initially, 400 positions from the drug programs
    in a reorganization and reprogramming because I believe that we
    had to reorient ourselves, first of all, as an agency before I
    came back to either the administration, the Justice Department
    or the Congress for additional resources. And in looking at it,
    it seemed to me that, first of all, I needed to put our house
    in order, focus on our priorities, be absolutely clear on what
    our priorities are up and down the line, and then have not only
    the FSL, funded staffing level, the manpower directed towards
    the priorities, but also the financing.
        The process I went through in making those decisions was to
    go to the Special Agents in Charge and say, ``What do you need
    to do in each of your territory's divisions to address either
    perceived counterterrorism, mission or threat in that
    division?'' And they came back with various numbers of agents
    that they believed they needed, depending on the division.
        Now, quite probably, one or more of them came back and
    said, ``Well, the Director is going to give us new resources,''
    and maybe gave me more numbers than they really actually
    needed. So we cut them down and looked at it across the
    country, and came up with approximately 500 that the Special
    Agents in Charge said, ``We need these numbers in our divisions
    to address counterterrorism.''
        And I went back to them and said, ``In your divisions, what
    are your priorities? What programs would you take these agents
    from?'' And coming back, it was 400 that came from the drug
    program. And I looked at that and I said, ``Okay. Why are we
    taking them from the drug programs?'' And we looked at areas
    where we overlapped with the DEA in terms of addressing the
    cartels, and we looked at areas where we do standalone drug
    cases that increasingly can be done by State and local law
    enforcement, standalone methamphetamine case, standalone
    marijuana cases.
        And what I wished us to remain focused on, are the
    organized crime drug enforcement task force cases, the high
    intensity drug trafficking areas cases, and those areas where
    we bring something special to the table and where we do not
    overlap with other Federal agencies or State and local
    agencies.
        Now, as we go down the path and I hear from State and local
    law enforcement, many of them are saying, ``We miss you in the
    drug area. We want you back more than you were before,'' and
    that is something that I will have to address down the road.

                                     LEGATS

        Senator Hollings. Well, as I understand it, Judge Freeh was
    putting these Legats out into the different countries as drug
    agents, and now I see you have them in Sarajevo, Bosnia,
    Kuwait, Uzbekistan, Kabul, Afghanistan, Belgrade, Serbia, that
    they have really moved from drugs to counterterrorism. You have
    been putting them down in the West Bank. You have put them
    somewhere in Beirut. You have put them in Syria. You have put
    them in Cairo. You have put them down in Riyadh. When you have
    them in Bosnia and Sarajevo, you are still chasing drugs.
    Afghanistan, you still--well, I mean, you might find some Al-
    Qaeda left there. But look at that, because what we have got to
    do is get both, to tell you the truth----
        Mr. Mueller. The list----
        Senator Hollings [continuing]. Of where the real money is
    coming from.
        Mr. Mueller. The list that you have read off----
        Senator Hollings. Yes.
        Mr. Mueller [continuing]. Are those that we are
    requesting----
        Senator Hollings. Yes.
        Mr. Mueller [continuing]. Expansion on in those particular
    cities. We do have a Legat in Cairo. We have Legats in Riyadh.
    We are expanding the Legat in Riyadh and minimizing--or I
    should not say minimizing, but cutting back the territory that
    was--or for which Riyadh was responsible. So we are adjusting
    our Legat distribution to reflect the new challenges of
    addressing counterterrorism. Even in South America, where there
    may well be enhanced activity from those who are affiliated
    with either Al-Qaeda, Hezbollah, or Hamas, our Legats down
    there are now finding that they are handling that type of
    activity rather than narcotics activity.
        And lastly, we do want to put a Legat in Beirut. We have
    been discussing that with the State Department for some time.
    The State Department has the embassy there, but because of the
    threat level, you need to have the personnel working the
    embassy in secure compound grounds. They simply do not have
    room now. They are anticipating building a new embassy to be
    completed in, I think, 2006, and then they will have space for
    us. And in the meantime, we are going to be exploring having a
    greater presence in Beirut than we currently do.
        Senator Hollings. Yes, you have to get to them and tell
    them to move somebody out. You cannot wait until 2006.
        One final question--Mr. Chairman, you have been very good
    to me.

                                 REORGANIZATION

        How do you coordinate our--just looking at the breakdown
    now that you have in the reorganization of the Bureau itself,
    and you have all of this Trilogy and you have all of these
    different officers and responsibilities. But where is the
    coordination? And how is that working so that you are informed?
    We cannot have another Minnesota situation where they kept
    calling the Headquarters but somehow it did not get through.
        Mr. Mueller. Well, there are actually three ways. The first
    way is--every time I speak to groups at the FBI, I say, ``I
    want to know the bad news.'' Inevitably, the good news has a
    way of reaching the top. It is the bad news that does not.
        Senator Hollings. Yes.
        Mr. Mueller. When I find that I do not get the news of
    those things that are wrong and substantial, I am not happy and
    that word has gone out. And so I have tried to change and make
    people understand that I would be twice as mad about not
    hearing about a mistake than hearing that a mistake was made.
    We are going to have to take risks. I want people to be
    aggressive investigators.
        And people will take risks, and I want them to take risks,
    and I do not want them to feel that they will be disciplined
    for taking the risk. We all make mistakes; I will make more
    than most people in the organization. But I want to hear about
    the issues such as what happened in Los Angeles, such as what
    happened in Minneapolis.
        The second way is by changing the accountability and
    responsibility for the national programs. And by that I mean
    counterterrorism, counterintelligence and cyber. Whereas in the
    past it would be the field office that was responsible for any
    particular case, in those national programs it is the Assistant
    Director in charge of counterterrorism that is responsible for
    the success or failure of a case. That means that individual
    has to know what is going on around the country. The Assistant
    Director does not do the investigation but must know about the
    investigations. And when it is in counterterrorism, there has
    to be direction from the center. There has to be accumulation
    of intelligence, analysis of that intelligence, dissemination
    of that intelligence, and undertaking operational
    responsibilities for that intelligence.
        So centralizing responsibility and accountability in those
    programs, I think, is going to make a substantial difference
    from the way we operated prior to September, prior to September
    11th.
        And the third way is that I have expanded--thanks to the
    approval of my initial reorganization, I have now four
    Executive Assistant Directors who have a much smaller span of
    control than before. Before September 11th, there were I think
    12 Assistant Directors, all reporting to the Deputy Director
    and then to me. Now I have a Deputy Director and there are four
    Executive Assistant Directors who report to the Director and
    the Deputy Director. So the span of control in these various
    areas is much more narrow than it was prior to September 11th.
        Senator Hollings. Thank you, Mr. Chairman.
        Senator Gregg. Senator Kohl.

                            HYDROGEN CYANIDE WEAPONS

        Senator Kohl. Thank you, Mr. Chairman, Senator Hollings,
    Director Mueller.
        Within the past month, the FBI has warned law enforcement
    agencies nationwide that terrorists could build a simple but
    deadly chemical weapon out of readily available materials.
    Specifically, the FBI cited hydrogen cyanide or chlorine gas as
    easy-to-make chemical weapons. What is so disturbing is how
    easy it is to obtain cyanide. As you know, it is readily
    available at chemical supply warehouses, from mail-order
    catalogs, and even via the internet.
        As you probably know much better than I do, terrorists may
    well use cyanide in a future attack. Attorney General Ashcroft
    told this subcommittee last week that he would work with us to
    prevent terrorists from acquiring this simple chemistry to
    launch an attack. We also hope that you can pledge to work with
    us to address this concern.
        How serious of a threat does the widespread availability of
    toxic industrial chemicals like cyanide pose? And what do you
    suggest we do? Are you prepared to work with us on some
    legislative improvement to the problem?
        Mr. Mueller. Well, we sent out a bulletin several weeks ago
    relating to a relatively simple explosive device, the schematic
    for which we had picked up in one of our searches overseas. It
    was to alert State and local law enforcement to be aware of
    this potential threat out there.
        We have over a period of time received threats about the
    possible, the potential use of cyanide in an attack. We have
    received threats internationally. Working closely with the CIA,
    the FBI has focused on addressing and identifying the expertise
    for use of this compound, amongst other types of poisons. We
    have also focused on the individuals in Al-Qaeda who may have
    that expertise and understanding, and those individuals in Al-
    Qaeda that may be participating in a network that would
    undertake such an attack utilizing cyanide.
        And when we receive the threats relating to use of the
    cyanide, we also may see in the same genre threats relating to
    the use of ricin, sarin, or other such compounds.
        With specific regard to cyanide and its ease of use in the
    United States, whenever we have an indication in a case that
    there is a potential for the use of cyanide, we utilize every
    arrow in our quiver, whether it be Foreign Intelligence
    Surveillance Act (FISA) intercepts or aerial or individual
    surveillance to make certain that we address that threat
    immediately.
        We also have reached out to the chemical companies, and the
    groups that represent chemical companies, to develop a liaison
    so we can do a better job in trying to identify misuses of
    cyanide compounds within the United States. As you know, it is
    very easy to get. It is prevalent--well, I should not say it is
    prevalent. But it is not hard to get. You can get it off of the
    internet, and we were exploring ways to curtail it, curtail
    that.
        We actually recently had a prosecution up in--I guess it
    was in Chicago, an individual who was--he had not--he was
    storing sodium cyanide and potassium cyanide and other toxic
    chemicals in passageways under the streets of Chicago. And we
    were onto that, we identified it and successfully prosecuted
    that individual. So where we find an indication of the use of
    cyanide, we investigate it, and we prosecute.
        We are working with the chemical industries within the
    United States to do more on that. We are certainly willing to
    cooperate and work with you in terms of additional legislation
    to address that threat.
        Lastly, we are working with the CIA and other agencies both
    within the United States and outside of the United States, to
    address any threats relating to the use of cyanide or any such
    compounds that comes from overseas.

                    CIGARETTE SMUGGLING/TERRORISM FINANCING

        Senator Kohl. Within the past month, the FBI has warned--I
    am sorry. Recent ATF investigations reveal that tobacco
    smugglers are using the profits they make from illegal
    operations in the United States to fund terrorist organizations
    like Hezbollah among others.
        I raised this issue with the Attorney General last week,
    and he seemed genuinely interested in helping to tackle this
    issue. This is a serious problem that is not getting the
    attention I believe that it deserves. It is a funding source
    for terrorism. Should the FBI play a role in investigating the
    terrorism-related aspect of this problem? Do you agree that
    this is a serious terrorism-related concern? And can you pledge
    to work with us on finding some remedy for terrorist
    organizations which use the legal profits from the tobacco
    industry?
        Mr. Mueller. Yes, I--we have had several recent cases,
    principally Hezbollah, where cigarette smuggling has been one
    of the illegal activities engaged in by individuals affiliated
    with Hezbollah, to gather monies, of which have been siphoned
    off to terrorist organizations overseas.
        We had a successful prosecution most recently in North
    Carolina in which a number of Hezbollah-associated individuals
    were convicted for their actions in cigarette smuggling. We
    recently had a case up in, I believe it was Detroit, that we
    indicted where there were a number of illegal activities by a
    group of individuals again associated with Hezbollah, and the
    charges there are racketeering charges.
        So we have a number of areas where we have seen this as one
    of the illegal activities engaged in principally by those
    associated with Hezbollah to gather funds. We are looking at it
    individually and through our Joint Terrorism Task Forces, by
    addressing the terrorist groups engaged in all types of illegal
    activities, including cigarette smuggling, extortion and other
    traditional racketeering crimes.
        We also have a terrorism financing section that was
    established after September 11th in the Counterterrorism
    Division, that has been working hard on all means and
    mechanisms of the financing of terrorists--not just profits
    that come from cigarette smuggling but also from narcotic
    trafficking, from extortion, and as well as from non-
    governmental organizations (NGOs), charitable organizations. So
    that section was established with experts in finance to focus
    on the sourcing and the funding of terrorists.
        And lastly, I would say we are working hand in glove with
    the CIA because most of the terrorism financing does not stop
    at our borders. It is integrated with other pockets of
    financing overseas, whether it be in the Middle East or in
    Europe. And so we are working very closely with our
    counterparts and with the CIA to focus on financing, to have a
    comprehensive strategy to address terrorism financing around
    the globe, of which the financing in the United States is but a
    part of it.
        Senator Kohl. Thank you for that answer.
        Thank you, Mr. Chairman.

                             INFORMATION TECHNOLOGY

        Senator Gregg. Thank you, Senator.
        I think it was Mr. Lowery who was reported to say that
    there is going to have to be a number of items in technology
    activity that would not be pursued in order to pay for the
    Trilogy. That was reported in the Federal Register. I think it
    was the Federal Register. Oh, Federal Times.
        What would be the items that you would not be pursuing in
    order to pay for Trilogy?
        Mr. Mueller. That is--he was misquoted.
        Senator Gregg. Oh. We have all experienced that.
        That is a good answer.
        That is a good answer.
        Mr. Mueller. It is also the accurate answer.
        He was misquoted. As I think we--as I have said before, to
    fund $137.7 million, we are taking those funds from a number of
    areas that I think we have let you know of. None of them are
    from other information technology projects. They are from--let
    me see. I know I have it some place here.
        We are taking the monies from unobligated balances from the
    emergency supplemental, as I know you will--we will probably
    discuss at some point; from prior year unobligated balances, as
    well as a reallocation of certain funds available in the
    current year. And they include some funds that we have set
    aside for information technology.
        I am tremendously frustrated, was when I first came and
    still am, at the fact that our information technology is not
    where I want it and need it to be tomorrow and today. I have
    come to learn through trial and error that I have to make
    certain that when we put pieces in place, that they are well
    thought out, that those pieces fit into the overall
    architecture and puzzle of the Bureau so that we do not have
    these same stovepipes. But there is so much more we could do
    with information technology, that every dollar I can get in our
    budget that I can put into advances in information technology,
    I am looking to put in. Now, that is difficult when I am having
    to ramp up the agent strength in our various programs, but
    particularly counterterrorism and counterintelligence, but I am
    loathe to take monies away from information technology for
    anything else.
        [The information follows:]

               Clarification of Sources of Trilogy Reprogramming

        The FBI proposes to fund the $137.9 million needed for
    Trilogy from prior year unobligated balances, current year
    funds, available information technology funding, and $33
    million in excess user fees. The FBI submitted a reprogramming
    request to the Department of Justice and the Office of
    Management and Budget. The detailed request was transmitted to
    Congress on May 21, 2003.

        Senator Gregg. Well, I agree with what you say. I think
    there is no question that the Department has had an antiquated
    technology capability for a long time, the agency, the Bureau.
    But the problem that we have seen, especially with the Bureau,
    but with other groups that we oversight in this committee, is
    that we build these, we make a commitment to move down these
    technology roads and then we build them out and we find that we
    have made huge errors, and we spend a lot of money. IAFIS was
    an example. NCIC was an example. Trilogy as it started was a
    classic example. The worst, of course, is the INS, which is in
    a category of its own when it comes to having wasted money on
    technology. It does not even communicate within the Department.
        And so we agree with you, that you need funds for
    technology. But our concern is if we give you too much money
    too fast, you end up buying stuff that does not work simply to
    spend the money and you end up going down roads that lead to
    dead ends or do not produce product, that do not create the
    integration that you need. So that is our reservation on some
    of this.
        I think you have done a good job of getting the technology
    on the Trilogy back together and up and focused, and that is
    great.
        I think, though, the same concept, the same fear, at least
    as far as my feeling, is with the amount of money that we are
    putting into the Bureau. It is coming in very fast, and you are
    shifting gears from a national police force to being a
    counterterrorism and counterintelligence force. And you are
    setting up, as you have to, all sorts of different things very
    quickly.
        The question is: Are we going to, by giving you this much
    money this fast, do you a disservice because you will end up
    going down the road of creating activity that 2 years, 3 years
    from now we will find out was just a waste?
        Mr. Mueller. Well----
        Senator Hollings. If you will yield on that point.
        I thought when you called about Smith, that you were going
    to call about the supplemental and I had the answer that you
    had $123 million unobligated. That is what you are talking
    about, right?
        Mr. Mueller. That is one of the answers.
        Senator Hollings. Yes.
        Mr. Mueller. Well, let me try to address those----
        Senator Gregg. Right, the $320 million is just----
        Mr. Mueller. Well, let me try to address those in some form
    of order. I think 18 months ago we had very little credibility
    in many places up here. And I came to see it because we had not
    put into place in my mind the individuals and the structure to
    address something that you need outside expertise to advise on.
    I think in the world, the FBI Special Agents, I think they are
    the best information gatherers in the world, best
    investigators.
        But when it comes to information technology, when it comes
    to financial posterity or financial planning, when it comes to
    running a 27,000-employee business, that background does not
    easily lend itself to that kind of organizational structure.
    And the biggest change I think we have made in the last 18
    months is bringing in individuals who have expertise in those
    areas. Whether it be Tina Jonas behind me as chief financial
    officer (CFO), who is familiar with this particular area, or
    Wilson Lowery, who came from IBM where he was part of the team
    that was doing re-engineering, or a chief information officer
    (CIO) that came from outside, the individuals we brought in I
    need to advise me and make certain that we are on the right
    track.
        And it is not just one person, as I have explained before.
    It is somebody who understands the finance; somebody who
    understands the technology; somebody who understands the
    project and getting the project done on time. All of these are
    talents that are specific and unique unto themselves, and you
    need all of them to reach the finish line. We have a number of
    those talents. We need some more.
        The other thing is, for my own sake, I mean, I come in from
    having been a prosecutor for a long time. Yes, I ran a criminal
    division at the Department of Justice, but I had not run a
    27,000-person institution where you needed to transform the
    institution and the technology. It has been a learning
    experience.
        And the one thing I have learned is that if I do not
    understand it and do not know and keep track of what is
    happening on the information technology side, it is going to go
    awry. Even though I am not a CIO, even though I am not a
    computer programmer, I do believe in order to transform the
    institution, you have to keep track of it from the very top and
    force yourself to learn it. And I am responsible ultimately for
    the success or failure of that program. I was delighted, as was
    everybody else, when we put in the wide area network and it
    came in on time.
        I will tell you that in October, as I may have mentioned to
    you before, we had what I call the ``graybeards'' come in and
    sit down with us for 2 days and go through our IT plans. And
    these are persons from Sandia Laboratories and elsewhere, and
    both Federal Government and outside computer specialists, to
    look through what we plan to do. And they came up with two
    points.
        One is that they said we would have substantial difficulty
    putting in the wide area network (WAN), because we were
    utilizing switches developed by the intelligence community that
    had never been put into a wide area network that size. And so I
    had some fear and trepidation that we actually would not get to
    the finish line on that, but we did.
        The second thing I learned is that--I had assumed that, for
    instance, you could put all of the information in a database,
    into one database. They came back and said no; for security
    reasons, no, keep separate databases.
        And so it is a combination of learning as we go along,
    having persons responsible for looking at the financial part of
    it, and where we are going. Are we spending our dollars
    correctly? Do we have the right contractors? Do we have the
    right technology? And will this technology put us where we want
    to be 5 years down the road?
        And these are the issues that I spend a substantial amount
    of time on now, because they are so integral to the future of
    the Bureau.
        Senator Gregg. Well, we appreciate that. And we also spend
    a substantial amount of time on that, and do appreciate
    communication in that area.
        Mr. Mueller. I always am open to suggestions, also. If we
    are doing it wrong, I want to know it, and I want to know it
    earlier rather than later. And so I am always open to
    suggestions as to how we can do it better.

                                COUNTERTERRORISM

        Senator Gregg. As an ancillary issue, you are now setting
    up, it appears to me, and which you have to, a whole series of
    counterterrorism intelligence task forces. You have TTIC. You
    have the foreign terrorism task force. As I understand it,
    every field office is going to have an intelligence officer who
    is the coordinating individual, which may have been set up
    outside without contacting the Congress, which we will need to
    discuss, but probably not here.
        Are we putting up so many of these groups that we are going
    to be back to where we were before 9/11, where there is just
    too many people out there doing the same stuff, or relatively
    related stuff, but they are not communicating with each other?
    Should we put the foreign task force in with the TTIC or----
        Mr. Mueller. Well, now, let me address a number of those
    issues. What I have tried to do in the Counterterrorism
    Division is specialize in certain areas such as finances and
    communications. The Foreign Terrorist Tracking Task Force,
    which is database mining for a particular operational mission,
    all of those are operational in the sense that they gather
    information in a particular area and then will run operations
    by that, further investigations in particular areas to identify
    terrorists, terrorist financing, terrorist communications, etc.
    And I consider those to be operational, and what we need to
    develop within the Counterterrorism Division to support the
    counterterrorism responsibilities nationwide.
        At the same time, I believe we had to enhance the focus on
    intelligence within our organization. I take full
    responsibility and I apologize for not having done the
    reprogramming that should have been done in anticipation of
    announcing the selection of an individual to be Executive
    Assistant Director for Intelligence. I had an Executive
    Assistant Director. It was my naive thought that since I had an
    open Executive Assistant Director position, I could put the
    person in there and call that person the Executive Assistant
    Director for Intelligence, without running it past Congress,
    for which I apologize.
        And with regard to the intelligence units in each of our
    field offices, we have intelligence units scattered around most
    of our field offices. And I wanted to make certain that that
    becomes an established program down the road. That also I
    should have run past you, and we will. But my expectation is
    what we will lend to our field offices is the capability of
    having an entity there that will be charged with gathering that
    intelligence and pushing it up, and as you look at it, I think
    you will find it beneficial.
        The last issue is: Do we have too many task forces? Do we--
    are we----

      TERRORIST THREAT INTEGRATION CENTER/FOREIGN TERRORIST TRACKING TASK
                                     FORCE

        Senator Gregg. Well, specifically, the Foreign Terrorist
    Task Force, why should that not be folded into this TTIC?
        Mr. Mueller. Because I believe it is operational--it is
    looking at identifying individuals who may fit a particular
    match of a terrorist and requires investigation as part of
    that.
        Now, when you look at what the TTIC is going to be--I
    believe in it. I am very supportive of the Terrorist Threat
    Integration Center because I believe we need an analytical
    center that focuses on terrorist threats, an analytical center
    where you have analysts that are pulling the pieces of
    information together from the various separate databases with
    regard to particular threats. But I do not believe that that
    should be operational.
        Senator Gregg. All right. That explains that.
        Well, let me just say on my behalf and I think I speak for
    most of the folks up here: We think you are doing a great job.
    You are trying hard, and you are certainly focused. And you are
    changing a ship that has been going one way for many years, and
    that has got to be done, and it is going fairly well. We are
    very impressed with the work you do.
        We appreciate the fact that your agents out there are
    trying to defend us and make us safe as a country, and we want
    to thank them for their service. We know they are working long
    hours, and they are out there trying to do something to protect
    us. And we appreciate that. Thank you.
        Senator Hollings. I concur.

                             conclusion of hearings

        Mr. Mueller. Thank you.
        Senator Gregg. Thank you very much.
        Senator Hollings. Thank you, Mr. Chairman.
        Senator Gregg. Thank you.
        [Whereupon, at 11:12 a.m., Thursday, April 10, the hearings
    were concluded, and the subcommittee was recessed, to reconvene
    subject to the call of the Chair.]

    DEPARTMENTS OF COMMERCE, JUSTICE, AND STATE, THE JUDICIARY, AND RELATED
                  AGENCIES APPROPRIATIONS FOR FISCAL YEAR 2004

                                  ----------

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        [The following testimonies were received by the
    Subcommittee on Commerce, Justice, and State, the Judiciary,
    and Related Agencies for inclusion in the record. The submitted
    materials relate to the fiscal year 2004 budget request for
    programs within the subcommittee's jurisdiction.]

                             DEPARTMENTAL WITNESSES

                                 THE JUDICIARY

     Prepared Statement of Leonidas Ralph Mecham, Director, Administrative
                           Office of the U.S. Courts

                                  INTRODUCTION

        Chairman Gregg, Senator Hollings, and Members of the Subcommittee:
    thank you for giving me the opportunity to present the fiscal year 2004
    budget request for the Administrative Office of the United States
    Courts (AO).
        Let me first take a moment to thank you for your help in conference
    on the fiscal year 2003 appropriation for the AO. I am grateful of your
    support in providing the AO with an increase in funding above the
    fiscal year 2002 appropriation. Crafting an acceptable conference
    agreement within the limited allocation you were provided was a
    difficult challenge. Your continued support and recognition of our
    service to the courts are very much appreciated.

                       ROLE OF THE ADMINISTRATIVE OFFICE

        Created by an Act of Congress in 1939, the Administrative Office of
    the United States Courts serves as the central support agency for the
    federal court system, with key responsibility for judicial
    administration, program management, and oversight.
        As such, the AO is the focal point for judiciary communication,
    information, program leadership, and administrative reform. Our
    administrators, accountants, systems engineers, analysts, architects,
    lawyers, statisticians, and other staff provide professional services
    to meet the needs of judges and staff working in the federal courts
    nationwide. We also staff the judiciary's policy-making body, the
    Judicial Conference of the United States, and its 24 committees.

                           SECURITY OF THE JUDICIARY

        During this past year, in the wake of the events of September 11,
    2001, and the anthrax incidents that followed, a principal focus of the
    AO has been to provide additional guidance on security and emergency
    preparedness to the courts. We have consulted with experts, analyzed
    alternatives, and taken numerous steps to ensure the safety and
    security of federal judges, judiciary staff, jurors, attorneys, the
    public, and others associated with the judicial process. These efforts
    would not have been possible without your support in providing the
    judiciary with $129 million in emergency supplemental funding during
    fiscal year 2002. I would like to take a few moments to highlight how
    we have used these monies as well as share with you some of the
    initiatives we have undertaken in the area of security during the last
    year.

    Emergency Supplemental Funding
        First and foremost, the supplemental funding enabled the judiciary
    to augment the U.S. Marshals Service's workforce with 106 new court
    security inspectors who will oversee courthouse security and coordinate
    on- and off-site protection of judges in each of the 94 districts and
    12 regional courts of appeals. The funding also covered the costs
    associated with 358 new Court Security Officers (CSOs) to provide a
    higher level of security, including extended evening and weekend
    coverage, enhanced perimeter and internal security patrols, 100 percent
    identification checks, and visual inspection of vehicles. The inability
    to provide expanded hours of security coverage in courthouses had been
    a major weakness in the judiciary's security program. Your assistance
    in addressing this need is very much appreciated.
        In addition, the supplemental funding is being used to pay for such
    things as bomb detection equipment, enhanced x-ray equipment for
    screening, bullet-proof vests for CSOs, security enhancements around
    the perimeter of courthouses, ballistic hardening of screening posts,
    and special security requirements for courts handling high-threat
    trials.
        We also used emergency supplemental funding to enhance the physical
    security of the Thurgood Marshall Federal Judiciary Building. Monies
    have been used to upgrade the fire control system which includes
    accessible features for secondary locations. Vehicles no longer are
    allowed to park or idle outside the building. We have purchased new
    state-of-the-art x-ray machines and video surveillance cameras,
    installed protective film on perimeter windows, purchased evacuation
    chairs, radiological monitoring devices, and are pursuing other
    security upgrades based on expert security advice, and assessment
    reports.

    Safe Mail Handling
        As I mentioned in my testimony before the Subcommittee last year,
    immediately following the incidents of anthrax-contaminated mail, the
    AO began sending nearly all correspondence to the courts via e-mail or
    facsimile transmission. In addition, consultant architectural services
    were obtained to study several existing courthouse mail facilities and
    handling practices to help develop procedures, standards, and
    infrastructure for safe mail handling in federal courthouses. In July
    2002, the Judicial Conference endorsed recommendations regarding safe
    mail handling procedures, and the construction of centralized mail
    rooms in courthouses using $12 million in fiscal year 2002 emergency
    supplemental funding. AO staff then developed guidelines and
    specifications for prototype mail rooms based on the size of the
    courthouse and the potential volume of mail.

    Emergency Preparedness
        Also during fiscal year 2002, the AO established the Judiciary
    Emergency Preparedness Office to give direct guidance and other
    assistance to courts for emergency preparedness, crisis response, and
    continuity of operations plans. Such plans focus on the safety of
    judiciary employees and the public, and ensure that essential functions
    and activities are not interrupted for long and that critical functions
    resume as quickly as possible. During the past year, representatives
    from this office have briefed nearly 2,000 members of the judiciary on
    the emergency preparedness program.

    Continuity of Operations Planning (COOP)
        And, with the help of an independent consultant, prototype
    Continuity of Operations Plan (COOP) templates and instructional
    materials have been developed for each court type based on the actual
    COOP plans developed with AO assistance by the courts in New York after
    the terrorist events of September 11, 2001. Representatives from the
    courts contributed to the development of the COOP template by
    identifying specific issues courts need to consider in creating their
    local plans. The final template was distributed to the courts in
    November 2002 and will help them identify vulnerabilities in the event
    of a crisis, do the advanced planning necessary to maintain normal
    operations, and conduct the extensive coordination required among local
    organizations. Courts can access templates and checklists about
    emergency preparedness on the judiciary's Emergency Preparedness
    Office's website. These templates will be refined and updated based on
    experience and feedback from the courts.

    Court Operations Support Center
        We are particularly grateful for your endorsement in the conference
    report of the recommendations of the Court Operations Support Center
    and Continuity of Operations Housing Plan report that we provided to
    the Subcommittee in November 2002. The establishment of a small leased
    facility at least 20 miles outside of Washington, D.C. will help ensure
    the continuity of critical court support operations in the event that
    administrative and automation support functions are shut down as a
    result of closure of the Thurgood Marshall Federal Judiciary Building.
    While the primary purpose of the facility will be continuity of
    operations, consistent with the conference report direction, we intend
    to provide telework opportunities for judiciary employees at this
    facility as well. We will work quickly to establish this facility, and
    I will keep you apprized of its progress.

    Courts Supported in High-Profile Trials
        The ongoing terrorist threat to our nation and increased focus of
    federal law enforcement resources on homeland security also mean that
    the federal courts are likely to be the forum for many more highly
    publicized and security-sensitive criminal proceedings. We've already
    had the Richard Reid case in Massachusetts and the John Walker Lindh
    case in the Eastern District of Virginia. We know of several more that
    are upcoming, including the Zacarias Moussaoui case, also in the
    Eastern District of Virginia. The courts hosting these trials face
    unprecedented and extraordinary challenges involving a wide range of
    issues from heightened security concerns, greater information
    technology support needs, and furnishing closed-circuit broadcasts of
    the proceedings to victims' families.
        The courts rely on the AO to provide support and advice to them on
    all of these issues. AO staff met with court staff from the Court of
    Appeals for the Fourth Circuit and the Eastern District of Virginia to
    discuss the possibilities of using videoconferencing for emergency
    appeals resulting from terrorist-related cases in the circuit. The AO
    also arranged for classified briefings from the National Security
    Agency (NSA) for judges and others to discuss increased risks from
    terrorists trials. In Massachusetts, staff, working with NSA
    representatives, conducted an information security analysis at the
    district and appellate courts, followed by briefings for court staff
    and judges.
        I look forward to working with you and the Members of this
    Subcommittee as we develop more specific plans to ensure that the
    federal courts are safe and readily accessible to the public. Even in
    the face of the grim realities of a terrorist attack, chemical or
    biological contamination, or natural disaster, we are doing our best to
    ensure that the business of the judiciary can and will continue without
    disruption.

                  RELATIONSHIP WITH THE U.S. MARSHALS SERVICE

        In my role as Secretary to the Judicial Conference, one of my
    primary responsibilities is to carry out and implement policy decisions
    of the Judicial Conference. Not surprising, providing for the safety
    and security of federal judges, judiciary staff, jurors, attorneys and
    other participants in the judicial process has always been a top
    priority for the judiciary.
        On May 5, 1981, Chief Justice Warren Burger met with Attorney
    General William French Smith to discuss the need for improved court
    security. Following this meeting, in July 1981, Attorney General Smith
    formed a task force to examine court security requirements and make
    recommendations for improvements. The task force report was issued in
    March 1982.
        To quote from the Joint Statement of the Chief Justice and the
    Attorney General before the Judicial Conference of the United States on
    March 11, 1982:
        The provisions of adequate security services to all the
    participants in the federal judicial system, most especially the
    Judiciary itself, is a critical element in the relationship between the
    Department of Justice and the Federal Courts. If we cannot ensure the
    safety of all participants in the judicial process, we cannot maintain
    the integrity of the system, we cannot--in sum--``establish justice,''
    as mandated in the preamble to the Constitution of the United States.
        The statement goes on to point out that the needs of the judiciary
    had risen dramatically due to the increase in the number of judges, the
    increase in the number of cases, combined with the increasingly complex
    and sensitive nature of the cases and people involved. Mr. Chairman, it
    is disturbing to note that twenty-one years later these statements are
    even more relevant.
        Today, the federal courts are at risk from domestic and
    international terrorists, organized domestic and international criminal
    organizations, and litigants distressed at the outcome of their
    individual cases. And, because of the role the judiciary plays in the
    prosecution of international and domestic terrorists, as well as the
    high profile of judges and court facilities in most communities,
    security threats to the federal judicial system will no doubt continue
    to increase.

    USMS Staffing Shortfalls
        The judiciary is a strong advocate for the resource needs of the
    U.S. Marshals Service (USMS). But the judiciary has no binding
    authority over the general level of security services provided it by
    the USMS. By statute, the judiciary depends on the Executive Branch's
    USMS as its security provider. This relationship makes it difficult for
    us to ensure the judiciary receives the security services it requires.
        During the past several years, the U.S. Marshals Service has
    experienced severe personnel resource deficiencies, particularly at
    courts along the Southwest border and in cities with burgeoning
    criminal caseloads. The Marshals Service could not redeploy sufficient
    resources to these areas without severely short-changing others. The AO
    recently learned that the USMS' budgeting model identified personnel
    shortages of approximately 1,200 positions. The USMS is operating at 70
    percent of its required staffing. It is critical to the welfare of the
    judiciary that the USMS be adequately staffed to perform all of its
    various missions so that judicial security does not take a back seat to
    other USMS priorities. We are, so to speak, at the mercy of the USMS,
    the Department of Justice, and the Office of Management and Budget in
    terms of their ability to provide the number of deputy marshals
    necessary to ensure the judiciary has a top notch security program.
        For more than a year, Judge Jane Roth, Chair of the Judicial
    Conference Committee on Security and Facilities, and I have been
    working with the Department of Justice and Director Reyna in an attempt
    to evaluate the USMS staffing requirements and develop a multi-year
    strategy to raise the number of funded marshals. To be frank, achieving
    a collaborative effort has not been easy, but the Department has
    recently decided to seek input from the judiciary in the development of
    a revised staffing formula.
        During consideration of the third fiscal year 2002 Emergency
    Supplemental, Senator Graham was successful in amending the bill on the
    Senate floor to include funding for the hiring of 200 additional deputy
    U.S. marshals for the protection of the judiciary. With your help in
    conference, $37.9 million was provided to support up to 250 new
    positions for the USMS. Unfortunately, certain funds in the Act were
    included on a contingent basis--contingent on the President submitting
    an official budget request designating those funds as an emergency
    requirement. In a letter dated August 6, 2002, I wrote to the President
    on behalf of the Judicial Conference to urge expeditious submission of
    an official budget request so these critically needed resources could
    be released. The President declined to take that action.
        For fiscal year 2003, through your leadership in conference on the
    Omnibus Appropriations Bill, $7.9 million was included for 58
    additional deputy U.S. marshal positions for the protection of the
    judiciary for high threat trials, and for districts demonstrating the
    highest priority needs. For fiscal year 2004, while the President's
    budget for the U.S. Marshals Service seeks $26.6 million for 231
    additional deputy U.S. marshal positions, it also includes a general
    base reduction of $25.1 million to this same account. I am concerned
    that judicial security may suffer as a result.

    Comprehensive Study on Judicial Security
        As I have tried to lay out before you, the AO and the Judicial
    Conference have been concerned with the state of judicial security and
    the unique position the judiciary finds itself in with regard to its
    dependence on the Department of Justice for some time. Before September
    11, 2001, the AO and the Judicial Conference Committee on Security and
    Facilities had undertaken a comprehensive look at various aspects of
    judicial security. Working with a private security contractor, the
    findings of the review were issued in November 2001. Enhancements
    funded by the three emergency supplementals and the initiatives that
    have been undertaken by the AO to strengthen the security of the courts
    were key recommendations contained in this comprehensive review.
        In fact, the 106 supervisory-level deputy U.S. marshal positions
    included in the emergency supplemental to coordinate judicial security
    in the 94 districts and 12 regional circuits were a direct outgrowth of
    a recommendation of the independent security experts. Congress has now
    transferred the funding to the USMS, Salaries and Expenses account, but
    I am grateful that you have included statutory language to ensure the
    funding and positions will continue to be assigned to court security.
    District marshals and judges have seen improvements in security with
    the addition of the new security positions.
        In the conference report accompanying the fiscal year 2003 Omnibus
    Appropriation Bill, you have directed the U.S. Marshals Service to
    conduct a study with an independent consultant on the management of the
    Court Security program and the unique relationship between the Federal
    Judiciary, the U.S. Marshals Service, and the Federal Protective
    Service in administering the Court Security program and providing
    facilities security for the judiciary. Mr. Chairman, consistent with
    our responsibility to monitor the provision of court security and our
    personal concern for the safety of the public, litigants, attorneys,
    jurors, judges, court staff and others in the judicial process, I
    respectfully urge you to permit the judiciary to share its views
    regarding the management of court security during the course of this
    study. Certainly the outcome of the study will have profound
    implications for the future delivery of judicial security. Judge Jane
    Roth and I hope that you will meet with us if you believe changes to
    our security arrangements are warranted.

                      ADMINISTRATIVE OFFICE BUDGET REQUEST

        The fiscal year 2004 budget request for the Administrative Office
    of the U.S. Courts is $70,584,000, representing an increase of
    $7,497,000, or 11.9 percent above the fiscal year 2003 available
    appropriation. While the percentage increase we are seeking appears
    significant, it should be noted that more than three-fourths of the
    requested increase for the AO, $5,842,000, is necessary to support
    adjustments to base. These adjustments are mainly comprised of standard
    pay and general inflationary increases, funding to replace a lower
    level of fee carryover with appropriated funds, and $400,000 to restore
    funding for critical cyclical replacement of information technology
    equipment that had to be deferred into fiscal year 2004. We are highly
    dependent on personal computers, data networks, and telecommunications
    to conduct AO business and support the courts. Funds must be available
    to ensure security and replacement of essential equipment.
        The remaining increase of $1,655,000, which I will describe in
    greater detail in a moment, is requested to support new security
    requirements, strengthen programmatic oversight, audits, reviews and
    assessments, allow us to fund an increase in the transit subsidy
    benefit for AO employees, and implement a cafeteria-style flexible
    benefit program.

    AO Staff Support for the Courts
        Specifically, $958,000 is requested to provide nine additional FTEs
    for program and security oversight. Continuing to develop new programs
    and systems while supporting a court system whose proportional growth
    far outpaces that of the AO is a daunting task. The staffing level in
    the AO has remained essentially the same over the last ten years, while
    court staffing has grown by 20 percent during the same time period,
    thus adding substantially to the AO workload.
        Each vacancy that occurs is carefully evaluated and used to fulfill
    our highest priority needs. Nowhere has this been more evident than
    with our increased focus on security and emergency preparedness.
    Without additional funding, we have had to shift duties and
    responsibilities to meet the most pressing and immediate requirements
    of the courts, and this has meant shortchanging other needs. For
    example, during fiscal year 2002, the AO devoted $1 million and 8 FTEs
    to homeland security efforts. Roughly 50 AO employees devoted staff-
    hours equivalent to 8 FTEs, developing and implementing enhanced
    judicial security programs--fulfilling responsibilities and carrying
    out duties other than those for which their positions were originally
    funded to support.
        I am proud of my staff and their dedication to serving the needs of
    the courts. However, because sufficient resources must be committed to
    core functions such as running key systems, providing basic payroll,
    personnel, and financial management services, and supporting the
    committees of the Judicial Conference, program oversight functions are
    in serious need of additional resources.
        The nine additional FTEs we are requesting will be applied to the
    following functions: adding staff to the facilities and security
    program to ensure greater emphasis on the planning aspects of emergency
    preparedness and crisis response; providing greater focus and support
    to the probation and pretrial services program, which currently has
    only 36 AO staff supporting 8,000 probation and pretrial services
    personnel in 94 districts nationwide, and a budget of $850 million;
    and, increasing program oversight and efficiency reviews to assist the
    courts in areas such as automated case management, financial
    management, and developing strengthened procurement policies and
    procedures.
        Mr. Chairman, I hope you can assist us with this much needed
    request for additional staffing at the AO.

    Cafeteria-Style Flexible Benefits Program
        As you may recall, the Judicial Conference is seeking legislation
    that would provide the judiciary with the authority to use appropriated
    funds and/or fees to help defray the cost of providing supplemental
    benefits to judiciary employees. Approval of the legislation will allow
    a full-flexible cafeteria plan to be available to all judiciary
    employees, including the AO, providing a supplemental benefits package
    that is competitive with those already provided throughout the private
    sector and state governments. Benefits that may potentially be offered
    in a cafeteria plan include such items as a dental program, a vision
    program, and life insurance, as well as short-term and long-term
    disability insurance.
        While the House passed its Federal Courts Improvement Bill with
    this needed authorization in it, the Senate failed to act on the
    measure during the 107th Congress. However, in anticipation of the
    enactment of legislation in fiscal year 2003 allowing flexible
    cafeteria-style benefits to be offered to the judiciary, our fiscal
    year 2004 request includes $432,000 to begin implementing such a
    program for AO employees. A similar request implementing the program
    judiciary-wide is included in the Salaries and Expenses account.

    Transit Subsidy
        Pursuant to the Transportation Equity Act for the 21st Century
    (Public Law 105-78), the AO implemented a transit subsidy benefit for
    its employees with available funding in fiscal year 2000. The benefit
    is currently $60 per month with a participation rate of approximately
    60 percent. Executive Order No. 13150 provided for an increase in the
    allowable benefit to $100 per month in January 2002. The AO is
    requesting $265,000 to increase the subsidy to the currently authorized
    amount of $100 per month.
        The already limited parking available in and around the Thurgood
    Marshall Federal Judiciary Building has been further reduced by the
    loss of parking spaces at Union Station due to security considerations.
    Compounding the situation is the elimination of nearby parking as a
    result of the construction of Station Place, which has necessitated
    employees of the AO to seek parking in remote locations that are
    unsafe. This, coupled with the continuing increase in traffic
    congestion in the Washington, D.C. area, has increased AO employee
    interest in the transit subsidy program. The requested program increase
    of $265,000 will allow us to increase the benefit for AO employees to
    the authorized level of $100 per month and cover the cost of an
    anticipated increase in the participation rate to 70 percent.

                      RESPONSIBILITIES AND ACCOMPLISHMENTS

        As I mentioned earlier, the Administrative Office has key
    responsibility for judicial administration, program management, and
    oversight. It supports the Judicial Conference and its 24 committees in
    determining judiciary policies, and develops new methods, systems, and
    programs for conducting the business of the federal courts. The AO also
    assists the courts in implementing better management practices,
    developing and supporting innovative technologies that enhance the
    operations of the courts, and collecting and analyzing statistics on
    the business of the federal courts for planning and determining
    resource needs.
        It assists the courts in program management, addressing areas such
    as case management, jury administration, defender services, court
    interpreting services, and court reporting. One of our major areas of
    support is of the probation and pretrial services program for which we
    are seeking additional oversight positions. In fiscal year 2002,
    probation and pretrial services offices supervised a record number of
    offenders and defendants (143,672) living in our communities on
    pretrial release, probation, parole, or supervised release. The AO
    staff provided policy guidance and program support to a system that
    encompasses 94 districts in 500 locations. The staff develop and
    administer national contracts for drug testing and electronic
    monitoring and help support 500 local purchase orders for substance
    abuse and mental health treatment. The AO also provides financial
    management services to the judiciary including budget formulation,
    execution, and accounting; and personnel and payroll support for 32,000
    judiciary employees. It supports the facilities and security needs of
    over 800 facilities housing judiciary operations, and conducts
    training, audits, and reviews to ensure the continued quality and
    integrity of federal court operations.
        In addition, the AO provides necessary support services to other
    entities including the Judicial Panel on Multi-District Litigation and
    the Foreign Intelligence Surveillance Court.
        Throughout 2002, the AO excelled in its day-to-day
    responsibilities. Let me take a moment to highlight just a few of these
    areas.

    Financial Stewardship
        Working with the courts to ensure the efficient and effective use
    of resources is a key AO function. It is imperative that we do all in
    our power to ensure that the monies appropriated to the judiciary are
    utilized prudently; assets and resources are protected from loss,
    waste, or abuse; operations are efficient and effective; financial
    reports are timely, accurate, and reliable; and business practices
    comply with applicable laws and regulations. In 2001, a Management
    Oversight and Stewardship Handbook was published and training on
    management oversight was provided to chief district judges and chief
    bankruptcy judges. In 2002, a companion program was launched for court
    executives. The AO has held two of six planned workshops of the new
    training program, Management in the Judiciary: The Rules, Tools and
    Tips of Good Stewardship. To date, 110 court executives have received
    training. The remaining 332 will receive training in fiscal years 2003
    and 2004.

    Strengthened Internal Controls
        Good internal controls are systematic safeguards that ensure
    objectives are achieved and assets are protected. With the
    participation of court managers, AO staff is developing a model
    internal controls handbook to assist court leaders in managing their
    courts. The handbook will identify the minimum procedural checks and
    balances that should be in place for finance, travel, procurement and
    contracting, property, human resources, information technology,
    records, and statistical reporting.

    Information Technology
        Another key responsibility of the AO is developing, implementing,
    and supporting new automated systems and technologies for the courts.
    One of our largest automation initiatives in recent years is the Case
    Management/Electronic Case Files (CM/ECF) project, which permits courts
    to receive documents over the Internet and maintain electronic case
    filings. We began national roll-out of CM/ECF in 2001. By March 2003,
    about 130 district and bankruptcy courts had begun or completed
    implementing the new systems and national implementation in all courts
    should be completed in 2005. More than 27,000 attorneys have already
    filed documents electronically and more than 6 million cases involving
    more than 15 million documents are in the electronic files systems. In
    fact, several recent mega-bankruptcies were filed electronically,
    enhancing both public access and case management. In 2002, the total
    number of Public Access to Court Electronic Records (PACER) accounts
    topped 200,000. These systems will save considerable court resources
    while also significantly improving public access to federal court
    records.
        Many systems have also been developed through the energy and
    creativity of AO-court partnerships. Probation and pretrial services
    officers who, as I noted earlier, supervise well over 100,000 persons,
    have started using the Probation and Pretrial Services Automated Case
    Tracking System-Electronic Case Management (PACTS-ECM), which in 2002
    went live in 17 districts. It is a comprehensive system designed to
    help probation and pretrial services officers by making offender case
    information more easily accessible. The system electronically
    generates, stores, and retrieves investigation and supervision case
    information, and provides digital images of offenders. It also has
    remote capabilities to allow officer access while in the field. The
    PACTS-ECM system is an invaluable resource as the number of offenders
    released from Federal prison who are serving terms of supervised
    release continues to escalate.

                                   CONCLUSION

        Mr. Chairman, Members of the Subcommittee, I do not believe that
    any one agency in the executive branch or the legislative branch offers
    the broad range of services and functions that the AO provides to the
    federal courts. However, in the interest of time and the particular
    focus of this hearing, I have tried to limit my testimony to our fiscal
    year 2004 budget request and the role of the AO in enhancing judicial
    security and ensuring the safe and uninterrupted delivery of justice.
    We take our responsibilities and service to the courts seriously and
    are always looking for ways to improve. I ask your support in
    accomplishing this by granting the increase the AO is seeking for
    fiscal year 2004. Thank you.
                                     ______

       Prepared Statement of the Honorable John G. Heyburn II, Chairman,
       Committee on the Budget, Judicial Conference of the United States

                                  INTRODUCTION

        Chairman Gregg, Senator Hollings, Members of the Subcommittee,
    thank you for giving me the opportunity to present the judiciary's
    fiscal year 2004 budget request.
        Before addressing our fiscal year 2004 request, on behalf of the
    entire judiciary, I want to express our appreciation for the funding
    levels provided to the judiciary for fiscal year 2003. We understand
    the difficult decisions and concerns that you faced, and will continue
    to face, balancing the needs of the newly-established Department of
    Homeland Security, the ongoing war against terrorism, the war in Iraq,
    and the funding needs of numerous domestic entities, while trying to
    hold down spending. Although we did not get all the funding we
    requested, we are very grateful that you and your dedicated staff
    worked with us to fund the judiciary's most pressing needs.

                                BUDGET OVERVIEW

        The budget request the judiciary has submitted for fiscal year 2004
    is that which is necessary to maintain our current staff and operations
    and to allow the courts to handle growing workload and other critical
    needs. The appropriations request is 10.8 percent over the available
    appropriations for fiscal year 2003. We realize that this request is
    higher than the 3.8 percent increase requested for discretionary
    spending, with the exception of homeland security, in the President's
    Budget. Although we are mindful of the need for fiscal restraint, now
    more than ever a strong judiciary is critical to the protection of our
    citizens. Threats to homeland security potentially involve civil or
    criminal actions that will require court orders and adjudication in
    this nation's courts.
        For all judiciary accounts, we are requesting a $530 million
    increase in appropriations over the enacted appropriations for fiscal
    year 2003. Nearly two-thirds of this requested increase ($338 million)
    is required to maintain current operations with pay and benefit
    adjustments, inflationary adjustments, increases in GSA space rental
    costs, an increase in filled Article III judgeships, and continued
    security measures. The remainder ($192 million) is primarily to provide
    for the programmatic and workload-related needs such as high-profile
    terrorist trials, the unprecedented numbers of bankruptcy filings, and
    significant increases in the probation and pretrial services workload
    as criminal filings continue to rise and as the number of offenders
    released from prisons into our communities with a need for drug and
    mental health treatment steadily increases. A detailed explanation of
    our fiscal year 2004 request is included as an appendix.

                             PROTECTION OF FREEDOM

        In these uncertain times, with our nation's safety and freedom
    threatened as it has never been before, our three branches of
    government must work together to protect the safety of our citizens and
    our heritage of freedom. A strong, independent federal judiciary,
    providing equal justice to all, is at the heart of what this nation
    stands for. As Chief Justice Rehnquist noted in his 2002 year-end
    report on the federal judiciary, there is a fundamental interdependence
    of our three separate branches of government when it comes to funding
    our nation's priorities, and we look to the Legislative and Executive
    Branches for support, funding and staffing.

                               WORKLOAD INCREASES

        The workload asked of the judiciary is truly uncontrollable,
    whether it is processing criminal, civil, or bankruptcy cases; or
    providing jury services, supervision and treatment of defendants and
    released felons, or representation to those financially unable to
    obtain private counsel. The judiciary has no major program which can be
    cut or deferred, only the people who provide those services, the
    systems that support them, and the facilities that house them.
    Therefore, when funding is reduced, the only place the reduction can be
    taken is in the staff and the supporting systems that perform those
    essential services.
        While we are not at a point where I would use the term crisis, I am
    very concerned about certain workload indicators that I believe are
    heading in the wrong direction, likely as a result of resource
    shortfalls.
        Pending criminal and bankruptcy cases have grown by 38 percent and
    17 percent respectively between 1998 and 2002. This means that the
    number of cases terminated is less than the number of new cases filed.
    The number of judges and court staff has not kept pace with the growth
    in caseload, and a disturbing argument could be made that this lack of
    judicial resources has resulted in a growth in backlogs.
        I am also concerned about our law enforcement function, probation
    and pretrial services. The caseload in these offices has grown by
    approximately 16 percent between 1998 and 2002. That in itself is
    significant, but in addition, the nature of their work has also
    changed. Officers are supervising more hardened offenders as evidenced
    by their more extensive criminal histories and the 67 percent increase
    in the average prison sentence. Furthermore, over this same time period
    the number of offenders with mental health conditions has grown by 81
    percent, and the number with substance abuse problems has grown by 48
    percent. While the number of officers has kept pace with the growth in
    the overall number of cases during this period, there has been no
    increase associated with the increased risk presented by these cases.
    Within the same relative level of staffing, our probation and pretrial
    services officers must devote a higher level of supervision to the more
    hardened criminals and those with drug abuse and mental health issues,
    which means they must devote less time to their other cases. On the one
    hand, I applaud them for prioritizing limited resources to the more
    complex cases, but on the other hand, I am concerned that the level of
    supervision of their other cases could pose a higher risk to the
    community in the long run.
        The courts experienced record workload increases in fiscal year
    2002. Bankruptcy filings grew 8 percent, civil filings in the U.S.
    district courts climbed 10 percent, criminal cases rose 7 percent, and
    the number of persons under probation supervision and supervised
    release as well as the defendants in the pretrial services systems each
    increased by 4 percent.
        As we look to what the future will bring, we note that in
    Conference report on the fiscal year 2003 appropriations, additional
    funds were provided to the U.S. Attorneys ``to aggressively prosecute
    cases of corporate fraud'' and the funding provided to the FBI included
    increases to combat violent crime and white collar crime. And, the
    Bureau of Prisons inmate population has reached an all-time high of
    165,000. Approximately 80 percent of these prisoners will be released
    to the community and will be under the supervision of probation
    officers at the completion of their sentences.
        These are just a few of the indicators that point to continued
    increases in workload for the federal judiciary. In fiscal year 2003,
    because of limited funding, we will be unable to provide for the full
    complement of staffing required to meet the workload requirements. I
    urge the Subcommittee, as you determine your funding priorities in this
    constrained environment, to consider providing the federal courts with
    the resources required to perform the very important functions assigned
    to them by the Constitution and the Congress. Without the funding
    increases needed to address growing workload, I believe the judicial
    system, and those who depend on it to resolve disputes, will begin to
    suffer.

                                  JUDICIAL PAY

        The need to increase judicial pay continues to be one of the most
    pressing issues facing the judiciary. Federal judicial salaries have
    lost 23.5 percent of their purchasing power since 1969, while during
    this same time period private sector wages have increased by 17.5
    percent. More than 70 Article III judges, all of whom have life-time
    appointments, left the bench between 1990 and February 28, 2003--either
    under the retirement statute if eligible or simply resigning--as did a
    number of bankruptcy and magistrate judges. Another judge resigned at
    the end of February, and two more judges have announced their intention
    to retire from federal bench later this year. During the 1960s only a
    handful of Article III judges retired or resigned. Many judges no
    longer take senior status and we are losing their valuable
    contributions as they seek private sector employment and compensation.
    A study of 1999 data indicated that senior judges participated in 15
    percent of appeals and presided over nearly 20 percent of trials.
        Recently, the report of the National Commission on the Public
    Service, also called the Volcker Commission, supported the need to
    address this issue. In its final report, the Commission said, ``The lag
    in judicial salaries has gone on too long, and the potential for
    diminished quality in American jurisprudence is now too large. Too many
    of America's best lawyers have declined judicial appointments.'' The
    salary differential when compared with the legal education profession
    has become quite dramatic. In 1969, the salaries of district court
    judges had just been raised to $40,000 while the salary of the dean of
    Harvard Law School was $33,000 and that of an average senior professor
    at the school was $28,000. That relationship has now been erased. The
    salaries of professors and deans at the twenty-five law schools ranked
    highest in the annual U.S. News and World Report survey found that the
    average salary for deans of those schools was $301,639. The average
    base salary for full professors at those law schools was $209,571, with
    summer research and teaching supplements typically ranging between
    $33,000 and $80,000. This compares with a district court judge's salary
    of $154,700. The Volcker Commission's report stated, ``Judicial
    salaries are the most egregious example of the failure of federal
    compensation policies. . . . Unless this is revised soon, the American
    people will pay a high price for the low salaries we impose on the men
    and women in whom we invest responsibility for the dispensation of
    justice''. The Commission expressed similar concerns about the
    inadequacy of congressional and executive salaries and recommended,
    ``Congress should grant an immediate and significant increase in
    judicial, executive, and legislative salaries to ensure a reasonable
    relationship to other professional opportunities.''
        I know that to address this issue requires a broad Congressional
    consensus. Nevertheless, this Committee can take a small, but vital
    step in the right direction by including the funding for the annual ECI
    adjustment for judges in this bill.

                                 NEW JUDGESHIPS

        Despite the substantial increase in workload, there has not been a
    major judgeship bill creating additional Article III judges since 1990
    or a bankruptcy judgeship bill since 1992. We are grateful for nine
    district judgeships added in the fiscal year 2000 appropriation, the
    ten additional district judgeships added in the fiscal year 2001
    appropriation, and the 15 additional permanent and temporary district
    judgeships Congress authorized in November 2002 as part of the
    Department of Justice authorization act. However, the need for
    additional appellate, district and bankruptcy judges is critical. For
    example, in 1992, when the last bankruptcy judgeships were created,
    each bankruptcy judge handled an average of 2,998 cases; each now
    handles an average of 4,777 cases. Likewise, appellate and district
    judges are handling more cases. We hope that you will support and
    provide funding for the Judicial Conference requests to create 57
    additional Article III judgeships and 36 bankruptcy judgeships.

                              COURT SUPPORT STAFF

        The court support staff are the backbone of court operations. From
    intake to disposition, it is the clerk's staff, along with the pretrial
    services and probation officers who keep the wheels of justice running
    smoothly. In order to ensure that resources are distributed as required
    by workload, the judiciary has developed scientifically-derived
    staffing formulas to construct the budget request and to allocate funds
    to the clerks' offices and to the probation and pretrial services
    offices. As filings and other workload factors fluctuate from year to
    year, the application of the formulas to the individual court units
    provides a corresponding increase or decrease in funding. This ensures
    the equitable allocation of resources to meet workload requirements.
        For the duration of the Continuing Resolutions this year, the
    clerks' offices and probation and pretrial services offices were held
    to a spending level significantly below the fiscal year 2002
    allotments, which put a major strain on the staffs. Most offices were
    unable to fill critical vacancies, and were anticipating the
    possibility of RIFs and furloughs. We are grateful for the fiscal year
    2003 appropriation, which will allow the courts the funding necessary
    to maintain a current services level of operations for the remainder of
    the year. However, it will not allow us to fully fund the formulas that
    provide for the staff necessary to keep pace with steadily growing
    workload. The gap between required staff levels and funded staff levels
    continues to grow.

                        PROBATION AND PRETRIAL SERVICES

        Federal probation and pretrial services officers protect the public
    through the investigation and supervision of defendants and released
    offenders within the federal criminal justice system. Pretrial services
    officers investigate the backgrounds of defendants charged with a
    federal crime, recommend in a report to the court whether to release or
    detain a defendant, and supervise those who are released to the
    community while they await their day in court. The probation officer
    enters the scene upon a finding of guilt, investigating the offender to
    provide the court with a presentence report, and supervising all
    offenders conditionally released to the community. As an example of the
    dedication of these officers and the difference they make in our
    communities I would like to tell you a success story that took place in
    the Eastern District of Virginia.
        ``JB'' began his three-year term of supervised release after
    serving time at the Federal Correctional Institution in Butner, North
    Carolina on a conviction for making bomb threats. He had a long-
    standing history of mental health problems characterized by anger,
    suspicion, paranoia, and aggressiveness. The FBI, the local police
    department, and JB's former employer--the target of JB's bomb threats--
    were extremely anxious about JB's release because of his unstable
    mental condition.
        Supervision in this case became difficult even before release. JB's
    request to relocate to his hometown in the Middle District of North
    Carolina was turned down because he had sent numerous threatening
    letters to his parents. With no acceptable release plan, he was to be
    released to Richmond--where he had no ties and where his former
    workplace was located.
        A senior Probation Officer (PO) in Virginia Eastern initiated
    contact with JB before he was released. She established and maintained
    contacts with local law enforcement, corporate security for the victim,
    and the probation office in the Middle District of North Carolina. She
    found JB temporary housing and placed him in treatment. She also began
    a close collaboration with the Richmond Behavioral and Health
    Authority, where JB was to participate in a program for homeless people
    in need of mental health treatment. This community resource provided
    the medication and treatment necessary to stabilize JB's mental
    condition and helped him with housing and job placement.
        The PO met with JB within 30 minutes of his release from custody.
    She conducted a thorough initial interview and gave him clear, detailed
    instructions as to what he was to do next. After that first contact,
    the PO closely monitored JB, speaking with him by telephone daily, when
    necessary. With each change of residence or job, the PO made a prompt
    on-site inspection and added new landlords and employers to her list of
    collateral contacts.
        Because the PO monitored JB's case very closely, she was able to
    identify potential danger signals and intervene quickly before a crisis
    arose, and to clarify what she expected of JB in each change of
    circumstance. She reinforced her expectations of him by using a blend
    of explanations, warnings, and incentives. For example, when JB took up
    photography as a hobby, the PO first set clear limits for this
    potentially intrusive activity. She then both monitored JB's work and
    complimented his growing skill. The PO also helped JB deal with the
    requirements of managing an independent life--serving as case manager
    and service broker with mental health counselors, employers, landlords,
    Social Security Administration officials, and family members. She
    encouraged JB in his successes and consoled him in his disappointments,
    while--within the bounds of confidentiality--also keeping her law
    enforcement and corporate security contacts informed of his activities
    and progress.
        As a result of these efforts, JB got a job at a local YMCA, where
    he became a productive, well-liked employee and served as their
    unofficial photographer. He became stabilized on medication and began
    receiving monthly social security disability benefits. JB occasionally
    visited his hometown, under the supervision of the North Carolina
    Middle probation office, and his relationship with his family improved
    so much that the district accepted him for courtesy supervision.
        When JB ended his term of supervised release, he was stable, back
    in his hometown with his family, equipped with a new skill, and able to
    support himself. The PO and the collateral network she developed
    provided the structure, control, treatment, and support necessary for
    JB to succeed and for the public to remain safe. Her efforts laid the
    foundation for JB's continued success in the future.
        Helping past offenders avoid becoming repeat offenders, while
    protecting the community, is the primary goal of supervision. With
    insufficient staffing resources and limited funds for programs that
    help offenders become productive members of our communities, we
    increase the risk to those communities.
        Persons under supervision have increased by 16 percent since 1998.
    More growth is expected for fiscal years 2003 and 2004. Further, the
    level of danger posed by many of those under supervision and their
    attendant drug and mental health problems has soared.

                               DEFENDER SERVICES

        Defender Services is also affected by the increase in criminal
    cases and the number of terrorist trials. In addition to the projected
    growth in representations in fiscal year 2004, the current projections
    for fiscal year 2003 exceed the funding provided. This means that some
    panel attorney payments likely will have to be deferred into fiscal
    year 2004, further raising the requirements for that year.
        We are grateful for the panel attorney rate increase to $90 per
    hour provided in fiscal year 2002. This was the first significant raise
    in private panel attorney hourly rates in most judicial districts since
    1986, and it was badly needed. The judiciary is collecting information
    in response to the Committee's questions about the extent to which the
    new rate has solved problems in obtaining adequate counsel for Criminal
    Justice Act (CJA) representation. However, even in a district where the
    $90 rate may now allow a court to obtain qualified counsel to accept
    CJA appointments, lawyers are accepting the cases at a significant
    financial sacrifice which ultimately will not bode well for the
    criminal justice system.
        To ensure that the panel rates do not further decline, in real
    terms, below the rates envisioned by the CJA, the Judicial Conference
    again has requested that the Congress raise the rate to $113 per hour.
    Even at $113 per hour, CJA counsel, who provide representation
    guaranteed by our Constitution, would be underpaid compared to rates
    paid by many federal agencies to private lawyers. In a survey of hourly
    rates paid to private counsel by government agencies conducted in 2001,
    the General Accounting Office found that the average hourly fees paid
    to private counsel ranged from $125 to $357, depending on the agency
    and the type of legal services. In addition, the average hourly billing
    rate charged by privately retained counsel, according to The 2002 Small
    Law Firm Economic Survey (Altman Weil, Inc.), is approximately $190 for
    sole practitioners and partners in small law firms. The judiciary and
    panel attorneys understand that CJA hourly rates were not intended to
    match those that lawyers charge their private clients. It is the
    judiciary's view that panel attorneys' compensation should cover
    reasonable overhead and a fair hourly fee, which warrants raising the
    CJA rate to $113.
        In deciding to continue to seek a nationwide $113 hourly rate for
    fiscal year 2004, the judiciary considered the possibility of proposing
    geographic-based rates. In addition to the reasons supporting a $113
    rate, the judiciary took note of several factors regarding geographic-
    based rates, including that the cost of living in an area is not the
    only factor in a court's ability to recruit and retain qualified
    attorneys to accept CJA appointments. For example, in a low-cost rural
    area where there is a minimal retained federal criminal practice and a
    limited pool of lawyers with federal criminal defense experience, a
    higher rate may be needed in order to provide sufficient incentive for
    attorneys to invest the time required to develop the necessary
    expertise and to then be willing to take on a substantial portion of
    the CJA caseload. The judiciary will continue to examine options, such
    as geographic-based rates, in developing its future funding requests.
        We are also requesting, for the first time, an increase in the
    maximum hourly rate to $157 for panel attorney compensation in capital
    cases. The $157 hourly rate represents the $125 rate adjusted for the
    cumulative cost-of-living adjustments provided for in the Antiterrorism
    and Effective Death Penalty Act of 1996. Counsel accepting appointments
    to capital cases typically are sole practitioners or are from small,
    independent firms, which do not have other attorneys willing or able to
    subsidize the cost of the CJA work. The amount of time that the
    attorneys need to devote to these capital cases is so extensive that it
    is generally impossible for the attorneys to handle other cases
    concurrently. The current maximum capital hourly rate of $125 is
    significantly below the market rates charged by lawyers for providing
    representation in comparable high-stakes, complex, and time-consuming
    cases. An increase would be the first in the maximum rate for capital
    cases since it was set statutorily in 1996. The cost of this increase
    is only $2.9 million. We urge you to consider it.

                                 COURT SECURITY

        We appreciate your continued support of our Court Security program
    and understand your concerns regarding budget administration and
    oversight of the program. This is a unique account--appropriated to the
    judiciary but primarily managed by the Department of Justice. The
    safety of the public, litigants, attorneys, jurors, judges, court staff
    and others in the judicial process is of primary concern to us, and we
    are fully committed to working with the USMS to make sure that the
    program is successful and that the resources you provide are managed in
    the most efficient and effective manner. You have directed the USMS to
    conduct a study on the management of this program, and we respectfully
    ask that the judiciary be involved actively in this study since the
    mission of the program is so important to us.
        In these troubled times when courthouses are such visible targets
    for terrorists, our Court Security program is more critical than ever.
    Court Security Officers (CSO) and security systems are key aspects in
    providing physical security to the courts. Statistical data provided by
    the USMS indicates that our security process detected 641,489 weapons
    such as guns, knives, and other items prohibited in courthouses in
    fiscal year 2002. The USMS also reported the detention or arrest of 16
    persons related to security breaches in courthouses during the year. I
    will share with you a few stories illustrating the vigilance and
    professionalism of our CSOs.
        In October of 2002, in the district of Colorado, a CSO intercepted
    an individual attempting to gain entrance into the courthouse with a
    .380 caliber automatic handgun concealed in a leather carrying case.
    The individual was also in possession of a loaded magazine. The
    individual was taken into custody.
        In December of 2001 in the Federal Courthouse and Post Office in El
    Dorado, Arkansas, two CSOs noticed a man in the Post Office lobby with
    a gun and badge. Although it is a reasonably large city, one of the
    CSOs recognized this man as an individual who some years before had
    been in court for a civil charge and was considered to have mental
    health problems. The two CSOs approached him and had to fight him to
    the floor. The individual had a fake badge and a real gun. He was
    apprehended, charged and found guilty of several charges including
    carrying a weapon into a federal building.
        In February of 2002, an individual used a hammer to shatter the
    glass in the front entrance door of the U.S. Federal Building at
    Beckley, West Virginia. Two CSOs quickly subdued this individual and
    restrained him until he was taken into custody by the U.S. Marshals
    Service.
        During a court session in the Southern District of Ohio a prisoner
    attempted escape. The prisoner was able to get out of the courtroom and
    almost out the front door, but two CSOs tackled and apprehended him at
    the front entrance.
        We appreciate your increased support and funding for this program.
    While we recognize the practical reasons for transferring the 106
    supervisory deputy marshal positions, approved by Congress in the
    fiscal year 2002 supplemental appropriation, to the USMS in fiscal year
    2003, these positions are a linchpin to effective security of our
    courthouses, and we look for your support to ensure that they will
    continue to be dedicated to courthouse security, and to our
    participation in the study on the management of the Court Security
    program.

                   CAFETERIA-STYLE EMPLOYEES BENEFITS PROGRAM

        For the past several years, the judiciary has been a leader in
    offering enhanced benefits to employees. Long-term care was introduced
    in 1999, followed by the existing flexible benefits plan, introduced in
    fiscal year 2000, which offers pre-tax benefits such as flexible
    spending accounts for health care, dependent care, payment of health
    insurance premiums, and commuter reimbursement. The judiciary was able
    to implement these benefits within the existing statutory framework and
    without requiring additional funds. We would like to do more for our
    employees to stay competitive in an era when skilled workers change
    jobs frequently. This is especially important to the judiciary as the
    work force of tempered professionals reaches retirement age and we are
    looking to maintain a qualified, stable work force. We cannot continue
    to be competitive in the employment market with substandard benefits,
    and so we are seeking legislation and funding to establish a cafeteria-
    style benefits program that would be funded in part by a modest per-
    employee contribution by the judiciary. The combined employee and
    employer contributions could eventually be used to purchase benefits
    from a menu of choices such as dental insurance, vision insurance,
    leave conversion, expanded commuter subsidies, short-term and long-term
    disability, and prescription drug insurance and mental health insurance
    to plug gaps in the Federal Employees Health Benefits (FEHB) programs.
    Benefit programs like these are common in state governments, the
    private sector, and other federal agencies such as the Federal Reserve,
    Federal Deposit Insurance Corporation, Comptroller of the Currency and
    the Postal Service--entities with which we compete for professional
    staff.
        Although the House passed the Federal Courts Improvement Bill with
    the needed authorization allowing us to use appropriated funds and/or
    fees to help defray the cost of providing these supplemental benefits,
    the Senate failed to act on the measure during the 107th Congress.
    However, in anticipation of the enactment of legislation in fiscal year
    2003 allowing flexible cafeteria-style benefits to be offered in the
    judiciary, we are including a request for $15.9 million, hoping to
    begin implementing the program in fiscal year 2004.

                   CONTRIBUTIONS OF THE ADMINISTRATIVE OFFICE

        The Administrative Office of the United States Courts serves as the
    central support agency for the federal courts, with key responsibility
    for judicial administration, policy implementation, program management,
    and oversight. The Administrative Office (AO) not only performs
    important administrative functions such as personnel, payroll,
    procurement, space management and planning, and accounting, but also
    provides a broad range of legal, financial, management, program, and
    information technology services to the courts. The AO's staff has been
    essentially frozen for ten years, while its work has expanded to
    support the courts.
        In the wake of the tragic events of September 11 and the anthrax
    mail situation, the AO has been working to provide additional guidance
    on security and emergency preparedness to the courts. The Director
    established a permanent Judiciary Emergency Preparedness Office to
    focus on crisis response, occupant emergency planning, and continuity
    of operations planning. Following the anthrax mail contamination
    crisis, the AO provided advice and contract support to test for anthrax
    and address mail handling concerns at courts across the nation. To
    avoid future contaminated mailings, the AO began using e-mail
    broadcasts, facsimile transmissions, and more extensive posting to our
    intranet site, the J-Net, to deliver information to the courts.
        With the help of an independent consultant, prototype Continuity of
    Operation Plan (COOP) templates and instructional materials have been
    developed for each court type based on the actual COOP plans for the
    U.S. Court of Appeals for the Second Circuit and the District and
    Bankruptcy Courts for the Southern District of New York. Templates and
    checklists about emergency preparedness have been made available on the
    Emergency Preparedness Office's J-Net website.
        The Director created a project team to assess the feasibility of
    establishing a Court Operation Support Center (COSC) outside downtown
    Washington, DC to address the vulnerability of key administrative and
    technical support to the courts. The primary objective of an off-site
    COSC is to ensure that support to the courts would continue
    uninterrupted in the event the Thurgood Marshall Federal Judiciary
    Building is rendered inaccessible. We intend to provide telework
    opportunities for judiciary employees at this facility as well. We are
    grateful for your endorsement of the COSC in the conference report on
    the fiscal year 2003 appropriations.
        As courts are facing more highly publicized and security-sensitive
    criminal proceedings, the AO has been providing support and advice to
    the courts on a wide range of issues from heightened security concerns
    to information technology, and furnishing closed-circuit broadcasts of
    the proceedings to victims' families.
        Working with the courts to ensure the efficient and effective use
    of resources is a key AO function. In fiscal year 2001, a Management
    Oversight and Stewardship Handbook was published and training on
    management oversight was provided to chief district judges and chief
    bankruptcy judges. In 2002, a companion program was launched for court
    executives. The AO has held two of the six planned workshops of the new
    training program, Management in the Judiciary: The Rules, Tools and
    Tips of Good Stewardship.
        The fiscal year 2004 budget request for the AO is $70,584,000,
    representing an increase of $7,497,000, or 11.9 percent above the
    fiscal year 2003 available appropriation. More than three-fourths of
    the requested increase is necessary to support adjustments to base,
    mainly standard pay and general inflationary increases, as well as
    funding to replace a lower level of fee carryover with appropriated
    funds. Of the remaining $1,655,000 increase, $958,000 is requested to
    provide nine additional FTE for program and security oversight. The
    staffing level in the AO has remained essentially the same over the
    last ten years, while court staffing has grown by 15 percent during the
    same time period.
        I urge the Committee to fund fully the AO's budget request. The
    increase in funding will ensure that the AO continues to provide
    program leadership and administrative support to the courts, and to
    lead the efforts for them to operate efficiently.

                  CONTRIBUTIONS OF THE FEDERAL JUDICIAL CENTER

        The Federal Judicial Center is seeking a modest 8.3 percent
    increase over its current appropriation. The Center is the federal
    judiciary's education and research arm. Its support is vital to the
    work of federal judges and the personnel of the courts.
        Judge Smith will return to California later this year to resume her
    duties as a U.S. district judge. All of us in the judiciary are
    grateful to her and to the Center for its contributions under her four
    years of leadership.
        With Judge Smith, I thank you for last year's increase for the
    Center, including the confirmation that the funds transferred in 2002
    are part of its base budget and available to support some of the
    distance education positions that it has requested for several years.
        A main element of the increase that the Center seeks in 2004 would
    restore its basic judicial education programs to a twelve-month cycle,
    rather than the current eighteen-month cycle. Having to go a year and a
    half between continuing education programs has been a matter of great
    concern to judges over the country. These programs provide updates on
    caselaw trends, on innovations in managing cases, and on such
    specialized topics as admissibility of scientific evidence.
    Furthermore, we can share notes with colleagues from other courts as
    well as with the excellent faculty that the Center assembles.
        I want also to recognize the importance of the Center's research,
    primarily for committees of the Judicial Conference, as detailed in
    Judge Smith's statement, and the Center's education to enhance
    management skills in the federal courts. I participated last fall in a
    Center program for new chief judges and unit executives, and it has
    helped me immensely. Center programs also provide a forum to stress the
    importance of economy in administration, which I did earlier this week
    when speaking at a Center conference for the clerks and chief deputies
    of the courts of appeals and the clerks of the bankruptcy appellate
    panels. Last October I provided similar guidance on fiscal realities
    and responsibility when making a presentation at a Center workshop for
    the clerks and chief deputies of our federal district courts.
        Center programs for our clerk's offices and our probation, and
    pretrial services offices, almost all of it by satellite and on the
    Web, has never been more important for court executives who must deal
    with employee unease and insecurity in these troubled times. Its
    importance highlights the need for the educational technology positions
    the Center requests.
        I believe the Center's request deserves the committee's support and
    urge favorable action on the full amount.

                                   CONCLUSION

        Chairman Gregg and Members of the Subcommittee, this concludes my
    statement. I look forward to working with you as you work to develop
    the fiscal year 2004 appropriation bill for the Judiciary.

                                    Appendix

                                    SUMMARY

        The fiscal year 2004 appropriation request for the Courts of
    Appeals, District Courts and Other Judicial Services totals
    $5,175,878,000, an increase of $540,200,000, or 11.7 percent, over the
    fiscal year 2003 available appropriations. In addition to appropriated
    funds, the judiciary utilizes other funding sources to supplement our
    appropriations including fee collections, carry forward of fee balances
    from a prior year, and the use of no-year funds. When all sources of
    funds are considered, the increase in obligations for fiscal year 2004
    is only $429,435,000 or 8.5 percent.
        Of the $540,200,000 increase in appropriations, 66 percent
    ($357,481,000) is adjustments to the fiscal year 2003 base associated
    with standard pay and other inflationary increases as well as other
    adjustments that will allow the courts to maintain current services in
    fiscal year 2004. The remaining 34 percent ($182,719,000) is needed to
    respond to increased requirements for magistrate judges, federal
    defender offices, security, drug and mental health treatment, and to
    fund additional court staff required to process growing workload. The
    request for the principal programs are summarized below.

    Salaries and Expenses
        The salaries and expenses of circuit, district, and bankruptcy
    courts and probation and pretrial services offices account for most of
    our request. A total of $4,467,930,000 in obligations is required for
    this account, including funding for the Vaccine Injury program, in
    fiscal year 2004. Funding totaling $276,285,000 is expected to be
    available from other sources including fee collections and carryforward
    balances to fund S&E requirements. This leaves an appropriation need of
    $4,191,645,000, which is $411,864,000 above the fiscal year 2003
    available appropriation.
        Of the $411,864,000 increase, 61 percent ($249,697,000) is needed
    to fund adjustments to the fiscal year 2003 base including: pay and
    benefit increases for judges ($12,563,000); increases in the number of
    filled Article III judges, senior judges, magistrates judges
    adjustments, and the filling of vacant Special Masters to handle
    vaccine injury cases ($13,725,000); pay and benefit increases for court
    support and probation and pretrial services staff ($95,327,000);
    increases necessary to maintain fiscal year 2003 staffing levels and
    automation support because of a reduction in non-appropriated funding
    ($30,571,000); increases for space rental and associated costs
    ($60,084,000); inflationary increases for operating costs
    ($12,339,000); increases to support existing and newly installed
    automated systems and to continue development of new information
    technology systems ($17,934,000); and increases for maintenance of
    telecommunications systems and systems for new space coming on-line
    ($7,154,000).
        The remaining 39 percent ($162,167,000) will fund 10 additional
    magistrate judges and their staff to help Article III judges handle the
    growing volume of civil and criminal cases facing the courts
    ($4,119,000); 807 court support FTEs to address the shortfall in the
    level of staffing and operating costs funded in fiscal year 2003
    ($97,025,000); 427 court support FTEs for a net increase in workload in
    fiscal year 2004 ($28,200,000); a cafeteria-style flexible benefits
    program for employees to reduce turnover and attract high quality new
    hires ($15,886,000); increased mental health and substance abuse
    treatment for projected growth in the number of offenders and
    defendants under supervision requiring this treatment ($7,369,000);
    annual recurring costs of the judiciary's off-site operations support
    center ($3,495,000); additional funding for the installation of
    courtroom audio systems during the construction of new courthouses
    ($4,384,000); and funding for background investigations for probation
    and pretrial services officers and officer assistants, and for court
    staff in sensitive positions ($1,689,000).

    Defender Services
        An appropriation of $635,481,000 is required for the Defender
    Services program to provide representation for eligible criminal
    defendants in fiscal year 2004. This is an increase of $100,520,000
    above the available fiscal year 2003 appropriation.
        Of this increase, 86 percent ($86,909,000) is needed for
    adjustments to the fiscal year 2003 base for inflationary and workload
    increases. Included in these adjustments are standard pay and inflation
    increases for Federal Defender Organizations ($14,002,000); a cost-of-
    living adjustment for panel attorneys ($1,247,000); other inflationary
    increases ($2,149,000); increase in the projected number of
    representations ($36,923,000); funding to maintain base caseload costs
    ($33,188,000); and a reduction in non-recurring costs (-$600,000).
        The remaining increase of 14 percent ($13,611,000) will fund an
    increase in the hourly panel attorney rate for non-capital cases, above
    the inflationary adjustment, to $113 beginning on April 1, 2004
    ($10,378,000); an increase in the hourly panel attorney rate for
    capital cases, beyond the inflationary increase requested, to $157
    effective on April 1, 2004 ($2,633,000); and start-up costs of two new
    federal defender offices expected to be opened in fiscal year 2004
    ($600,000). The Congress and the Judicial Conference have urged us to
    establish more federal defender organizations as an alternative to
    using panel attorneys in districts where this would be appropriate.

    Fees of Jurors and Commissioners
        For the Fees of Jurors program, an appropriation of $53,181,000 is
    required, a decline of $1,100,000 from the fiscal year 2003 available
    appropriation. This decline is the result of a decrease in the
    projected number of juror days (-$1,447,000); and an increase for
    inflation ($347,000).

    Court Security
        For the Court Security program, an appropriation of $295,571,000 is
    required, which is an increase of $28,916,000 above the fiscal year
    2003 available appropriation. Of this increase, 76 percent
    ($21,975,000) is for adjustments to base including: an increase for
    standard pay, benefit and contractual services inflation ($13,237,000);
    an increase to annualize the costs for 10 new court security officers
    (CSOs) partially funded in fiscal year 2003 ($290,000); non-pay
    inflationary increases ($303,000); an increase of 26 court security
    officers for new or existing courthouse space ($980,000); and an
    increase for the cyclical replacement of security systems and equipment
    ($7,165,000).
        The remaining increase of 24 percent ($6,941,000) will fund
    security systems and equipment for perimeter security, CSO radio
    repeater installations, and systems in probation and pretrial services
    offices ($6,072,000); CSO orientation training and contracting officer
    training for staff who administer the CSO contract ($550,000); and four
    additional FTE to administer the Court Security Program at the U.S.
    Marshals Service to improve program oversight and administration
    ($319,000).
                                     ______

      Prepared Statement of Gregory W. Carman, Chief Judge, United States
                          Court of International Trade

        Chairman Gregg, Senator Hollings, and Members of the Subcommittee:
    thank you once again for allowing me this opportunity to submit this
    statement on behalf of the United States Court of International Trade,
    which is a national trial-level federal court established under Article
    III of the Constitution with exclusive nationwide jurisdiction over
    civil actions pertaining to matters arising out of the administration
    and enforcement of the customs and international trade laws of the
    United States.
        The Court's budget request for fiscal year 2004 is $14,206,000,
    which is $519,000 or 3.8 percent over the fiscal year 2003 enacted
    appropriation of $13,687,000 and an increase of $597,000 or 4.4 percent
    over the level after the rescission imposed by Congress. This request
    will enable the Court to maintain current services and provide for
    standard pay and other inflationary adjustments to base. The Court's
    budget request included a small program increase of $50,000 to upgrade
    its security recording system to a digital system that will increase
    the accuracy and reliability of its current system, while, at the same
    time enhancing its internal and external surveillance capabilities. The
    requested increase, however, was included in the recently enacted
    Wartime Supplemental Appropriation Bill and will allow us to move
    forward with this security upgrade during fiscal year 2003. The Court
    continues, as it has done for the past nine years, to hold its
    requested budget increases below 6 percent.
        In response to several studies conducted by GSA and the U.S.
    Marshals Service, and in the wake of September 11th, the Court, in
    fiscal year 2002, requested and received funds for an architectural
    analysis of the structure of the Courthouse in order to determine the
    vulnerability of the facility in case of a bomb blast and/or a
    terrorist attack. As a result of this analysis, the Court, using other
    funds from its fiscal year 2002 appropriation, asked the contractor for
    recommendations as to the feasibility of modifying the existing
    building in a manner that would ensure the health, security and
    effective operation of the Court. The contractor's final report was
    completed at the beginning of fiscal year 2003. Specific
    recommendations were made that would make the courthouse less
    vulnerable and safer for the Judges, the employees and the public. The
    Court is working closely with all relevant agencies to obtain
    appropriate funding for the implementation of the needed modifications
    to the building.
        In accordance with its Long Range Plan, the Court continues to
    upgrade its technology infrastructure and expand staff development
    programs in the areas of technology and job related skills without
    requesting additional funds. The Court is in the process of completing
    the implementation of a customized version of the Federal Judiciary's
    Case Management/Electronic Case Files (CM/ECF.) System and the related
    file tracking, scanning and indexing solutions. The upgrading of the
    wiring of its data network and voice connections will be completed in
    fiscal year 2003. This upgrade will greatly increase the Court's access
    to the Judiciary's Data Communications Network (DCN), improve data
    speeds and enable the Court to address its current and future
    telecommunications needs. Additionally, the Court has installed its own
    frame relay connections for direct access to the DCN and a separate
    frame relay connection that enables the Court to host public access
    systems, such as its Internet Website. In fiscal year 2003, the Court
    will purchase a Virtual Private Network System (VPN) that will provide
    high speed remote access to Court systems by the Judges and Court
    employees working at remote locations. As in the past, the Court will
    continue to use its Judiciary Information Technology Fund for the
    cyclical replacement of aging desktop and server based hardware
    systems.
        In fiscal year 2004, the Court remains committed to ensuring that
    the Court's technology infrastructure will continue to support its
    short and long term needs, thereby permitting the Court to operate
    efficiently and effectively. Among the projects to be supported by the
    Court's budget request and the carryforward balance from its Judiciary
    Information Technology Fund are: (1) supporting the Court's Case
    Management/Electronic Case Files (CM/EC) System; (2) expanding,
    improving and supporting the Court's remote access capability; (3)
    supporting a windows-based financial management system; (4) improving
    the Court's disaster recovery capabilities; (5) supporting new software
    applications that not only enable Judges and Court staff to view
    instructional videos at individual workstations, but integrates the
    Federal Judiciary's Training Network with the Court's local area
    network; (6) upgrading the Court's networked records management and
    tracking system for all case records; and (7) upgrading and supporting
    the online library automation system that enables the Judges and Court
    staff to search electronically for books and resource materials in the
    Court's Library collection.
        Additionally, the fiscal year 2004 request will enable the Court to
    continue its cyclical maintenance program of the Court's facilities,
    including the replacement of certain furniture with ergonomic designs
    that will minimize the risk of injury to Court personnel.
        Lastly, the fiscal year 2004 request also includes funds for the
    continued support and maintenance of security system upgrades
    implemented by the Court in fiscal years 1999 through 2003.
        The Court's continued commitment to fulfill its mission through the
    use of technology will enable it to enhance the delivery of services to
    the Court family, bar and public.
        I would like to reaffirm that the Court will continue, as it has in
    the past, to conserve its financial resources through sound and prudent
    personnel and fiscal management practices. The Court's ``General
    Statement and Information'' and ``Justification of Changes,'' which
    provide more detailed descriptions of each line item adjustment, were
    submitted previously. If the Committee requires any additional
    information, we will be pleased to submit it.
                                     ______

     Prepared Statement of Hon. Fern M. Smith, Director, Federal Judicial
                                     Center

        Mr. Chairman, Members of the Subcommittee: I am pleased to submit
    this statement in support of the Federal Judicial Center's request for
    fiscal 2004 funds to help it improve the administration of justice.
        This is the last request I will submit to you; this fall, having
    completed my four-year commitment, I will return to the Northern
    District of California, where I have been a U.S. district judge since
    1988. It has been a pleasure to work with the subcommittee and its
    staff.
        The Center's statutory Board, which the Chief Justice chairs, has
    selected U.S. District Judge Barbara Rothstein of Seattle as the
    Center's ninth director. She will take up her duties in early
    September.
        This statement summarizes our 2004 request and provides a brief
    accounting of major Center activities to promote improved judicial
    administration in the United States and, to the degree our resources
    permit it, to work with other public and private organizations to
    provide help to the judiciaries in foreign countries that need our
    assistance.
        As to the Center's 2003 funding, especially in light of the fiscal
    constraints you faced, I am grateful for the base funding and the
    partial adjustments to that funding. Thank you as well for recognizing
    as part of the base budget, the funds you transferred in 2002 for
    distance education, which provide us some of the positions for distance
    education that we have been requesting since 1998.

                                  2004 REQUEST

        The Center's Board unanimously approved the 2004 request for
    $22,434,000, an 8.3 percent increase to provide adjustments to the 2003
    base, modest program enhancements to allow a return to a twelve-month
    cycle of education programs for federal judges, and five additional
    distance education positions. Statement of Hon. Fern M. Smith,
    Director, Federal Judicial Center, May 1, 2003
    Judicial education and training programs ($500,000)
        The funds for more timely education for federal judges are vital to
    our task of keeping judges knowledgeable about the constant changes in
    the law, science, and technology. Last year, in fact, the Board
    prepared its own statement supporting this element of that year's
    request, noting ``the Board does not burden Congress with direct
    communications about the Center's appropriation, relying instead on the
    Center director for that task. The special importance of restoring
    these programs to an annual basis merits an exception to that
    practice.''
        Center educational programs last year reached almost 31,700
    participants. Almost 80 percent participated in satellite broadcasts
    and other forms of distance education.
        For federal judges, the Center provides education in several forms,
    including manuals, satellite broadcasts, and small seminars or
    workshops to orient new judges to their responsibilities and to provide
    experienced judges with assistance in specific areas, such as mediation
    or intellectual property law.
        Another fundamental element of our education for judges is
    periodic, general continuing education programs for circuit judges,
    district judges, magistrate judges, and bankruptcy judges. These
    programs assist judges on a variety of subjects, including updating
    them on new case law relevant to frequently litigated issues,
    describing new techniques of case management, and reviewing the ethics
    requirements that govern judges. Moreover, these programs allow judges
    to learn from their colleagues as well as from the faculty we assemble
    and to share innovations that have proven successful as well as those
    that have not.
        Until 1999, a judge could attend such a general program once a
    year. In 1999, we shifted to an eighteen-month cycle as our
    appropriation declined and because we thought that distance education
    could compensate for longer intervals between programs.
        That decision has provoked considerable negative commentary from
    judges across the country. As the Center Board said last year, ``[o]f
    all the comments we receive from other judges about the Center's work,
    none is as frequent and widespread as the need to make these programs
    available on an annual basis. The Center's general continuing education
    programs are the core of its educational effort for judges. They are
    essential to helping judges meet the challenges of rapid change,
    increasing complexity, and growing numbers in the cases before them.''
        Seeking this modest increase in funds for judicial education
    seminars in no way signals the Center's retreat from distance
    education. In most respects, distance education has been a great
    success. Our travel budget, with this request, would still be about
    $1,000,000 below our 1995 travel budget. We want to continue to
    emphasize cost-effective, non-travel, asynchronous learning for the
    employees of the courts and for judges to the degree it is effective.
        At the same time, we recognize that some face-to-face educational
    opportunities are essential, especially for those with responsibilities
    like those of federal judges. Heavy caseloads and the isolation
    inherent in performing judicial duties limit opportunities for judges
    to meet in a detached atmosphere and discuss the nuances of changing
    precedents and case-management techniques. These are not subjects or
    procedures that lend themselves to learning solely by computer or video
    screen.

    Five additional positions (3 FTE) to enhance the Center's use of
            distance education technologies ($311,000)
        The Center has long relied on distance education technologies for
    the bulk of the education it provides, including the Federal Judicial
    Television Network, which the Center began operating in April 1998.
    Since then, the Center has been requesting ten additional positions for
    video, multimedia, and automation specialists to support distance
    education and its necessary technologies. You provided for some of
    these positions in 2002 by transferring $400,000 to the Center's
    appropriation from the funds that Congress had earlier transferred to a
    completed federal appellate courts study commission, and then including
    those funds in our 2003 base. We appreciate that assistance, but the
    need for the remaining positions has not diminished, and so I am
    requesting again funds to provide for five additional distance
    education-related positions.
        The five additional positions we seek in 2004 will permit us to
    bring on additional software engineers and computer-training
    technologists to ensure the federal courts have readily available,
    quality education without the need or expense of travel.

                         CENTER SERVICES AND ACTIVITIES

        The following summary of current Center activities is an accounting
    for our stewardship of the funds you provide.

    Promoting security in the administration of justice
        The Center's ``critical incident stress management'' training helps
    courts develop teams to provide crisis intervention to their personnel
    victimized by natural disasters, terrorist attacks, and work-related
    trauma. Such teams assisted in the crisis response for the New York
    federal courts following 9/11.
        Center Federal Judicial Television Network series on security
    include:
      --crisis management training through Leading in Times of Crisis,
            featuring court managers who have successfully confronted
            crises in their own courts, and. Confronting Crises: The
            Employee's Perspective, to help staff prepare for potential
            security threats and crises
      --a safety series to enable probation and pretrial services officers
            to mentally rehearse appropriate reactions to security threats
            in the office, in the field, and during home contacts with
            offenders, defendants, and third parties.
        Additionally, at the request of the Judicial Conference Committee
    on Court Administration and Case Management, the Center is assessing
    the Conference's Criminal Case Files Pilot Programs to learn, among
    other things, about the possible harm or threats of harm that may
    result from providing remote public electronic access to documents
    filed in criminal cases.

    Promoting the fair and efficient disposition of litigation
        Helping judges dispose of cases fairly, quickly, and inexpensively
    is a major theme of our initial orientation seminars for new judges. We
    also provide judges an extensive array of manuals and sourcebooks about
    case-management techniques, including recurring problems in criminal
    trials, managing cases for resolution by alternatives to conventional
    procedures, and effective use of courtroom technology.
        Our research for committees of the Judicial Conference includes
    analyses of class action litigation and a study of the incidence of
    sealed settlements in district courts across the country, a subject of
    national interest since the recent decision of the federal district
    court in South Carolina not to permit the practice.

    Judicial ethics
        We work closely with the Judicial Conference Committee on the Codes
    of Conduct to keep judges and their staffs fully informed of their
    ethical obligations and to help them understand the often complex rules
    designed to promote judicial impartiality. This year we published two
    new guides, one for judges on their recusal obligations under the
    judicial disqualification statute and one for judges' law clerks on the
    restrictions that apply to them.

    Helping courts help offenders
        The Center is conducting two related studies of federal court
    programs, prompted by increased national interest in offender re-entry
    programs and recent legislation providing post-incarceration vocational
    and remedial educational opportunities for certain releasees. One study
    will produce empirical information about federal probation officers'
    efforts to assist appropriate prisoners in preparing for reentry into
    the community. The other will help the Eastern District of Missouri
    evaluate its Offender Employment Program, which emphasizes the
    educational and employment needs of the offender and provides
    employment-related services coordinated by probation officers who are
    trained employment specialists.
        We are also assessing the substance abuse treatment and mental
    health services needs of Native American offenders, in order to help
    probation and pretrial services officers better meet the special needs
    of this group.

    Promoting public understanding of the judicial process
        We recently released an interactive Web site, ``Inside the Federal
    Courts,'' available at http://www.fjc.gov, that helps federal court
    employees, as well as the media and citizens of this and other
    countries, understand the federal court system's structure and
    operation. This includes a section on Congress's role in improving the
    federal courts. We also produced an eighteen-minute video, An
    Introduction to the Patent System, that judges may use to help explain
    patents and the patent process to jurors. Bar associations are making
    copies available to lawyers and the public.

    Assisting the judiciaries of foreign countries
        Mr. Chairman, I would also like to give you a brief update of our
    work to promote independent and effective dispute resolution in the
    courts of foreign countries.
        In the last twelve months, the Center has provided briefings about
    the U.S. judicial system to 488 judges and legal officials from 66
    countries, as well as a limited amount of more substantial assistance,
    either by in-country technical assistance or seminars held here in the
    United States. Neither our briefings nor our more extensive projects
    for foreign judiciaries are funded from the Center's appropriation. We
    provide this assistance at the request of either domestic agencies or
    foreign institutions, which fund the travel, lodging, and subsistence.
        Our activities this year included a small seminar on educational
    techniques with our counterparts from Mexico and Canada, this a follow-
    up to the Chief Justice's meeting with the President of the Supreme
    Court of Mexico in September 2001. The Center also hosted a number of
    judges, scholars, and government officials as part of its Visiting
    Foreign Judicial Fellows Program. These included a labor judge from
    Brazil, who researched the use of alternative dispute resolution at the
    appellate level, and an official from the Ministry of Justice of
    Azerbaijan, who studied judicial education. In October 2002, I, and
    another representative from the Center, participated in a CEELI
    Institute conference in Prague, Czech Republic, that brought together
    representatives of judicial training centers from Russia, Eastern
    Europe, and Central Asia to discuss strategies for delivering judicial
    education. The Center continues to facilitate a variety of other
    international exchanges, including a bimonthly digital video-conference
    between judges from Ecuador and the United States and a recent panel
    discussion on the judiciary for officials from Afghanistan.

    The Center workplace
        The Center's statute provides greater flexibility in personnel
    matters than many federal agencies enjoy. We have used that flexibility
    to adopt a broad payband system and to implement employee-recommended
    policies that will further our ability to give the taxpayers their due
    while providing employees flexible work schedules and workplace
    options. We know that the latter often contributes to the former.
        Well before 1990, we permitted flextime for all employees. Since
    1994, we have allowed employees to choose a compressed work schedule.
    All of our employees use flextime and more than half are on compressed
    work schedules.
        In 1997 we established a telecommuting policy applicable to all
    Center employees, subject to managers' discretion. Although it is not
    practical to do some Center jobs--such as video production--at home, 8
    percent of Center employees telecommute regularly. We also make
    telecommuting available to employees on a day-by-day basis, as the
    needs present themselves, and last year, we accommodated more than 50
    requests from a staff of fewer than 140. We intend to do even better in
    this regard next year.
        To encourage employee use of public transportation, we offer our
    employees a transportation subsidy of $60 per month.
        Our employees are also eligible to participate in a number of
    supplemental benefits programs, such as pretax health insurance premium
    payments, flexible spending accounts to fund health care, child care,
    and commuter costs (beyond those covered by the subsidy noted above),
    and a long-term care insurance program. We are grateful to the
    Administrative Office of the U.S. Courts for developing these
    innovative policies.
        Mr. Chairman, I appreciate this opportunity to explain our
    budgetary needs for the next fiscal year and to describe some of the
    Center's work and its effect on the work of the courts.
        I will be pleased to answer any questions you may have.
                                     ______

    Prepared Statement of Diana E. Murphy, Chair, United States Sentencing
                                   Commission

        Chairman Gregg, Senator Hollings, Members of the Subcommittee,
    thank you for the opportunity to submit a statement in support of the
    United States Sentencing Commission's appropriation request for fiscal
    year 2004. The Commission was resurrected with the appointment of a
    full complement of seven voting commissioners on November 15, 1999, and
    I currently serve as Chair. In a relatively brief period, the
    Commission has reestablished its policy making role in the federal
    criminal justice system as envisioned by Congress under the Sentencing
    Reform Act of 1984.
        To date, the new commissioners have promulgated over fifty
    amendments to the federal sentencing guidelines, and Congress has
    without exception accepted all of the Commission's amendments. The
    Commission has set aggressive annual agendas and achieved significant
    results by creating new guidelines and modifying existing guidelines
    covering offenses such as:
      --nuclear, chemical, and biological weapons offenses,
      --terrorism,
      --sexual offenses against children,
      --human trafficking and peonage,
      --stalking,
      --intellectual property infringement,
      --identity theft,
      --counterfeiting,
      --economic crimes and money laundering,
      --illegal firearm sales and possession,
      --illegal reentry,
      --ecstasy trafficking,
      --methamphetamine and amphetamine manufacturing, and
      --cultural heritage resources.
        The Commission worked diligently to clear the significant backlog
    of crime legislation created by previous vacancies on the Commission.
    This amendment cycle, we expect to submit to Congress amendments to the
    federal sentencing guidelines implementing new crime legislation and
    addressing such difficult areas as:
      --terrorism,
      --corporate fraud,
      --oxycodone offenses,
      --cybersecurity,
      --involuntary manslaughter,
      --campaign finance violations, and
      --offenses involving the use of body armor.
        The Commission will be unable to respond to the emergencies
    identified by Congress without the staff resources required. Sentencing
    guidelines must be carefully crafted to meet policy needs and to fit
    within our interlocking system. To accomplish what Congress expects,
    the Commission must be able to maintain its ability to respond quickly
    to emerging national priorities. The Commission is dedicated to
    continuing its important role in addressing national priorities such as
    terrorism and corporate crime, but our current resources limit our
    ability to respond to new information, acquire sophisticated expertise,
    and develop novel approaches.
        For these reasons, the Commission requests an appropriation of
    $13,200,000 for fiscal year 2004. This funding request for fiscal year
    2004 represents a zero percent increase over the Commission's request
    for fiscal year 2003.

                              RESOURCES REQUESTED

        The Commission's appropriation request for fiscal year 2004 is
    $13,200,000, the same amount requested for fiscal year 2003. We
    understand increases are generally difficult to justify, particularly
    this year, but we need to develop the necessary staff expertise in
    areas of national importance such as terrorism and corporate crime.
    Staff resources have become increasingly taxed at the same time as we
    have received increased requests for sentencing information from the
    Congress, the General Accounting Office, the federal Judiciary, the
    media, and other interested parties. We now must analyze an increased
    number of new case filings, develop ever more proposed guideline
    amendments each year, and fulfill other statutory duties to train and
    provide expertise on sentencing issues to the federal courts, Congress,
    and the Executive branch. The Commission respectfully urges Congress to
    appropriate $13,200,000 in fiscal year 2004 to enable the Commission to
    keep pace with these significantly increased demands.

                                 JUSTIFICATION

    Sentencing Reform Act Requirements
        The Commission was created under the Sentencing Reform Act of 1984
    as a permanent, independent agency within the judicial branch. Congress
    gave the Commission a dual mission: (a) to establish and maintain a
    national guideline system for federal sentencing policies and
    practices; and (b) to serve as an expert agency and leading authority
    on federal sentencing matters.
        In fulfilling these basic requirements, the Commission annually
    issues a sentencing guidelines manual that delineates penalty levels
    for all federal offenses. In addition to encompassing all federal
    offenses, the guidelines manual incorporates amendments approved by the
    Commission for newly enacted crime legislation passed by Congress. The
    guidelines manual is used by prosecutors, defense counsel, and
    probation officers in making sentencing recommendations to the courts.
    Federal district judges must use the guidelines manual when imposing a
    sentence, and it must also be relied upon by all federal appellate
    judges and the justices of the United States Supreme Court when
    reviewing the imposed penalties. Since the first manual went into
    effect on November 1, 1987, over half a million defendants have been
    sentenced under the guideline system.

    Commission Response to the Threat of Terrorism and Corporate Crime
        This appropriation request again grows out of the need to
    reestablish the staffing levels necessary to respond to emerging
    national priorities and to support a fully functioning Commission. The
    policy work of the Commission generally is determined by three sources:
    (1) legislative directives by Congress and new crime legislation; (2)
    resolution of conflicting interpretations of sentencing guidelines
    among the circuit courts of appeals; and (3) internal priorities that
    are set by the commissioners following an annual solicitation published
    in the Federal Register.
        Due to the extended absence of voting commissioners in the late
    1990s and a firm commitment on the part of the new Commission to
    respond quickly to congressional directives, the Commission has focused
    resources toward implementing crime legislation. Congress has called
    upon the Commission to implement crime legislation covering a wide
    range of disturbing criminal conduct, including sexual offenses against
    children, human trafficking and peonage, stalking, identity theft,
    ecstasy trafficking, methamphetamine and amphetamine manufacturing, and
    intellectual property infringement.
        New laws passed by Congress to secure our nation from the threats
    of terrorism and to protect our workforce from economic disruption
    caused by corporate crime are perhaps the most important--and most
    complex--for the Commission to implement. In the area of terrorism, the
    Commission submitted to Congress a guideline amendment that
    significantly increased the penalties for offenses involving the
    importation and exportation of nuclear, biological, and chemical
    weapons on May 1, 2001, a full four months before the terrorist strikes
    of September 11th and subsequent nationwide anthrax attacks and
    threats. By utilizing our extensive datasets to review national
    security offenses, the Commission identified the inadequacy of existing
    penalties before concerns were widely shared.
        Congress responded quickly to the threat of terrorism by passing
    the USA PATRIOT Act, Pub. L. 107-56, and the Commission responded in
    kind. In less than six months, the Commission promulgated a
    comprehensive package of amendments to the guidelines implementing the
    USA PATRIOT Act. Among the most significant of the provisions are
    appropriately severe penalties for offenses committed against mass
    transportation systems and interstate gas or hazardous liquid
    pipelines, increased sentences for threats that substantially disrupt
    governmental or business operations or result in costly cleanup
    measures, expanded guideline coverage for bioterrorism offenses, and a
    new guideline covering material support to foreign terrorist
    organizations.
        This year Congress once again has called upon the Commission to
    implement terrorism related legislation. The Public Health Security and
    Bioterrorism Preparedness and Response Act of 2002, Pub. L. 107-188,
    and the Terrorist Bombings Convention Implementation Act of 2002, Pub.
    L. 107-197 require the Commission to develop new guideline provisions
    to address protection of the nation's food and water supplies and to
    review the penalty structure for certain national security offenses,
    including nuclear, biological, and chemical weapons offenses.
        In addition, the Homeland Security Act of 2002 (specifically
    section 225, the ``Cyber Security Enhancement Act of 2002''), Pub. L.
    107-296, requires the Commission implement new guideline provisions to
    punish appropriately and effectively deter crimes that undermine our
    nation's cybersecurity. Specifically, the Act requires the Commission
    on an expedited basis to develop guideline provisions that adequately
    account for eight enumerated factors, such as ``whether the offense
    involved a computer used by the government in furtherance of national
    defense, national security, or the administration of justice,'' and
    ``whether the violation was intended to, or had the effect of,
    significantly interfering with or disrupting a critical
    infrastructure.''
        The Commission is making progress toward implementing each of these
    new terrorism related legislative items. As the nation learns more
    about identifying terrorism related conduct, the Commission expects
    Congress will continue to respond with further legislation. The
    Commission needs to acquire additional staff expertise to meets its
    related responsibilities. For example, Congress has introduced
    legislation that would require significantly increased penalties for
    certain terrorism related offenses involving identity theft, the
    ``Identity Theft Penalty Enhancement Act of 2003.'' This legislation
    already has passed the Senate Judiciary Committee and would require the
    Commission to evaluate how it would affect and interact with existing
    guideline provisions.
        In April 2001, the Commission promulgated a multi-part amendment
    that made comprehensive changes to the guidelines covering economic
    crime. Economic offenses account for more than one quarter of all the
    cases sentenced in the United States federal district courts. The
    Commission had received from the federal Judiciary and the Department
    of Justice testimony and survey results that indicate that the
    sentences for these offenses were inadequate to punish appropriately
    defendants in cases in which the monetary loss was substantial. After a
    number of years of data collection, analyses, public comment, and
    public hearings, the Commission passed a comprehensive economic crime
    package that, among other things, provides significantly increased
    penalties for mid and high level fraud, theft, and tax offenses
    involving moderate and large monetary losses and significantly improved
    the operation of the money laundering guideline.
        While the Commission's guideline amendment was pending before
    Congress, a number of corporate scandals became publicized. Congress
    responded swiftly by passing the Sarbanes-Oxley Act of 2002 The Act
    required the Commission to promulgate on an emergency basis several new
    guideline provisions relating to securities fraud, pension fraud,
    accounting fraud, and other more general types of fraud. Fortunately,
    the Commission was able to build upon expertise it had acquired
    developing the 2001 economic crime package, and in six months the
    Commission completed a multi-part amendment that increases penalties
    significantly for serious fraud offenses.
        The emergency guideline, which became effective January 25, 2003,
    includes new sentencing enhancements for offenses involving more than
    100 victims, substantially endangering the solvency and financial
    security of a publicly traded corporation or other organization with
    1,000 or more employees, and securities fraud committed by officers or
    directors of publicly traded corporations. The Commission continues to
    address the problems and will submit for congressional review a
    permanent amendment by May 1, 2003.

    New Opportunities in Fiscal Year 2004 in Corporate Crime and Native
            American Issues
        Early in 2002 the Commission created two special panels of outside
    experts to study problems related to corporate crime and disparities
    encountered when Native Americans are sentenced in federal court under
    the Major Crimes Act. Each ad hoc group was given eighteen months to
    work on recommendations to the Commission, and each has been
    functioning effectively and has obtained public input into its work.
    Both groups will issue their reports in fiscal year 2004 which will be
    shared with the public. Then the Commission will need to work on
    possible amendments to Chapter 8 (the guidelines for sentencing
    organizations, including corporations, associations, municipalities,
    unions, etc.) and to guidelines particularly affecting Native
    Americans. While this method of gathering expert assistance has proven
    extremely cost effective, we need additional staff to draw out from a
    wealth of material the optimum proposals and to translate them into
    guidelines.
        The corporate crime advisory group is comprised of sixteen
    nationally recognized experts drawn from government, private business,
    and academia, and is chaired by a former United States Attorney. The
    Commission has requested the expert committee to review the
    effectiveness of the criteria for an effective corporate compliance
    program and the deterrence of corporate crime. The advisory committee
    has actively engaged in research and soliciting public comment,
    including a day-long public hearing. The hearing covered many issues
    that bear directly on organizations' abilities and incentives to detect
    and report wrongdoing before it becomes widespread and
    institutionalized.
        Congress also recognizes the critical role the organizational
    guidelines perform, and in the Sarbanes-Oxley Act directed the
    Commission to ensure that the guidelines that apply to organizations
    are sufficient to deter and punish organizational misconduct. Because
    the Commission had a jump start in this area and had already formed the
    advisory group, the expert panel will be able to report its findings
    and recommendations to the Commission in October 2003. At that time,
    the Commission expects to have a sound foundation for staff to help us
    deliberate and consider promulgation of appropriate modifications to
    the organizational guidelines during fiscal year 2004.
        The formation of the Native American advisory group grew out of a
    hearing the Commission held in Rapid City, South Dakota in 2001. The
    Rapid City hearing focused on issues relating to Native Americans and
    was attended by a number of individuals who now serve on the advisory
    group. As a result of testimony at the hearing as well as public
    comment we received, the Commission formed the advisory group and
    requested that the group to report its findings during fiscal year
    2004. The Commission is devoting additional staff resources to
    sentencing issues that particularly affect Native Americans. For
    example, the Commission has created a new sentencing guideline aimed at
    protecting our cultural heritage resources and other national
    treasures, has conducted several days of intensive training for
    prosecutors defense attorneys, and probation officers in Indian
    Country, and has begun to study federal crimes for which Native
    Americans comprise a significant proportion of offenders, such as
    manslaughter.

    Additional Sentencing Priorities
        Drug trafficking offenders continue to comprise the majority of the
    federal criminal caseload, and the Commission is constantly identifying
    and responding to new drugs of abuse. In recent years, the Commission
    has acted to increase penalties significantly for methamphetamine,
    amphetamine, ecstasy, and certain List I chemical offenses.
        This amendment cycle the Commission is focusing on the increasing
    problem of oxycodone trafficking. Using its comprehensive sentencing
    database, the Commission recently identified a significant increase in
    the number of offenses involving the pain killer Oxycontin. The
    Commission currently is considering an amendment to the drug guideline
    that will recalibrate the way in which this drug is penalized so that
    the penalties for offenses involving oxycodone will be substantially
    increased. The Commission hopes that this increased penalty structure
    will help deter any further increase in the abuse of this drug and
    serve to punish appropriately those criminals who engage in its illegal
    trafficking.
        The Commission also is aware that Congress may enact legislation
    directing it to review the guidelines pertaining to GHB, a drug that is
    often associated with date rape. Bills have been introduced both in the
    Senate and the House on this issue, and, if enacted, they would require
    the Commission to engage in a comprehensive review of the penalty
    structure for this particular drug during fiscal year 2004. The
    Commission also is aware of other drug related legislation that would
    require a response from us if enacted.
        The Commission also is examining several guidelines covering
    offenses against persons and this work must be extended through fiscal
    year 2004. The 21st Century Department of Justice Appropriations
    Authorization Act, Pub. L. 107-273, for example, contains two
    directives to the Commission. The first directs the Commission to
    provide an appropriate sentencing enhancement for any crime of violence
    or drug trafficking crime in which the defendant used body armor. The
    Commission expects to submit an amendment to Congress by May 1, 2003,
    implementing this first directive. The second and more complicated
    directive requires the Commission to provide an appropriate sentencing
    enhancement for assaults against a federal judge and lists eight
    factors that the Commission must consider. The Commission expects that
    the Native American advisory group's review of the federal assault
    penalty structure will be helpful to implementation of this
    congressional directive during fiscal year 2004.
        The Commission also is reviewing the guideline covering involuntary
    manslaughter after receiving congressional inquiries on the matter. The
    Commission currently is considering an amendment that would
    significantly increase the penalties for such offenses, but the
    Commission's work in the area of crimes against individuals will
    continue into fiscal year 2004. The overwhelming majority of offenders
    convicted of assaults or homicide at the federal level are Native
    Americans. As a result, the ad hoc committee also is examining the
    guidelines pertaining to manslaughter. Even though the Commission may
    make some change to the involuntary manslaughter guideline this
    amendment cycle, we likely will continue our work in the area of
    manslaughter until after receiving the report and recommendations from
    the Native American advisory committee during fiscal year 2004.
        The Commission also has been very active in the area of sexual
    offenses. In every amendment cycle since the Commission was
    reconstituted in 1999, the Commission has promulgated new amendment
    provisions addressing various egregious sexual offenses. These many new
    guideline provisions provide severe punishment for such heinous crimes
    as human trafficking (in response to an emergency directive contained
    in the Victims of Trafficking and Violence Protection Act of 2000),
    sexual abuse of a minor, and commercial sex acts such as the production
    of child pornography and prostitution.
        Sexual offenses involving children, however, continues to be of
    great concern, and the Commission is aware of several bills recently
    introduced in the 108th Congress that would require further action by
    the Commission. For example, the Senate recently overwhelming passed S.
    151, the ``PROTECT Act,'' which creates several new offenses relating
    to ``virtual'' child pornography and contains several directives to the
    Commission. The directives, among other things, would require the
    Commission to incorporate the new virtual child pornography offense
    into the sentencing guidelines and revisit guideline treatment of
    offenses involving interstate travel to engage in illegal sexual acts
    with children. If S. 151 or other similar bills are enacted, the
    Commission will be required to devote significant resources toward
    implementing those provisions during fiscal year 2004.
    Ongoing Research and Analysis Obligations
        In fiscal year 2004, as part of its ongoing mission the Commission
    will continue to work on several studies reflecting the operation of
    the guidelines since their inception. In conjunction with these
    studies, the Commission began a comprehensive assessment of the
    guidelines pertaining to drug offenses, which comprise a majority of
    the cases sentenced under the guidelines. In May 2002, the Commission
    issued a comprehensive 112 page report to Congress examining the
    current federal penalty structure for crack cocaine and powder cocaine
    offenses. The report contained concrete recommendations for Congress to
    consider regarding statutory and guideline penalties for cocaine
    offenses which I presented at a hearing before the Senate Judiciary
    Subcommittee on Crime and Drugs on May 22, 2002.
        The report on federal cocaine sentencing policy was informed by an
    intensive project which involved analyzing the court documents for
    1,600 cocaine offense cases sentenced in fiscal year 2000--representing
    approximately 20 percent of all federal cocaine offenses that year. The
    Commission analyzed important variables such as the offender's function
    in the offense, the geographic scope of the offense, and the presence
    of aggravating factors such as possession, brandishment, or use of a
    weapon, bodily injury, sales to protected persons such as minors, and
    sales in protected locations such as areas surrounding schools and
    playgrounds.
        The Commission currently is collecting similar data with respect to
    other major drugs of abuse, such as methamphetamine, heroin, and
    marijuana. This process entails gathering information on the offense
    conduct and offender characteristics for over 3,000 federal drug
    trafficking offenders. This analysis is continuing through fiscal year
    2004 and provide information on the organizational structure of drug
    trafficking operations and assist in the evaluation of the sentencing
    structure for these offenses.
        The Commission has also undertaken the most comprehensive study of
    recidivism rates for federal offenders. The Commission is tracking more
    than 6,000 federal offenders through the criminal justice system to
    determine who becomes a repeat offender and what factors may be
    predictive of such behavior. The results will assist in evaluating the
    established criminal history categories and the role of the guidelines
    in deterring crime. While encouraged by the progress made on the
    project, full access to arrest and conviction records to complete the
    work only recently occurred when Congress authorized access by the
    Commission to a National Crime Information Center terminal under the
    21st Century Department of Justice Appropriations Act. The Commission
    expects both the recidivism study and the consideration of any
    modifications to the guidelines in response to its findings to continue
    through fiscal year 2004.

    Commission Struggles with Increasing Caseload
        A key component to the Commission's ability to implement
    legislation and develop new guideline provisions is its comprehensive,
    computerized data collection system. This comprehensive database serves
    as a clearinghouse of federal sentencing information and forms the
    basis for the Commission's monitoring and evaluating the guidelines,
    undertaking many of its research projects, and responding to hundreds
    of data requests received from Congress and other criminal justice
    entities each year.
        For each case sentenced under the guidelines, the Commission enters
    over 200 items of information into its database, such as each count of
    conviction, the number and nature of victims, the magnitude of economic
    loss, the type and quantity of drugs, and the number and type of
    weapons. The Commission is only funded and physically equipped to
    process some 40,000 cases annually, but for each of the last four years
    it has received well over 50,000 cases annually. We expect to receive
    63,000 cases in fiscal year 2003, and our resources do not permit
    timely processing of the extensive information. We plan to experiment
    with an electronic file transfer system to enable the 94 federal
    districts to submit five major court documents (the Judgment and
    Commitment Order, the Presentence Report, the Indictment, the Plea
    Agreement, and the Statement of Reasons) to the Commission in a
    paperless manner, thereby improving efficiencies and lessening delays,
    but this system will require substantial start up costs.
        Additionally, the Commission performs case processing for
    organizational/corporate sentences, appellate cases, and probation
    revocation/supervised release violations. The Commission also has
    received requests that additional coding modules be added to analyze
    Rule 35 sentencings and plea bargaining, which we could undertake only
    with additional funding.

    Increased Training Needs for Larger Federal Criminal Justice System
        Over the last several years, as Congress has devoted increased
    resources to law enforcement, the number of federal judges,
    prosecutors, probation officers, and defense attorneys who require
    training and assistance on how to use the guidelines has increased
    proportionately. The Sentencing Reform Act requires the Commission to
    provide guideline training, in part because training promotes
    uniformity in guideline application and thereby reduces sentencing
    disparity--both central goals of the Act.
        Commission staff provides training on the sentencing guidelines to
    more than 2,500 individuals annually at approximately 50 training
    programs across the country, including ongoing programs sponsored by
    the Commission, the Federal Judicial Center, the Department of Justice,
    the American Bar Association, and other criminal justice entities. Each
    year the Commission cosponsors a National Sentencing Seminar to train
    hundreds of probation officers, prosecutors, and defense attorneys on
    guideline application. New personnel often have no knowledge of the
    federal guidelines system, and seasoned personnel need training in the
    new guidelines promulgated each year. The program is so popular that we
    must turn away people due to the high volume of interest.
        The Commission also plays a major role preparing for and
    participating in the biennial National Sentencing Institute sponsored
    by the Federal Judicial Center and attended by a large number of
    federal judges. The Commission also maintains a telephone HelpLine
    service to answer guideline application inquiries from federal judges,
    probation officers, prosecuting and defense attorneys, and law clerks.
    However, if the Commission is not provided sufficient funding to
    restore personnel in other areas of the agency, its quality of training
    will suffer because its training staff may be diverted to other
    projects.

                                   SUMMATION

        The Commission has worked very hard with limited resources to
    respond when called upon to help the President and Congress address
    emerging national priorities such as the threat of terrorism and
    corporate fraud. In many ways these are novel complex areas that
    require the Commission to acquire and maintain additional in-house
    expertise. Moreover, Congress and the Commission continue to identify
    new areas of concern that require substantial resources, such as
    oxycodone offenses, involuntary manslaughter, and sexual offenses
    against children. We cannot undertake a policy agenda of any real
    significance without enhancing our staff power, particularly given the
    large increase in the number of cases sentenced each year which require
    compilation and analysis.
        The requested funding level would enable the Commission to continue
    its work in areas of national importance, enhance staff expertise,
    provide training to a rapidly expanding audience, process its surging
    caseload effectively, continue its monitoring and research of the
    guidelines, and continue to be responsive to the concerns of the
    federal criminal justice community.
                                     ______

    Prepared Statement of Haldane Robert Mayer, Chief Judge, U.S. Court of
                        Appeals for the Federal Circuit

        Mr. Chairman, I am pleased to submit my statement to the Committee
    for the United States Court of Appeals for the Federal Circuit's fiscal
    year 2004 budget request.
        Our 2004 budget request totals $22,422,000. This is an increase of
    $2,227,000 over the fiscal year 2003 approved appropriation of
    $20,195,000. Twenty-nine percent (29 percent) of the requested
    increase, $646,000, is for mandatory, uncontrollable increases in
    costs. The remaining increase of $1,581,000 is for funding of
    additional positions and other program increases.
    Request for Program Increases
        A total of $1,581,000 for program increases is requested. The
    breakdown and further justification for each amount follows. The
    justifications for the program increases are separated into four
    categories: staffing; courtroom renovations; technology advancements;
    and security staffing enhancements.
        A portion of this program increase request, $653,000, was requested
    to cover the cost of thirteen (13) additional Court Security Officers
    (CSOs) for fiscal year 2004. These additional CSOs were requested and
    needed to bring our total CSOs up to current U.S. Marshal Service
    Standards. This requested increase, however, was included in the
    recently enacted Supplemental Appropriation Bill. This amount will
    enable us to begin the recruiting and hiring process in fiscal year
    2003.

    Two New Staff Positions
        The court requests $208,000 to cover the cost of two new positions
    for nine (9) months in fiscal year 2004. The positions requested are
    for a Deputy to the Circuit Executive position ($130,000) and a
    Computer Security Specialist ($78,000).
        The position of Deputy to the Circuit Executive has become
    necessary to assist the Circuit Executive with the variety of duties
    assigned to that office. The Deputy would assist in overseeing the
    offices that operate under the direction of the Circuit Executive and
    would act in the absence of the Circuit Executive.
        We also request funding to hire a full-time permanent Computer
    Security Specialist. Upon completion of a formal security review and
    assessment of the court's electronic information system, the National
    Security Agency in August 2000 concluded that the court should hire an
    Information Technology Specialist. This person would monitor and
    protect the security of the court's information system. The Computer
    Security Specialist would ensure that all electronic communications and
    information in judges' chambers and staff offices are protected and
    secure from compromise or unlawful release. Both of these positions
    were requested in our fiscal year 2003 budget request and denied.

    Courtroom Renovations
        The court is requesting $170,000 to begin the long-overdue
    renovations of courtrooms to bring them up to 21st Century security and
    technology standards to benefit judges, attorneys, and litigants. There
    have been no upgrades to the courtrooms, with the exception of new
    carpet, since the opening of the courthouse in 1967.
        We have requested funding for this project in our 2001, 2002, and
    2003 budget requests. We have taken our request to GSA as suggested by
    the Subcommittee. At this time, GSA has indicated that they are taking
    every appropriate action to have this project included in their fiscal
    years 2004 and 2005 budgets. Should the court be successful in
    receiving funding through GSA to pay for the renovations of the
    courtroom Congress will be notified that this request for $170,000 is
    no longer necessary.

    Improvements in the Court's Courtroom and Courthouse Computer
            Technology and Security
        We request $490,000 for program advancements in the area of
    technology in the courtrooms, judges' chambers, and staff offices.
        The Judicial Conference of the United States recognized that
    courtroom technologies are a necessary and integral part of courtrooms.
    Based on those findings and the fact that the Administrative Office of
    the United States Courts (AO) currently is implementing this program in
    courts across the country, the court is requesting funding to upgrade
    the courtroom technology in one of its courtrooms. The figure of
    $215,000 was provided to the court by the AO based on its experience to
    date with upgrading courtrooms. Not only would this benefit the
    Judiciary and the court, it would benefit counsel and litigants. One
    phase of this new technology will give counsel the opportunity to argue
    a case offsite while connected to the courtroom as if the attorney were
    in the courthouse, thus cutting expenses for the litigant.
        We also request $205,000 to develop and augment a disaster recovery
    plan for the court's electronic data system. In the event of a major
    disaster, it will be necessary to access the court's computer network
    from a remote site as well as locally. This amount is a one-time cost
    estimate to put this recovery system in place.
        The National Security Agency performed a study of court security in
    2000 and recommended improved computer security hardware and software
    to assist in the detection and prevention of electronic computer
    attacks and intrusions to the court's computer network. The cost of
    upgrading the security of the court's computer system is $70,000.

    Increased Security Position
        This court requests $60,000 to cover the cost of hiring one (1)
    Supervisory Level on-site Deputy U.S. Marshal.
        The court requests funding to hire one (1) full-time Supervisory
    Level Deputy U.S. Marshal Inspector to coordinate facilities security
    at the National Courts Building based on this same need for upgraded
    security. The Inspector will report to the Chief Judge, will ensure
    that protection of judges on and off-site is properly coordinated, will
    supervise the court security officers assigned to the National Courts
    Building, and will work with the court security committee on matters
    involving staff and courthouse security.
        Currently the Federal Circuit shares a Deputy U.S. Marshal with the
    United States Court of Appeals for the District of Columbia Circuit and
    the United States District Court for the District of Columbia. The
    shared U.S. Deputy Marshal is assigned to the U.S. District Court for
    the District of Columbia and is located at the District of Columbia
    Circuit courthouse. It is a daunting task and a big assignment for one
    person to cover adequately the security needs of two separate
    courthouses and four separate courts located in different parts of the
    District of Columbia.
        In a March 7, 2003 memorandum to Chief Judges of the U.S. Courts,
    AO Director L. Ralph Mecham emphasized the importance of having a full-
    time Deputy U.S. Marshal Inspector assigned to each court. ``It seems
    clear,'' Director Mecham said, ``that in today's high risk environment
    there should be USMS personnel at the local level assigned to security
    responsibilities on a full-time basis.'' As the only United States
    Court of Appeals with national jurisdiction, the Federal Circuit should
    be given the same consideration in the assignment of security personnel
    as the twelve other regional circuits. Indeed, it is hard to understand
    how the USMS can assign a Deputy U.S. Marshal Inspector to the District
    of Columbia Circuit--a regional court of appeals--and direct that
    Inspector to provide security to the Federal Circuit--a national court
    of appeals located across from The White House--on an as-needed basis.
        I also would like to address a statement that was contained in the
    Conference Report for our 2003 budget request. That document contained
    language referring to a reduction in the number of filings at the
    Federal Circuit between 1992 and 2001. Our figures show that total case
    filings for the Federal Circuit for the ten-year period did drop 219
    cases from 1,702 in fiscal year 1992 to 1,483 in fiscal year 2001. That
    drop is consistent with the statement contained in the Conference
    Report. However, the reduction in the court's caseload does not justify
    a reduction in staff for two reasons.
        First, starting with the 1,702 cases in 1992--which represented at
    that time the second highest number of annual case filings since 1982--
    the number of total cases filed each subsequent year through 2001
    sometimes increased and sometimes decreased and occasionally exceeded
    1,702. In fiscal year 2002, the Federal Circuit's total filings
    increased to 1,748; this is the third highest number of filings ever
    for the Federal Circuit--nearly 18 percent higher than the 2001 filings
    and 3 percent higher than the 1992 filings.
        The second reason why the reduction of 219 case filings over the
    ten-year period does not justify a reduction in court staff is that the
    reduction does not reflect an important change in the court's workload.
    In short, it ignores how particular categories of cases have increased
    or decreased. Attention to the number of appeals in patent cases from
    district courts is critical when assessing the court's workload. Patent
    cases typically involve complex science and engineering principles, as
    well as multiple issues dealing with patent validity, infringement,
    defenses, counterclaims, and damages. In addition, the patent cases
    often have lengthy trial records and extensive damages. In sum, patent
    appeals typically take much more time than, for example, the court's
    Merit Systems Protection Board (MSPB) cases. Hence, even though case
    filings went down by 219 when comparing 1992 to 2001, appeals from
    district courts--almost all of which are patent cases--went up from 315
    in 1992 (about 18.5 percent of the total cases), to 403 in 2001 (about
    27 percent of the total cases). At the same time, the much easier MSPB
    cases dropped from 789 in fiscal 1992, to 421 in fiscal 2001. And in
    fiscal 2002, when total cases increased nearly 18 percent from 2001,
    district court cases increased 19 percent, to 480, while MSPB cases
    rose only 3 percent, to 435.
        The significant rise over the last 10 years in the number of patent
    infringement cases filed with the court and the nearly 18 percent
    increase in the court's annual filings from 2001 to 2002 warrant an
    increase--not a decrease--in court staff. Further, a careful review of
    the number of support personnel assigned to the Federal Circuit will
    establish that the staff numbers are considerably smaller than other
    courts of appeals.
        I would be pleased, Mr. Chairman, to answer any questions the
    Committee may have or to meet with the Committee members or staff about
    our budget requests.
        Thank you.
                                     ______

                           NONDEPARTMENTAL WITNESSES

               Prepared Statement of the American Bar Association

        The American Bar Association is centrally concerned with promoting
    improvements in the administration of justice and preserving the
    independence of the judiciary as fundamental to a free society. In
    furtherance of these two objectives, we are submitting this statement
    to address the need for increased compensation for Article III judges
    and to urge Congress to appropriate adequate funds for the State
    Justice Institute. We respectfully request that this statement be
    incorporated into the Subcommittee's record of hearings on fiscal year
    2004 appropriations for Commerce, Justice and State, the Judiciary and
    Related Agencies.

                            STATE JUSTICE INSTITUTE

        In 1984, Congress created the State Justice Institute (SJI) as a
    federally funded, private, non-profit corporation to award federal
    grants to improve the quality of justice in state courts, facilitate
    better coordination between state and federal courts, and foster
    innovative, efficient solutions to common problems faced by all courts.
    It is the only source of federal funding exclusively dedicated to
    helping to meet the needs of our state courts, which hear over 97
    percent of the nation's cases. Since it became operational in 1987, the
    SJI has parlayed a modest amount of federal money into court
    improvement projects that benefit the nation's judicial system in its
    entirety and the public it serves. On behalf of the Association's
    410,000 members, we can unequivocally say that the overwhelming
    consensus in the legal community is that the SJI effectively,
    efficiently and consistently executes its mandate despite a de minimis
    annual budget, which has never exceeded $13.55 million.
        In creating the State Justice Institute, Congress recognized that
    our state and federal courts are separate but interdependent and that
    the quality of justice in this nation depends on the vitality of both
    court systems. Concluding that the federal government has a stake in
    maintaining strong state judicial systems and improving state-court
    partnerships, Congress created SJI to monitor the state judicial
    system, assist in prioritizing the needs of the state courts and award
    small federal grants to foster solutions to critical problems
    confronting the courts. To enable all courts to benefit from federally
    funded projects, Congress required SJI to maximize the impact of each
    grant--even those that provide technical assistance to a court with a
    specific problem--through a variety of techniques, such as maintaining
    readily accessible information clearinghouses to assure that effective
    new approaches are shared with courts nationwide, convening national
    conferences to address emerging justice system issues, and placing
    practical products into the hands of judges and court personnel who can
    most benefit from them. These various strategies have proven effective
    in maximizing the benefits derived from each spent federal dollar and
    avoiding wasteful duplication of effort to solve identical or similar
    judicial administration problems.
        After 15 years of SJI's operation, and out of a renewed concern for
    fiscal restraint in a time of competing budgetary demands, Congress
    requested that the Attorney General of the United States evaluate and
    report back on the effectiveness of the SJI. In November 2002, the
    Attorney General submitted his report to Congress in which he concluded
    that SJI effectively implements its mission with only minimal
    administrative costs. Moreover, the Attorney General reaffirmed the
    wisdom of the 98th Congress by validating the premise on which SJI was
    created. He noted that an important Federal purpose was served by
    supporting SJI's mission to improve the quality of justice in state
    courts, observing that, ``given overlapping state-federal jurisdiction,
    it is in the Federal government's interest to have effective and fair
    state courts, lest litigants turn to Federal courts to resolve matters
    properly within state court responsibilities.''
        The American Bar Association concurs with these core findings. By
    strengthening our state courts, SJI grants strengthen our entire
    justice system. Furthermore, we would like to point out that the
    federal government also has a direct interest in the vitality of our
    state courts because many important federal programs depend on state
    courts for their implementation.
        Subsequent Congresses, including this one, have in fact
    acknowledged the appropriateness of providing federal assistance to
    state court projects by regularly appropriating funds for specific
    state court improvement projects sponsored by individual members. In
    fact, the funds spent on these projects often have exceeded the maximum
    appropriation SJI has ever received. While we do not doubt that such
    funds have been expended for worthy state court projects that have
    improved the administration of justice in a particular jurisdiction or
    state, we do not believe that it is a cost-efficient or effective way
    to provide federal financial support to strengthen our state judicial
    system. In contrast, disseminating federal funds through SJI assures
    that government money is spent on finding solutions to the most
    pressing judicial administration problems and sharing these solutions
    with every state and federal court.
        The conference report accompanying Pub. L. No. 108-7 appropriated
    $3.1 million in funding for SJI for fiscal year 2003 but contained the
    proviso that SJI should obtain future funding from ``bar associations
    and the States, who are the beneficiaries of SJI's work.'' Such a
    proposal is unrealistic and would effectively terminate this highly
    effective program.
        The courts are an integral part of our democratic system of
    government. Their support should come from the public fisc. SJI was
    created to provide federal support for needed improvements to
    supplement state court resources, which are often inadequate because of
    strapped state budgets. Bar associations and other grantee
    organizations, in essence, already contribute their own funds to SJI by
    absorbing some of the cost of any grant activity in which they are
    involved. Furthermore, SJI relies on the dedication and expertise of
    organizations, such as the ABA, to develop and implement programs that
    will strengthen the justice system; and in return, SJI pays for a
    substantial portion of the cost of worthy programs, while grantees
    provide a certain amount of matching funds. In this way, SJI grants not
    only require a sharing of the financial burden, but they also help
    forge essential public-private partnerships to address justice system
    issues.
        In addition, the ABA and other bar associations already make
    substantial financial (in addition to other) contributions to promote
    excellence in the justice system by annually allocating a significant
    amount of their general revenues for judicial system improvements. For
    example, in fiscal year 2004, the ABA alone will spend almost $2.5
    million on such programs and projects.
        In conclusion, terminating funding for the only government-funded
    entity exclusively dedicated to providing federal grants for projects
    to improve state courts makes no sense, especially at a time when our
    courts are facing a nation-wide fiscal crisis. Congress has a strong
    federal interest in strengthening the state courts and maintaining a
    robust justice system as well as a responsibility to implement sound
    fiscal policies. To deny the small sum of $13.5 million to a program
    that is supported by every state supreme court and highly praised by
    the legal community, but authorize appropriations for projects that
    primarily benefit individual state courts, represents a serious fiscal
    miscalculation. For all these reasons, the ABA urges Congress to
    preserve SJI as a federally funded institute and to appropriate
    sufficient funds for fiscal year 2004 for SJI to carry out its mandate.
    The ABA recommends an appropriation of $13.5 million--the amount that
    SJI received in 1996.

    Article III Judicial Salaries
        The 108th Congress has inherited a federal salary system for top-
    level government officials that is badly in need of reform. This is
    particularly true with respect to the Federal Judiciary.
        The National Commission on the Public Service (otherwise known as
    the ``Volcker Commission'') concurs with this assessment. Composed of
    government leaders from past Administrations, the non-partisan
    Commission recently issued its report, Urgent Business for America:
    Revitalizing the Federal government for the 21st Century, which
    concluded that ``[j]udicial salaries are the most egregious example of
    the failure of federal compensation policies.'' It recommended that
    Congress take immediate steps to substantially raise federal judicial
    pay.
        During the past decade in particular, judges have experienced both
    an absolute loss in purchasing power and a relative decline in
    remuneration as the salaries of peer group members have risen
    dramatically. Despite five salary adjustments since 1993, judges have
    suffered a 10.9 percent decline in the purchasing power of their
    salaries. That judicial pay has not even kept pace with inflation has
    robbed judges of the prospect of salary stability during their tenure
    on the bench.
        Judges freely acknowledge that rendering public service in a highly
    visible and respected role and serving in a lifetime appointment are
    intangible benefits that help compensate for the reduced salary levels
    associated with the bench. Nonetheless, compensation levels for
    attorneys from other work sectors are relevant to the issue of fair and
    adequate judicial compensation.
        While the vast majority of federal judges have the requisite years
    of experience and legal skills that would enable them to command
    compensation similar to that paid to top-notch, seasoned attorneys in
    the private sphere ($400,000 to $800,000 according to the most recent
    surveys conducted by the National Law Journal), it is obviously not
    practical to suggest that Federal judges should be paid that much. The
    salaries of leaders of academia or nonprofit institutions are
    considered more reasonable points of reference because the level of
    education and expertise required of leaders of these institutions and
    the psychic satisfaction derived from holding such jobs are comparable
    to those of Federal judges.
        Associate Justice Stephen Breyer, in testimony submitted to the
    Volcker Commission, stated that the average salary of nonprofit CEOs is
    $212,000--approximately 20 percent higher than that of a Supreme Court
    Justice and about 35 percent higher than that of a federal district
    judge. Further, the differential between federal judicial salaries and
    salaries of leaders in the academic world is even larger: the average
    salary for deans of the twenty-five law schools ranked highest in the
    annual U.S. News and World Report survey was $301,639 and the average
    base salary for full professors at those law schools was $209,571.
        Even though market conditions alone should not be the measure of
    the adequacy of judicial salaries, the widening disparity between
    judicial salaries and those of attorneys with comparable skills
    employed in the private sphere is causing demonstrable harm to our
    nation's Third Branch by deterring excellent candidates from seeking
    judicial appointments and motivating sitting judges to resign
    prematurely from office to enter a more lucrative field.
        Between 1990 and 2003, 77 Article III judges resigned or retired
    from the Federal bench and many of them returned to private practice.
    Fifty-one of the 77 departed judges entered the private practice of law
    and 14 others accepted jobs in related fields. Sixteen of the 77 judges
    departed before reaching retirement age, thereby forfeiting their right
    to salary for life. Premature departures from the bench impose both
    real and intangible costs upon the Third Branch, by compromising
    judicial independence fostered by life tenure and depriving the Federal
    Judiciary of the skills of some of its most capable and experienced
    jurists.
        Inadequate judicial salaries also disadvantage the Federal
    Judiciary in the ``war for talent.'' Judicial pay may not be a
    deterrent to individuals who are independently wealth or who are
    already in public service, where salaries are generally lower, but it
    is a strong disincentive for lawyers in private practice whose varied
    experiences bring a perspective and independence that is vital to the
    judiciary. Our analysis of the occupations held immediately prior to
    the confirmation of all district and circuit court judges appointed
    since 1977 supports this conclusion. For example, during President
    Carter's term of office, 49.5 percent of his district court appointees
    came from the public sector, while 57.6 percent of President Bush's
    district court appointees through the 107th Congress have come from the
    public sector.
        White House Counsel Alberto Gonzales made this same point in an
    interview published in the May 2002 edition of The Third Branch:

        ``We are aware of both young lawyers with family obligations and
    established prominent lawyers with substantial investment in their
    practice and community who feel that they cannot afford to go on the
    federal bench. The Judiciary suffers when it cannot attract top tier
    lawyers for whatever reason.''

        The Federal Judiciary benefits from the collective wealth of
    experience of its jurists who have served in different capacities in
    the public and private sectors. It is enriched by their diverse
    backgrounds and better able to serve the need of all Americans. We
    cannot afford to lose the diversity of the bench that comes from the
    appointment of individuals of varying financial means who have served
    in different capacities in both the public and private sectors.
        In conclusion, while we recognize that there is a compelling need
    for salary reform within all top levels of government, we believe that
    there is an urgent and immediate need to substantially increase
    judicial salaries in order to maintain a stellar judiciary and protect
    one of the pillars of our democracy--Federal judicial independence. We
    urge you to support an appropriation for the Federal Judiciary that is
    sufficient to cover a substantial pay raise for all Article III judges.
                                     ______

          Prepared Statement of the American Sportfishing Association

        The American Sportfishing Association (ASA) recommends the
    following as the Subcommittee considers appropriations for the National
    Marine Fisheries Service (NMFS) for fiscal year 2004. The American
    Sportfishing Association is a non-profit trade association whose 555
    members include fishing tackle manufacturers, sport fishing retailers,
    boat builders, state fish and wildlife agencies, and the outdoor media.
        The ASA makes these recommendations on the basis of briefings with
    agency staff and from years of experience with fisheries management in
    this Nation. It is important to note that sportfishing provides $116
    billion in economic output to the economy of the United States each
    year. Sportfishing in marine waters alone provides a $31 billion impact
    each year to coastal states.
        Saltwater fishing is the fastest growing sector of recreational
    fishing. Because of this the ASA urges NMFS to continue the pursuit of
    sound management of marine fish stocks by supporting the Regional
    Fishery Management Councils, the States, and the Interstate Marine
    Fisheries Commissions. Collectively, these programs conduct research
    and collect data that is essential for managers to appropriately
    maintain marine stocks and assure that areas are open to anglers. For
    the Regional Fishery Management Councils to carry out the regulations
    of the Magnuson-Stevens Fisheries Conservation and Management Act they
    must be properly funded. The Association recommends funding the
    Regional Councils activities at the $16.032 million level.
        The Association supports the fiscal year 2004 President's request
    for a $3.0 million increase in funds for fisheries stock assessment and
    improvement of data collection, but also recommends an additional $21.2
    million with the goal of funding stock assessment at the $100 million
    level by fiscal year 2008.
        The ASA requests a total of $12.8 million for Fish Statistics--
    Economics and Social Science Research. These would include:
      --An increase in base funding for NOAA Fisheries could create a
            premiere Center for Excellence in Recreational Fisheries
            Economics. The Center could be housed in NOAA Fisheries and
            could provide the umbrella for recreational fisheries data
            collection and economic analysis conducted within NOAA
            Fisheries and by academia under contract. The Center will serve
            three primary functions: (1) strategic planning for data
            collection and analysis; (2) development and application of
            analytical techniques for measuring the costs, benefits, and
            impacts of recreational fisheries management; and (3) improved
            outreach and information sharing to ensure that both fisheries
            managers and the public receive and understand the data
            products. The Center will work in concert with and complement
            the existing NOAA Fisheries recreational fisheries economics
            program and the Marine Recreational Fisheries Statistics Survey
            (MRFSS) program. The ASA recommends a $500,000 increase in base
            funding in fisheries statistics for the Center.
      --The Association urges Congress to appropriate an additional $9.5
            million in new base funding for fisheries statistics to
            significantly improve catch and effort data through the NOAA
            Fisheries' Marine Recreational Fisheries Statistics Survey
            (MRFSS). Base funding has not increased substantially since the
            survey's inception in 1979. Improved data collection is central
            to achieving the rebuilding and management standards called for
            in the Sustainable Fisheries Act.
      --The ASA recommends Congress increase base funding by $2.8 million
            for the NOAA Fisheries recreational economics program. This
            program within NOAA Fisheries is severely understaffed and
            under-funded. The most basic recreational fishery data is
            unavailable making NOAA Fisheries unable to fulfill their
            congressionally mandated requirements to provide the basic data
            for recreational fisheries management. This additional funding
            should go directly towards outfitting new Centers with PhD
            level recreational fisheries economists, improving data
            collection and conducting expenditure surveys, and conducting
            critical research.
        The Association urges congress to appropriate $10 million for the
    Atlantic Coastal Fisheries Cooperative Management Act which allows
    government, state agencies, and interstate marine fishery commissions
    to work together in support of fisheries resources. These efforts have
    showed success in stripped bass and weakfish management, and it's
    continued success relies on this level of funding.
        Fish habitat restoration programs would be more cost-effective and
    successful if partnered under a State-Federal cooperative program
    undertaking research and management of fish habitat. ASA is pleased
    with the Administration's budget of $13.22 million for fish habitat
    restoration. Furthermore, we support the continuation of the Charleston
    Bump Billfish Tagging program that serves as an important fish nursery
    for Atlantic Highly Migratory Fish species (AHMF).
        Providing a complete database of information on high priority
    species aids in identification, protection and restoration efforts of
    exploited fish along the Atlantic, Gulf and Pacific coasts. The SEAMAP
    program builds this database and partners with another program, the
    MARFIN program, and together they work to support fishery independent
    research on high priority species. ASA is concerned about the erosion
    of these partnerships and recommends funding for the SEAMAP program at
    $6 million and the MARFIN program also at $6 million ($4 million for
    the Southeast and $2 million for the Northeast).
        The American Sportfishing Association is very concerned with the
    low level of funding for the Anadromous Fisheries Act. Continual
    declines in funding means the needs of most anadromous fish stocks will
    not be met because funding cannot be supported through other federal
    and state funds or the fisheries management community. Therefore, the
    Association urges Congress to fund the Anadromous Fisheries Act grants
    to States at $8 million.
        The ASA is again disappointed in the level of funding for the
    Saltonstall-Kennedy grant program. This program promotes and develops
    fisheries by funding high priority research and development needs. ASA
    urges the Administration to restore this program to the fiscal year
    1999 level of $11.171 million.
        The ASA agrees with the Administration's request to ensure NMFS'
    vessels are in good condition for proper management and research needs.
    These vessels are chartered privately by universities and states, and
    thus their condition is important to the safety of their users.
        Concluding with our NMFS recommendations we would also like to
    comment on some of the other line items in NOAA's budget.
        ASA urges Congress to recognize critical marine resources issues
    and how funding efforts can play a large role in developing new
    technologies. These efforts are stronger with the ability of a
    coalition of federal and state scientists for these critical issues.
    Two important efforts taking place at the Hollings Marine Laboratory
    (HML) and the Fish Cooperative Institute, does important work on marine
    environmental health, biotechnology, and ecototxicology. The
    Association is pleased with the Administration's request to fund the
    HML at $2.5 million and the Fish Cooperative Institute at $750,000.
        The past few years have encountered a large breakout of algal
    blooms resulting in bad pfiesteria seasons. In response to this, effort
    to research and control the problem was largely taken on by the South
    Carolina Harmful Algal Bloom Task Force and was funded by the
    government. The Administration has proposed to terminate this program
    and the ASA urges Congress to continue funding this program at $600,000
    to continue the work on the outbreak of algal blooms.
        Two of the most successful state-federal cooperative efforts to
    improve the quality of our natural resources are the National Estuarine
    Research Reserve (NERR) and Coastal Zone Management (CZM) programs. The
    American Sportfishing Association is pleased with the proposed $16.4
    million for NERR and the $10.012 million for research facilities at
    NERR sites. In addition, we are very pleased with the many efforts of
    these programs ranging from public access to non-point source
    pollution. The ASA also supports the Administration's request for $85
    million for the CZM grants to help states and local communities work to
    improve coastal areas.
        The Coastal Services Center makes valuable contributions toward
    stewardship and provides support to the coastal states in regards to
    advanced coastal decision support systems. This program has yielded
    innovative work in conjunction with state participation and the ASA
    urges funding at the $18 million level.
        One important task of NOAA is to be able to access and treat
    damaged marine resources caused by releases of hazardous substances.
    The Damage Assessment and Restoration Program (DARP) directs these
    efforts and takes on the responsibility of restoring these damaged
    areas as quickly as possible to reduce the amount of loss of fisheries
    and marine habitats. The Association strongly supports the President's
    request for $17.199 million for damage assessment activities and
    restoration efforts of DARP.
        The Sea Grant College Program provides critical research and
    educational opportunities for maintenance and improvement of marine
    resources. The Association recommends funding at the authorized level
    of $73 million and we also disagree with the proposed moving of the
    program to the National Science Foundation. NOAA is more efficient at
    connecting the researchers and their findings to the marine community.
        Finally, Mr. Chairman, the ASA is concerned about NMFS' promotion
    and use of marine reserves to the exclusion of other proven management
    options. This has penalized recreational anglers and is far from a
    proven management tool for marine resources. Public closures should be
    the last management option, not the first. Furthermore, NMFS has
    prepared no standardized implementation guidelines, no conservation
    goals, or long term monitoring plans for the use of marine reserves.
    The ASA requests that funding for the planning and implementation of
    any future marine reserves be halted until management guidelines, such
    as those outlined in the Freedom To Fish legislation, are put in place.
        Mr. Chairman, please make these recommendations part of the record
    for the Subcommittee's 2004 appropriations process.
                                     ______

               Prepared Statement of the Doris Day Animal League

        Mr. Chairman and members of the Appropriations Subcommittee on
    Commerce, Justice, State and Judiciary, thank you for the opportunity
    to submit testimony on behalf of the 300,000 members and supporters of
    the Doris Day Animal League requesting that the Federal Bureau of
    Investigation assign the crime of animal cruelty its own classification
    in the Uniform Crime Reporting Program.

    The Significance of Animal Cruelty as a Crime: ``The Violence
            Connection''
        Animal cruelty, especially egregious acts, was once viewed as an
    offensive behavior unrelated to other crimes. Now it is recognized as a
    serious crime with important implications for human society. A growing
    body of research, produced over the last thirty years, establishes a
    clear link between animal abuse and human violence. One comprehensive
    study of data from a twenty-year period found that adults convicted of
    animal were more likely than their peers to engage in other forms of
    criminal activities, including violent crimes against humans, property
    crimes, and drug and disorderly offenses. Other studies conducted in a
    number of counties in the United States confirm the overlap between
    committing acts of animal cruelty and engaging in other types of
    criminal behavior. In addition to the association between animal
    cruelty and criminal behavior, there is also evidence that the severity
    of violence against animals can indicate the degree of aggressiveness
    toward human individuals. Research on incarcerated adult males
    demonstrated that the most aggressive inmates had the most violent
    histories of animal cruelty. It is worth noting that in dangerous
    situations such as a hostage taking, the FBI has included a history of
    animal cruelty among the factors used to determine an individual's
    threat level.
        Another important link between animal abuse and human violence,
    with important policy implications, is the co-occurrence of family
    violence and animal abuse. In interview studies with domestic violence
    victims, between 54-71 percent of the women report that their partners
    also harmed or killed the family pet. Child abuse and animal abuse also
    are linked: animal abuse was confirmed in 88 percent of families under
    the supervision of a child welfare agency for physically abusing their
    children.
        In addition to being linked to other types of criminal activity and
    family violence, animal abuse by children signals an important warning.
    The Federal Bureau of Investigation was one of the first to recognize
    the significance of juvenile animal cruelty when it reported that many
    serial killers had abused animals as children. It also has been
    reported that many of the school shooters had engaged in various forms
    of animal cruelty. The National Crime Prevention Council, the
    Department of Education, and the American Psychological Association all
    list animal cruelty as one of the indicators or warning signs of future
    violence. Furthermore, researchers agree that persistent aggressive
    behavior in childhood, termed ``conduct disorder,'' tends to be fairly
    stable trait throughout life and is the single best predictor of later
    criminal behavior. Animal cruelty is one of the symptoms for a
    diagnosis of conduct disorder and therefore can be one of the earliest
    indicators that a child is at risk.
        Not all children who abuse animals will become serial killers,
    school shooters, or criminals as adults. However, research clearly
    suggests that engaging in childhood animal cruelty conditions an
    individual to accept, or engage in, interpersonal violence as an adult.
    Responses to ``The Violence Connection''
        Government bodies, professional organizations, and communities have
    responded to information about the animal abuse-human violence
    connection. For example, before 1990, only seven states had felony
    provisions in their animal anti-cruelty statutes; now 41 states and the
    District of Columbia have felony-level laws. As of this date, 24 states
    have provisions in their animal anti-cruelty statutes that permit or
    mandate psychological counseling for offenders.
        In addition to changes in state animal cruelty statutes, awareness
    of the significance of animal abuse as a crime has resulted in the
    development of a number of programs. ``Safe Pet'' programs, in which
    the pets of domestic violence victims are provided safekeeping so that
    women feel free to leave dangerous situations, are being instituted in
    communities throughout the United States. Animal control officers are
    being trained to ``cross report,'' that is, to look for signs of child
    and spousal abuse when investigating an animal abuse or neglect
    complaint. Intervention programs for children and adults who abuse
    animals have been developed and mental health professionals are being
    trained in this area of treatment.

    Modifying the Reporting Categories of the Uniform Crime Reporting
            Program
        The Uniform Crime Reporting (UCR) Program is a nationwide effort in
    which crime statistics are collected from nearly 17,000 city, county,
    and state law enforcement agencies. During 2000, the participating
    agencies represented 94 percent of the total U.S. population. The
    current UCR Program classifies offenses in two groups, Part I and Part
    II. Crimes vary from criminal homicide in Part I to vagrancy and curfew
    and loitering laws in Part II. Not only law enforcement, but also
    criminologists, sociologists, legislators, municipal planners, the
    media, and others interested in criminal justice use the statistics for
    research and planning purposes. However, under the current UCR Program,
    there is no category to report crimes of animal cruelty, even though
    animal abuse often is an indicator of other types of criminal behavior,
    including family violence.
        Assigning the crime of animal cruelty to its own classification
    would have a number of advantages. Law enforcement agencies,
    researchers, policy planners, and others would be better able to
    understand the factors associated with animal abuse, track trends at
    the state and national level, and determine demographic characteristics
    associated with animal abuse--all of which would assist in promoting
    more effective intervention and prevention strategies to interrupt the
    cycle of violence. Finally, assigning animal cruelty its own category
    would assist law enforcement agencies by helping them identify and
    track individuals with histories of violence.

    Proposed Report Language for the Senate Subcommittee on Commerce,
            Justice, State and Judiciary Appropriations
        We respectfully request that the Subcommittee consider the
    following report language for the Commerce, Justice, State and
    Judiciary Appropriations bill:
        ``The Committee commends the Federal Bureau of Investigation (FBI)
    for its successful Uniform Crime Reporting (UCR) Program. Currently,
    there is no individual category for animal cruelty in the UCR Program
    even though animal cruelty is a crime in all states, certain acts of
    animal cruelty are felonies in 41 and the District of Columbia, and it
    is linked to other types of crime, including family violence.
    Therefore, there is no way to systematically track such cases. The
    current practice is to rely on the limited ability of local animal
    control agencies to monitor animal cruelty cases or literally check
    local court records. Given the current arrangement, state and national
    trends are impossible to identify.
        ``The Committee directs the FBI to provide the necessary resources
    to assign the crime of animal cruelty its own classification in the UCR
    Program by adding this category to its software and other reporting
    mechanisms. This will enable law enforcement agencies and researchers
    to track trends and better understand factors associated with
    committing animal abuse, allowing more effective interventions.
    Additionally, individuals who are more likely to commit other serious
    crimes could be identified.
        ``The Committee further directs the FBI to provide a report to the
    Committee by December 2003 on the integration of this category into its
    UCR Program.''

                                 REFERENCE LIST

        Ascione, F. A. (1993). Children who are cruel to animals: A review
    of research and Implications for developmental psychopathology.
    Anthrozoos, 6, 226-247.
        Ascione, F. A. (1998). Battered women's reports of their partners'
    and their children's' cruelty to animals. Journal of Emotional Abuse,
    1, 119-133.
        Ascione, F. A. (2001). Animal abuse and youth violence. Office of
    Juvenile Justice and Delinquency Prevention (OJJDP), Juvenile Justice
    Bulletin, September.
        Boat, B. (1999). Abuse of children and abuse of animals: Using the
    links to inform child assessment and protection. In F. R. Ascione & P.
    Arkow (Eds.), Child abuse, domestic violence, and animal abuse: Linking
    the circles of compassion for prevention and intervention (pp. 83-100).
    West Lafayette, Indiana: Purdue University Press.
        Deviney, E., Dickert, J., & Lockwood, R. (1983). The care of pets
    within child abusing families. International Journal for the Study of
    Animal Problems, 4, 321-329.
        Felthous, A.R. & Kellert, S.R (1987). Childhood cruelty to animals
    and later aggression against people: A review. American Journal of
    Psychiatry, 144, 710-717.
        Flynn, C. P. (2000). Why family professionals can no longer ignore
    violence toward animals. Family Relations, 49, 87-95.
        Jory, B. & Randour, M.L. (1999). The AniCare Model of Treatment for
    Animal Abuse (adult version). Printed and distributed by the Doris Day
    Animal Foundation and Psychologists for the Ethical Treatment of
    Animals.
        Kellert, S.R. & Felthous, A. R. (1985). Childhood cruelty toward
    animals among criminals and noncriminals. Human Relations, 38, 1113-
    1129.
        Luke, C., Arluke, A., Levin, (1997) Cruelty to animals and other
    crimes: A study by the MSPCA and Northeastern University. Boston:
    Massachusetts. Society for the Prevention of Cruelty to Animals.
        Randour, M.L., Krinsk, S., & Wolf, J. (2002). AniCare Child: An
    Approach for the Assessment and Treatment of Childhood Animal Abuse.
    Printed and distributed by the Doris Day Animal Foundation and
    Psychologists for the Ethical Treatment of Animals.
                                     ______

       Prepared Statement of the University Corporation for Atmospheric
                                    Research

        On behalf of the University Corporation for Atmospheric Research
    (UCAR) and the university community involved in weather and climate
    research and related education, training and support activities, I
    submit this written testimony for the record of the U.S. Senate
    Committee on Appropriations, Subcommittee on Commerce, Justice, State
    and the Judiciary. This testimony pertains to the fiscal year 2004
    budget request for the National Oceanic and Atmospheric Administration
    (NOAA). UCAR is a consortium of 66 universities that manages and
    operates the National Center for Atmospheric Research (NCAR) and
    additional atmospheric and related sciences programs. In addition to
    its member universities, UCAR has formal relationships with
    approximately 100 additional undergraduate and graduate schools
    including several historically black and minority-serving institutions,
    and 40 international universities and laboratories. The National
    Science Foundation (NSF) and other federal agencies, including NOAA,
    support UCAR.

                                  INTRODUCTION

        As one of the world's foremost scientific and environmental
    agencies, NOAA has responded to the needs of the nation in designing
    its budget and program to protect citizens, the environment and the
    economy. Last year the NOAA leadership conducted a nationwide program
    review, asking for input from NOAA's many stakeholders. Those responses
    are reflected in the subsequent strategic plan, ``New Priorities for
    the 21st Century.'' We applaud the NOAA leadership for its vision, and
    urge the Committee to support the critical, evolving work of this
    agency. Within the NOAA fiscal year 2004 budget request, I would like
    to comment on the following offices and programs:
    Office of Oceanic and Atmospheric Research (OAR)
        The OAR supports a network of scientists and environmental research
    laboratories in order to provide the sound science upon which decision
    makers can frame effective regulations to solve environmental problems
    and upon which economic growth can be managed in an environmentally
    sound manner. The President's request for OAR overall is down 2 percent
    from the fiscal year 2003 final appropriation. However, since the
    fiscal year 2004 request, which preceded the fiscal year 2003 final
    numbers, was based on the fiscal year 2003 request and reflected a
    major increase for OAR, we believe that the Administration is
    demonstrating strong commitment to the work of OAR. Therefore, I ask
    the Committee to provide OAR with a five percent increase and fund the
    Office at $384.0 million in fiscal year 2004.
        U.S. Weather Research Program (USWRP).--USWRP is an interagency
    program that is dedicated to making forecasts of high-impact weather
    more specific, accurate, and reliable, thereby saving lives and
    property, and helping regional economies. I urge the Committee to
    support the fiscal year 2004 request of $4.0 million for the USWRP Base
    and $1.3 million for THORPEX, an international program focused on
    extending weather predictability from the current 7 days to two weeks
    and double the rate of improvements in forecast skill by 2012, and to
    support the request of $7.3 million for the High Impact Weather Program
    component of the USWRP.
        U.S. Weather Research Program--Collaborations Fund.--Through the
    Office of Oceanic and Atmospheric Research (OAR) and the National
    Weather Service (NWS), NOAA bears a great responsibility for advancing
    the nation's weather research and the application of that research to
    improve weather forecasts and warnings. The best way to accomplish this
    is to form working alliances, or partnerships, between the scientific
    expertise that exists within NOAA and the country's broad expertise
    within the university and private sector communities. Competitive
    proposals and a peer review process through the establishment of a
    Collaborations Fund would ensure that the best research results and
    technologies are achieved for the resources available. I urge the
    Committee to establish the USWRP Collaborations Fund with a new
    allocation of $20 million in NOAA's Office of Oceanic and Atmospheric
    Research, in order to leverage the research and research applications
    expertise of this country toward accelerated implementation of the
    USWRP goals.
        Climate and Global Change Program.--The climate variability
    predictions provided by the Climate and Global Change Program are
    absolutely critical to related national and international policy
    formulation and to efforts to adapt to and mitigate the effects of
    long-term climate change. The Program is an integral part of the
    interagency U.S. Global Change Research Program (USGCRP) that is the
    major U.S. contributor to the world's understanding of the global
    climate system. The President's request for this program is $73.0
    million, down 2.3 percent from the fiscal year 2003 final
    appropriation. I urge the Committee to provide the Climate and Global
    Change Program $74.7 million at the very least, the level at which this
    program is funded for fiscal year 2003.
        Phased-Array Radar.--NOAA requests $1 million to develop new
    technologies for forecasting and detecting tornadoes and other forms of
    severe weather and to disseminate this information to emergency
    managers, the media, and the general public for appropriate action.
    This initiative will provide the meteorological research community with
    the first dedicated phased-array radar facility to collect real-time
    data around the clock. When fully implemented, tornado warning lead
    times could be doubled from 11 to a life-saving 22 minutes. I urge the
    Committee to support the $1 million request for the Phased-Array Radar.
        Climate Observations and Services Program.--I urge the Committee to
    fund the $55.3 million fiscal year 2004 request for Climate
    Observations and Services. A robust observing system is perhaps the
    most critical tool for the development of more accurate weather and
    climate models. The increase for this program will build the climate
    observing system required to support the research, modeling, and
    decision support activities for the Administration's Climate Change
    Research Initiative (CCRI). I further urge the Committee to support the
    President's fiscal year 2004 request of $42.0 million for CCRI, our
    nation's key research contribution to the global issue of climate and
    environmental change.

    Laboratories and Joint Institutes
        The 12 NOAA Research Laboratories, located across the country with
    field stations around the world, conduct an integrated program of
    fundamental research, technology development, and services to improve
    understanding of the Earth and its oceans and inland waters, the lower
    and upper atmosphere, and the space environment. The Laboratories have
    established formal collaborative agreements with universities and non-
    profit research institutions to form 11 Joint Institutes to study the
    earth's oceans, inland waters, intermountain west, atmosphere, arctic,
    and solar-terrestrial environment. I would like to comment on the
    fiscal year 2004 request for the following laboratories:
        Forecast Systems Laboratory (FSL).--The fiscal year 2004 request
    terminates the nation's Wind Profiler Network, 35 stations that provide
    hourly wind profiles from the ground to 53,000 feet to operational
    weather forecasters and weather models. These data provide invaluable
    support in the forecasting of tornadoes, winter storms and flash
    floods. I strongly urge the Committee to restore $4.1 million for the
    Wind Profiler Network and to thereby fund the Forecast Systems
    Laboratory $11.5 million for fiscal year 2004.
        Boulder Facilities Operations.--Six of the 12 NOAA Research
    Laboratories, one NESDIS Data Center, one of OAR's 11 Joint Institutes,
    and the Denver Forecast Office of the National Weather Service (NWS)
    are all housed in Boulder at the David Skaggs Research Center. The
    fiscal year 2003 Omnibus Bill eliminated rent, maintenance, utility,
    and security charges assessed by the General Services Administration
    for this building. It is critical that the Committee support Boulder
    Facilities Operations at $4.5 million as requested for fiscal year
    2004.
        Adjustments to Base.--Failure to fund unavoidable increases to the
    base budget, such as inflationary costs, changes in costs for salaries,
    and good and services, can have a significant impact on the operations
    of an agency, and affect productivity over time when those increases
    have to be funded out of research programs. I urge the Committee to
    restore the $4.5 million that was cut from Adjustments to Base in the
    fiscal year 2003 Omnibus Bill, thereby increasing the fiscal year 2004
    request to $10.0 million.
        Space Environment Center (SEC).--The SEC is the national and world
    warning center for disturbances that can affect people and equipment
    working in the space environment. It provides real-time monitoring and
    forecasting of solar and geophysical events, conducts research in
    solar-terrestrial physics, and develops techniques for forecasting
    solar and geophysical disturbances. SEC's Space Weather Operations
    Center is jointly operated with the U.S. Air Force because DOD's smart
    weapons' accuracies, as well as the ability of ships, planes and
    special forces units to fix their positions using GPS, are adversely
    affected by space weather events. The fiscal year 20043 Omnibus Bill
    cut the SEC by $2.25 million, an amount that seems to have been
    restored in the fiscal year 2004 request. I urge the Committee to fund
    the fiscal year 2004 request of $8.3 million for the Space Environment
    Center.

    National Weather Service (NWS)
        As the nation's vulnerability to weather related hazards rises
    because of increasing population, enhanced infrastructure, and
    population movement toward cities in threatened regions such as coastal
    areas, the NWS strives to mitigate impacts through improved forecasts
    and warning systems for the protection of life and property. There are
    few agency programs that impact our daily lives and the health of our
    economy as profoundly as does the NWS. I urge the Committee to support
    the fiscal year 2004 NWS overall request of $820 million. Within NWS, I
    would like to comment on the following programs:
        NWS Adjustments to Base.--As the largest and most labor-intensive
    service within NOAA--70 percent of its budget dedicated to labor--the
    NWS depends on full funding of personnel cost increases in order to
    sustain current service levels. In the past, reductions in ATBs
    resulted in cutbacks in NWS research grants and forecaster training
    programs. It is critical that the Committee support the $20.1 million
    to fund adjustments to base.
        NOAA Center for Weather and Climate Prediction.--The Department of
    Commerce, the State of Maryland, and academic community advisors have
    all agreed on a shared vision to build a Center of Excellence for
    Environmental Research, Education, Applications and Operations in order
    to meet NOAA operational requirements to create research synergy in
    weather and climate prediction; to accelerate transition of new science
    and technology into operations; and to enhance recruitment
    opportunities. I ask that the Committee support the request of $10.4
    million for this new state-of-the-art facility.
        Advanced Hydrologic Prediction System (AHPS).--Seventy-five percent
    of all Presidential Disaster Declarations involve flood damages. AHPS
    will provide emergency managers with critical data with which to save
    lives and property, manage energy and water resources more efficiently,
    and enable a more rapid infusion of scientific advances into the
    system. Within the NWS Operations, Research, and Facilities account, I
    urge the Committee to support the fiscal year 2004 request of $6.1
    million.
        Aviation Weather.--Weather is the cause of approximately 200 U.S.
    general aviation pilot fatalities per year and over 70 percent of U.S.
    commercial airline delays that result in tremendous cost to customers
    and companies. The Aviation Weather program increases the number of
    aviation weather observations; transitions research into operations
    more efficiently; and develops and implements new training programs for
    forecasters, pilots, and air traffic controllers. I urge the Committee
    to support the NWS Aviation Weather initiative at the requested $2.5
    million for fiscal year 2004.
        NWS Weather and Climate Supercomputing and Backup (Systems
    Acquisition).--The critical nature of the separate request for NWS
    supercomputing backup cannot be exaggerated. The NWS forecast computing
    capabilities are located at a single facility which means that the
    nation's severe weather watches and warnings all emanate from one
    location that could fail for a number of reasons including faulty
    technology, power supply problems, or terrorism. The redundancy,
    provided by supercomputing backup, covers those risks and is a critical
    component of the Department of Commerce Homeland Security Initiative.
    When not in emergency use, the backup provides needed computing time
    for weather and climate research. I urge the Committee to support the
    fiscal year 2004 request of $19.3 million for NWS Weather and Climate
    Supercomputing and $7.2 million to implement the backup computer
    system.
        Radiosonde Replacement Network.--There is little doubt that the
    obsolete infrastructure for this principle data source on upper air for
    all weather forecasts and models will fail by 2005 if it does not
    receive adequate modernization funding now. I urge the Committee to
    support the fiscal year 2004 request of $6.9 million for the Radiosonde
    Replacement Network in the NWS Procurement, Acquisition and
    Construction (PAC) account.
        Advanced Weather Interactive Processing System (AWIPS).--This
    interactive computer system integrates all meteorological and
    hydrological data, and all satellite and radar data. AWIPS is a
    fundamental source of data for the research community and, when
    combined with NEXRAD radar, it enables the NWS to issue far more
    effective weather warnings and forecasts for the entire country. In the
    NWS Operations, Research and Facilities (ORF) account, I urge the
    Committee to support the fiscal year 2004 proposed amount of $37.6
    million for AWIPS. In the NWS Procurement, Acquisition and Construction
    (PAC) account, I urge the Committee to fund AWIPS at the $16.3 million
    request at least, an amount level with fiscal year 2003.
        Cooperative Observer Network.--The network's 11,000 weather
    observation sites are used to maintain the country's climate record and
    to provide data to NWS local field offices and to university
    laboratories. I urge the Committee to support the request of $1.9
    million, the same as the fiscal year 2003 enacted level, for
    Cooperative Observer Network maintenance.
        Central Forecast Guidance.--The NWS Central Forecast Guidance line
    provides most of the funding for the National Centers for Environmental
    Prediction (NCEP), nine centers within the NWS that all work together
    toward the common goal of using data for weather predictions and
    seasonal forecasts in order to save lives, protect property, and create
    economic opportunity. Forecasts that reach the public via media outlets
    originate at NCEP. In recent years, the centers have not been supported
    adequately to process weather data and transfer it into operations. In
    order to address this problem, I urge the Committee to support the
    fiscal year 2004 request of $45.1 million, a 3.7 percent increase over
    the fiscal year 2003 enacted level.

    National Environmental Satellite, Data and Information Service (NESDIS)
        NESDIS operates this country's space-based component of the global
    environment observing system, and manages the world's largest
    collection of atmospheric, geophysical, and oceanographic data
    representing 85 percent of the data used by the NWS for forecasting
    activities. Society depends on NESDIS for data that affect numerous
    activities including distributing energy supplies, maintaining
    satellite communications, developing global food supplies, increasing
    aviation safety, managing natural resources, protecting citizens from
    natural hazards, and transporting our nation's armed forces. I urge the
    Committee to support the fiscal year 2004 request of $91.2 million for
    NESDIS Environmental Satellite Observing Systems, an increase of $5
    million over the fiscal year 2003 enacted level.
        The rich data collected by the NESDIS satellite systems are
    acquired, processed, analyzed, archived and disseminated through the
    Data Information Management Systems to commerce, industry, agriculture,
    science and engineering, the general public, and government at all
    levels. While the Satellite Systems function collects data, the Data
    Centers and Information Services function makes those data useful and
    available, so I am disturbed to see that the data management function
    is recommended for a $5.3 million decrease. An increase in funding for
    the observing systems that collect data obviously should be coupled
    with an increase in funding for the management systems that make the
    collected data useful and accessible. I urge the Committee to
    appropriate, at the very least, $5.3 million above the request in order
    to restore the NESDIS Data Centers and Information Services to the
    fiscal year 2003 enacted level of $64.4 million in fiscal year 2004.

    Educational Partnership Program with Minority Serving Institutions
        Under-representation of minorities in earth science disciplines in
    this country is a serious issue that must be addressed by multiple
    programs across multiple agencies and institutions. I urge the
    Committee to support the $15.0 million request for NOAA's Educational
    Partnership Program with Minority Serving Institutions.
        On behalf of the UCAR community, I want to thank the Committee for
    the important work you do for U.S. scientific research, infrastructure,
    education, and training. We understand and appreciate that the nation
    is undergoing significant budget pressures at this time, but a strong
    nation in the future depends on the investments we make in science and
    technology today. We appreciate your attention to the recommendations
    of our community concerning the fiscal year 2004 budget of the National
    Oceanic and Atmospheric Administration.
                                     ______

    Prepared Statement of the National Federation of Community Broadcasters

        Thank you for the opportunity to submit testimony to this
    Subcommittee regarding the appropriation for the Public
    Telecommunications Facilities Program (PTFP). As the President and CEO
    of the National Federation of Community Broadcasters, I speak on behalf
    of over 200 community radio stations and related organizations across
    the country. This includes the new Low Power FM service that has
    recently been authorized by the FCC. NFCB is the sole national
    organization representing this group of stations, which provide service
    in both the smallest communities and largest metropolitan areas of this
    country. Nearly half of our members are rural stations, and half are
    minority controlled stations.
        In summary, the points we wish to make to this Subcommittee are
    that NFCB:
      --Supports funding for PTFP that will cover the on-going needs of
            public radio and television stations.
      --Supports funding for conversion of public radio and television to
            digital broadcasting.
      --Requests report language to ensure that PTFP utilizes any digital
            funds it receives for radio as well as television needs.
        Community radio supports $70 million in funding for the Public
    Telecommunications Facilities Program in fiscal year 2004.--Federal
    support distributed through the PTFP is essential to continuing and
    expanding the public broadcasting service throughout the United States.
    It is particularly critical for rural stations and for those stations
    serving minority communities. PTFP funds new stations, expanding the
    reach of public broadcasting to rural areas and to audiences that are
    not presently served by existing stations. In addition, it replaces
    obsolete and worn out equipment so that the existing stations can
    continue to broadcast high quality programming. Finally, with the
    advent of digital broadcasting, PTFP funding will help with the
    conversion to this new technology.
        We support $70 million in funding to ensure that both the on-going
    program--currently funded in fiscal year 2003 at $43.4 million--will be
    continued, and that the increase to $70 million will be available to
    help cover the cost of radio and television converting to digital
    transmission. This increase in funding is particularly urgent this year
    because the FCC has now endorsed a standard for digital radio
    broadcasting and the television conversion deadline is imminent.
        Federal funding is particularly critical to stations serving rural
    and underserved audiences which have limited potential for fundraising
    because of sparse populations, limited number of local businesses, and
    low income levels. Even so, PTFP funding is a matching program so that
    the federal money is leveraged with a local commitment of funds. This
    program is a strong motivating factor in raising the significant money
    necessary to replace, upgrade and purchase expensive broadcast
    equipment.
        Community radio supports funding for conversion to digital
    broadcasting for public radio and television.--While public
    television's digital conversion needs are more immediate, the Federal
    Communications Commission has now approved a standard for digital radio
    transmission. The initial conversion of radio stations is being
    concentrated in 13 seed markets. The Corporation for Public
    Broadcasting (CPB) is using some of its previously appropriated digital
    funds to help public stations in these markets convert to digital,
    conduct additional research on AM radio conversion, and work with radio
    receiver manufacturers to build in the capacity to receive a 2nd audio
    channel. The development of 2nd audio channels will potentially double
    the public service that public radio can provide, particularly to
    unserved and underserved communities. This initial funding from CPB
    will only help a small number of the stations that will ultimately need
    to either convert or be left behind while the world goes digital.
        We appreciate Congress' direction to the Corporation for Public
    Broadcasting that it utilize its digital conversion fund for both radio
    and television and ask that you ensure that the PTFP funds are used for
    both media. Congress stated, with regard to the fiscal year 2000
    digital conversion funds:
        The required (digital) conversion will impose enormous costs on
    both individual stations and the public broadcasting system as a whole.
    Because television and radio infrastructures are closely linked, the
    conversion of television to digital will create immediate costs not
    only for television, but also for public radio stations (emphasis
    added). Therefore, the Committee has included $15,000,000 to assist
    radio stations and television stations in the conversion to
    digitization . . . (S. Rpt. 105-300)
        NFCB requests that the funding for digital conversion be committed
    in advance to facilitate the orderly transition of a very
    individualized process--a process that will be different at each
    station. Advance funding will give the system time to raise the
    substantial matching funds that will be necessary and to know what
    additional funds will be needed to complete the process.
        Thank you for your consideration of our testimony.
                                     ______

     Prepared Statement of the Regional Information Sharing Systems (RISS)
                                    Program

        The Regional Information Sharing Systems (RISS) Program
    respectfully requests that Congress appropriate for fiscal year 2004,
    $50 million to continue their support in combating drug trafficking and
    organized crime.
        These funds will enable RISS to continue identifying, targeting,
    prosecuting, and removing criminal conspirators involved in terrorism
    activity, drug trafficking, organized criminal activity, criminal
    gangs, and violent crime that span multijurisdictional boundaries.
    Funds will allow RISS to continue to support the investigation and
    prosecution efforts of over 6,300 local, state, and federal law
    enforcement member agencies across the nation comprising over 675,000
    sworn law enforcement personnel.
        Through funding from Congress, RISS has implemented and operates
    the only secure Web-based nationwide network--called riss.net--for
    communications and sharing of criminal intelligence by local, state,
    and federal law enforcement agencies. Funds will allow RISS to upgrade
    the technology infrastructure and resources to support increased use
    and reliance on the system by member law enforcement agencies and
    support the integration of other systems connected to riss.net for
    information sharing and communication. Using Virtual Private Network
    technology, the law enforcement users access the public Internet from
    their desktop and have a secure connection over the private riss.net
    intranet to all RISS criminal intelligence databases and resources.
    RISS member law enforcement agencies accessed riss.net an average of
    3.9 million times per month during fiscal year 2002. Riss.net is a
    proven, highly effective system that improves the quality of criminal
    intelligence information available and puts it in the hands of the law
    enforcement officers to make key decisions at critical points in their
    investigation and prosecution efforts.
        The Office of Justice Programs (OJP), Regional Information Sharing
    Systems (RISS) is a federally funded program comprised of six regional
    intelligence centers. The six centers provide criminal information
    exchange and other related operational support services to local,
    state, and federal law enforcement agencies located in all fifty
    states, the District of Columbia, U.S. territories, Canada, Australia,
    and England. These centers are:
        Middle Atlantic-Great Lakes Organized Crime Law Enforcement Network
    (MAGLOCLEN).--Delaware, District of Columbia, Indiana, Maryland,
    Michigan, Pennsylvania, Ohio, New Jersey, and New York, as well as
    Canada and England.
        Mid-States Organized Crime Information Center (MOCIC).--Illinois,
    Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South
    Dakota, and Wisconsin, as well as Canada.
        New England State Police Information Network (NESPIN).--
    Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and
    Vermont, as well as Canada.
        Regional Organized Crime Information Center (ROCIC).--Alabama,
    Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, North
    Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia, and
    West Virginia, as well as Puerto Rico and the U.S. Virgin Islands.
        Rocky Mountain Information Network (RMIN).--Arizona, Colorado,
    Idaho, Montana, Nevada, New Mexico, Utah, and Wyoming, as well as
    Canada.
        Western States Information Network (WSIN).--Alaska, California,
    Hawaii, Oregon, and Washington, as well as Canada, Guam, and Australia.
        RISS is a crucial force in fighting terrorism, increased violent
    criminal activity by street gangs, drug traffickers, sophisticated
    cyber criminals, and emerging criminal groups that require a
    cooperative effort by local, state, and federal law enforcement.
    Interagency cooperation has proven to be the best method to combat the
    increasing criminal activity in these areas. The RISS Centers are
    filling law enforcement's need for rapid, but controlled sharing of
    information and intelligence pertaining to known or suspected drug
    traffickers and criminals. Congress funded the RISS Program to address
    this need as evidenced by its authorization in the Anti-Drug Abuse Act
    of 1988.
        The success of RISS has been acknowledged and vigorously endorsed
    by the International Association of Chiefs of Police (IACP), as well as
    other national law enforcement groups such as the National Sheriff's
    Association (NSA) and the National Fraternal Order of Police (NFOP).
    These groups have seen the value of this congressional program to law
    enforcement nationally and have worked with the National Association of
    Attorneys General (NAAG), the National District Attorneys Association
    (NDAA), and the National Criminal Justice Association (NCJA) to further
    strengthen the awareness of RISS.
        RISS is operating current state-of-the-art technical capabilities
    and systems architecture that allow local, state, and federal law
    enforcement member agencies to interact electronically with one another
    in a secure environment. The RISS system has built-in accountability
    and security. The RISS secure intranet (riss.net) protects information
    through use of encryption, smart cards, Internet protocol security
    standards, and firewalls to prevent unauthorized access. The RISS
    system is governed by the operating principles and security and privacy
    standards of 28 CFR Part 23 (Criminal Intelligence Systems Operating
    Policies). The technical architecture adopted by RISS requires proper
    authorization to access information, but also provides flexibility in
    the levels of electronic access assigned to individual users based on
    security and need-to-know issues. Riss.net supports secure e-mail and
    is easily accessible using the Internet. This type system and
    architecture is referenced and recommended in the General Counterdrug
    Intelligence Plan (GCIP).
        The RISS Program promotes federal, state, local, and tribal law
    enforcement information sharing. RISS is the mechanism that state and
    federal law enforcement agencies are using to leverage their resources
    and existing systems for sharing sensitive but unclassified
    information. RISS has entered into a partnership with the High
    Intensity Drug Trafficking Areas (HIDTA) to electronically connect all
    of the HIDTA's to riss.net for communications and information sharing.
    Currently, 15 HIDTA's are electronically connected as nodes to riss.net
    and RISS is working to complete the connection of the remaining
    HIDTA's. Nine state agencies are currently connected as nodes on
    riss.net. An additional 15 state law enforcement agencies are pending
    connection as nodes to share information, including terrorism and
    homeland security information, using riss.net.
        The National Drug Intelligence Center (NDIC) is a member of RISS
    and uses the RISS network as a communications mechanism for publishing
    counterdrug intelligence products to federal, state, and local law
    enforcement members. RISS and the El Paso Intelligence Center (EPIC)
    officials entered into a partnership and have electronically connected
    EPIC as a node to riss.net to capture clandestine laboratory seizure
    data from RISS state and local law enforcement member agencies. RISS is
    currently working with the U.S. Department of the Interior, Bureau of
    Land Management (BLM), to connect all of the BLM offices to riss.net.
    Other systems connected to riss.net are the Law Enforcement
    Intelligence Unit (LEIU) and the National Drug Pointer Index (NDPIX).
    The National White Collar Crime Center (NW\3\C) and the Financial
    Crimes Enforcement Network (FinCEN) are currently pending connection to
    riss.net as nodes.
        During 2002, officials of the FBI Law Enforcement Online (LEO)
    system and the RISS system achieved interconnection of the two systems
    for distribution of sensitive but unclassified homeland security
    information to authorized users of both LEO and RISS. In addition, the
    Executive Office of the United States Attorneys (EOUSA) and the RISS
    Centers initiated actions to connect staff to riss.net at each of the
    93 U.S. Attorneys' Offices (USAO) Anti-Terrorism Task Forces throughout
    the United States.
        RISS is also expanding its resources to deliver the RISS Anti-
    Terrorism Information Exchange (RISS ATIX) to provide access through
    riss.net to additional groups of users for secure interagency
    communication, information sharing, and dissemination of terrorist
    threat information. These additional groups of users, referred to as
    RISS ATIX participants, will include public service, public safety,
    emergency management, utility, and other critical infrastructure
    personnel that have traditionally not been served by RISS. RISS ATIX
    participants will be assigned restricted access to certain specific
    RISS services and resources as appropriate in consideration of their
    roles with regard to terrorism and disasters.
        All of these above mentioned state and federal agencies are
    integrating with and using the riss.net secure nationwide
    communications backbone to share criminal intelligence and alerts and
    homeland security information within their own agencies and among the
    other agencies. RISS needs funds to purchase hardware and software to
    support these agency system connections to riss.net to continue to
    provide and improve access for sharing information for law enforcement
    agencies across the country. In addition, RISS has developed RISS ATIX
    to provide first responders and critical infrastructure personnel with
    a secure means via riss.net to communicate, share information, and
    receive terrorist threat information. RISS is operating an
    unprecedented nationwide network for communicating critical information
    in a secure environment to both law enforcement and other first
    responders. To support the increased needs of these personnel and
    continue to maintain the RISS system and demand for RISS services and
    resources, RISS is requesting an increase in funding to $50 million for
    2004.
        RISS continues to promote interagency investigations by improving
    capabilities for member agencies to quickly and easily access RISS
    databases and resources by expanding the enrollment of member agencies
    for access to riss.net through distribution of security hardware and
    software. In view of today's increasing demands on federal, state, and
    local law enforcement budgets, requests for RISS services have risen.
    The Institute for Intergovernmental Research (IIR) report on the RISS
    Program showed that as of December 31, 2002, the number of criminal
    subjects maintained in the RISSIntel intelligence databases for all
    Centers combined was 1,079,369 with 258,907 new subjects being added in
    2002. The combined databases of all six RISS Centers also maintained
    data on 1,712,307 locations, vehicles, weapons, and telephone numbers
    for a grand total of 2,791,676 data entries available for search. For
    the twelve-month period January through December 2002, the total number
    of inquiries by law enforcement member agencies to the RISSIntel
    database for all six regional intelligence centers combined was
    766,845. These inquiries resulted in hits or information to assist law
    enforcement agencies in their criminal cases. All RISS Centers combined
    delivered 19,777 analytical products to member agencies in support of
    their investigation and prosecution efforts in 2002.
        This support of law enforcement has had a dramatic impact on the
    success of their investigations. Over the three-year period 2000-2002,
    RISS generated a return by member agencies that resulted in 10,024
    arrests, seizure of narcotics valued at almost $141 million, seizure of
    over $13 million in currency, and recovery or seizure of property
    valued at over $25 million. In addition, almost $3 million was seized
    through RICO civil procedures. In the 22-year period since 1980 when
    the Program was fully implemented, the RISS Program has assisted its
    member agencies with their investigations. Results of these
    investigations have amounted to over $12.7 billion dollars in
    recoveries at a total cost that approximates 2.72 percent of that
    amount, or a $37 return for every dollar spent.
        The Bureau of Justice Assistance administers the RISS Program and
    has established guidelines for provision of services to member
    agencies. The RISS regional intelligence centers are subject to
    oversight, monitoring, and auditing by the U.S. Congress, the General
    Accounting Office, a federally funded program evaluation office; the
    U.S. Department of Justice, Bureau of Justice Assistance; and local
    government units. The Intelligence Systems Policy Review Board also
    monitors the RISS Centers for 28 CFR Part 23 compliance.
        It is respectfully requested that the Congress fully fund the RISS
    Program as a line item in the congressional budget, in the requested
    amount of $50 million. Local and state law enforcement, who depend on
    the RISS Centers for information sharing, training, analytical support,
    funding, and technical assistance, are anticipating increased
    competition for decreasing budget resources. The state and local
    agencies require more, not less, funding to fight the nation's crime/
    drug problem.
        We are grateful for this opportunity to provide the committee with
    this testimony and appreciate the support this committee has
    continuously provided to the RISS Program.
                                     ______

                  Prepared Statement of The Ocean Conservancy

        The Ocean Conservancy (TOC) is pleased to share its views regarding
    the marine conservation programs in the budgets of the National Oceanic
    and Atmospheric Administration's (NOAA) and the Department of State's
    Bureau of Oceans and International Environmental and Scientific
    Affairs. TOC requests that this statement be included in the official
    record for the fiscal year 2004 Commerce, Justice, State, the Judiciary
    and Related Agencies bill. TOC cannot overstate the importance of this
    Subcommittee in advancing marine conservation and greatly appreciates
    the funding provided in fiscal year 2003. TOC recognizes the
    constraints this Subcommittee faces this year and urges you to continue
    to make ocean conservation a top priority.

                NATIONAL OCEANIC AND ATMOSPHERIC ADMINISTRATION

    Conservation Trust Fund
        Passed by Congress in 2000, the Conservation Trust Fund (also
    referred to as the Conservation Spending Category) is a groundbreaking
    bipartisan accomplishment and represents a major advancement in
    conservation funding. TOC is grateful that this Subcommittee has upheld
    its commitment to funding the Conservation Trust Fund over the last
    three fiscal years and calls for your continued commitment in fiscal
    year 2004 by dedicating $520 million for critical ocean and coastal
    conservation activities within NOAA. We also urge you to protect the
    integrity of the trust fund by limiting its uses for net increases
    rather than a substitute for base funding.

    Coral Reef Conservation
        NOAA plays a critical role in protecting coral reefs, serves on the
    successful Interagency Coral Reef Task Force and has major
    responsibilities for implementing the National Action Plan to Conserve
    Coral Reefs. Through monitoring, mapping, restoration and outreach
    activities, NOAA works with state, territory, local and other parties
    to reduce land-based pollution, overfishing, diseases, and other
    threats to coral reefs. TOC is disappointed that the Subcommittee cut
    funding for coral reefs in fiscal year 2003 and respectfully requests
    that at a minimum, funding be restored in fiscal year 2004. In
    addition, $2 million above the Administration's request is desperately
    needed to support local efforts to protect coral reefs and should be
    directed to the Coral Reef Conservation Fund established by the Coral
    Reef Conservation Act of 2000 (Public Law 106-562). This funding will
    leverage an additional $2 to $4 million in matching resources through
    partnerships with local, state and territory governments, universities,
    the private sector and others to fund on-the-ground coral reef
    conservation and management activities in the United States and its
    territories. This funding is one of The Ocean Conservancy's highest
    priorities.

    National Ocean Service
                Marine Sanctuary Program
        Our nation's 13 sanctuaries encompass almost 18,000 square miles of
    our most significant marine resources. TOC requests the Subcommittee
    provide $37.8 million for sanctuary operations, $2 million above the
    Administration's request. This increase is critical to reducing
    staffing shortages and supporting conservation, community outreach,
    research, and education programs, and updating sanctuary management
    plans as required by law. TOC also supports the Administration's
    request of $10 million for construction, particularly for interpretive
    facilities to educate the general public about the role of the federal
    government in managing our nation's ocean and coastal resources.

                Marine Protected Areas (MPAs)
        TOC greatly appreciates this Subcommittee's $1 million increase in
    fiscal year 2003 to support NOAA's MPAs initiative and requests an
    additional $1 million increase in fiscal year 2004. This $5 million
    will allow NOAA to work more effectively with federal and state
    agencies and other partners to acquire data for the ongoing MPA
    inventory and support the recently formed Marine Protected Areas
    Advisory Committee and its working groups. This increase will allow
    NOAA to better assist stakeholders, including states, the National Park
    Service and others by holding regional workshops and providing training
    and technical assistance to determine how best to design and implement
    MPAs.

                Nonpoint Pollution Implementation Grants
        Nonpoint source pollution continues to be the nation's largest
    source of water pollution. There were over 13,410 closings and
    advisories at U.S. beaches in the year 2001. TOC supports the
    Administration's fiscal year 2004 request of $10 million to help
    coastal states and territories, with approved nonpoint plans, continue
    to make progress in implementing their priority activities.

                National Marine Fisheries Service
        The Ocean Conservancy remains concerned about the state of our
    nation's fisheries. As the $100 million for fisheries disaster
    assistance in fiscal year 2003 demonstrates, we must do a better job
    managing our fisheries. Below is what TOC believes are NMFS's most
    pressing needs.

                Expanding Fisheries Stock Assessments
        The status of roughly two-thirds of our commercially caught ocean
    fish populations is unknown due in large part to lack of funding for
    basic research and regular stock assessments. We applaud the
    Subcommittee's decision to increase stock assessment funding to $17
    million in fiscal year 2003 and urge that this trend continues with $25
    million in fiscal year 2004. Doing so will help reduce the backlog in
    research days-at-sea and give managers baseline information critical to
    managing our fisheries. This funding is one of The Ocean Conservancy's
    highest priorities.

                Fisheries Observers
        Along with stock assessments, reliable, objective information about
    how many fish are being caught, directly and as bycatch, is crucial to
    responsible management of our fish populations. Observers are a key
    means of collecting such information. TOC recommends $25 million for
    fisheries observers in fiscal year 2004, $5 million above the
    Administration's request and encourages the Subcommittee to prioritize
    the following three programs.

                Bycatch Observers
        TOC fully supports the Administration's $2.8 million initiative to
    reduce bycatch. The $2 million within this initiative for bycatch
    observers will support approximately 2,000 observer days-at-sea,
    thereby enhancing the collection of bycatch data from commercial and
    recreational fishing vessels. Two fisheries in the Gulf of Mexico in
    desperate need of increased observer coverage are the bottom longline
    fishery and the shrimp otter trawl fishery. Longlines capture a variety
    of ocean wildlife besides the reef fish they target, including marine
    birds, sea turtles and soft corals. The shrimp fishery is believed to
    be the largest fishery in the Gulf of Mexico, but efforts to monitor
    the effort and catch are limited. With revised turtle excluder device
    regulations going into effect in August, it is critical that an
    observer program be established.

                National Observer Program
        While encouraged by the Administration's request to expand the
    national observer program, TOC believes that $7 million is still
    inadequate and recommends additional support for NMFS to meet its
    national observer needs.

                West Coast Observers
        TOC respectfully requests that the Subcommittee, at the minimum,
    return funding for West Coast Observers to the fiscal year 2002 level
    of $4.0 million.

                Enforcement/Surveillance and Vessel Monitoring System
        In addition to better data, enforcement of our fishery management
    laws is critical. Unfortunately, lack of funding has hampered NMFS's
    ability to kept pace with the need. TOC urges $46.9 million in fiscal
    year 2004 to address this shortfall so that more officers can be hired
    to better enforce our fisheries management laws. TOC supports expanding
    the Vessel Monitoring System (VMS) program. While we are pleased that
    the Subcommittee provided a slight increase in VMS in fiscal year 2003,
    we urge that the President's request of $7.4 million be fully supported
    in fiscal year 2004.

                Essential Fish Habitat (EFH)
        Given the need to better understand the impacts of fishing and
    other activities on EFH, and the need to more fully comply with the
    Magnuson-Stevens Fishery Conservation and Management Act's requirement
    to minimize impacts to those habitats, TOC believes that increased
    funding is crucial and requests $12.5 million in fiscal year 2004.

                Atlantic Coast Cooperative Statistics Program
        TOC greatly appreciates the Subcommittee's support of $2 million in
    fiscal year 2003 for this unique cooperative state and federal
    fisheries data collection program. We request $3 million in fiscal year
    2004 so that this program can be expanded and better implemented along
    the East Coast, thereby helping to ensure that data collection methods
    are more consistent and reliable.

                Highly Migratory Shark Fisheries Research Program
        This effective multi-regional collaborative effort conducts
    research on shark and ray populations in the Gulf of Mexico, the
    Atlantic, and the Pacific. Information developed from this program has
    provided critical information for assessing the status of shark
    populations and informing better management. TOC greatly appreciates
    the Subcommittee's rejection of the Administration's proposed cut in
    fiscal year 2003 and requests at least level funding in fiscal year
    2004.

                Pacific Highly Migratory Species Research
        TOC supports funding for this program, believes the
    Administration's request of $750,000 is inadequate and requests $1.5
    million in fiscal year 2004. Specifically, funding is needed to conduct
    stock assessments and biological studies and improve bycatch mitigation
    techniques for these fisheries.

                Marine Mammal Protection
        TOC believes the lack of adequate resources has severely hampered
    NMFS's ability to effectively implement the MMPA and requests $9.1
    million in fiscal year 2004, $2 million above the Administration's
    request. This increase is necessary to fund top priority studies
    identified by the take reduction teams: to design and implement fishery
    management plans that will not endanger marine mammals; conduct
    research on population trends, health, and demographics; and to carry
    out education and enforcement programs. It would also allow research
    into the causes of strandings and die-offs and identification of
    mitigation measures to prevent such deaths in the future.

                Bottlenose Dolphin Research
        In response to the more than 100 bottlenose dolphin mortalities in
    the gillnet fishery off North Carolina (over four times allowable
    levels), the Atlantic Bottlenose Take Reduction Team was established in
    2001. TOC recommends $3 million in fiscal year 2004 to reduce dolphin
    mortalities by refining population estimates, conducting bycatch
    estimates and increasing observer coverage.

                Endangered Species
        NMFS bears significant responsibility for administering the
    Endangered Species Act and is responsible not only for the recovery of
    already-listed species such as Northern Atlantic Right Whales (see
    below), smalltooth sawfish, Steller sea lions, and all species of sea
    turtles found in U.S. waters, but also for responding to listing
    petitions in a timely fashion, consulting with federal agencies on
    proposed actions that may affect listed species, designating critical
    habitat, and implementing recovery plans. TOC is concerned about NMFS's
    ability to meet its responsibilities under the ESA and respectfully
    requests the Subcommittee increase NMFS's ESA base funding by $2
    million to meet its fiscal year 2004 demands.

                North Atlantic Right Whales
        With approximately only 300 North Atlantic Right Whales still
    alive, funding is needed to improve our understanding of right whales
    and to develop fishing technologies to reduce entanglements. TOC thanks
    the Subcommittee for its support of $10 million in fiscal year 2003 and
    requests level funding in fiscal year 2004.

                              DEPARTMENT OF STATE

    Bureau of Oceans and International Environmental and Scientific Affairs
                International Fisheries Commission Account
        TOC requests $200,000 for the State Department to support
    implementation of two landmark agreements, the Inter-American
    Convention for the Protection and Conservation of Sea Turtles (IAC) and
    the Memorandum of Understanding on the Conservation and Management of
    Marine Turtles and their Habitats of the Indian Ocean and South East
    Asia (IO). To date, nine nations, including Brazil, Costa Rica,
    Ecuador, Honduras, Mexico, the Netherlands, Peru, and Venezuela have
    ratified the IAC. To date, 23 countries have signed the IO agreement.
    Since ratifying the IAC and becoming a signatory of the IO agreement in
    2000, the United States has played a leading role in the establishment
    of these instruments and continued leadership and support will ensure
    their early momentum continues.

                            MARINE MAMMAL COMMISSION

        TOC requests that the Subcommittee support the Marine Mammal
    Commission at $1.895 million in fiscal year 2004, per the
    Administration's request.

                           ANTI-ENVIRONMENTAL RIDERS

        TOC urges this Subcommittee to not attach any anti-environmental
    rider to this or any other appropriations bill. In the past, riders
    have been used by Members of Congress to rollback environmental
    protection and prevent NOAA from advancing marine conservation.
        These programs and issues are of the utmost importance to the
    stewardship of the nation's living marine resources. We greatly
    appreciate your support for these programs in the past and look forward
    to continued, responsible funding for these programs in fiscal year
    2004. Thank you for considering our requests.
                                     ______

                   Prepared Statement of The Asia Foundation

        The importance and continuing relevance of the Asia Foundation's
    mission and mandate have been underscored by the events of September 11
    and the war on terrorism: to develop institutions of governance,
    including constitutional frameworks, legislative branch and judiciary;
    support civil discourse and conflict resolution; expand economic
    opportunity to improve the quality of life and give more people a stake
    in stability; and promote better understanding between the United
    States and the countries of Asia.
        The Asia Foundation is gratified by the confidence of the Congress
    in its programs, as demonstrated by an increased appropriation of
    $10.44 million for fiscal year 2003, $1 million above the
    Administration's request. While the Administration has endorsed the
    work of The Asia Foundation by requesting an appropriation of $9.25
    million for fiscal year 2004, the Foundation respectfully hopes that
    the Congress will once again add to its funding, given the unparalleled
    new challenges facing Asia and The Asia Foundation's distinctive
    capacity to address them. As the Subcommittee knows, The Asia
    Foundation implements concrete programs in Asia that improve governance
    and legal reform, protect human rights, promote economic reform and
    encourage peaceful, cooperative international relations.
        In the face of growing anti-Americanism and the threats of rising
    extremism in countries with predominantly Muslim populations in Asia,
    where over 70 percent of the world's Muslims live, it is more important
    than ever to address the root causes of persistent poverty, lack of
    opportunity, and loss of faith in local leaders and institutions. These
    new circumstances in Asia highlight the importance and value of The
    Asia Foundation's programs. The Foundation is the only American
    organization with a distinctive history of fifty years of presence and
    engagement in Asia, especially in Afghanistan, Pakistan, and Indonesia,
    the front line states in the war on terrorism.

                                    OVERVIEW

        The United States and Asia both face new challenges, complicated by
    the war on terrorism, the war in Iraq and the instability likely to
    occur in its aftermath. More than ever, the United States must support
    political stability, and economic reform, and give attention to
    countries where recent events have exacerbated U.S. bilateral
    relations, in countries that have been traditional allies of the United
    States, as well as in the countries with predominantly Muslim
    populations in Asia. Working together with Asian organizations as a
    trusted partner through a network of 17 offices in Asia, The Asia
    Foundation is the only longstanding American nongovernmental,
    nonpartisan organization with local credibility, a nuanced
    understanding of the issues facing each country, and unparalleled
    access and relationships with government, nongovernmental groups, and
    the private sector. In addition to the importance of these programs in
    the lives of people of these countries, the Foundation's efforts also
    make an important and tangible contribution to public diplomacy for the
    United States.

                         THE ASIA FOUNDATION'S MISSION

        The Asia Foundation's core objectives are central to U.S. interests
    in the Asia-Pacific region.
      --Democracy, human rights and the rule of law: developing and
            strengthening democratic institutions and encouraging an
            active, informed and responsible non-governmental sector;
            advancing the rule of law; and building institutions to uphold
            and protect human rights, including women's rights and
            opportunity;
      --Open Trade and Investment: supporting open trade, investment and
            economic reform at the regional and national levels;
      --Peaceful and Stable Regional Relations: promoting U.S.-Asian
            dialogue on security, regional economic cooperation, law and
            human rights.
        In the past, this Committee has encouraged the Foundation's grant
    making role, and we remain faithful to that mission. The Foundation's
    hallmark is to make sequential grants to steadily build and strengthen
    institutions, develop leadership, and advance policy reforms in Asia.
    Foundation assistance supports training, technical assistance, and seed
    funding for new, local organizations, all aimed at promoting reform,
    building Asian capacity, and strengthening U.S.-Asia relations.
    Foundation grantees can be found in every sector in Asia, leaders of
    government and industry and at the grass roots level, in the
    increasingly diverse civil society of Asia. The Foundation is
    distinctive in this role, not only providing the technical assistance
    necessary, as in the case of the drafting of the Afghan constitution,
    but also in providing grants that cover nuts and bolts necessities to
    support that effort, such as reference materials, equipment and
    administrative support costs for the Constitutional Commission. The
    Asia Foundation is a well recognized American organization, but its
    programs are grounded in Asia, helping to solve local problems in
    cooperation with Asian partners.

                                    PROGRAMS

        Examples of programs include:
      --Legislative Development.--The Foundation has contributed to the
            development of legislatures in 17 countries in Asia through
            technical assistance, training members and staff and
            facilitating interaction with the nongovernmental sector. The
            Foundation is the only American organization providing
            legislative training on responsible legislative practice, and
            orientation for all four newly elected provincial assemblies in
            Pakistan. The Foundation is also the only American organization
            providing technical assistance to the Constitutional Commission
            in Afghanistan for the drafting of the new constitution, the
            public consultation and Constitutional Loya Jirga process.
      --Civil Society.--The Foundation is the single largest supporter of
            the nongovernmental sector in the Asian countries in which we
            operate. The Foundation builds the capacity of organizations,
            encourages public participation and works to improve the
            regulatory environment for NGOs. In Cambodia, the Foundation
            continues to be the largest supporter of human rights,
            environment and research and policy NGOs in Cambodia. The
            Foundation's Pakistan programs support community based
            organizations that provide educational services in areas where
            none exist, particularly in the economically distressed border
            areas of the Northwest Frontier Province (NWFP). The Foundation
            also supports new NGO activities in Afghanistan, such as
            ASCHIANA which provides education for girls and young women
            denied schooling under the Taliban through a cooperative
            project with the National Geographic Society.
      --Human Rights, Conflict and Islam.--The Foundation's human rights
            programs promote the protection and advancement of human rights
            through support of nongovernmental and governmental human
            rights efforts at the local, regional and national levels. The
            Foundation's programs focus on human rights education, the
            development of monitoring groups, forensic training to
            investigate past abuses, media training, guides on
            international human rights standards, conflict reporting for
            journalists, programs to prevent trafficking and violence
            against women and alternative dispute resolution programs in
            conflict areas. The Foundation's twenty year history of working
            with mainstream Muslim groups in Indonesia, Pakistan and
            Mindanao in the Philippines makes it uniquely positioned to
            encourage programs that promote moderate views, religious
            tolerance, peace, conflict management and the rights of women
            under Islam, including the use of Islamic scriptures to
            communicate messages of tolerance and non-violence. These
            innovative and sensitive programs can only be accomplished
            through an on the ground knowledge of the context facing
            mainstream Muslims, and through partnerships built on trust.
            The Foundation gives special attention to the troubled areas of
            Indonesia through support for local human rights efforts in
            Aceh, Papua and most recently, in the Maluku Islands. Programs
            include media campaigns through radio and television by
            moderate groups to promote pluralism and tolerance in conflict
            prone areas and the utilization of mosque youth networks to
            educate and strengthen networks for democracy and pluralistic
            Islam.
      --Legal Reform.--In East Timor, the Foundation provided technical
            assistance for the drafting of the constitution and new
            legislation, and for increased access to justice for citizens,
            by involving civil society and public consultation in the law
            making process. In China, the Foundation supports legal aid
            services and popular legal education in some of China's poorest
            provinces, including those with minority populations such as
            Yunnan and Xinjiang, and for millions of migrant women workers
            in Guangdong. In Nepal, the Foundation piloted mediation
            projects in western Nepal, areas under the heavy influence of
            the Maoist rebels, and continues to expand community mediation
            programs, legal reform within the courts, establishment of
            legal information systems, and the development of watchdog
            citizens' groups to raise awareness of corruption and
            misconduct. The Foundation supports reform of the Supreme Court
            in Indonesia, which has included civil society input in an
            unprecedented step to reform case assignment, audit its
            procedures and processes, and improve the quality of the
            judicial appointment process.
      --Economic Growth and Opportunity.--Small and medium enterprises are
            a vital engine for economic growth, providing employment and
            opportunity for millions throughout the region. The
            Foundation's programs help to reform the environment for small
            business growth in Indonesia, Bangladesh, Thailand, and Sri
            Lanka by removing policy barriers and regulatory red tape,
            reducing corruption, and providing a voice for small
            entrepreneurs through support for business associations and
            business-government dialogue. The Foundation funds efforts to
            improve corporate governance in Korea, China, Japan, and the
            Philippines.
      --International Relations.--The Foundation continues to invest in
            young leaders through diplomatic training programs in U.S.
            universities for Chinese foreign affairs staff, fellowships for
            Vietnamese and Indian diplomats, and study programs for
            Southeast Asian young leaders. Programs also include support
            for the Council for Security Cooperation in the Asia Pacific
            (CSCAP), training programs for compliance with trade agreements
            and the WTO for Chinese and Vietnamese officials, and track II
            programs on cross-straits relations and Northeast Asian
            security.

                                   CONCLUSION

        As the preceding examples of The Asia Foundation's work emphasize,
    the Foundation is a field-based organization that supports projects in
    Asia that build the capacity of Asian institutions and support reform
    efforts, while at the same time maintaining close links with the U.S.
    foreign policy community. We are first and foremost a grant making
    organization. The Foundation has consistently received national
    recognition for its efficient grant-to-operating ratio, reflecting its
    commitment to maximizing the impact of its programs in Asia, while
    keeping expenses low. We are not a research organization or an academic
    institution, nor are we Washington based. We operate on the ground in
    Asia as an accepted, trusted partner and supporter of Asian reform
    efforts that simultaneously support and reinforce American political,
    economic, and security interests. We partner in our programs with
    American and international public and private organizations to leverage
    our resources and make investments pay off. The Foundation's
    partnership with the Microsoft Corporation on the Cambodian Information
    Centers, the first project of its kind to expand Internet and media
    resources to all 22 provinces of the country, is but one example.
        Public funding is essential to the Foundation's mission. While the
    Foundation has made gains in expanding private funding, the flexibility
    and reliability that public funding lends to the Foundation's efforts
    are critical. As an organization committed to U.S. interests in Asia,
    we can only be successful if potential private donors understand that
    the U.S. government continues to support our efforts in the region.
    Furthermore, private funds are almost always tied to specific projects
    (as are USAID funds for which the Foundation competes) and do not
    replace public funding, either in scale or flexibility. Moreover, the
    flexibility afforded by U.S. government appropriated funds enables the
    Foundation to respond quickly to fast-breaking developments and program
    opportunities, as demonstrated by our programs related to the needs of
    the Ministry of Women's Affairs in Afghanistan in 2001 and the National
    Human Rights Commission office in Aceh, during the height of the
    violence in the conflict-prone province in 2002.
        Budget constraints resulted in significant reductions in the
    Foundation's annual appropriation in 1996. The current requested level
    for fiscal year 2004 is still well below the Foundation's $15 million
    annual appropriation during the decade prior to 1996. The $15 million
    level has been authorized consistently by the Congressional authorizers
    in recent years. We have worked hard to manage our budget, reduce staff
    and expenditures, increase our efficiency, and diversify our funding
    sources. We have struggled to maintain our country office presence in
    Asia, although budget cuts did force closure of the Malaysia office in
    1996.
        But commitment to a field operation is not without risk, as seen in
    the situation facing U.S. embassies abroad. Now more than ever, the
    Foundation and its supporters believe that its critical and most
    important asset is its field office network in Asia, enabling the
    Foundation to address critical development and reform on the ground,
    especially in critical front line states such as Pakistan, Afghanistan,
    and Indonesia. Increased security measures to protect Foundation staff
    have been necessary, and Foundation offices all have contingency
    evacuation measures in place. Maintaining overseas offices costs more
    than maintaining operations within the United States and the new
    demands to ensure adequate security have added to this cost. Today, we
    face serious budgetary constraints. We cannot forsake the safety of our
    staff, but at the same time, we are, as always, committed to ensuring
    that the maximum possible amount of appropriated funds are dedicated to
    programs on the ground.
        In closing, we believe that we have an opportunity and the
    obligation to demonstrate America's strong commitment to working with
    Asian leaders to assure the security and well being of the people of
    Asia. The Asia Foundation's programs represent a distinctive and
    positive American response to the challenges facing Asia today,
    contributing to the development of stable societies and advancing the
    interests of the United States in the region. At a time of rapid change
    and uncertainty, additional funding would enable the Foundation to
    expand its role and its programs to help meet these challenges.
                                     ______

             Prepared Statement of the Investment Company Institute

        The Investment Company Institute \1\ appreciates this opportunity
    to submit testimony to the Subcommittee in support of the fiscal year
    2004 Appropriations request for the Securities and Exchange Commission
    (SEC). The Institute would like to commend the Subcommittee for its
    consistent past efforts to assure adequate resources for the SEC.
    ---------------------------------------------------------------------------
        \1\ The Investment Company Institute is the national association of
    the American investment company industry. Its membership includes 8,929
    open-end investment companies (``mutual funds''), 553 closed-end
    investment companies and 6 sponsors of unit investment trusts. Its
    mutual fund members have assets of about $6.322 trillion, accounting
    for approximately 95 percent of total industry assets, and 90.2 million
    individual shareholders.
    ---------------------------------------------------------------------------
        Mutual funds are one of the primary savings and investment vehicles
    for middle-income Americans. Today, more than 95 million investors in
    over 54 million U.S. households own mutual fund shares. Since 1990, the
    percentage of U.S. retirement assets held in mutual funds has more than
    quadrupled. Moreover, most mutual fund investors are ordinary
    Americans; the median household income of fund shareholders is
    approximately $62,000. These millions of average Americans deserve
    continued vigilant regulatory oversight of mutual funds. For this
    reason, sufficient funding of the SEC should be a priority. The
    Institute urges Congress to provide appropriations at a level
    sufficient to ensure the SEC's ability to fulfill its regulatory
    mandate.
        The Administration's fiscal year 2004 budget proposes SEC funding
    at a level of $841.5 million. This greatly exceeds last year's
    appropriation of $711.7 million. The Institute supports this enhanced
    level of funding to support the SEC's operations, especially those of
    the Division of Investment Management, which regulates the mutual fund
    industry. Such resources will help the SEC to carry out its many
    important initiatives, which include, among other things, adopting
    requirements for improved shareholder reports, analyzing the
    feasibility of requiring new compliance related rules for investment
    companies and investment advisers, finalizing rules to combat money
    laundering, and finalizing amendments to the mutual fund advertising
    rules.
        The recommended enhanced level of funding also will permit the SEC
    to monitor compliance with the many significant new requirements
    adopted as a result of the Sarbanes-Oxley Act of 2002, which include,
    among others, disclosure regarding codes of ethics for senior executive
    officers and the presence of financial experts on audit committees,
    certification of financial and other information, independence
    standards for public company auditors, and standards of conduct for
    corporate attorneys. Moreover, it will permit the SEC to fulfill its
    mandate to oversee the operation of the Public Company Accounting
    Oversight Board (PCAOB), including the ratification of fundamental
    rules and procedures for the PCAOB. We also are pleased that H.R. 658/
    S. 496, ``The Accountant, Compliance, and Enforcement Staffing Act of
    2003,'' has been introduced in both the House and the Senate. This bill
    would permit the SEC more flexibility in its hiring process, making it
    easier for the SEC to hire the staff it needs to carry out these
    additional responsibilities.
        Several important SEC initiatives indicate an enhanced workload for
    the Division of Investment Management. First, the Division will be
    responsible for monitoring compliance with the new requirements related
    to proxy voting. Second, the Division will be responsible for providing
    the SEC with a report on the hedge fund industry, assisting with SEC
    hearings to be conducted in connection with this endeavor, and
    analyzing the need for, and potentially developing, new regulations
    related to hedge funds. Third, the Division will be instrumental in
    responding to Congressional inquiries related to mutual fund issues.
    These important initiatives, which will affect millions of American
    investors, will require additional staff to see that they are properly
    analyzed and to develop appropriate recommendations.
        Adequate funding is also needed for the SEC's new enhanced risk-
    based inspection program, which began in fiscal year 2003 and will
    continue in fiscal year 2004. For investment companies and investment
    advisers, this means that those with relatively higher risk profiles
    will be examined every two years, while all remaining firms will be
    examined no less frequently than every four years. These more frequent
    inspections are a significant improvement over the five-year inspection
    cycle for investment advisers and investment companies that existed
    prior to fiscal year 2003, and the SEC's appropriations should be
    sufficient to continue this important initiative.
        Finally, adequate funding is essential to the SEC's efforts to
    educate investors. The SEC's Internet website contains many sources of
    important information for investors, including an on-line publication
    explaining mutual funds and investor alerts that help investors avoid
    scams and securities frauds. These and other SEC programs assist
    investors to understand the capital markets and establish realistic
    expectations about market performance. This is an integral part of the
    agency's mission to protect investors.
        In order to accomplish these worthy objectives and to continue to
    function as an effective regulatory agency, we support that the SEC be
    funded at the level requested by the Administration and supported by
    Chairman Donaldson.
        We appreciate your consideration of our views.
                                     ______

                     Prepared Statement of American Rivers

                NATIONAL OCEANIC AND ATMOSPHERIC ADMINISTRATION

        This year, American Rivers was joined by more than 400 national,
    regional and local organizations concerned with river conservation
    throughout the United States \1\ in calling for significantly increased
    funding for the following programs in the Commerce, Justice, State and
    the Judiciary (CJS) Appropriations bill. I urge that these requests be
    incorporated in the CJS Appropriations bill for fiscal year 2004.
    ---------------------------------------------------------------------------
        \1\ These groups have endorsed the ``River Budget for fiscal year
    2004'', a report of national funding priorities for local river
    conservation. A list of groups endorsing the River Budget can be viewed
    at http://www.americanrivers.org/riverbudget/default.htm
    ---------------------------------------------------------------------------
    Federal Salmon Plan for the Columbia and Snake rivers
        Several Members of Congress from the Northwest, as well as the
    Administration, have pledged to work to restore twelve Endangered
    Species Act listed stocks of Snake and Columbia river salmon without
    partially removing the lower four Snake River dams. Congress can help
    honor that commitment by funding the necessary salmon recovery
    measures. More than two years since the release of the 2000 Federal
    Salmon Plan for the Columbia and Snake rivers, federal agencies have
    failed to fulfill nearly three-quarters of its requirements.
        The Salmon Plan relies primarily on improving tributary and estuary
    habitat and reforming hatchery and harvest practices. While over 500
    fisheries scientists and most conservationists believe that partial
    removal of the lower Snake River dams must be the cornerstone of a
    larger strategy to recover Snake River salmon, many elements of the
    Salmon Plan are also necessary to achieve salmon recovery.
        If the Salmon Plan's non-breach recovery package is not funded and
    implemented, or if these actions do not yield the needed biological
    benefit for Snake River stocks, the plan contemplates seeking
    congressional authorization--after a ``check-in'' this September--to
    partially remove the four lower Snake River dams or pursue other
    stronger recovery measures.
        Inadequate federal funding is a major reason that implementation of
    the Salmon Plan has fallen so far behind. Full funding for fiscal year
    2004 will require $529.3 million distributed among ten different
    federal agencies through five different appropriations bills. The CJS
    Appropriations bill governs funding for the National Marine Fisheries
    Service (NMFS), which is charged with pursuing and administering the
    Salmon Plan's crucial science and monitoring activities, as well as
    implementing hatchery and harvest reform measures. The administration
    has proposed increasing the NMFS budget for Columbia River salmon by
    approximately 50 percent this year, from the fiscal year 2003 level of
    $26.2 million to $39.7 million in fiscal year 2004. While this increase
    would be helpful, internal NMFS documents estimate that fully
    implementing the Salmon Plan would require an increase of closer to 200
    percent.
        To ensure full development of the scientific standards, reforms,
    and restoration activities required by the Federal Salmon Plan,
    Congress should fund NMFS Columbia Basin salmon programs at $69.8
    million.

    Pacific Coastal Salmon Recovery Fund
        Pacific salmon are a national treasure with enormous economic,
    cultural, and environmental significance in the states of Washington,
    Oregon, California, Idaho, and Alaska. A century ago, salmon were an
    anchor of the region's economy. Unfortunately, past and present
    mismanagement of our rivers, lands, and salmon fisheries have caused
    populations of salmon to decline dramatically over the past century,
    and 26 runs of Pacific salmon and steelhead are now listed under the
    Endangered Species Act.
        One important program aimed at restoring imperiled runs of chinook,
    coho, sockeye, and chum salmon, as well as steelhead trout, is the
    Pacific Coastal Salmon Recovery Fund, funded through the National
    Oceanic and Atmospheric Administration. For the past three years, this
    program has provided much-needed assistance to state, local, and tribal
    governments in Washington, Oregon, California, and Alaska for salmon
    recovery projects. This year we urge Congress to make the State of
    Idaho and Snake River salmon and steelhead eligible to benefit from
    this program as well.
        By increasing funding for the Pacific Coastal Salmon Recovery Fund
    in fiscal year 2004, Congress can help restore this economically,
    culturally, and ecologically valuable resource and help the Northwest
    states and local communities to adopt and embrace the measures needed
    to restore Pacific salmon and steelhead. Restoring salmon will also
    allow the United States to satisfy treaty obligations with Northwest
    Indian tribes and Canada.
        We urge Congress to increase funding for the Pacific Coastal Salmon
    Recovery Fund to no less than $200 million in fiscal year 2004.

    Fisheries Habitat Restoration
        The fisheries habitat provided by estuaries and coastal wetlands
    serves many essential functions for communities across the nation.
    Eighty to 90 percent of all recreational fish catch and 75 percent of
    all commercial harvest depends upon healthy coastal and estuarine
    habitats. More than half the coastal wetlands in the lower 48 states
    have been lost, and almost 40 percent of estuarine habitat has been
    impaired by damming and diverting countless rivers and streams.
        The Fisheries Habitat Restoration program, funded through the
    National Oceanic and Atmospheric Administration (NOAA) Restoration
    Center, reaches out to local constituencies to accomplish on-the-
    ground, community-based projects to restore estuaries and coastal
    habitats. Partnerships and local involvement are fundamental to the
    success of this program. Partners typically match federal dollars 1:1
    and leverage those dollars up to 10 times more through state and local
    participation. To date, the program has funded 600 projects in 25
    states, promoting fishery habitat restoration in coastal areas with a
    grassroots, bottom-up approach.
        We urge Congress to provide the NOAA Fisheries Habitat Restoration
    Program with $18,500,000 to help more communities restore and protect
    and restore the health of their estuaries and coastal habitats.

    Hydropower Relicensing
        The National Marine Fisheries Service (NMFS) would greatly benefit
    from additional funding to address the growing number of hydropower
    dams that need renewal of their operating licenses from the Federal
    Energy Regulatory Commission (FERC). Under the Federal Power Act, NMFS
    plays a role in setting license conditions to protect and conserve
    anadromous (sea-run) fisheries such as Pacific and Atlantic salmon,
    steelhead and sea-run cutthroat trout, and shad. Licenses are nearing
    expiration at hundreds of dams around the country, and workloads are
    increasing for NMFS and other resource agencies. Increasing NMFS's
    limited hydropower relicensing budget would help ensure a more
    efficient licensing process, benefit the hydropower industry, and
    further efforts to protect and restore our nation's anadromous
    fisheries.
        Congress should provide NMFS with a $2 million increase to its
    Habitat Conservation line item specifically for hydropower relicensing.
                                     ______

     Prepared Statement of the Alliance for International Educational and
                               Cultural Exchange

        The Alliance for International Educational and Cultural Exchange
    appreciates the opportunity to submit testimony in support of the
    educational and cultural exchange programs administered by the
    Department of State.
        The Alliance is the leading policy voice of the U.S. exchange
    community, and has worked closely with the subcommittee on exchange
    issues. We note with gratitude the subcommittee's role in increasing
    exchange appropriations in recent years.
        The Alliance comprises 67 nongovernmental organizations, with
    nearly 8000 staff and 1.25 million volunteers throughout the United
    States. Through its members, the Alliance supports the international
    interests of 3300 American institutions of higher education.
        With grassroots networks reaching all 50 states, Alliance members
    help advance the U.S. national interest by putting a human face on
    American foreign policy, transmitting American values, fostering
    economic ties with rapidly developing overseas markets, and assisting
    individuals with the development of critical foreign language, cross-
    cultural, and area studies expertise. Our members also leverage
    considerable private resources--in cash and in kind--in support of
    these critical programs.
        By engaging a very broad array of American individuals and
    institutions in the conduct of our foreign affairs, exchange programs
    build both enhanced understanding and a web of productive contacts
    between Americans and the rest of the world.
        Our requests for the fiscal year 2004 exchange appropriation fall
    into three broad categories:
    Core Exchange Budget--Bureau of Educational and Cultural Affairs
        As a nation, we need to provide more opportunities for emerging
    leaders around the world to experience first-hand our society, our
    values, and our people. The Alliance therefore urges the subcommittee
    to provide substantial increases in funding for exchange programs.
    While appropriations for these programs have moved up in recent years,
    this account still lags well behind its historic levels in constant
    dollars due to the deep cuts of the mid-nineties. Coupled with the
    increases in fixed program costs such as airfare and accommodation,
    reduced appropriations have resulted in significantly diminished
    participant levels in programs consistently cited by our embassies as
    one of their most effective means of advancing U.S. policy interests.
        For example, the Bush Administration's request for the State
    Department's core exchanges in fiscal year 2004, excluding funding for
    programs provided for under the Freedom Support Act and SEED, appears
    to be level with the current year appropriation of $245 million. In
    fact, we understand that this ``level funding'' amounts to a reduction
    of approximately $7.5 million available for programs, when one factors
    in increased costs.
        While exchange budgets have risen in recent years thanks to the
    leadership of this subcommittee, State Department figures for the core
    exchange budget--excluding Freedom Support Act and SEED funding--
    indicate that exchange funding has declined 40 percent in constant
    dollars over a 10-year period (1993-2002).
        As our experiences since September 11, 2001, demonstrate clearly,
    we need public diplomacy and exchanges more than ever. We need to build
    trust and understanding for our people and our policy goals not just in
    the Muslim world--an effort that will be of critical importance--but
    around the globe. To win the war on terrorism and to rebuild Iraq, we
    will need the help of our friends and allies in every region of the
    world. This is a time to intensify and expand our public diplomacy, and
    we believe there is strong bipartisan support in Congress to do exactly
    that.
        We therefore urge the subcommittee to fund the Department of
    State's core exchange budget at $286 million, the level authorized by
    the 107th Congress. This amount would provide for targeted, meaningful
    growth in every region of the world in support of our most important
    foreign policy objectives.

    Exchanges with the countries of the former Soviet Union and Central
            Europe
        We note that the Bush Administration budget request moves funding
    for exchange programs authorized by the Freedom Support Act (FSA) and
    SEED into the CJS bill for the first time. If the appropriations
    subcommittees agree with this change and the CJS subcommittee includes
    these programs in its bill, we urge you to substantially increase
    funding over the Administration's request.
        The Administration has requested $100 million for these programs.
    Our best estimates suggest that this level represents a cut of
    approximately 28 percent. We hope the subcommittee will agree that this
    reduction is unwise in regions of the world of such strategic
    importance to the United States. This is particularly true when one
    considers the effectiveness and impact of these exchange programs.
        We urge the subcommittee to fund FSA and SEED programs at an
    overall level of $145 million, which would allow for increases in
    program costs and a modest boost for these high priority activities.
        A central aspect to the opening of the region has been the
    opportunity for the peoples of these countries to see how a democratic
    society functions, based on the principles of democracy and a free
    market economy. In recent Congressional testimony, former U.S.
    Ambassador to the Russian Federation James W. Collins said, ``Efforts
    at reform in business and education--are just beginning to take hold.
    We're just starting to create an established and recognizable critical
    mass of individuals able to sustain our national interest in fostering
    reforms in these countries. Now is not the time to be reducing these
    efforts, particularly with Russia and Ukraine, whose challenges remain
    paramount. I believe there is no greater priority in Eurasia at this
    time than developing and sustaining the young leadership of that region
    in their associations with the West and that responsibility remains
    critically in our hands.''

    Islamic Exchange Initiative--Building Cultural Bridges
        While the need for increased funding is worldwide, increased
    exchanges with the Islamic world are particularly critical as we pursue
    the war on terrorism. To defeat terrorism, the United States will need
    more than the might and skill of our armed forces. To ultimately defeat
    terrorism, we must also engage the Muslim world in the realm of ideas,
    values, and beliefs.
        No previous foreign affairs crisis has been so deeply rooted in
    cultural misunderstanding. One of the lessons of September 11 is that
    we have not done an adequate job of explaining ourselves to the world,
    or of building the personal and institutional connections with these
    countries that support healthy bilateral relationships. Policy
    disagreements alone cannot account for the fact that many in Islamic
    countries regard the United States, the greatest force for good in
    human history, as a source of evil.
        A Gallup poll conducted in February 2002 reported that 61 percent
    of Muslims believe that Arabs did not carry out the attack on the
    United States. That statistic alone speaks somber volumes about our
    failure to project our values and ideals effectively in Islamic
    nations.
        Given the importance and urgency of the task and the broad arc of
    countries we will need to engage, stretching from Africa to Southeast
    Asia, we urge the subcommittee to appropriate $100 million for this
    purpose.
        As a long-term solution to the profound problems of cultural
    misunderstanding, there is no substitute for public diplomacy. It must
    be a key component of our long-term effort to eradicate terrorism.
    Public diplomacy in the Muslim world will require a sustained, serious
    effort if we are to succeed in our quest for lasting peace and
    security, stable bilateral relationships, and an end to terrorism. An
    Islamic Exchange Initiative, designed to broaden the range of
    meaningful relationships based on shared interests with current and
    emerging leaders and key institutions in Muslim countries, will be
    critical to our success.
        Changing minds--or merely opening them--is a long, painstaking
    process. There are no quick fixes. If we are to win the war on
    terrorism, there will be no avoiding the need to build bridges between
    the American people and the people of the Muslim world. We must begin
    this process now.
        In the Islamic world, we envision this initiative engaging the full
    range of programs and activities managed by the Bureau of Educational
    and Cultural Affairs: Fulbright and Humphrey exchanges that will
    stimulate broader cultural understanding, joint research and teaching,
    and foster positive relationships with a new generation of leaders;
    university affiliations targeted toward key fields such as mass media
    and economic development; International Visitor and other citizen
    exchange programs designed to bring emerging leaders into significant
    and direct contact with their professional counterparts and the daily
    substance of American life; youth and teacher exchanges and enhanced
    English teaching programs, all designed to bring larger numbers of
    young people a direct and accurate picture of our society, based on
    personal experience rather than vicious stereotyping.
        Increasing the State Department's exchanges with the Islamic world
    will give us the means to develop productive, positive relationships.
    This initiative will engage the American public--in our communities,
    schools, and universities--in an effort to project American values. We
    will find no better or more convincing representatives of our way of
    life.
        And the engagement of the American public will leverage significant
    additional resources to support this effort.
        Initial efforts were made during the 107th Congress to both
    authorize and fund programs on a broad range of exchange activities to
    build relationships with the Islamic world and enhance U.S. national
    security.
        We commend the subcommittee for funds made available in the fiscal
    year 2002 supplemental for Islamic exchanges. The $10 million
    appropriated by this subcommittee has been put to good use by the
    Department of State in key programs such as Fulbright, International
    Visitors, and English teaching.
        We also recognize that this funding reflected the broad bipartisan
    support for an Islamic Exchange Initiative, clearly expressed in the
    passage in the House of the Hyde/Lantos Freedom Promotion Act, and in
    the Kennedy/Lugar Cultural Bridges Act, which attracted 12 cosponsors
    of both parties in the Senate.
        A meaningful and effective Islamic exchange initiative will require
    $100 million above the appropriation for the State Department's core
    exchanges. We recognize that this is a significant amount of money. We
    believe, however, that this funding level is necessary and appropriate
    given the expanse of the Muslim world and the urgency and importance of
    the task at hand. Moreover, this amount of money spent on promoting our
    ideas and values is very small when compared to the sums we will expend
    on military hardware, but it is no less crucial to our success.
        The level of support we have witnessed from senior members of both
    parties and both chambers underscores the timeliness and importance of
    this initiative. This is a moment when our national interests require
    Congressional leadership to build these cultural bridges.
    Other program issues
        In addition, we would like to draw the subcommittee's attention to
    three specific programs we believe are deserving of additional support:
      --The Foreign Study Grants for U.S. Undergraduates program, also
            known as the Gilman Scholarship Program, assists students of
            limited financial means from the United States to pursue study
            abroad. Demand for the scholarships is enormous, demonstrated
            by the nearly 3,000 applicants from 44 states and Puerto Rico
            last year. Due to funding constraints, however, the program was
            only able to grant 302 awards.
      --The Educational Partnership Program (formerly known as the College
            and University Affiliations Program) supports cooperation
            between U.S. colleges and universities and foreign post-
            secondary institutions in the form of faculty exchanges,
            curriculum development, collaborative research and other
            activities.
      --Overseas Educational Advising/Information Centers serve as an
            important, unbiased information resource for prospective
            foreign students interested in the United States.
        We have provided subcommittee staff with report language on these
    issues and welcome the opportunity to discuss them with you.
        The U.S. exchange community stands ready to assist you in these
    efforts, and is grateful for your support.
                                     ______

         Prepared Statement of the American Foreign Service Association

        Mr. Chairman and members of the Subcommittee, on behalf of the
    American Foreign Service Association (AFSA) and the 23,000 active-duty
    and retired members of the Foreign Service, I express our appreciation
    for the opportunity to share our views and concerns with you.
        The work of this Subcommittee is vital to the success of our
    Nation's foreign policy. Your decisions determine whether we have the
    infrastructure and many of the tools of diplomacy needed to implement
    our policy. The Subcommittee's and the Congress's support of the
    Administration's request in meeting our staffing needs, improving our
    information technology systems, making our posts and missions more
    secure, and providing for an active exchange program is very much
    appreciated. Certainly Secretary of State Colin Powell and his staff
    also must be thanked for their hard work on our behalf as they make
    their presentations before the Congress. The Secretary consistently
    describes his current role as both the President's principal foreign
    policy advisor and as the CEO of the Department of State. It has been a
    long time since the Foreign Service has had a Secretary who has worn
    both hats so effectively.
        As the representative of the Foreign Service, our major concern is
    the appropriations for the Administration of Foreign Affairs section of
    the appropriations bill. This area covers funding for personnel and
    especially the Secretary's Diplomatic Readiness Initiative (DRI),
    funding to bring the Department into the 21st Century in terms of
    information and communications technology, and the security of our
    people as they serve this Nation in over 250 posts and missions around
    the world.

                 CONTINUED VIGILANCE OF STAFFING NEEDS REQUIRED

        With the fiscal year 2004 request of $97 million for the DRI to
    hire 399 additional foreign affairs personnel above attrition, we are
    in the final year of a three-year plan to fill an identified personnel
    shortfall of over 1,100 people.
        As you know, several important 1999 and 2000 studies from very
    respectable organizations found the infrastructure of diplomacy ``near
    a state of crisis.'' The Overseas Presence Advisory Panel (OPAP)
    reported in 1999:

        ``The United States overseas presence, which provided the essential
    underpinnings of U.S. foreign policy for many decades, is near a state
    of crisis. Insecure and often decrepit facilities, obsolete information
    technology, outmoded administrative and human resources practices, poor
    allocation of resources, and competition from the private sector for
    talented staff threaten to cripple our nation's overseas capability,
    with far-reaching consequences for national security and prosperity.''

        Fortunately the warnings in those studies were taken to heart. The
    Secretary and the Congress worked together to fill that personnel
    shortfall and to improve our information technology over three years.
    We are already beginning to see the benefits as new personnel are
    hired, the stress is being lifted from the shoulders of overly
    stretched personnel and there is an easing, though not a reduction, in
    the work expectations of ``doing more with less.'' Foreign Service
    personnel are able to take needed training and participate in career
    development programs instead of having to choose between training and
    filling an empty position, and a surge capacity is developing.
        Further, because of the support for our information and
    communications technology systems, our equipment is modern and we have
    or will soon have classified and unclassified connectivity to every
    post that requires it, and access to the Internet from our desktops.
    Our communications and information systems are no longer the sad joke
    they had become, and there are plans to continue improvements in these
    areas including the SMART initiative to overhaul the systems for
    cables, messaging, information sharing, and document archiving.
        The momentum that started two years ago needs to be maintained. The
    DRI needs to be successfully completed and the drive to improve our
    information and communications technology sustained.
        However, Mr. Chairman, in terms of the DRI, I would also urge the
    Subcommittee to see adequate staffing as a dynamic process. The 1,158-
    person shortfall was identified nearly 3 years ago as existing at that
    point in time. Conditions have changed since then, and the complexity
    of the demands on diplomacy continue to grow around the world. Section
    301 of Public Law 107-228, the Foreign Relations Authorization Act of
    2003 requires the Secretary of State to submit a ``Comprehensive
    Workforce Plan'' for the Department for the fiscal years 2003 through
    2007. ``The plan shall consider personnel needs in both the Civil
    Service and the Foreign Service and expected domestic and overseas
    personnel allocations.'' AFSA would encourage the Subcommittee to
    consider these workforce plans for staffing considerations as a start
    to accommodate changes in the world in the coming years. We were near
    crisis until the Administration and the Congress stepped in to turn
    things around. The job is not done, and such a situation should not be
    allowed to occur again. As the Secretary often states, ``diplomacy is
    the first line of offense,'' and there are serious consequences for the
    economy, the welfare and the security of our nation if diplomacy is not
    adequately funded to do the job.

                    EMBASSY SECURITY--STILL MUCH TO BE DONE

        AFSA believes that together, the Department of State and the
    Congress have been making impressive strides in improving the security
    of our posts and missions abroad. After the 1998 east Africa bombings
    of our embassies, the Accountability Review Boards (ARB), chaired by
    Admiral William Crowe, looked into the cause of those bombings and made
    several important conclusions. First, they found that there was a new
    face to international terrorism and a new threat environment. Secondly,
    the ARB found that the cause of the bombings could not be placed at the
    doorstep of any single individual but that it was a systemic problem of
    inattention.

        ``. . . there was a collective failure by several Administrations
    and Congresses over the past decade to invest adequate efforts and
    resources to reduce the vulnerability of U.S. diplomatic missions
    around the world to terrorist attacks.''

        The ``new threat environment'' continues to haunt us as seen by the
    continued attacks on the symbols of our country at home and abroad.
    However, we have seen the second lesson addressed through a major
    multi-year increase in security funding in both the hiring of
    additional security personnel and in security upgrades that has left no
    facility abroad unimproved. This increased funding is paying off as
    evidenced by the minimal damage done to the American Consulate in
    Karachi in a terrorist bombing in July 2002.
        Mr. Chairman, despite significant upgrades to the security of our
    facilities around the world, the General Accounting Office reported in
    its March 20, 2003 testimony before the Senate Committee on Foreign
    Relations:

        ``. . . even with these improvements, most office facilities do not
    meet security standards. As of December 2002, the primary office
    building at 232 posts lacked desired security because it did not meet
    one or more of State's five key current security standards. . . . Only
    12 posts have a primary building that meets all 5 standards. As a
    result, thousands of U.S. government and foreign national employees may
    be vulnerable to terrorist attacks.''

        The Foreign Service does not seek hilltop fortresses in which to do
    our work. Such would be counterproductive to our purpose for being in a
    country. We accept the dangers that are part of our profession, but we
    also expect that our government, which sends us to these posts, should
    seek to provide for our safety as much as possible. AFSA urges that
    funding continue at its current, if not an accelerated pace, to
    complete the work of securing our posts and missions abroad.
        ``Soft Targets''.--There is a subset of our concerns about the
    security of our posts and missions abroad. As you know from our
    testimony submitted to the Subcommittee last year, threats to ``soft
    targets'' are a major concern to the Foreign Service. In just the past
    year, we have had a mother and daughter killed in a church in
    Islamabad, Pakistan, and an USAID official assassinated in front of his
    house in Amman, Jordan. We also saw the bombing of a nightclub that was
    popular a Western tourist spot in Bali, Indonesia. The threats to
    ``soft targets'' are very real for us. To Foreign Service members, the
    term ``soft targets'' means our spouses and children as we try and lead
    a somewhat normal life of going to school, to church, and on other
    family outings.
        Mr. Chairman, we appreciate and thank you for your personal concern
    and leadership in this area. It is clear that through your and this
    Committee's work, the legislative branch understands that more than
    bricks and mortar need to be protected, but the Foreign Service
    community as well. The lead that this Committee took in setting aside
    funds to examine the threat against schools abroad that our children
    attend, and the Senate's designation, through your work, to have $10
    million additional funds for soft target protection in the fiscal year
    2003 Supplemental Appropriations add to our appreciation. While the
    additional funds for embassy security were significant, we were sorry
    to see that Conference recommendations had dropped the additional funds
    specifically designated for soft target protection.
        AFSA urges this Subcommittee to continue in its efforts to provide
    additional funding to shore up this important part of our overseas
    security. ``Soft targets'' is a descriptive euphemism, but what we are
    really talking about is the lives of our people and their families as
    they serve this Nation abroad.

                                   CONCLUSION

        Mr. Chairman and members of the Subcommittee, I again wish to
    express our appreciation for the opportunity for the American Foreign
    Service Association to share our views and concerns with you. The
    decisions you make affect both our professional and private lives as we
    serve this Nation abroad. You directly help determine how safe we are
    at work and in our housing abroad; what our working conditions are
    like, from having to work in converted cargo boxes to comfortable,
    fully equipped offices; whether we have adequate staffing to share the
    work and whether we have information and telecommunications software
    and equipment to talk to our Colleagues around the world. We thank you
    for your understanding these past few years, and we ask for your
    continued support in the fiscal year 2004 funding process and beyond.
                                     ______

      Prepared Statement of the Association of Small Business Development
                                    Centers

        Mr. Chairman, Mr. Ranking Member and members of the Subcommittee, I
    am Donald Wilson, President of the Association of Small Business
    Development Centers (ASBDC). The Association is grateful for the
    opportunity to submit this testimony for the record of the
    Subcommittee's fiscal year 2004 hearings.
        ASBDC's members are the 58 State, Regional and Territorial Small
    Business Development Center programs comprising America's Small
    Business Development Center Network. All Small Business Development
    Center (SBDC) grantees, located throughout the 50 States, the District
    of Columbia, Puerto Rico, the Virgin Islands, Guam and American Samoa,
    are members of the ASBDC.
        Since its establishment by Congress in 1980, America's Small
    Business Development Center Network has provided in-depth counseling of
    an hour or more, and training of two hours or more, to roughly 10
    million small business owners and aspiring entrepreneurs. In addition,
    millions more entrepreneurs have used the network as an informational
    resource for answers to questions as simple as how to get a business
    license or where to get an employer identification number.
        ASBDC urges the Subcommittee to fund our nation's SBDC network at
    its currently authorized level of $125 million in the fiscal year 2004
    Commerce-Justice-State Appropriations bill. The Association recognizes
    the difficult funding choices that the Subcommittee must make in these
    difficult times, and that ASBDC's recommendation represents a
    significant increase in the current funding level for the SBDC program.
    However, America's SBDC network can help our country recover from its
    current economic stagnation, create desperately needed new jobs, and
    generate the additional Federal revenues needed to reduce the budget
    deficit.
        First, it is important to note that Federal funding for the SBDC
    network generates more revenue for the Federal treasury than it costs
    the taxpayer. The President's fiscal year 2004 Budget points out that
    an independent evaluation of the SBDC program indicated that each $1
    spent on SBDC counseling resulted in $2.78 in tax revenues. The SBDC
    program generated an estimated $182.9 million in Federal revenue in
    2001--an excellent return for a Federal investment of $88 million for
    the nationwide SBDC program.
        In addition, America's SBDC network has a proven record of creating
    jobs and generating growth for America's small businesses. At the
    beginning of the most recent recession in 2001, as large corporation
    after large corporation announced layoffs, long-term counseling clients
    of the SBDCs added 46,688 new jobs, saved 34,215 existing jobs, started
    12,872 new businesses, increased sales by $3.9 billion, and saved an
    additional $4.3 billion in sales. In addition, SBDC long-term
    counseling helped small businesses obtain an estimated $2.7 billion in
    financing in 2001. That means every dollar spent on the operation of
    the SBDC network leveraged approximately $15.89 in new capital raised
    by long-term SBDC clients in 2001.
        Based on its record over the past 10 years, with funding of $125
    million our nation's SBDC network could help SBDC long-term counseling
    clients to:
      --create an estimated 111,744 new full time jobs;
      --increase sales by an estimated nine billion dollars;
      --produce an estimated $266 million in additional revenue for the
            Federal government; and
      --produce an estimated $397 million in additional tax revenue for
            State governments.
        Federal funding for the national SBDC network is an investment in
    the job creation potential of America's small business sector--the
    engine of our nation's economy. Today, job creation by small businesses
    has declined as America's entrepreneurs struggle in a sluggish economy.
    Initial weekly unemployment claims have been above 400,000 for the past
    eleven consecutive weeks--a clear indication that the economy is still
    struggling to recover from recession. In fact, 2001 and 2002 were the
    worst two consecutive years of job creation in the American economy
    since the 1950's.
        America's SBDC Network can help the small business sector of our
    economy generate jobs again, but we need the resources to do the job.
    Federal funding available for distribution to the SBDC program
    decreased between fiscal year 1994 and fiscal year 2004 (after
    accounting for inflation, earmarks and the establishment of the SBDC
    program in Guam and American Samoa)--while Federal government receipts
    increased by 26 percent in constant dollars. In addition, as a result
    of the 2000 Census, 24 States--including Kentucky, Maryland, New Mexico
    and Wisconsin--are subject to receiving less Federal funding for their
    SBDC programs than they received in 2001--simply because their
    populations did not grow as fast as other State populations.
        There is room in the Federal budget for increased resources for our
    nation's SBDC network. For example, the Small Business Administration
    (SBA) Budget proposal for fiscal year 2004 calls for increasing the
    SBA's Salaries and Expenses account to $219 million. That is an
    increase of $57 million (35 percent) compared to fiscal year 2002, and
    an increase of $10 million (5 percent) compared to the SBA's fiscal
    year 2003 Budget proposal. However, the SBA's Budget proposal calls for
    cutting the SBA Non-Credit Business Assistance account to $141 million
    in fiscal year 2004. This is the account that funds SBDCs and other
    programs that provide direct assistance to small businesses. For those
    programs, the SBA's Budget proposes to cut $26 million (20 percent)
    compared to fiscal year 2002, and $3 million (2 percent) compared to
    the SBA's fiscal year 2003 Budget proposal. Funding for SBA can be more
    wisely spent on direct assistance for small businesses rather than on
    administrative overhead.
        I urge you to consider that Federal funding for the SBDC network is
    now more important than ever, as State governments across the country--
    including possibly Colorado, Hawaii, Kentucky, Maryland, New Hampshire,
    Texas, Vermont, Wisconsin and others--are cutting back on their
    contributions to the SBDCs. This is not because of lack of support for
    the SBDC program, but rather because of the revenue crises faced by
    State governments across the country. Unless Federal support for the
    national SBDC network is able to make up for cuts in State funding,
    SBDC program capacity across the United States will have to be severely
    cut back. Counselors will have to be laid off and service centers will
    have to be closed. The job creation and economic development activities
    of the SBDC network will be curtailed proportionately--at the very time
    that the economy is in need of a stimulus.
        Recent and pending state budget cuts in SBDC funding will assure
    that America's Small Business Development Center network will contract
    even further this year without a significantly increased federal
    appropriation. Rural areas which have unique economic development needs
    have already been adversely impacted by the closing of centers and the
    laying off of counselors. Unlike other federal management and technical
    assistance programs, federal dollars appropriated to the SBDC program
    leverage roughly three additional non-federal dollars. The decline in
    state resources as result of the crisis in state budgets cannot
    possibly be made up from private sector sources in the current economic
    climate. The Federal government needs to recognize the growing
    financial plight of the SBDC network in these trying economic times. If
    the Federal government does not allocate resources to the SBDC program
    at a level approximating $125 million for fiscal year 2004, the
    management and technical assistance needs of tens of thousands of small
    firms will go unmet and thousands of private sector jobs will likely be
    lost. The resulting decline in economic activity will surely have a
    significantly negative impact on state and federal budgets. The
    remarkable infrastructure of over 900 SBDC service centers developed
    over the past twenty-three years will deteriorate even further as more
    service centers are closed and dedicated counselors are laid off.
        The work of America's Small Business Development Center Network is
    constantly being recognized by others. The Bill J. Priest Institute for
    Economic Development, a Division of the Dallas County Community College
    District, was the only recipient of the Texas Award for Performance
    Excellence in 2002. The award is patterned after the Malcolm Baldrige
    National Quality award and recognizes Texas organizations that excel in
    world-class management, achievement, and performance excellence in
    applying quality and customer satisfaction principles. A critical
    component of the Institute is the Dallas Regional SBDC. NAMTAC, the
    National Association of Manufacturing and Technical Assistance
    Center's, presented its 2002 Outstanding Project of the Year Award to
    the New York State SBDC for its efforts to help small businesses
    recover from the September 11, 2001 terrorists attack in that state.
    The Maine SBDC program late last year was awarded the Margaret Chase
    Smith Maine State Quality Award. This award recognizes organizations
    for performance excellence based on criteria corresponding to the
    Malcolm Baldrige National Quality Award.
        In June of last year Secretary of Commerce Evans presented the
    Black Hawk College Export Trade Center, a special component of the
    Black Hawk College SBDC, with the President's ``E'' Award for Exporting
    Excellence. This prestigious award was created by President John F.
    Kennedy to recognize U.S. Businesses or organizations that have
    demonstrated outstanding growth and innovation in exports or export
    service. ASBDC is proud of the accomplishments of its members and their
    capable and committed personnel.
        The Subcommittee's consideration of fiscal year 2004 funding for
    the SBDC program comes at a critical time for our nation's economy.
    Small businesses generate 52 percent of Gross Domestic Product,
    represent 99 percent of all employers and employ 51 percent of all
    private sector employees. During the past decade small businesses
    created roughly 70 percent of net new jobs in our economy. But all is
    not well with the small business sector. The most recent data available
    from SBA's Office of Advocacy finds that in 2001 small business
    bankruptcies nationwide increased nearly 13 percent over the previous
    year. No doubt, newer national figures will show those numbers further
    increasing. The majority of small business owners have never received
    any formal entrepreneurial training. The majority has never managed a
    business during an economic downturn. The need for management and
    technical assistance within the small business sector is greater today
    than ever before. The Department of Labor confirms that when
    unemployment rises, self-employment rises.
        There are 23 million small business owners in the United States,
    and the Kauffman Foundation estimates that one in 10 adult Americans is
    seeking to start his or her own business. Forty percent of SBDC clients
    are women (SBDC's served over a quarter million female clients last
    year) and 22 percent are minorities. Demand for entrepreneurial
    services among these constituencies is exploding.
        SBA figures for fiscal year 2002 show that SBDC counseling cases
    and training attendees combined increased from 610,000 in fiscal year
    2001 to 650,000 in fiscal year 2002 despite an increase in federal
    funding of less than $100,000. These client numbers represent real
    people, your constituents, individuals, many with families, and
    mortgages, tuition payments and dreams. They are real people like Dr.
    Harris Goldberg, a chemist from Hillsborough, New Jersey who was
    featured in a December 16, 2002 article in the Wall Street Journal. Dr.
    Goldberg had been laid off, decided to seek assistance at his local
    SBDC and now has his own successful firm providing employment to
    others.
        If we are to have any chance of growing this economy at the level
    needed to provide jobs and enhance federal revenues, there must be a
    clear determination by Congress to provide the resources to increase
    the service capacity of the SBDC program. ASBDC appreciates the
    Subcommittee's support for the SBDC network in past years. I urge you
    to support an appropriation of $125 million for our nation's SBDC
    network in the fiscal year 2004 Commerce-Justice-State Appropriations
    bill. Thank you.
                                     ______

                  Prepared Statement of The Nature Conservancy

        The Nature Conservancy is escalating its focus on freshwater,
    coastal, and marine conservation by establishing Freshwater and Marine
    Initiatives that will employ the science, partnerships, ecosystem
    approach, and site-based conservation that has worked throughout our
    fifty-year history. These initiatives will strengthen the work that we
    are engaging in with partners to develop a ``conservation blueprint''
    identifying the places that, if conserved, will collectively protect
    the nation's plants, animals, and natural communities for the long-
    term. Several NOAA programs have been, or will be successful at
    conserving many places identified by our blueprint.

    Coastal Zone Management
                CZM Grants to States--$80 million
                CZM Program Administration--$7.5 million
                Non-point Pollution Implementation Grants--$15 million
        This unique federal-state-territorial partnership created under the
    Coastal Zone Management Act (CZMA) serves to protect, restore, and
    responsibly develop the nation's coastal communities and resources
    along 95,000 miles of shoreline. State and territorial CZM programs
    link national objectives with implementation and stewardship at the
    local level. Increased funding for this program in fiscal year 2004
    would advance protection of coastal, ocean, and Great Lakes species and
    their habitats; maintain the natural shoreline such as beaches, dunes
    and wetlands; and enhance scientific research and education, while
    allowing for certain economic growth.
        Many Conservancy chapters already pursue mutual goals with state
    CZM programs. We are working to strengthen these partnerships in light
    of our heightened emphasis on conserving freshwater, coastal, and
    marine biodiversity.

    National Estuarine Research Reserve System
                Operations--$18 million
                Procurement, Acquisition and Construction--$15 million
        Authorized as part of the Coastal Zone Management Act (CZMA), the
    twenty-five ``living laboratories'' making up the National Estuarine
    Research Reserve System (NERRS) require funding appropriate to the
    importance of estuaries to critical habitat and coastal economies.
    Adequate funding for the NERRS will permit individual reserves to
    better implement strong management, research, education, and
    stewardship activities within surrounding communities, and acquire key
    tracts of land and conservation easements that buffer development
    impacts. This funding would also facilitate implementation of system-
    wide monitoring and coastal training programs, and would enable
    expansion in order for the system to represent the suite of
    biogeographic regions that together comprise our nation's coastlines.
        We work closely with New Hampshire's Great Bay, Florida's
    Apalachicola Bay, Alaska's Kachemak Bay, South Carolina's ACE Basin,
    and Mississippi's Grand Bay reserves. As preserve managers, we at the
    Conservancy know first hand that the NERRS implements solid science to
    inform communities about how coastal ecosystems function, how humans
    affect them, and methods for improving their condition.

    National Marine Sanctuaries--$38 million
        The Nature Conservancy urges the Committee to fund the National
    Marine Sanctuary Program at their fully authorized level of $38 million
    in fiscal year 2004 and we support the President's funding request for
    $10 million for Procurement, Acquisition & Construction for the
    Sanctuaries. This funding would extend volunteer programs, provide for
    additional monitoring, and would fulfill a national plan for public
    outreach. It would also enable new investments in science needed to
    better manage complex issues surrounding sanctuaries. Finally,
    additional funding will enable implementation of revised and more
    detailed management plans.
        The Conservancy is currently working cooperatively with the NMS
    program and the National Marine Sanctuary Foundation to develop
    effective volunteer programs for all of the Sanctuaries to better
    leverage federal investments with the ``sweat equity'' of those
    thousands of committed volunteers across the country. We are also
    working with the Monterey Bay NMS to determine overlapping goals and
    opportunities for collaboration as the sanctuary reviews its management
    plan. Finally, our most extensive experience has been with the Florida
    Keys NMS where their management plan, developed in cooperation with the
    state of Florida and the Sanctuary Advisory Committee, is being
    implemented.

    Coastal and Estuarine Land Conservation Program--$60 million
        The Coastal and Estuarine Land Conservation Program (CELCP) was
    authorized by Congress as part of the Commerce, Justice, State, and
    Judiciary Appropriations Act of 2002. In its first year, this new
    program directed $15.8 million to coastal and estuarine areas with
    significant conservation, recreation, ecological, historical, or
    aesthetic value that are threatened by conversion from their natural
    state to other uses.
        Nowhere in the nation are threats such as sprawl, habitat loss, and
    fragmentation more significant than along our nation's coasts. That is
    why a program providing grants that allow for land acquisition as a
    conservation strategy serves as an important addition to federal
    efforts focused on protecting valuable habitat for the long-term. As a
    result, The Nature Conservancy supports a significant increase in
    funding ($60 million) for the CELCP in fiscal year 2004.
        In addition, we have identified four high-priority projects for
    CELP funding in fiscal year 2004:
      --Crow's Nest (VA)--$4 million
      --Gustavus Land Access and Enhancement (AK)--$1.5 million
      --Amsterdam Beach (NY)--$3 million
      --Ingleside (TX)--$500,000

    Fisheries Habitat Restoration--$20 million
        The Nature Conservancy strongly supports NOAA's coastal habitat
    restoration efforts, and recommends funding levels of $20 million for
    Fishery Habitat Restoration. Most of this funding would ensure the
    continued success of NOAA's Community-based Restoration Program (CRP).
    This funding level would enable the CRP to direct more seed money to
    local communities across the country for the restoration of vital
    habitats including wetlands, seagrass beds, mangroves, anadromous fish
    spawning areas, and coastal rivers. Additionally, it would increase the
    CRP's geographic scope and the rate at which it can encourage community
    ownership and restoration of critical and rapidly dwindling habitat.
    This program has not only leveraged up to $10 for every federal dollar
    invested at more than 500 projects, but has also leveraged a
    conservation ethic across the nation.
        As a national partner, the Conservancy has experienced first hand
    how the CRP inspires local efforts to conduct meaningful, on-the-ground
    restoration of freshwater, coastal, and marine habitat. Since
    partnering with the CRP in 2000, we have already directed $1 million to
    community-based projects in Florida, New York, Connecticut, North
    Carolina, Delaware, Virginia, California, and Texas. With one year
    remaining in our national partnership, we are excited about what lies
    ahead.

    Pacific Salmon Recovery Program
        The Conservancy considers salmon conservation a critical aspect of
    our work in the Pacific Northwest, Alaska, and the Northeast. Given the
    complex life history of this keystone species--migrating hundreds of
    miles past forests and farms, cities and dams, from fresh to saltwater
    during their lifecycle--successful salmon conservation requires action
    across a broad landscape.
        History has shown that money spent on habitat restoration and
    recovery could have been used more effectively and at less cost to the
    taxpayer if applied at a landscape-scale before systems were altered
    and degraded. However, habitat destruction, reduced streamflows,
    pollution, passage impediments, and overharvest have already played a
    role in the decline of salmon stocks. That is why generous funding to
    conserve and recover salmon in the Pacific Northwest and Alaska ($200
    million for the Pacific Coastal Salmon Recovery Fund; $55 million for
    NMFS Funding for Pacific Salmon Recovery), and in the Northeast ($30
    million for an equivalent Atlantic Coastal Salmon Recovery Fund), is
    now needed.
        In the Pacific Northwest and Alaska, the Pacific Coastal Salmon
    Recovery Fund has enabled states and tribes to support local efforts to
    evaluate, protect, and restore key habitat while enhancing local
    economies. NMFS funding enhances that support with scientific research
    and monitoring, and by spurring new cooperative efforts. In the
    Northeast, a significant amount of collaborative work among federal
    agencies, industry, private landowners, and other stakeholders has
    begun. The time is right to establish a similar approach and
    complementary funding for USFWS and NMFS.

    Marine Protected Areas--$5 million
        Marine protected areas (MPAs) are proven tools for rebuilding and
    sustaining fisheries, recovering threatened and endangered species, and
    providing recreational opportunities. The Conservancy has learned this
    first hand through work with scientists, community members,
    international governments, and federal agencies to establish MPAs and
    identify and protect biodiversity within them in places such as the
    Florida Keys, the Exuma Cays Land and Sea Park in the Bahamas, and
    Kimbe Bay in Papua New Guinea.
        The Conservancy recommends that $5 million be appropriated for MPAs
    so that NOAA can continue working with federal and state agencies and
    other partners to assess MPA design and effectiveness as a management
    tool that protects biodiversity while permitting use of the nation's
    valuable marine resources. Increased funding would also expedite
    information collection and collaborative efforts required for
    completion of the first nationwide inventory of MPAs. Additional funds
    would be employed to improve coordination and information sharing at
    regional and national levels; support training and technical assistance
    for communities, users, management agencies, and others; and increase
    public involvement through the MPA web site.

    Coral Reef Conservation--$30.25 million (total)
        The Nature Conservancy supports the President's request for $28.25
    million in fiscal year 2004 for activities that benefit coral reefs,
    including:
      --National Ocean Service--$16 million + $2 million
      --National Marine Fisheries Service--$11 million
      --Ocean and Atmospheric Research--$500,000
      --NESDIS--$750,000
        This funding would be used to advance priorities identified by the
    U.S. Coral Reef Task Force including comprehensive mapping and
    monitoring of coral reefs, research into ecological processes upon
    which reefs depend, integration of human activities, and public
    education. With such funding, this scientifically-based effort will
    protect and restore coral reefs in the United States and its
    territories. It will serve as a model in intergovernmental coordination
    and coral reef protection for similar initiatives around the world.
        The Conservancy urges the Committee to add to the President's
    request $2 million for grants to support on-the-ground conservation
    efforts. The availability of a small pot of funds that could be made
    available as grants to community-based efforts to address land-based
    sources of pollution or to support collaborative efforts to identify
    and designate Marine Protected Areas would be of substantial benefit to
    implementing the Coral Reef Task Force Action Plan.
        While NOAA's activities, guided by the Task Force, have made great
    strides in coral reef conservation, the Conservancy would like to see
    more funding dedicated to addressing this issue at an international
    scale. The combined effects of global climate change and human
    activities have led coral reef ecosystem health to decline severely all
    over the world in recent decades. It is now critical to take action
    before the tragedy becomes irreversible. Successful conservation of
    coral reefs will involve a broad-scale, global, and long-term
    commitment.

    Estuary Restoration Program--$1.2 million
        The Nature Conservancy supports the President's request of $1.2
    million for NOAA in fiscal year 2004 to carry out their duties related
    to this program.
        The Estuary Restoration Act of 2000 created this program with the
    goal of restoring one million acres of estuary habitat by 2010. Subject
    to annual appropriations by Congress, the legislation authorized $275
    million over five years dedicated to public-private partnerships
    reversing the deterioration of estuaries through restoration of habitat
    that has been degraded by population growth, dams, and pollution. The
    Estuary Restoration Act emphasized the need for a centralized source of
    information on restoration activities, that provides for a consistent
    monitoring methodology that supports an iterative process and
    meaningful measures of success.

    International Conservation
                Technical Assistance under CZMA--$1 million
                International Cooperation under NMSA--$500,000
        We recognize the significant accomplishments of the National Ocean
    Service (NOS) over the past several years in developing international
    capacity for integrated coastal management and marine protected area
    management particularly in Asia, the Pacific, and the Caribbean. NOS
    provides critical environmental leadership, for example: in the
    development of the recently ratified Protocol on Specially Protected
    Areas and Wildlife (SPAW) in the wider Caribbean region, its support of
    the International Coral Reef Initiative and the Global Coral Reef
    Monitoring Network, its leadership of IUCN's World Commission on
    Protected Areas (Marine) and especially extensive preparations for the
    marine program of the World Parks Congress in September 2003. We
    encourage increased allocation of resources toward these and other
    international activities with $1 million added to appropriations under
    Section 310, Technical Assistance, of the Coastal Zone Management Act,
    and $500,000 added to appropriations under Section 305, International
    Cooperation, of the National Marine Sanctuaries Act.
                                     ______

               Prepared Statement of the American Bar Association

        I am Jonathan Ross a lawyer in private practice with the
    Manchester, New Hampshire law firm of Wiggin & Nourie. This testimony
    is submitted at the request of the President of the American Bar
    Association, Alfred P. Carlton, Jr., to voice the Association's views
    with respect to the fiscal year 2004 appropriations for the Legal
    Services Corporation and the Judiciary's Defender Services Program.
        I submit this testimony in my capacity as Chair of the American Bar
    Association's Standing Committee on Legal Aid and Indigent Defendants.
    This Standing Committee serves the ABA and the nation by examining
    issues relating to the delivery of civil legal assistance and criminal
    defender services to the poor. It maintains a close liaison with state
    and local bar association leaders, providing information and developing
    policy and initiatives on civil legal aid and indigent defense.

                           LEGAL SERVICES CORPORATION

        The ABA recommends LSC's fiscal year 2004 appropriation be
    increased to $387.7 million.--The ABA is profoundly grateful for the
    Subcommittee's inclusion of the Harkin-Smith-Domenici amendment in the
    Senate's version of the fiscal year 2003 appropriation bill. This
    amendment increased LSC's funding by $19 million and was intended to
    prevent drastic funding cuts to legal aid programs serving 26 states.
    We are also grateful for the Subcommittee's hard work to ensure that
    half of that amount, $9.5 million, was included in the final version of
    the fiscal year 2003 appropriations bill.
        As you know, the Corporation redistributes grants to local legal
    aid programs every 10 years using a formula based on the most recent
    census. This reallocation resulted in significant cuts to service areas
    in these 26 states, including Ohio, Mississippi, Pennsylvania,
    Missouri, Kentucky, Alabama, Texas, Wisconsin, Vermont, Louisiana,
    Illinois, West Virginia, Minnesota and Michigan. Because of the static
    nature of LSC funding and the 5.74 percent increase in the poverty
    population nationwide, even states whose poverty population (and LSC-
    eligible clients) remained the same or actually increased may have
    received funding cuts.
        At present, however, no state is able to meet the current demand
    for legal assistance, as programs must continue to turn away eligible
    clients with all but critical legal needs. In addition to the increase
    in the number of eligible clients as a result of the increase in the
    national poverty population, almost every state has already experienced
    or expects significant decreases in supplemental funding provided
    through state legislatures and/or Interest on Lawyer Trust Accounts
    (IOLTA).
        At the same time, various credible studies--state and national--
    continue to show that despite the combined efforts of legal aid
    programs and private bar pro bono attorneys, 80 percent of the legal
    needs of those in poverty go unmet. These people are substantially the
    ``working poor'' who encounter legal problems relating to family
    relationships, domestic violence, health, employment, housing and other
    basic life issues. Such hardships have only increased in scope and
    frequency since the terrorist attacks and as a result of the faltering
    economy. Now, with the mobilization of U.S. forces for the war in Iraq,
    there has been an increased demand for legal services among our
    servicemen and women, many of whom qualify for legal aid.
        We understand that your Subcommittee faces many difficult funding
    choices right now. However, assuring access to our justice system for
    low-income individuals to resolve their legal problems peacefully is
    essential to preserving the rule of law. At this time, the ABA
    respectfully requests that the Subcommittee fund LSC at $387.7 million
    for fiscal year 2004.
        The LSC has historically been grossly under-funded. In 1996,
    Congress reduced LSC's funding by 30 percent from $415 million to $278
    million and required many reforms in the way the LSC operated and
    restricted the activities of its local program grantees. The LSC has
    fully implemented all the required reforms, insuring that local
    grantees focus on meeting the basic, everyday legal needs of the poor.
    The appropriation has increased modestly since 1996, to $338.8 million
    for fiscal year 2003, but this amount is less than half the funding, in
    constant dollars, that LSC received in 1980.
        We estimate that, with inflation, the amount needed to merely bring
    LSC to pre-1996 levels would be $490 million. The ABA therefore urges
    Congress to restore LSC's funding to $490 million. In view of other
    pressing needs, we recognize that this cannot be accomplished at once,
    and ask the Subcommittee to increase LSC's funding from the fiscal year
    2003 level of $338.8 million to this amount over a three-year period
    starting with a $51.1 million increase in fiscal year 2004.
        At the very minimum, the ABA urges the Subcommittee to provide at
    least $352.4 million for fiscal year 2004, as recently requested by the
    Legal Services Corporation. LSC's request represents an increase
    correlating to the increase in the poverty population reported by the
    2000 census.
        The Legal Services Corporation Plays A Vital Role in the Justice
    System.--For more than a quarter century, the Legal Services
    Corporation has been a lifeline for Americans in desperate need. For
    poor Americans, LSC-funded legal services programs have been there at
    times when they had nowhere else to go. These are just a few examples
    of the millions of people legal aid lawyers help every year:
      --Alexander and his wife had to move to another state for health
            reasons. They were unable to sell their mobile home, and
            eventually the lender repossessed the unit. Later, a collection
            agency notified them that they still owed $12,000 on the note.
            At age 84, Alexander, who took pride in his good credit rating,
            wanted to do the right thing. He could not, however, pay the
            amount owed, nor could he afford an attorney. The local legal
            services office was able to assist him in obtaining a
            settlement agreement. He paid the settlement amount and was
            able to keep his good credit rating. He has returned to the
            work force part time and is caring for his ailing wife.
      --Mark, 38 years old, was dying from non-Hodgkin's lymphoma.
            Conventional chemotherapy had helped, but he needed a special
            type of bone marrow transplant to ensure that the lymphoma
            would not recur. Without the procedure, his doctors predicted
            that he would have only one year to live. Medicaid denied the
            procedure, claiming that this type of transplant was not a
            covered benefit even though it is considered the current
            standard of care for the disease. Mark's legal services
            attorney successfully argued that the denial was improper. The
            transplant was successful, and Mark is now home and seeking
            employment.
        The Corporation, formed in 1974 with bipartisan Congressional
    support and the endorsement of the Nixon Administration, was created to
    ensure that all Americans have access to a lawyer and the justice
    system for civil legal issues regardless of their ability to pay.
    Today, this is more important than ever. A weak economy has created
    pressing new legal needs for many Americans who have lost employment or
    suffered other setbacks. According to the 2000 census, more than 36
    million Americans live in poverty, making more than one in six
    Americans eligible for LSC-funded representation.
        The National Legal Aid Program Merits Strong Congressional Support
    Because:
      --LSC-funded programs provide basic legal services for poor Americans
            in every Congressional District in the country.--LSC disburses
            95 percent of its annual federal appropriation to 161 local
            legal aid programs serving low-income individuals and families
            in every county and Congressional District in the country.
            Boards consisting of leaders in the local business and legal
            communities set the priorities for and oversee these programs,
            which are required by law to provide basic legal services to
            the poor.
      --LSC-funded legal aid lawyers save and protect American families.--
            Local legal aid programs make a real difference in the lives of
            millions of low-income American families by helping them
            resolve everyday legal matters, including family law, housing,
            and consumer issues, and by helping them obtain wrongly denied
            benefits such as social security and veterans' pensions. LSC-
            funded programs often provide assistance to those who suddenly
            qualify and need legal assistance, such as when natural or
            national disaster strikes; LSC-funded programs were
            instrumental in assisting September 11 victims and families.
            Many low-income military families qualify for legal aid, and
            seek help with such matters as estate planning, consumer and
            landlord/tenant problems and family law.
      --LSC-funded programs are the nation's primary source of legal
            assistance for women who are victims of domestic violence.--
            Legal aid programs identify domestic violence as one of the top
            priorities in their caseloads. While domestic violence occurs
            at all income levels, low-income women are significantly more
            likely to experience violence than other women, according to
            the U.S. Bureau of Justice Statistics. Recent studies also show
            that the only public service that reduces domestic abuse in the
            long term is women's access to legal aid.
      --The White House, the Congress and the American people support the
            LSC.--President Bush supports funding for the LSC, recognizing
            that ``[f]or millions of Americans, LSC-funded legal services
            is the only resource available to access the justice system.''
            A bipartisan majority in Congress supports LSC; the Harkin-
            Smith-Domenici amendment ultimately added $9.5 million to LSC's
            fiscal year 2003 budget at a time when many other domestic
            programs were being cut or flat-funded. The American public
            agrees that federal tax dollars should fund LSC: a national
            poll reported in 2000 that 82 percent of those surveyed
            supported government-funded legal aid.
      --The private bar cannot replace the services provided by LSC-funded
            programs.--The private bar actively encourages and organizes
            its members to provide pro bono legal services. Among many
            other efforts, the ABA's Standing Committee on Legal Aid to
            Military Personnel helps the military and the Department of
            Defense improve the effectiveness of legal assistance in civil
            matters to an estimated nine million servicemen and women and
            their dependents. However, a well-funded federal legal services
            program is essential to leverage other resources--human and
            financial--to help meet the legal needs of the poor. Without
            adequate federal funding, these non-LSC resources would be both
            less abundant and less effectively utilized--and, in many
            cases, would not exist.
                criminal justice act: defender services program
        The ABA supports the request of the U.S. Judicial Conference for an
    hourly rate increase from $90 to $113 for compensation for panel
    attorneys who represent indigent defendants under the Criminal Justice
    Act. This modest increase is needed to continue to attract and retain
    competent panel attorneys. We also support the Judiciary's request for
    funds sufficient to increase the maximum hourly capital panel attorney
    rate from $128 to $157. The current capital panel attorney rate has not
    been raised since 1989, and now does not even cover overhead costs for
    many attorneys doing this most difficult work, work often done under
    highly stressful, emergency conditions. The Florida Supreme Court
    recently concluded that every capital case by definition involves
    ``extraordinary circumstances and unusual representation.'' Without a
    fee increase, scores of qualified attorneys will simply stop taking
    capital cases.

                                   CONCLUSION

        The American Bar Association urges the Subcommittee to provide
    adequate funding for the Legal Services Corporation and the Defender
    Services Program. These two programs are essential for ensuring ``equal
    access to justice'' for all.
        Thank you for your consideration.
                                     ______

         Prepared Statement of the National Center for Victims of Crime

        My name is Susan Herman, and I am the executive director of the
    National Center for Victims of Crime. I submit this testimony to urge
    members of the Subcommittee on Commerce, Justice, State and the
    Judiciary to raise the cap on the Victims of Crime Act (VOCA) Fund to
    $685 million for fiscal year 2004. In addition, I urge you to prevent
    the creation of additional earmarks off the top of the VOCA Fund.
        The National Center for Victims of Crime is the leading resource
    and advocacy organization for victims of crime. We are well acquainted
    with the funding needs of the nation's crime victim assistance
    programs. Since its founding in 1985, the National Center has worked
    with public and private non-profit organizations and agencies across
    the country, and has provided information, support, and technical
    assistance to hundreds of thousands of victims, victim service
    providers, allied professionals, and advocates. Our toll-free
    information and referral Helpline keeps us in touch with the needs of
    crime victims nationwide. Through our day-to-day interactions with our
    members and with the 7,800 crime victim service providers in our
    service referral network, we are aware of the work they do and of the
    impact that funding decisions at the federal level have on their
    ability to meet the needs of victims. We also interact with crime
    victim service providers through our Training Institute, which offers
    training on a variety of issues to service providers throughout the
    country. In short, we hear from victims and service providers every day
    about the impact and importance of the VOCA Fund.
        As you know, the VOCA Fund consists of fines and penalties imposed
    on federal offenders. The bulk of the money is distributed each year by
    formula grants to the states to fund both their crime victim
    compensation programs, which pay many of the out-of-pocket expenses
    incurred by victims, and victim assistance programs, such as rape
    crisis centers, domestic violence shelters, victim assistants in law
    enforcement and prosecutor offices, and other direct services for
    victims of crime.
        Last year's $600 million cap on the VOCA Fund translated to a cut
    in funding for crime victim assistance programs of approximately eight
    percent. This eight percent funding decrease resulted from a change in
    the VOCA formula enacted in October 2001 as part of the anti-terrorism
    legislation, the USA PATRIOT Act, Pub. L. 107-56. That change increased
    the amount of VOCA Funds paid to states for their crime victim
    compensation programs, leaving less available for grants to victim
    service agencies.
        The amount of VOCA money a state receives for compensation is
    limited to a percentage of what that state paid out in a given year.
    Previously, states received a reimbursement of 40 percent of what they
    paid out in crime victim compensation. Beginning in fiscal year 2003,
    that amount increased to 60 percent of what the state paid out. The
    increase in VOCA funds that states received for compensation programs
    limited the funds available for crime victim services. The USA PATRIOT
    Act had coupled the formula change with an incremental annual increase
    in the VOCA cap that would have offset the loss of funds for victim
    services. That annual increase mechanism, however, was stricken by
    language in the appropriations measures for fiscal year 2002.
        The impact of that eight percent cut has been significant for
    programs already suffering from reduced private giving and state
    support. From around the country, programs have reported to us that
    they have had to:
      --Lay off staff, or reduce full time staff to part time.--Uniformly,
            programs reported that they were already operating at bare
            bones levels. The only area left to cut is staff time, which
            directly reduces services available to victims. Many programs
            also reported that there were no similar agencies or services
            in their area to whom victims could turn. The following
            response from a Louisiana rape crisis center was typical: ``We
            have already cut as many positions as we can without shutting
            down entirely. We counsel victims of sexual assault, and any
            cut will mean no counseling for those victims.'' In many
            instances, programs have only one or two paid staff, and the
            reduction in their time will necessitate elimination of
            extensive volunteer programs because there will be insufficient
            professional oversight and coordination.
      --Limit their geographic coverage.--For instance, from Colorado,
            Michigan, and Virginia we heard from programs that had been
            serving victims in 5 to 10 counties; now they have had to pull
            back from service in the outlying regions, leaving those
            victims without services. Some programs serving rural victims
            can no longer reimburse mileage or phone costs for volunteer
            advocates who offer services throughout a large area.
      --Discontinue services for special populations of victims.--In some
            places, victim assistance programs have recently conducted or
            been a part of needs assessments and strategic planning
            efforts, and thus have a clear picture of special victim
            populations which are not being adequately served. Many
            services that had been developed for special populations are
            being eliminated because of reduced funding. One program from
            Minnesota stated that their ``immigrant and refugee program to
            sexual assault victims will be cut. The bilingual advocate for
            this program will most likely be laid off. The outreach to this
            population in our community has been building for the past 8
            years. The trust and confidence from the community will be
            eroded. Most importantly, an underserved community will go
            unserved.''
      --Discontinue services for secondary victims.--For example, many
            battered women's programs, which had relied on VOCA funding to
            support services for the children who witnessed or sustained
            abuse, are having to restrict and even eliminate those
            services. A North Carolina shelter told us, ``In [our] county
            there have been two domestic violence murders in 2003 one of
            which was a stalking case. The five children involved in those
            cases need our programs and we may not have the resources to
            serve them. Then what?''
      --Turn away crime victims.--Victim service providers from Alabama,
            Massachusetts, and Nevada all reported that the numbers of
            victims seeking assistance, and the numbers of schools and
            other organizations seeking outreach programs, have increased
            at the same time the available funding has decreased. One North
            Carolina program noted, ``County guidance counselors and
            medical professionals continue to identify and refer more and
            more children who are victims of family violence, sexual
            assault and sexual abuse due to the education provided by this
            agency to teach them how to recognize child victims/witnesses
            of domestic violence. Yet, we will not be able to offer our
            afternoon programming or summer programs to additional children
            until some of the current children enrolled in the program age
            out.''
        The effect of this year's cuts have been significant. The National
    Center for Victims of Crime is asking that the VOCA Fund cap be raised
    to $685 million for fiscal year 2004, to help programs make up for the
    loss in funding this year and enable them to begin to expand their
    programs. When we asked victim assistance programs about their spending
    priorities for any increase in funding, they reported the following
    needs:
      --Services to immigrant victims of crime.--All over the country,
            there are limited services, or even a complete absence of
            services, for large groups of immigrant victims of crime. Such
            victims are often linguistically or culturally isolated.
            Without the availability of interpreters or bi-lingual service
            providers, such victims cannot access the services that may
            otherwise be available. Additionally, victims who come from a
            society where the police are not trusted, or a culture where
            sexual violence is unmentioned or domestic violence is
            condoned, often require a different approach to providing
            services. Effective victim services require ready access to
            service providers who are culturally knowledgeable and
            sensitive to these varying needs, and programs in Arizona,
            Georgia, Michigan, Mississippi, Nebraska, and Wyoming all
            listed providing services to immigrant victims as a priority.
      --Services to victims in rural jurisdictions.--Too many victims in
            rural jurisdictions still lack access to basic services. In
            many parts of the country, victims are hundreds of miles from
            the nearest rape crisis center or battered women's shelter.
            Victim service providers in Alabama, Idaho, Kentucky, and
            Montana all reported a need to expand efforts to cover multi-
            county areas through the creation of satellite offices, the use
            of volunteers or staff to travel to victims' homes or other
            locations; or to increase the use of the Internet to serve
            victims in rural communities.
      --Assistance to victims with disabilities.--One area of greatest need
            is in reaching and serving crime victims with disabilities:
            developmentally disabled victims, mentally ill victims, hearing
            impaired victims, and others whose disability makes them
            simultaneously more vulnerable to crime and less able to access
            existing services. Many service providers, including programs
            in Michigan, Minnesota and Pennsylvania, would like to expand
            their programs to provide appropriate services to such crime
            victims.
      --Assistance to elderly victims.--A number of victim assistance
            programs noted a need to increase their services to elderly
            victims of crime, who often lack other forms of support and who
            may require a service provider to visit them in their homes.
            Victim assistance programs in Ohio, Pennsylvania, Texas and
            Wyoming all listed services to elder victims as a priority.
      --Assistance to teen victims.--Many victim assistance programs are
            hoping to extend services to teen victims of crime, especially
            teen victims of dating violence. Providing prompt services to
            teen victims can significantly lessen the lifelong impact of
            crime, and programs in Indiana, Iowa, Minnesota, and Texas all
            described a need for services to teen victims.
      --Providing more timely services to victims.--Victims in many
            programs are waiting weeks or months to get into counseling or
            support groups; victims in the criminal justice system may not
            be contacted until close to the trial stage. Victim service
            providers in Colorado, Massachusetts, New York, and Virginia
            all spoke of the need to hire additional staff to eliminate or
            significantly reduce such waiting periods for services.
      --Serving victims of non-violent crime.--As the incidence of identity
            theft and fraud have increased, and the understanding of the
            impact of non-violent crime on victims has grown, many victim
            assistance programs, including those in Minnesota, Ohio, and
            Pennsylvania, expressed a desire to expand their services to
            include such victims.
      --Technology investments to enhance victim services.--Many victim
            assistance programs reported that outdated computer equipment
            limits their efficiency. There is also a great need for case
            management software and assessment tools to help programs
            improve and evaluate their effectiveness in serving victims of
            crime. Programs in Kentucky, Pennsylvania and Texas all noted
            such needs.
        Finally, while our first priority is to see the cap on the VOCA
    Fund raised to $685 million for fiscal year 2004, we also urge you to
    discontinue earmarks for federal positions off the top of the VOCA
    Fund. New earmarks on the Fund have been enacted over the last several
    legislative sessions, limiting the amount of money ultimately available
    to states to fund local programs. These earmarks provide for victim/
    witness coordinators in U.S. Attorneys' offices, for victim assistance
    in the FBI, and for an automated victim notification system at the
    federal level. Such expenditures are expected to be nearly $34 million
    in fiscal year 2003. These earmarks result in a significant decrease in
    funding available to help the vast majority of crime victims--victims
    whose cases are prosecuted and who are served at the state and local
    levels. Such federal positions may be warranted, but surely Congress
    can find other sources of revenue to support federal employees.
        The most important action Congress can take to help this nation's
    victims of crime is to provide the funding for services and
    compensation programs that help them rebuild their lives. Congress'
    creation of the VOCA Fund in 1984 was a landmark action that
    fundamentally changed the way our society responds to victims of crime.
    We urge you to continue this great effort, by raising the cap on the
    VOCA Fund to $685 million, and resisting pressure to earmark the Fund.
    We must continue the progress of our national response to victims of
    crime.
                                     ______

     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 2004 funding request of $500,000
    from the National Oceanic and Atmospheric Administration (NOAA) for
    CCOS as part of a Federal match for the $9.1 million already
    contributed by California State and local agencies and the private
    sector. NOAA was under contract for approximately $700,000 to measure
    winds and temperatures during the CCOS field study. Currently, NOAA is
    under contract for $250,000 to participate in the CCOS data analysis
    and modeling. This request will partially replace funding already spent
    for NOAA's participation in CCOS.
        Most of central California does not attain federal health-based
    standards for ozone and particulate matter. The San Joaquin Valley is
    developing new State Implementation Plans (SIPs) for the federal ozone
    and particulate matter standards in the 2002 to 2004 timeframe. The San
    Francisco Bay Area has committed to update their ozone SIP in 2004
    based on new technical data. In addition, none of these areas attain
    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 is designed to enable central
    California to meet Clean Air Act requirements for ozone State
    Implementation Plans (SIPs) as well as advance fundamental science for
    use nationwide. The CCOS field measurement program was conducted during
    the summer of 2000 in conjunction with the California Regional
    PM10/PM2.5 Air Quality Study (CRPAQS), a major
    study of the origin, nature, and extent of excessive levels of fine
    particles in central California. CCOS includes an ozone field study, a
    deposition study, data analysis, modeling performance evaluations, and
    a retrospective look at previous SIP modeling. The CCOS study area
    extends over central and most of northern California. The goal of the
    CCOS is to better understand the nature of the ozone problem across the
    region, providing a strong scientific foundation for preparing the next
    round of State and Federal attainment plans. The study includes six
    main components:
      --Developed the design of the field study
      --Conducted an intensive field monitoring study from June 1 to
            September 30, 2000
      --Developing an emission inventory to support modeling
      --Developing and evaluating a photochemical model for the region
      --Designing and conducting a deposition field study
      --Evaluating emission control strategies for 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
    Particulate Air Quality Study, are landmark examples of collaborative
    environmental management. The proven methods and established teamwork
    provide a solid foundation for CCOS. The sponsors of CCOS, representing
    state, local government and industry, have contributed approximately
    $9.1 million for the field study. The federal government has
    contributed $3,730,000 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 $6.25 million to
    complete the data analysis and modeling portions of the study and for a
    future deposition study. 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. The CCOS field study
    took place concurrently with the California Regional Particulate Matter
    Study--previously jointly funded through Federal, State, local and
    private sector funds. CCOS was timed to enable leveraging the efforts
    of the particulate matter study. Some equipment and personnel served
    dual functions to reduce the net cost of the CCOS field study. From a
    technical standpoint, carrying out both studies concurrently was a
    unique opportunity to address the integration of particulate matter and
    ozone control efforts. To effectively address these issues requires
    federal assistance.
        For fiscal year 2004, our Coalition is seeking funding of $500,000
    from the National Oceanic and Atmospheric Administration (NOAA).
    Meteorological data were continuously collected during the CCOS field
    program. Extensive meteorological data collected as part of the field
    study can be used by NOAA to strengthen its ongoing research activities
    such as improving meteorological forecasting and providing information
    on weather conditions along the Pacific coast for use in U.S. weather
    models. In addition, CCOS provides data for research on air flows in
    complex terrain. The improved results obtained from this research have
    national applicability.
        Thank you very much for your consideration of our request.
                                     ______

       Prepared Statement of the Monmouth University School of Science,
                           Technology and Engineering

          ESTABLISHMENT OF THE CENTER FOR COASTAL WATERSHED MANAGEMENT

        The Department of the Interior's policies and practices reflect the
    fact that clean water is essential to all Americans. Water resources in
    the United States provide water to drink, water to irrigate crops,
    provide habitat for a diversity of fish and wildlife, as wells as
    provide for recreational opportunities such as fishing, boating, and
    swimming. However, the U.S. Environmental Protection Agency (EPA) has
    acknowledged that a majority of our watersheds have water quality
    problems that include contamination with pathogens or toxic chemicals,
    nutrient enrichment, fish and wildlife habitat loss, and invasive
    species. According the EPA, these problems continue to impair
    watersheds nationwide and prohibit the attainment of water quality
    goals. They conclude by stating that problems are complex and varied,
    and that governments working alone cannot solve all of them.
        The Nation's fish and aquatic resources are among the richest and
    most diverse in the world and annually they provide ecological, social,
    and economic benefits to citizens and visitors. However, despite
    efforts to conserve fish and other aquatic resources, a growing number
    are declining and in need of special protection or management efforts
    in some part of their natural or historic range. According to the U.S.
    Fish and Wildlife Service (FWS), the reasons for these declines are
    linked largely to habitat loss or alteration and the impacts of harmful
    exotic or transplanted species. To move forward in efforts to conserve
    and manage aquatic resources and their habitats across the country, FWS
    acknowledges the need to take an ecosystems approach and form
    partnerships that promote collaboration among governmental agencies,
    organizations, and individuals.

    Rationale for a Coastal Watersheds Approach
        New Jersey is a state richly endowed with coastal resources. These
    resources support traditional fisheries and maritime industries as well
    as more contemporary businesses and rapidly growing new concepts in
    residential development. However, because of the rapid growth of both
    resident and tourist populations, the nation's most densely populated
    state faces enormous pressures balancing growth demand with the limited
    nature of its coastal resources.
        The marine ecosystems within the state currently exhibit signs of
    stress and deterioration, as documented in the scientific and popular
    literature. As coastal use and development increase and coastal
    population continues to rise, impacts on the environment will become
    even more severe. Among the most important impacts of concern in the
    coastal zone are degradation and loss of habitats and the deterioration
    of water quality.
        The health and vitality of New Jersey's marine resources are
    dependent upon the ability of governmental decision-making processes to
    protect and enhance the coastal environment and reduce environmental
    risk associated with unwise development and waste disposal practices.
    However, throughout the past decade New Jersey citizens have been
    disillusioned by what many perceive as an apparent inability to
    properly manage the coastal zone even after such events as beach
    closures, nuisance algal blooms, fish kills, contamination of habitats
    and organisms with pathogens and toxic chemicals, sewage treatment
    problems, depletion of fish stocks, and rampant coastal development
    resulting in nonpoint pollution problems in ocean waters, coastal bays,
    their tributaries and watersheds. A significant part of this
    frustration is due to the inability of multiple governmental units to
    collectively respond to very complex environmental phenomena.
                  the center for coastal watershed management

    Progress To Date
        Projects conducted by the Monmouth University Center for Coastal
    Watershed Management will assist federal, state and local agencies,
    communities, and organizations in achieving their goals and objects as
    they relate to coastal watersheds and their natural and living
    resources.
        During the past year, as plans for the Center for Coastal Watershed
    Management were under development at Monmouth, a number of projects
    dealing with watershed research and education were initiated:
      --Bacterial source tracking (BST) methodologies are being used for
            identification of specific sources of fecal contamination in
            local rivers, lakes, and estuaries.
      --Rapid bioassessment (RBA) techniques are being used to characterize
            several streams and lakes in Monmouth County.
      --Fish communities in Whale Pond Brook, Deal Lake, Wreck Pond and the
            Manasquan River Estuary are being characterized using passive
            and active fishery sampling techniques.
      --Local watershed and community groups have been assisted with
            organization and implementation of stream cleanups and
            assessments of impairments to the Whale Pond Brook and Poplar
            Brook watersheds.
      --STE has hosted or conducted numerous seminars and workshops dealing
            with coastal and watershed issues in conjunction with a variety
            of groups:
        --Atmospheric Deposition (NJ Sea Grant Program)
        --Nuisance Algal Blooms (NJ Sea Grant Program)
        --Early Life History of Fishes of the Mid-Atlantic (NOAA/NMFS)
        --Watershed Educators Workshop (NJDEP/Monmouth County)
        --Stormwater Management and Restoration Techniques for Coastal
                Ponds and Lakes (NJDEP/Monmouth County)
        --Volunteer Watershed Monitoring (NJDEP/Monmouth County)
        --Watershed Area 12 Congress (NJDEP/Monmouth County)
        --Water Monitoring Training Course (Monmouth County/YSI, Inc.)

    Current and Future Objectives
        In New Jersey, persistent coastal issues remain to be addressed,
    including nonpoint source pollution, headwaters destruction, deposition
    of pollutants into waterways, and habitat degradation. The State of New
    Jersey has acknowledged the need for creative, comprehensive solutions
    to watershed preservation, protection, and management. In 1997,
    Department of Environmental Protection (NJDEP) began implementing a
    statewide watershed management framework to provide a means to further
    restore and maintain the physical, chemical, and biological integrity
    of waters in the state using sustainable management principles that
    allow a more holistic, rather than site-specific, approach to most
    effectively protect water resources. The state's watershed management
    framework is based on three key components: a geographic focus;
    continuous improvement based on sound science; and partnership/
    stakeholder involvement.
        The Monmouth University Center for Coastal Watershed Management (MU
    CCWM) will be housed within the School of Science, Technology and
    Engineering. The Center will spearhead the application of science and
    technology to the effective management of watershed resources in New
    Jersey's coastal environment. The Center, in partnership with the
    Monmouth County Health Department and with other regional
    organizations, will serve as a focal point for the development of
    leading edge approaches to the solution of problems facing local
    communities and decision-makers at all levels of government by:
      --Promoting interdisciplinary studies of coastal watersheds by
            Monmouth University faculty, students, associates, and
            colleagues; and
      --Fostering collaboration between citizens, watershed and community
            organizations, governmental agencies, local businesses, the
            scientific community, and other parties interested in watershed
            management and restoration.
        Specific objectives of the Monmouth University Center for Coastal
    Watershed Management include:
      --Strengthen teaching, research, and outreach at Monmouth University
            with emphasis on programs crossing university departmental
            boundaries as they relate to the environmental, social, and
            economic aspects of coastal watershed management.
      --Provide a forum for the integration of knowledge from a wide array
            of technical disciplines in addressing watershed management
            issues.
      --Establish an analytical capability to provide scientific
            information necessary for making informed watershed management
            decisions.
      --Facilitate access to objective and scientifically sound information
            on effective techniques to protect and restore coastal and
            urban watersheds.
      --Conduct community outreach programs highlighting the need for
            greater protection of our waters and reliable and effective
            ways of protecting and restoring coastal and urban watersheds.
      --Conduct workshops and special programs for pre-college students and
            educators from local school districts.
      --Conduct continuing professional education programs for practicing
            professionals in the form of short courses, workshops, and
            seminars.
      --Involve undergraduate students in faculty-supervised independent
            research related to ecology, natural resource management,
            environmental and resource economics, and local environmental
            issues.
      --Maximize University participation in the local, regional, and
            statewide watershed initiatives.
                                     ______

          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 four 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 with internationally
    recognized expertise, led by 46 curators, conduct laboratory and
    collections-based research programs as well as fieldwork and training.
    The Museum's research programs are organized under five divisions
    (Anthropology; Earth, Planetary, and Space Sciences; Invertebrate
    Zoology; Paleontology; and Vertebrate Zoology), along with the Center
    for Biodiversity and Conservation (CBC). 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 symposia that focus on conservation
    issues. In 2002, the symposium, ``Sustaining Seascapes: the Science and
    Policy of Marine Resource Management,'' was co-sponsored by NOAA's
    Marine Protected Areas Center, along with other federal and private
    organizations, and examined the large-scale conservation of marine
    ecosystems, giving special consideration to novel approaches to the
    sustainable management of biodiversity and fisheries. The focus of
    2003's symposium, held March 20-21, was on conservation issues related
    to increased ecotourism in Southeast Asia.
        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. Within the
    collections are many spectacular individual collections, including the
    world's most comprehensive collections of dinosaurs, fossil mammals,
    Northwest Coast and Siberian cultural artifacts, North American
    butterflies, spiders, Australian and Chinese amphibians, reptiles,
    fishes, and one of the world's most important bird collections.
    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.
        An exciting chapter in the Museum's history will occur this spring
    when one of the flagship and most popular halls--the Hall of Ocean
    Life--reopens after an extension renovation. Drawing on the Museum's
    world-renowned expertise in Ichthyology as well as other areas of
    vertebrate as well as invertebrate zoology, the Hall will be pivotal in
    educating visitors about the oceans' key role in sustaining life on our
    planet. It will feature two new ``Spectrum of Life'' walls highlighting
    the extraordinary diversity of marine life, a completely renovated two-
    story diorama of the Andros Coral Reef, a spectacular sea floor slab
    from the late Jurassic Period, and panels showcasing fossil specimens
    and some of the earliest signs of life on Earth, as well as the
    beloved, and refurbished, 94-foot-long giant blue whale. 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), will provide visitors 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.
        With the reopening of the Hall of Ocean Life, the Museum will have
    a singular opportunity for public education about marine environments,
    and it will draw on its vast educational resources to do so. In its
    Halls of Biodiversity, Planet Earth, and Ocean Life, the Museum
    presents current science news through Science Bulletins--multimedia
    productions that bring the latest science news and discoveries to the
    public using high-definition video documentaries, kiosks, and the web.
    The Bulletins will present features on such issues as marine
    biodiversity report, ocean life discoveries, and more. In addition, the
    Museum's Education Department provides standards-based curricular
    materials and on-site programs for more than 400,000 students and
    teachers who visit the Museum in school and camp groups each year, as
    well as professional development programs for teachers, Moveable
    Museums that travel to schools and community sites, a model after-
    school program, award-winning online educational resources, and
    lectures, workshops, and field excursions for adult learners. The
    Museum's National Center for Science Literacy, Education, and
    Technology, launched in 1997 in partnership with NASA, employs
    innovative technologies to bring educational materials and programs to
    online audiences nationwide.

                  COMMON GOALS OF NOAA AND THE AMERICAN MUSEUM

        Today, as throughout its history, the National Oceanic and
    Atmospheric Administration [NOAA] is committed to describing and
    predicting changes in the Earth's environment and to conservation and
    wise management of the nation's coastal and marine resources. It
    dedicates itself to forecasting environmental changes, providing
    decision makers with reliable scientific information, and fostering
    global environmental stewardship.
        The American Museum shares NOAA'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 marine, coastal, and other natural environments and
    habitats--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. The Museum
    has also long been at the forefront of developing new research modes
    and methods, and today, throughout the science divisions and the CBC,
    AMNH investigators are exploring applications of GIS and remote sensing
    technologies to advance research pertinent to conservation and
    protecting threatened species and habitats.
        The research programs of the CBC and the science divisions are
    enhanced by the Museum's research resources and technological capacity.
    New research tools--including molecular technologies, new collection
    types, innovations in computation, and GIS and remote sensing--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 significant resources in these areas which it would bring to
    bear in its proposed partnership with NOAA. These include the
    following:
        Molecular Laboratories.--The Museum's molecular systematics program
    is at the leading edge of comparative genomics and the analysis of DNA
    sequences for evolutionary research. It includes two Molecular
    Systematics Laboratories, with sophisticated technologies for
    sequencing and advanced 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.
        Frozen Tissue Collection.--The Museum is expanding its collections
    to include preserved biological tissues and isolated DNA in its new
    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. Capable of housing one
    million specimens, it will be the largest super-cold tissue collection
    of its kind. In the past two years, 15,000 specimens not available at
    any other institute or facility have already accessioned. At the same
    time, the Museum is pioneering the development of collection and
    storage protocols for such collections. To maximize use and utility of
    the facility for researchers worldwide, the Museum is also developing a
    sophisticated website and online database that includes collection
    information and digitized images.
        Supercomputing.--Museum researchers now have onsite access to a
    560-processor cluster--the fastest parallel computing cluster in an
    evolutionary biology laboratory and one of the fastest installed in a
    non-defense environment. This computing cluster, constructed in-house
    from scratch, represents one of the key achievements of Museum
    scientists who, over the last eight years, have taken a leadership role
    in developing and applying new computational approaches to deciphering
    evolutionary relationships through time and across species. Their
    groundbreaking efforts in cluster computing, algorithm development, and
    evolutionary theory have been widely recognized and commended for their
    broad applicability for biology as a whole. Indeed, the bioinformatics
    tools these Museum scientists are creating will not only help to
    generate evolutionary scenarios, but also will inform and make more
    efficient large genome sequencing efforts pertinent to biodiversity
    science as well as be applicable in other informatics contexts, in non-
    genomics areas of evolutionary biology as well as in other disciplines.
        Remote Sensing and Geographical Information Systems Technologies.--
    The CBC houses a Remote Sensing/Geographical Information Systems (RS/
    GIS) lab which 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 than can connect field work 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 and marine
    reserve research in various ways--for example, to identify sites
    suitable for biological inventory; to provide supplementary
    quantitative and qualitative data in and around study sites (e.g.
    extent of habitat fragmentation); and to develop persuasive visual
    depictions and digital presentations for reports, publications, and
    meetings.
        Building on the scientific strengths and resources outlined above,
    the Museum now proposes to launch, in partnership with NOAA, a basic
    and applied research initiative that employs the latest technologies to
    advance scientific understanding of resource management and stewardship
    issues for marine and coastal environments. The explosion of research
    technologies creates a unique window of opportunity for the Museum to
    develop new ways to integrate these state-of-the-art analytical tools
    into its biological and environmental research, as well as to present
    results to the public in its exhibition halls, websites, and
    educational programs. It is this intersection of research capability
    and technological opportunity that underlies the planned initiative.
        The Museum proposes a multifaceted initiative to include work in
    areas of concern it shares with NOAA, such as the following:
        Conservation research using GIS.--Museum vertebrate and
    invertebrate zoologists carry out ambitious field work and collection
    expansion programs throughout the tropical freshwaters of the globe,
    conduct biotic surveys, and explore marine ecosystems:
      --Ichthyologists, for example, study the evolution, behavior, and
            conservation of the largest and most diverse populations--and
            one of the most endangered of all vertebrate groups--the
            fishes. Their work concerns not only discovery and
            classification of many still unknown species but also the
            protection and conservation of many species whose habitats and
            survival are at risk.
      --Invertebrate zoologists are discovering many species of marine
            invertebrates. Field research in the Florida Keys, for
            instance, is documenting for the first time the extraordinary
            biodiversity of marine mollusks.
        These researchers, in studying endangered ecosystems, marine
    species, and marine reserves, can use GIS to develop finer, tighter,
    more precise datasets. Also, GIS analysis enables them to ask more
    sophisticated and flexible questions, and to discover patterns, series,
    and gradations.
        Biodiversity conservation.--CBC investigators are conducting
    important research field projects relying on the capacities of GIS/RS.
    They include:
      --Marine reserve networks.--Researchers in the CBC's marine program
            are using GIS to analyze the physical, biological, and cultural
            processes affecting coral reef systems in the Bahamas. GIS is
            an indispensable tool in this research, because it allows the
            researchers to integrate maps with sets of biophysical and
            socioeconomic data and to create dynamic models for testing
            hypotheses about marine reserve networks in a spatially
            realistic framework.
      --Humpback whales in Madagascar.--Collaborating researchers from the
            American Museum and the Wildlife Conservation Society are using
            GIS to track the migrations of Humpback whales in the western
            Indian Ocean region. They are creating a database that contains
            identification photos, biopsies, DNA sequences, and sighting
            information for hundreds of individual whales. Being able to
            identify individuals at the genetic level will enable
            researchers to unravel the complex migration patterns of
            Humpbacks with greater accuracy, thus improving conservation
            practices and increasing understanding of marine sanctuaries,
            the status of whales, their population structure, abundance,
            and recent trends in their distribution.
      --Biotic surveys and inventories.--The CBC conducts floral and faunal
            surveys in ecologically threatened regions of Bolivia and
            Vietnam. Both countries are extremely rich in biodiversity that
            is threatened by high rates of deforestation and inadequate
            conservation planning. These biotic surveys provide essential
            data on the distribution and abundance of species, thus
            enabling researchers to analyze the role of climate change on
            land cover and develop plans to reduce threats to biodiversity.
            They also create an opportunity for Museum researchers to train
            local field biologists and conservation managers how to conduct
            surveys using remote sensing data and biophysical measures and
            how to apply results to the long-term management and
            conservation of biodiversity.
        Collections data and access.--Museum researchers can use GIS to
    bring the Museum's vast collections alive and to increase exponentially
    the analyses that researchers can carry out for conservation research
    and decision making. By coupling GIS with the Museum's increasingly
    strong web presence to provide easy access, researchers worldwide will
    be able to pose more sophisticated questions and uncover new
    connections and relationships among the collections data. For example,
    by using georeferenced data, researchers can compare current maps with
    legacy data to trace environmental changes over time.
        Public education and outreach.--As an added benefit of the proposed
    partnership with NOAA, the Museum plans to feature current NOAA-related
    science and discovery in the renovated Hall of Ocean Life as well as in
    its other educational programs and resources. With access to GIS
    applications and datasets, the Science Bulletins, for example, can
    promote public understanding of current science through global earth
    science-related datasets, maps, and more.
        These research applications for GIS and other technologies
    demonstrate the Museum's enormous potential for using cutting-edge
    tools to help advance environmental forecasting, provide decision
    makers with reliable scientific information, and foster global
    environmental stewardship.
        We therefore request $1 million to join in partnership with NOAA to
    advance basic and applied research that will strengthen resource
    management and conservation of marine and coastal environments and
    public understanding of these issues. In so doing, the Museum will
    support its participatory share with funds from nonfederal as well as
    federal sources. By generating critical scientific knowledge about the
    vital role of ocean and marine environments, we can advance our shared
    commitment to environmental stewardship so pivotal to our nation's and
    our planet's health.
                                     ______

             Prepared Statement of the City of Gainesville, Florida

        Mr. Chairman: On behalf of the City of Gainesville, Florida, I
    appreciate the opportunity to present this written testimony to you
    today. The City of Gainesville is seeking federal funds in the fiscal
    year 2004 Commerce, Justice, State and Judiciary Appropriations bill to
    assist with the following innovative projects the City is undertaking:
      --The Joint Communications Project, to facilitate communication and
            data sharing between our urban area public safety and court
            system agencies. The project is an innovative crime data
            gathering, reporting and training system that will include a
            Geographic Information System (GIS), interactive Internet/
            Intranet applications, Crime Mapping and automated reporting
            through the use of laptop computers. The goal is to obtain
            accurate, timely information that will be shared with the
            appropriate criminal justice system entities and/or individuals
            and to focus efforts on training others in this highly
            technical area of law enforcement.

    Joint Communications Project
        The City of Gainesville seeks a federal funding strategy to
    implement an innovative crime data gathering, reporting and training
    system that will include a Geographic Information System, (GIS),
    interactive Internet/Intranet applications, Crime Mapping and automated
    reporting through the use of laptop computers. Though portions of this
    project have been attempted by other agencies, the Gainesville Police
    Department will become one of the first law enforcement agencies in the
    state to gather, analyze and provide information regarding crime and
    quality of life type incidents in such an efficient, comprehensive and
    automated manner.
        The goal is to obtain accurate, timely information that will be
    shared with the appropriate criminal justice system entities and/or
    individuals and to focus efforts on training others in this highly
    technical area of law enforcement. At least one outcome of this effort
    will be the facilitation of communication and data sharing between our
    urban area public safety and court system agencies through the use of
    system-wide technology upgrades. The impact for the entire region is
    considerable, since this county serves as the regional center for much
    of rural north Florida's medical care, disaster management, and
    criminal justice services. The estimated funds needed to continue these
    efforts are $4.77 million.
        The City of Gainesville, located in the north central portion of
    the State of Florida, is a diverse community of 110,000 and serves as
    the county seat for Alachua County and its additional 130,000
    residents. Gainesville is the home of the University of Florida and
    serves as the regional business center for the surrounding,
    predominately rural counties. The community is served primarily by
    three law enforcement agencies, the Gainesville Police Department, the
    University Police Department and the Alachua County Sheriff's Office
    representing approximately 625 sworn men and women. The City of
    Gainesville has been a proven leader for many years in the field of law
    enforcement with innovative programs developed here being adopted by
    agencies from around the nation. Over the past 15 years the City has
    been dedicated to the principles of Community Oriented Policing and is
    one of the few agencies in the nation to apply its concepts department
    wide. The City and County serve as the regional center for much of
    rural north Florida's medical care, disaster management, and criminal
    justice services.
        The need for this system is driven by the lack of availability of
    resources provided to tier 1 (population over 250,000) and tier 2 (seat
    of government) cities that have been funded by prior Federal
    initiatives. Although the region has a total population over 450,000
    and geographic area of 8,500 square miles, it is not within the primary
    grant recipient categories in previous efforts. However, considerable
    efforts have been made to provide resources through other means and
    utilizing existing resources. The estimated funds needed to continue
    these efforts are $4.77 million.
        This community faces problems endemic to communities nationwide. In
    a time where the individual on the street can obtain any amount of
    immediate and up to date information, the law enforcement officer must
    often make decisions based on information that is incomplete or out of
    date. The City of Gainesville has taken steps to attempt to partially
    remedy this situation by combining communications systems with area law
    enforcement in an effort allowing neighboring agencies to at least
    communicate by voice transmission. What we are seeking is the funding
    to take these initial steps to the next level providing the officer on
    the street with clear, complete, and accurate information about the
    situations they encounter. Included in this project is the benefit of
    data sharing between agencies working in this community allowing better
    informed decision making and improved distribution of resources. The
    various portions of this program are designed to work together to
    provide improved, more effective service to the residents of this
    community.
        The project consists of:
      --Equipping law enforcement, fire personnel and emergency medical
            responders with interoperable mobile data communications
            system. ($3.54 million), and
      --System wide upgrades to improve data collection, incident
            assignment and dissemination of data to allow combined
            operations. ($1.23 million).
        Communications interoperability and accurate, timely data
    collection are crucial to law enforcement and disaster response. Recent
    events such as acts of domestic terrorism, natural disasters, anti-war
    protests and mass casualty tragedies have highlighted the importance of
    coordinated interactions among public safety agencies from all levels
    of government. This ability to interoperate among public safety
    responders can be measured in lives saved. Interoperability consists of
    the ability of public safety personnel from one agency to communicate
    by radio and data transmission with personnel from other agencies on
    demand and in real time. To achieve interoperability requires improving
    public safety wireless communications by addressing each of the five
    areas of interoperability--coordination and partnerships, funding,
    spectrum, standards and technology, and security.
        The Alachua County Sheriff, with funding from the City and County,
    operates a combined communication center constructed in fiscal year
    2000 with $4.2 million in local funding. The center serves five law
    enforcement agencies, eleven fire rescue agencies, the county
    correctional facility, multiple government agencies of the city and
    county, a regional airport, and an industrial fire brigade. The local
    city owned utility, Gainesville Regional Utilities, provides an owned
    and operated 800 Mhz. Trunked Radio System (voice-only) to all of these
    agencies, along with another, the University of Florida's Police
    Department. This project has demonstrated the nadir of the
    interoperability standard promulgated by the FCC and other Federal
    agencies. The infrastructure for digital interoperability has also been
    built into the system, but thus far only one agency, because of its
    small numbers of units, has been able to make that next step into
    wireless data communications. The funds being sought for data
    interoperability will take the system to the next step by enhancing
    joint response capability, information sharing, data acquisition,
    intelligence gathering and dissemination, data security, and agency
    efficiency. While each entity alone and in joint projects such as the
    communications center has attempted to address these shortcomings, the
    high capital cost of these acquisitions is the major stumbling block to
    providing the final step to what is truly the pinnacle of
    interoperability achievement in a medium-sized community (225,000 total
    county population).
        The utilization of a mobile data system has numerous advantages for
    the law enforcement officer as well as for the public. Removing the
    reliance on strictly verbal communication by way of radio and widening
    the information flow through direct data communications results in an
    enhancement of the ability to successfully resolve problems in the
    field. Laptop computers as in-car computer aided dispatch terminals
    significantly increase the ability for public safety officers to
    communicate.
        Computers used in this manner can perform many important tasks. The
    mobile data computers can send and receive information between the
    officer and the dispatcher, including calls for service. Non-emergency
    calls are forwarded from the dispatcher to the appropriate unit without
    the need to transmit the information verbally over the radio, thus
    saving ``air-time'' for use in emergency situations and reducing the
    possibility of misunderstanding or receiving incorrect information.
    This also allows an increase in the amount of information the officer
    in the field has available in responding to situations. Additionally
    there is the potential for a decrease in the need for additional
    dispatchers even if the number of calls for service increases.
        Through the use of mobile data computers officers and supervisors
    can find the location of other officers and check on their current
    status. Eliminating the need for officers to request this information
    from a dispatcher gives all members of the agency a complete picture of
    the availability of officers for calls for service. Officers can also
    refer to information about calls awaiting dispatch and information
    regarding previous calls for service. Officers would be able to view
    past and current activity within his/her assigned area. Obtaining
    pertinent information in a timely manner permits the officer(s) to make
    more informed strategic and investigative decisions. This accessibility
    to information would permit officers to better inform citizens and
    business owners regarding activities. In addition officers would be
    able to communicate vehicle-to-vehicle by sending messages from one
    officer to another. This eliminates the need for officers to use ``air-
    time'' with less important transmissions. Law enforcement officers can
    conduct computer checks on wanted persons and stolen vehicles without
    having to tie up a dispatcher. This allows officers to check a large
    number of persons and vehicles, which can significantly increase the
    number of people who are arrested for warrants and the number of
    recovered stolen vehicles. A single dispatcher can only handle one (1)
    request at a time, while the computer system can handle numerous
    requests at the same time.
        In a time where crime knows no geographical boundaries, the ability
    to easily share timely information between differing agencies is of
    great importance. The ability for field officers to share information
    is a growing concern. Incidents spill across jurisdictional boundaries
    and there is an increasing need to share resources between agencies.
    The widening of the data pipeline to the field officer allows more
    flexibility and increases the amount of information readily available.
    The use of mobile data computers would allow increased and easier
    information sharing which should improve the ability of officers to
    respond to most situations.
                                     ______

                  Prepared Statement of the Hoopa Valley Tribe

        He Yung: my name is Clifford Lyle Marshall, Chairman of the Hoopa
    Valley Tribe. The Hoopa Valley Tribe is located in Northern California
    and in the County of Humboldt. Our treaty was signed providing the
    whole Hoopa Valley as a reservation. It was not until 1876 that an
    executive order was signed acknowledging this treaty. Since first
    European contact the culture and tradition remains to this day.
        The culture of the Hoopa Valley People is a way of life. Our
    ceremonial dances are healing or payer dances. These dances are held
    for spiritual meaning performed at sacred places, to balance the world.
    The Hoopa Valley People lived in harmony for over 10,000 years prior to
    European Contact. We had our own laws and rules that our people
    followed to live together and settle controversial issues by a form of
    payment.
        Currently we have a Tribal Court and Tribal Police Department that
    operates on a daily basis and is utilized by the Hoopa and surrounding
    Communities. We do not receive any of the monies for fines or tickets
    issued on the Hoopa Valley Tribal Reservation this money is collected
    by the State of California. This is not helping our community as far as
    administering the law enforcement or Tribal Court Programs. Our
    community looses approximately $750,000 annually in fines that should
    be distributed back to the Hoopa Valley Tribe to offer more services to
    our community. Further, the county refers probationary matters, such as
    counseling and the like, to our Human Services Department without
    paying part of expenses. This is becoming costly and burdensome to the
    Tribe.
        Law Enforcement operations consist of many diverse activities which
    are directed toward the attainment of Department objectives. Activities
    such as patrolling and issuing traffic citations are not objectives in
    themselves, rather, they are methods of achieving the real objectives
    of preventing and deterring crime, arresting criminal offenders, and
    preventing traffic accidents.
        Law Enforcement needs:
      --15 Full Time Officers (at $36,000 per year) = $540,000.00
      --6 Part Time Positions (at $18,000 per year) = $108,000.00
      --7 Dispatchers
      --2 Full-time:  $22,880.00 = $160,160
      --5 Part-time  $11,440.00 = $57,200
      --Vehicles: 3 at 35,000 = $105,000
      --Gas/maintenance/other = $50,000
      --Communications = $12,000.00
    Tribal Court Needs
        A new building. The current building is over 78 years old. We are
    growing as a community and will need to grow to accommodate the needs
    as follows:
      --Automated Case Management System: $26,000
      --Personnel and Automated Court Services: $395,000
      --Law Library: $15,457
      --Structural Modification: $1,336,000.00
      --Tribal Court Improvements: $43,800

                         TRIBAL COURT NEEDS ASSESSMENT

        The Hoopa Valley Tribal Court's prospective improvements are listed
    below according to the level of priority within each category. We have
    included a brief summary of information, which follows each list.
    Please note that some of the items are listed below as autonomous
    functions and the court lists them in the interest of demonstrating
    their supplemental impact upon the court's ability to function
    effectively within our jurisdiction.

    Unresolved Essential Tribal Court Needs
      --Automated Case Management System $26,000.00
      --Telephone System with Voice Mail
        Our court currently operates on a hard paper file system with very
    little computer management backup. This creates a burden upon the court
    because it compromises the court's ability to effectively manage its
    caseload. As our caseload begins to increase as a result of recent
    legislative activity, the daily operations of the tribal court will
    increasingly begin to diminish in the absence of the above listed
    requirements.
        Our current telephone system is antiquated and problematic. Our
    Court employs the use of a single answering machine, which makes it
    necessary to personally manage all incoming telephone calls, which is
    often an ineffective use of the current clerk's time.

    Funding Requirements for Personnel and Ancillary Court Services
                Existing Positions
      --Court Liaison Officer/Bailiff Subsidization $24,000.00
                Proposed Positions
      --Deputy Court Clerk $27,000.00
      --Public Defender $45,000.00
      --Probation Officer $40,000.00
      --Mediator/Mediation Services Provider $70,000.00
      --Associate Judge $60,000.00
      --Legal Aid Provider $36,000.00
      --Guardian Ad Litem $46,000.00
      --Public Guardian $47,000.00
        Our existing personnel have repeatedly proven themselves committed
    both to the Tribal Court and to its community. Although the budget has
    not previously allowed for any substantial increases, the tribal court
    staff deserves to be adequately compensated for their exemplary work.
    The Hoopa Valley Tribal Police Department has recently provided the
    court an opportunity to utilize a Court Liaison Officer who functions
    as a liaison between the court, the law enforcement department, and the
    community. The court would like to retain this myriad of services by
    supplementing the CLO salary in conjunction with the Hoopa Valley
    Tribal Police Department.

    Law Library
      --Three Computers $6,000.00
      --One Computer Printer $257.00
      --Subscription to Lexis-Nexis on line legal search engine $600.00
      --Self Help Legal Aid Manuals $8,600.00
        Our Court is required to provide a legal library to the public.
    This library currently consists of the entire Hoopa Valley Tribal Law
    and Order Code and the Indian Law Reporter. These often prove sorely
    inadequate in meeting our public's needs. We would ultimately like to
    provide three computers that would allow citizens to conduct legal
    research via a computer generated legal search engine. We would also
    like to empower our litigants to represent themselves using Self-Help
    manuals that we would provide in our library.

    Necessary Structural Modifications
      --Secured Parking Area $10,000.00
      --Court Renovation $126,000.00
      --Juvenile Detention Facility $585,000.00
      --Youth Regional Treatment Facility $615,000.00
        The court staff currently utilizes 90 percent of the court's
    available parking. This creates a problem for persons attempting to
    access the court. Our courthouse also needs a great deal of structural
    renovation. Our courthouse has had very basic maintenance services in
    the 38 years that it has existed. Our building requires a great deal of
    renovation and preventive maintenance in order to secure its continued
    existence for the coming years. We have a new juvenile justice avenue
    available in our court. The effectiveness of this juvenile court would
    be tenfold with the use of ancillary programs such as a detention
    facility and a treatment facility. The court is ready to assist
    juveniles and the families of juveniles in need, and these ancillary
    programs would greatly increase our effectiveness in doing so.

    Tribal Court Improvements
        Tables, Chairs, Desks $10,000.00
        Fireproof File Cabinets $800.00
        Metal Detector $5,000.00
        Court Automobile $28,000.00
        Some additional minor improvements such as these listed above would
    assist in the daily functioning of the court. Our courtroom needs
    plaintiff and defendant tables, and we are currently utilizing very old
    court furniture that belongs to the state court. We need additional
    file cabinets with the ability to protect our files from damage, and
    security and convenience necessitate the additional listed items.
                                     ______

    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 submit testimony
    concerning the National Sea Grant Program in the fiscal year 2004
    budget of the National Oceanic and Atmospheric Administration (NOAA).
    NAUFWP represents approximately 55 university programs and their 440
    faculty members, scientists, and extension specialists, and over 9,200
    undergraduates and graduate students working to enhance the science and
    management of fisheries and wildlife resources.
        The Office of Oceanic and Atmospheric Research (OAR) is the main
    research arm of NOAA, contributing to all other Line Offices and
    Strategic Plan goals and providing the scientific basis for national
    policy decisions in key areas. OAR supports a world-class network of
    scientists and environmental research laboratories, and partnerships
    with academia and the private sector. NAUFWP supports the President's
    fiscal year 2004 request of $380.6 million for Oceanic and Atmospheric
    Research.
        The National Sea Grant College Program provides essential academic
    research, education, and extension services for the oceans community.
    Sea Grant research is critical to the maintenance and improvement of
    the nation's marine resources. We were concerned by the
    Administration's proposal in fiscal year 2003 to move the Sea Grant
    College Program to the National Science Foundation (NSF). While the
    NSF's record of accomplishment in basic research is unparalleled, their
    strength is not in the deployment of applied research, education, and
    extension--the very characteristics that have made the National Sea
    Grant College Program so successful. Unfortunately, the Sea Grant
    program has been under funded for many years. Therefore, NAUFWP
    strongly supports the maintenance of the Sea Grant Program in the NOAA
    budget, and urges Congress to appropriate $68.41 million for this
    program in fiscal year 2004.
        NAUFWP supports the National Invasive Species Act Program, and the
    Marine Aquaculture Program, two partnership programs within NOAA that
    provide information to support policy and management decisions,
    increase knowledge of coastal and marine ecosystems, and provide the
    scientific basis for enhancing the Nation's marine economic sector.
    NAUFWP supports the Administration's $1 million increase for the NOAA
    Invasive Species Initiative, and the $2.6 million request for the NOAA
    Marine Aquaculture Program. We urge Congress to appropriate these
    amounts for fiscal year 2004.
        Thank you for considering the views of universities with fisheries
    and wildlife programs. We look forward to working with you and your
    staff to ensure adequate funding for fish and wildlife research,
    education, and conservation.

           LIST OF WITNESSES, COMMUNICATIONS, AND PREPARED STATEMENTS

                                  ----------
                                                                       Page
    Alliance for International Educational and Cultural Exchange,
      Prepared Statement.............................................   302
    American Bar Association, Prepared Statements..................279, 313
    American Foreign Service Association, Prepared Statement.........   305
    American Museum of Natural History, Prepared Statement...........   321
    American Rivers, Prepared Statement..............................   301
    American Sportfishing Association, Prepared Statement............   282
    Ashcroft, Hon. John, Attorney General of the United States,
      Office of the Attorney General, Department of Justice..........   103
        Prepared Statement...........................................   109
    Association of Small Business Development Centers, Prepared
      Statement......................................................   307

    Byrd, Senator Robert C., U.S. Senator From West Virginia,
      Questions Submitted by.........................................1, 149

    California Industry and Government Central California Ozone Study
      (CCOS) Coalition, Prepared Statement...........................   318
    Campbell, Senator Ben Nighthorse, U.S. Senator From Colorado,
      Questions Submitted by.........................................    39
    Carman, Gregory W., Chief Judge, United States Court of
      International Trade, the Judiciary, Prepared Statement.........   266
    City of Gainesville, Florida, Prepared Statement.................   324

    Domenici, Senator Pete V., U.S. Senator From New Mexico,
      Questions Submitted by....................................35, 84, 138
    Donaldson, William H., Chairman, Securities and Exchange
      Commission.....................................................   205
        Prepared Statement...........................................   206
    Doris Day Animal League, Prepared Statement......................   284

    Evans, Hon. Donald L., Secretary of Commerce, Office of the
      Secretary, Department of Commerce..............................    49
        Prepared Statement...........................................    51

    Gregg, Senator Judd, U.S. Senator From New Hampshire:
        Opening Statements.................................1, 103, 205, 223
        Questions Submitted by.......................................29, 74
        Remarks of...................................................    12

    Heyburn, Honorable John G., II, Chairman, Committee on the
      Budget, Judicial Conference of the United States, the
      Judiciary, Prepared Statement..................................   257
    Hoopa Valley Tribe, Prepared Statement...........................   327
    Hollings, Senator Ernest F., U.S. Senator From South Carolina,
      Questions Submitted by.........................................    42

    Inouye, Senator Daniel K., U.S. Senator From Hawaii, Questions
      Submitted by...................................................    85
    Investment Company Institute, Prepared Statement.................   300

    Kohl, Senator Herb, U.S. Senator From Wisconsin, Questions
      Submitted by...................................................   200

    Leahy, Senator Patrick J., U.S. Senator From Vermont, Questions
      Submitted by...................................................   150

    Mayer, Haldane Robert, Chief Judge, U.S. Court of Appeals for the
      Federal Circuit, the Judiciary, Prepared Statement.............   277
    Mecham, Leonidas Ralph, Director, Administrative Office of the
      U.S. Courts, the Judiciary, Prepared Statement.................   251
    Mikulski, Senator Barbara A., U.S. Senator From Maryland,
      Questions Submitted by.........................................46, 89
    Monmouth University School of Science, Technology and
      Engineering, Prepared Statement................................   319
    Mueller, Robert S., III, Director, Federal Bureau of
      Investigation, Department of Justice...........................   223
        Opening Statement............................................   223
        Prepared Statement...........................................   227
    Murphy, Diana E., Chair, United States Sentencing Commission, the
      Judiciary, Prepared Statement..................................   271

    National Association of University Fisheries and Wildlife
      Programs, Prepared Statement...................................   329
    National Center for Victims of Crime, Prepared Statement.........   315
    National Federation of Community Broadcasters, Prepared Statement   290

    Powell, Hon. Colin L., Secretary of State, Office of the
      Secretary, Department of State.................................     1
        Opening Statement............................................     1
        Prepared Statement...........................................     5

    Regional Information Sharing Systems (RISS) Program, Prepared
      State-
      ment...........................................................   291

    Smith, Hon. Fern M., Director, Federal Judicial Center, the
      Judiciary, Prepared Statement..................................   268
    Stevens, Senator Ted, U.S. Senator From Alaska, Questions
      Submitted by...................................................   147

    The Asia Foundation, Prepared Statement..........................   296
    The Nature Conservancy, Prepared Statement.......................   310
    The Ocean Conservancy, Prepared Statement........................   293

    University Corporation for Atmospheric Research, Prepared
      Statement......................................................   286

                                 SUBJECT INDEX

                                  ----------

                             DEPARTMENT OF COMMERCE

                            Office of the Secretary

                                                                       Page
    Additional Committee Questions...................................    74
    Backlog of Patent Applications...................................    57
    Byrd Amendment...................................................    91
    CIAO Moved to Homeland Security..................................    56
    Climate Change...................................................    55
    Cost of Outside Contractor Patent Search.........................    96
    Critical Infrastructure Protection...............................    75
    Deducting 201 Duties From AD/CVD Margins.........................    94
    Economic Growth..................................................    52
    Emergency Steel Loan Guarantee Program...........................    92
    Entry/Exit System Based on Biometrics............................    56
    Facilities, Infrastructure and Safety............................    54
    Fisheries........................................................    55
    Free Trade Concerns..............................................    67
    Homeland Security................................................53, 74
    Import Administration............................................    94
        Customs Instructions.........................................    95
    Import Monitoring Program........................................    93
    Manufacturing Extension Partnership Program......................    69
    National Institute of Standards and Technology (NIST)/Homeland
      Security.......................................................    76
        Law Enforcement Technologies Standards.......................    77
        Progress Investigating WTC Attacks...........................    57
        Warwick, Rhode Island Fire Investigation.....................    79
        Work With INS on the Entry/Exit System.......................    56
        World Trade Center Investigation.............................    78
    National Oceanic and Atmospheric Administration (NOAA)...........    85
    Paperless Patent Application Process.............................    83
    Patent and Trademark Office:
        Five Year Strategic Plan.....................................    80
        Increase in User Fees........................................    79
    Pilot of Outside Contractor Patent Search........................    99
    Public Telecommunications Facilities, Planning and Construction..    84
    Reliability of Outside Contractor Patent Search..................    97
    Research and Development for Counterterrorism....................    72
    Search Contractors Owning Patents................................   101
    Softwood Lumber..................................................    83
    Steel Tariffs--WTO Decision......................................    90
    Stopping Pilot of Competitive-sourcing...........................   101
    The 21st Century Strategic Plan..................................    59
    Tourism..........................................................    85
    Trade Adjustment Assistance......................................    88
    Trade Agreements--Impact on Sugar................................    89
    Transparency in Trade Negotiations...............................    89
    201 Mid-term Review..............................................    93
    Validity of Outside Contractor Patent Search.....................96, 98
    Working Capital Fund.............................................    84

                             DEPARTMENT OF JUSTICE

                        Federal Bureau of Investigation

    Changing to Meet:
        Cyber Threats................................................   230
        Intelligence Threats.........................................   229
        Terrorist Threats............................................   228
    Chicago Field Office.............................................   232
    Cigarette Smuggling/Terrorism Financing..........................   244
    Clarification of Sources of Trilogy Reprogramming................   246
    Clarification:
        Amount Requested for Information Technology in Fiscal Year
          2004.......................................................   238
        IAFIS Case in Los Angeles....................................   239
        Percentage Increase of Agents in Chicago Field Office
          Focusing on Counterterrorism Prior to September 11 to May/
          June of 2002, and During War With Iraq.....................   233
    Counterintelligence............................................225, 236
        Progress.....................................................   229
        Threats......................................................   229
    Counterterrorism..........................................224, 231, 248
        Progress.....................................................   227
        Threat.......................................................   228
        Training.....................................................   234
    Criminal Justice Information Services (CJIS).....................   239
    Cyber Crime......................................................   226
        Progress.....................................................   229
        Threat.......................................................   229
    Domestic Intelligence............................................   237
    Drugs/Terrorism Financing........................................   240
    FBI Culture......................................................   234
    Fiscal Year 2004:
        Budget Request...............................................   230
        Counterintelligence Budget Request...........................   229
        Counterterrorism Request.....................................   228
    Hydrogen Cyanide Weapons.........................................   243
    Information Technology...........................................   245
    Legats...........................................................   241
    Most Recent Polygraph of Special Agent James J. Smith, Subject of
      Espionage Case in Los Angeles, California......................   237
    Number of Agents in Chicago Field Office.........................   232
    Other Programs...................................................   230
    Percentage of Curriculum at Quantico Dedicated to
      Counterterrorism (CT)..........................................   234
    Reorganization...................................................   242
    Status of the Trilogy Reprogramming Request......................   238
    Technology Progress............................................226, 230
    Terrorism........................................................   235
    Terrorist Threat Integration Center/Foreign Terrorist Tracking
      Task Force.....................................................   249
    Trilogy..........................................................   237

                         Office of the Attorney General

    Additional Committee Questions...................................   138
    Alien Assistance Program.........................................   126
    America's Law Enforcement and Mental Health Project Act..........   127
    Antitrust--Telecom...............................................   202
    Attorney General's Opening Statement.............................   103
    Chemical Weapons.................................................   129
    Civil Rights...................................................108, 124
    Clarification of Fiscal Year 2004 Trilogy Request and
      Reprogramming..................................................   137
    Combating Corporate Fraud........................................   114
    Corporate Fraud..................................................   120
        Task Force...................................................   107
    Crime-Free Rural States Program..................................   199
    Crimes Against Children..........................................   108
    Deported Individuals.............................................   125
    DNA Initiative...................................................   194
    Drug Enforcement.................................................   107
        And Treatment................................................   115
    Emergency Wartime Supplemental Appropriation.....................   123
    Enhancing DNA Programs...........................................   117
    Enron Task Force.................................................   120
    FBI Enforcement of Immigration Laws..............................   196
    Federal Judges--New Mexico.......................................   128
    First Responders.................................................   108
    FISA (Foreign Intelligence Surveillance Act).....................   202
    Implementation of USA PATRIOT Act and Other Issues Related to War
      on Terrorism...................................................   200
    Imported Explosives..............................................   201
    Integrated Prevention Strategy...................................   106
    Iraqi Task Force Plan............................................   104
    Juvenile Accountability Incentive Block Grant Program............   200
    Local Law Enforcement Funding....................................   130
    Managing the Department's Financial and information Resources,
      Including Enhancing Information Security.......................   118
    Mental Health Courts.............................................   146
    National Security Council........................................   121
    National Security Entry-Exit Registration System.................   199
    Need for Additional Permanent Judgeships in New Mexico...........   139
    OIG Oversight of DEA and FBI.....................................   200
    Operation Top Off................................................   134
    Other Important Activities.......................................   118
    Preventing and Combating Terrorism, Including Counterintelligence   110
    Preventing Crimes Against Children...............................   116
    Privacy Act Exemptions...........................................   150
    Project Safe Neighborhoods.......................................   108
    Protecting the Judicial System and Managing Federal Detention and
      Incarceration Capacity.........................................   117
    Radiation Exposure Compensation Program........................128, 140
    Risk of International Terrorism in the United States.............   133
    Rocket Launchers and Airline Security............................   133
    Safe Explosives Act..............................................   149
    SCAAP and Southwest Border.......................................   138
    Sleeper Cells....................................................   203
    State and Local Funding..........................................   135
    State Justice Institute..........................................   127
    Terrorism:
        Prevention...................................................   105
        Threat:
            Integration Center.......................................   121
            Warning System...........................................   131
    Terrorist Threat.................................................   124
        Integration Center.........................................122, 125
            Budget...................................................   122
    Tobacco Smuggling/Terrorist Financing............................   130
    Trilogy..........................................................   136
    2003 Supplemental Budget Request.................................   104
    2004 Budget Request..............................................   105
    USA PATRIOT Act..................................................   150
    Village of Chickaloon and Village Forestry Department of Alaska..   147

                              DEPARTMENT OF STATE

                            Office of the Secretary

    Additional Committee Questions...................................    29
    Aid to Turkey....................................................    20
    Antiterrorism Training...........................................    37
    Berlin/Frankfurt Facilities......................................    43
    Compensation for Iranian Hostages................................    26
    Consular Officers................................................    30
    Cost Sharing Initiative..........................................    42
    Current Situation in Iraq........................................    18
    Defining Victory in Iraq.........................................    17
    Diplomatic Readiness Initiative..................................    29
    Dolphin-Safe Tuna................................................    46
    Embassy Construction.............................................    32
    Evaluating the Hiring Initiative.................................    44
    Foreign Policy Advisor Responsibilities: Funding America's
      Diplomacy Around the World.....................................     9
    French Role in the Congo.........................................    25
    History Regarding Regime Change in Iraq..........................    19
    Islamic Center in Turkey.........................................    24
    Madrasas.........................................................    24
    Personnel Placement Decisions....................................    30
    Post-Saddam Iraq.................................................    23
    Relevance of the United Nations..................................    21
    Removing Saddam Hussein..........................................    16
    Renovation of U.N. Building in New York..........................    25
    Right-sizing.....................................................    31
    Role for France and Germany......................................    24
    Russia and Iran's Nuclear Program................................    36
    Saddam Hussein and Weapons.......................................    13
    Saudi Arabia and 9/11 Terrorists.................................    23
    Situation in North Korea.........................................    27
    Soft Targets.....................................................    32
    Status of:
        Ally Support.................................................    20
        Other Arab Nations...........................................    22
    The CEO Responsibilities: State Department and Related Agencies..     6
    USAID Facilities.................................................    43
    Victory in Iraq..................................................    14

                       SECURITIES AND EXCHANGE COMMISSION

    Effect of Sarbanes-Oxley on Corporate Directors..................   219
    Expensing Stock Options..........................................   216
    Fiscal 2003......................................................   207
    Fiscal 2004......................................................   211
    Hedge Funds......................................................   213
    Pay Parity.......................................................   213
    Public Company Accounting Oversight Board........................   217
    Sarbanes-Oxley Act...............................................   218
    Status of Enron Case.............................................   214