[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]



 
                      THE NATIONAL NANOTECHNOLOGY
                     INITIATIVE: REVIEW AND OUTLOOK

=======================================================================

                                HEARING

                               BEFORE THE

                        SUBCOMMITTEE ON RESEARCH

                          COMMITTEE ON SCIENCE
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                               __________

                              MAY 18, 2005

                               __________

                           Serial No. 109-15

                               __________

            Printed for the use of the Committee on Science


     Available via the World Wide Web: http://www.house.gov/science



                    U.S. GOVERNMENT PRINTING OFFICE
21-195                      WASHINGTON : 2005
_____________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov  Phone: toll free (866) 512-1800; (202) 512ï¿½091800  
Fax: (202) 512ï¿½092250 Mail: Stop SSOP, Washington, DC 20402ï¿½090001
                                 ______

                          COMMITTEE ON SCIENCE

             HON. SHERWOOD L. BOEHLERT, New York, Chairman
RALPH M. HALL, Texas                 BART GORDON, Tennessee
LAMAR S. SMITH, Texas                JERRY F. COSTELLO, Illinois
CURT WELDON, Pennsylvania            EDDIE BERNICE JOHNSON, Texas
DANA ROHRABACHER, California         LYNN C. WOOLSEY, California
KEN CALVERT, California              DARLENE HOOLEY, Oregon
ROSCOE G. BARTLETT, Maryland         MARK UDALL, Colorado
VERNON J. EHLERS, Michigan           DAVID WU, Oregon
GIL GUTKNECHT, Minnesota             MICHAEL M. HONDA, California
FRANK D. LUCAS, Oklahoma             BRAD MILLER, North Carolina
JUDY BIGGERT, Illinois               LINCOLN DAVIS, Tennessee
WAYNE T. GILCHREST, Maryland         RUSS CARNAHAN, Missouri
W. TODD AKIN, Missouri               DANIEL LIPINSKI, Illinois
TIMOTHY V. JOHNSON, Illinois         SHEILA JACKSON LEE, Texas
J. RANDY FORBES, Virginia            BRAD SHERMAN, California
JO BONNER, Alabama                   BRIAN BAIRD, Washington
TOM FEENEY, Florida                  JIM MATHESON, Utah
BOB INGLIS, South Carolina           JIM COSTA, California
DAVE G. REICHERT, Washington         AL GREEN, Texas
MICHAEL E. SODREL, Indiana           CHARLIE MELANCON, Louisiana
JOHN J.H. ``JOE'' SCHWARZ, Michigan  VACANCY
MICHAEL T. MCCAUL, Texas
VACANCY
VACANCY
                                 ------                                

                        Subcommittee on Research

                  BOB INGLIS, South Carolina, Chairman
LAMAR S. SMITH, Texas                DARLENE HOOLEY, Oregon
CURT WELDON, Pennsylvania            RUSS CARNAHAN, Missouri
DANA ROHRABACHER, California         DANIEL LIPINSKI, Illinois
GIL GUTKNECHT, Minnesota             BRIAN BAIRD, Washington
FRANK D. LUCAS, Oklahoma             CHARLIE MELANCON, Louisiana
W. TODD AKIN, Missouri               EDDIE BERNICE JOHNSON, Texas
TIMOTHY V. JOHNSON, Illinois         BRAD MILLER, North Carolina
DAVE G. REICHERT, Washington         VACANCY
MICHAEL E. SODREL, Indiana           VACANCY
MICHAEL T. MCCAUL, Texas             VACANCY
VACANCY                                  
SHERWOOD L. BOEHLERT, New York       BART GORDON, Tennessee
                 DAN BYERS Subcommittee Staff Director
            JIM WILSON Democratic Professional Staff Member
        ELIZABETH GROSSMAN, KARA HAAS Professional Staff Members
                      JAMES HAGUE Staff Assistant


                            C O N T E N T S

                              May 18, 2005

                                                                   Page
Witness List.....................................................     2

Hearing Charter..................................................     3

                           Opening Statements

Statement by Representative Bob Inglis, Chairman, Subcommittee on 
  Research, Committee on Science, U.S. House of Representatives..    11
    Written Statement............................................    12

Statement by Representative Darlene Hooley, Ranking Minority 
  Member, Subcommittee on Research, Committee on Science, U.S. 
  House of Representatives.......................................    12
    Written Statement............................................    13

Prepared Statement by Representative Eddie Bernice Johnson, 
  Member, Subcommittee on Research, Committee on Science, U.S. 
  House of Representatives.......................................    15

Prepared Statement by Representative Michael M. Honda, Member, 
  Subcommittee on Research, Committee on Science, U.S. House of 
  Representatives................................................    15

Prepared Statement by Representative Russ Carnahan, Member, 
  Subcommittee on Research, Committee on Science, U.S. House of 
  Representatives................................................    16

                               Witnesses:

Mr. Scott C. Donnelly, Senior Vice President for Global Research; 
  Chief Technology Officer, General Electric
    Oral Statement...............................................    16
    Written Statement............................................    19
    Biography....................................................    20
    Financial Disclosure.........................................    21

Dr. John M. Kennedy, Director, Center for Advanced Engineering 
  Fibers and Films, Clemson University
    Oral Statement...............................................    22
    Written Statement............................................    23
    Financial Disclosure.........................................    30

Dr. John M. Cassady, Vice President for Research, Oregon State 
  University
    Oral Statement...............................................    31
    Written Statement............................................    33
    Biography....................................................    38
    Financial Disclosure.........................................    39

Mr. Michael Fancher, Director of Economic Outreach, Associate 
  Professor of Nanoeconomics, Albany Nanotech
    Oral Statement...............................................    39
    Written Statement............................................    42
    Biography....................................................    48
    Financial Disclosure.........................................    49

Discussion.......................................................    50

             Appendix 1: Answers to Post-Hearing Questions

.................................................................
Dr. John M. Cassady, Vice President for Research, Oregon State 
  University                                                         66

             Appendix 2: Additional Material for the Record

Statement of Bob Gregg, Executive Vice President, FEI Company....    68

The National Nanotechnology Initiative at Five Years: Assessment 
  and Recommendations of the National Nanotechnology Advisory 
  Panel, President's Council of Advisors on Science and 
  Technology, May 2005...........................................    70


       THE NATIONAL NANOTECHNOLOGY INITIATIVE: REVIEW AND OUTLOOK

                              ----------                              


                        WEDNESDAY, MAY 18, 2005

                  House of Representatives,
                          Subcommittee on Research,
                                      Committee on Science,
                                                    Washington, DC.

    The Subcommittee met, pursuant to call, at 10:10 a.m., in 
Room 2318 of the Rayburn House Office Building, Hon. Bob Inglis 
[Chairman of the Subcommittee] presiding.


                            hearing charter

                        SUBCOMMITTEE ON RESEARCH

                          COMMITTEE ON SCIENCE

                     U.S. HOUSE OF REPRESENTATIVES

                      The National Nanotechnology

                     Initiative: Review and Outlook

                        wednesday, may 18, 2005
                         10:00 a.m.-12:00 p.m.
                   2318 rayburn house office building

1. Purpose

    On Wednesday, May 18, 2005, the Research Subcommittee of the 
Committee on Science of the House of Representatives will hold a 
hearing to review the activities of the National Nanotechnology 
Initiative (NNI).

2. Witnesses

Mr. Scott Donnelly is the Senior Vice President for Global Research for 
the General Electric Company.

Dr. John Kennedy is Director of the Center for Advanced Engineering 
Fibers and Films (CAEFF) at Clemson University. CAEFF is a National 
Science Foundation-supported Engineering Research Center.

Dr. John Cassady is Vice President for Research at Oregon State 
University (OSU). OSU plays a leading role in the Oregon Nanoscience 
and Microtechnologies Institute.

Mr. Michael Fancher is Director of Economic Outreach at Albany 
NanoTech. He is also Associate Professor of Nanoeconomics at the State 
University of New York at Albany, College of Nanoscale Science and 
Engineering.

3. Overarching Questions

          Which fields of science and engineering present the 
        greatest opportunities for breakthroughs in nanotechnology, and 
        which industries are most likely to be altered by those 
        breakthroughs in both the near-term and the longer-term?

          What are the primary barriers to commercialization of 
        nanotechnology, and how can these barriers be overcome or 
        removed? What is the Federal Government's role in facilitating 
        the commercialization of nanotechnology innovations, and how 
        can the current federal nanotechnology program be strengthened 
        in this area?

          What is the workforce outlook for nanotechnology, and 
        how can the Federal Government and universities help ensure 
        there will be enough people with the relevant skills to meet 
        the Nation's needs for nanotechnology research and development 
        and for the manufacture of nanotechnology-enabled products?

4. Brief Overview

          In December 2003, the President signed the 21st 
        Century National Nanotechnology Research and Development Act 
        (P.L. 108-153), which originated in the Science Committee. This 
        Act provided a statutory framework for the interagency National 
        Nanotechnology Initiative (NNI), authorized appropriations for 
        nanotechnology research and development (R&D) activities 
        through fiscal year 2008 (FY08), and enhanced the coordination 
        and oversight of the program. Funding for the NNI has grown 
        from $464 million in fiscal year 2001 (FY01) to $1.1 billion in 
        FY05, and 11 agencies currently have nanotechnology R&D 
        programs.

          In addition to federal investments, State governments 
        and the private sector have become increasingly involved in 
        supporting nanotechnology. In 2004, the private sector in the 
        U.S. invested roughly $2 billion in nanotechnology research, 
        while states invested roughly $400 million. The state 
        investment is primarily spent on infrastructure and research at 
        public universities, while the private funding focuses on 
        applied research and development activities at small and large 
        companies, and funding for start-up nanotechnology ventures.

          The 21st Century National Nanotechnology Research and 
        Development Act required that a National Nanotechnology 
        Advisory Panel (NNAP) biennially report to Congress on trends 
        and developments in nanotechnology science and engineering and 
        on recommendations for improving the NNI. The first such report 
        will be released on May 18. Its recommendations include 
        strengthening Federal-industry and Federal-State cooperation on 
        nanotechnology research, infrastructure, and technology 
        transfer, and broadening federal efforts in nanotechnology 
        education and workforce preparation.

5. Background

Overview of Nanotechnology
    The National Academy of Sciences describes nanotechnology as the 
``ability to manipulate and characterize matter at the level of single 
atoms and small groups of atoms.'' An Academy report describes how 
``small numbers of atoms or molecules. . .often have properties (such 
as strength, electrical resistivity, electrical conductivity, and 
optical absorption) that are significantly different from the 
properties of the same matter at either the single-molecule scale or 
the bulk scale.'' Scientists and engineers anticipate that 
nanotechnology will lead to ``materials and systems with dramatic new 
properties relevant to virtually every sector of the economy, such as 
medicine, telecommunications, and computers, and to areas of national 
interest such as homeland security.'' \1\
---------------------------------------------------------------------------
    \1\ Small Wonders, Endless Frontiers: A Review of the National 
Nanotechnology Initiative, National Research Council/National Academy 
of Sciences, 2002.
---------------------------------------------------------------------------
    Nanotechnology is an enabling technology and, as such, its 
commercialization does not depend specifically on the creation of new 
products and new markets. Gains can come from incorporating 
nanotechnology into existing products, resulting in new and improved 
versions of these products. Examples could include faster computers, 
lighter materials for aircraft, less invasive ways to treat cancer, and 
more efficient ways to store and transport electricity. Some less-
revolutionary nanotechnology-enabled products are already on the 
market, including stain-resistant wrinkle-free pants, ultraviolet-light 
blocking sun screens, and scratch-free coatings for eyeglasses and 
windows.
    In October 2004, a private research firm released its most recent 
evaluation of the potential impact of nanotechnology. The analysis 
found that, in 2004, $13 billion worth of products in the global 
marketplace incorporated nanotechnology. The report projected that, by 
2014, this figure will rise to $2.6 trillion--15 percent of 
manufacturing output in that year. The report also predicts that in 
2014, ten million manufacturing jobs worldwide--11 percent of total 
manufacturing jobs--will involve manufacturing these nanotechnology-
enabled products.\2\
---------------------------------------------------------------------------
    \2\ Lux Research, ``Sizing Nanotechnology's Value Chain,'' October 
2004.
---------------------------------------------------------------------------
National Nanotechnology Initiative
    The National Nanotechnology Initiative (NNI) is a multi-agency 
research and development (R&D) program. The goals of the NNI, which was 
initiated in 2000, are to maintain a world-class research and 
development program; to facilitate technology transfer; to develop 
educational resources, a skilled workforce, and the infrastructure and 
tools to support the advancement of nanotechnology; and to support 
responsible development of nanotechnology. Currently, 11 federal 
agencies have ongoing programs in nanotechnology R&D funding for those 
activities is shown in Table 1. Additionally, 11 other agencies, such 
as the Food and Drug Administration, the U.S. Patent and Trademark 
Office, and the Department of Transportation, participate in the 
coordination and planning work associated with the NNI.




    In 2003, the Science Committee wrote and held hearings on the 21st 
Century National Nanotechnology Research and Development Act, which was 
signed into law on December 3, 2003. The Act authorizes $3.7 billion 
over four years (FY05 to FY08) for five agencies (the National Science 
Foundation, the Department of Energy, the National Institute of 
Standards and Technology, the National Aeronautics and Space 
Administration, and the Environmental Protection Agency). The Act also: 
adds oversight mechanisms--an interagency committee, annual reports to 
congress, an advisory committee, and external reviews--to provide for 
planning, management, and coordination of the program; encourages 
partnerships between academia and industry; encourages expanded 
nanotechnology research and education and training programs; and 
emphasizes the importance of research into societal concerns related to 
nanotechnology to understand the impact of new products on health and 
the environment.

National Nanotechnology Advisory Panel Report
    The 21st Century National Nanotechnology Research and Development 
Act required the establishment or designation of a National 
Nanotechnology Advisory Panel (NNAP) to assess and provide advice on 
the NNI. In July 2004, the President designated the existing 
President's Council of Advisors on Science and Technology to serve as 
the NNAP. The NNAP's responsibilities include providing input to the 
administration on trends and developments in nanotechnology and on the 
conduct and management of the NNI.
    The NNAP is required to report to Congress on its activities every 
two years, and its first report will be formally released on May 18, 
2005. (Its content is described below.) The report assesses the U.S. 
position in nanotechnology relative to the rest of the world, evaluates 
the quality of current NNI programs and program management, and 
recommends ways the NNI could be improved.

            Benchmarking
    The NNAP report finds that U.S. leads the rest of the world in 
nanotechnology as measured by metrics such as level of spending (both 
public and private), publications in high-impact journals, and patents. 
The report also finds, however, that other countries are increasing 
their efforts and investments in nanotechnology and are closing the gap 
with the U.S. Some countries cannot afford to invest as broadly as the 
U.S., which has supported nanotechnology efforts relevant to a wide 
range of industries, but these other countries--particularly in Asia--
have instead chosen to concentrate their investments in particular 
areas to make strides in a specific sector. For example, Korea and 
Taiwan are investing heavily in nanoelectronics while Singapore and 
China are focusing on nanobiotechnology and nanomaterials, 
respectively.

            NNI Management
    The NNAP report finds that the NNI is a well managed program. The 
report notes that the balance of funding among different areas of 
nanotechnology is appropriate and emphasizes the importance of 
investment in a diverse array of fields rather than a narrow focus on a 
just a few ``Grand Challenges.'' In particular, the NNAP lauds the NNI 
for advancing the foundational knowledge about control of matter at the 
nanoscale; creating an interdisciplinary nanotechnology research 
community and an infrastructure of over 35 nanotechnology research 
centers, networks, and user facilities; investing in research related 
to the environment, health, safety, and other societal concerns; 
establishing nanotechnology education programs; and supporting public 
outreach.

            Recommendations
    The NNAP recommends continued strong investment in basic research 
and notes the importance of recent federal investment in research 
centers, equipment, and facilities at universities and national 
laboratories throughout the country (see Appendix A). Such facilities 
allow both university researchers and small companies to have access to 
equipment too expensive or unwieldy to be contained in an individual 
laboratory.
    The NNAP also emphasizes the importance of State and industry 
contributions to the U.S. nanotechnology efforts and recommends that 
the NNI expand federal-state and federal-industry interactions through 
workshops and other methods.
    The NNAP also recommends that the Federal Government actively use 
existing government programs such as the Small Business Innovation 
Research (SBIR) and the Small Business Technology Transfer (STTR) 
programs to enhance technology transfer in nanotechnology. All grant-
giving agencies are required by law to have SBIR and STTR programs, and 
some of them specifically target solicitations toward nanotechnology. 
However, it is hard to get a clear, up-to-date picture of how much 
funding is actually provided for nanotechnology-related projects in 
these programs and on what the demand for SBIR/STTR funding in this 
area is. The NNAP also recommends that federal agencies be early 
adopters and purchasers of new nanotechnology-related products in cases 
where these technologies can help fulfill an agency's mission.
    The NNAP also finds that the NNI is making good investments in 
environmental, health, and safety research, and recommends that the 
Federal Government continue efforts to coordinate this work with 
related efforts in industry and at non-profits and with activities 
conducted in other countries. The NNAP emphasizes the importance of 
communication with stakeholders and the public regarding research and 
findings in this area.
    Finally, the NNAP emphasizes the importance of education and 
workforce preparation and recommends that the NNI coordinate with 
Departments of Education and Labor to improve access to materials and 
methods being developed for purposes of nanotechnology education and 
training.

Challenges Ahead
    The NNAP notes that successful adoption of nanotechnology-enabled 
products will require coordination between federal, State, academic, 
and industrials efforts (including for efficient commercialization of 
products), training of a suitable high-technology workforce, and 
development of techniques for the responsible manufacture and use of 
these products.
    Developing a federal strategy to facilitate technology transfer of 
nanotechnology innovations is a particularly complex challenge because 
of the wide range of industry sectors that stand to benefit from 
nanotechnology and the range of time scales at which each sector will 
realize these benefits. The NNAP report provides examples of various 
possible nanotechnology applications and when they are expected to 
reach the product stage (Table 2). The applications cover sectors from 
information technology and health care to security and energy, and some 
applications are on the market now, while others are more than 20 years 
in the future.




    As the NNAP report notes, the states are playing an increasing role 
in nanotechnology. In 2004, state funding for nanotechnology-related 
projects was $400 million, or approximately 40 percent of the total 
federal investment. To date, State funding for nanotechnology has been 
focused on infrastructure--particularly the construction of new 
facilities--with some research support being provided in the form of 
matching funds to public universities that receive federal research 
dollars. In addition to receiving state support, universities and 
national laboratories also leverage federal investments through 
industry contributions of funds or in-kind donations of equipment and 
expertise. The report on a 2003 NNI workshop on regional, State, and 
local nanotechnology initiatives lists 18 specific examples of these 
non-federal initiatives.\3\ (Witnesses at the hearing will describe the 
specific approaches being taken in New York, South Carolina, and 
Oregon.)
---------------------------------------------------------------------------
    \3\ Regional, State, and Local Initiatives in Nanotechnology is the 
report on a workshop convened on September 30-October 1, 2003 by the 
Nanoscale Science, Engineering and Technology (NSET) Subcommittee, the 
interagency group that coordinates NNI activities. The report is 
available online at http://www.nano.gov/041805Initiatives.pdf.
---------------------------------------------------------------------------
    In recent years, the focus has been on the construction of 
nanotechnology facilities, but as these building projects financed by 
federal, State, and private funding are completed, the nanotechnology 
community must consider how best to capitalize on these new resources. 
Specifically, funding will have to be found for operating expenses, and 
policies that will attract public and private sector users to these 
facilities will be needed on topics such as collaboration, intellectual 
property, and usage fees.
    The diversity of industry sectors will be a challenge for 
developing appropriate education and workforce training programs in 
nanotechnology. The predicted scale and breadth of research and 
manufacturing jobs related to nanotechnology will require not only 
specialized programs but also integration of nanotechnology-related 
information into general science, technology, engineering, and 
mathematics education.
    Finally, successful integration of nanotechnology into products 
will require an understanding of the standards and regulations needed 
to govern responsible manufacturing and use of nanotechnology-enabled 
products. Currently, $82 million of the NNI R&D funding is spent on 
research related to the societal implications of nanotechnology. Of 
this amount, $38.5 million is specifically directed at environmental, 
health, and safety research, while the remainder is for the study of 
economic, workforce, educational, ethical, and legal implications. In 
addition to this funding, relevant work is also ongoing in other NNI 
focus areas. One example is the development of measurement techniques 
at the nanoscale which are necessary to set standards that can be used 
for quality control of nanotechnology products and to manage compliance 
with safety regulations. Another example is the study of the basic 
mechanisms of interaction between nanoscale materials and biological 
systems, which can provide critical information for health care 
applications as well as safe use practices.

6. Witness Questions

    The witnesses were asked to address the following questions in 
their testimony:

Questions for Mr. Scott Donnelly:

          What fields of science and engineering present the 
        greatest opportunities for breakthroughs in nanotechnology, and 
        what industries are most likely to be impacted by those 
        breakthroughs in both the near-term and the longer-term?

          What are the primary barriers to commercialization of 
        nanotechnology, and how can these barriers be overcome or 
        removed?

          To what extent has GE made use of university research 
        and of facilities at universities and national laboratories? 
        How important are these resources to GE's research program and 
        how could they be more helpful?

Questions for Dr. John Kennedy:

          How does the Clemson Center for Advanced Engineering 
        Fibers and Films (CAEFF) interact with the private sector? What 
        are the greatest barriers to increased academic/industrial 
        cooperation in nanotechnology?

          How does the State of South Carolina provide support 
        to CAEFF for nanotechnology and other high-technology 
        activities? How does this complement funding from the Federal 
        Government and the private sector? What, if any, gaps remain?

          What is the workforce outlook for nanotechnology, and 
        how can the Federal Government and universities help ensure 
        there will be enough people with the relevant skills to meet 
        the Nation's needs for nanotechnology research and development 
        and for the manufacture of nanotechnology-enabled products?

          How can Federal and State governments, industry, and 
        academia best cooperate to facilitate advances in 
        nanotechnology?

Questions for Dr. John Cassady:

          How do Oregon State University (OSU) and the Oregon 
        Nanoscience and Microtechnologies Institute (ONAMI) interface 
        with the private sector? What are the greatest barriers to 
        increased academic/industrial cooperation in nanotechnology?

          How does the State of Oregon provide support to OSU 
        and ONAMI for nanotechnology and other high-technology 
        activities? How does this complement funding from the Federal 
        Government and the private sector? What, if any, gaps remain?

          What is the workforce outlook for nanotechnology, and 
        how can the Federal Government and universities help ensure 
        there will be enough people with the relevant skills to meet 
        the Nation's needs for nanotechnology research and development 
        and for the manufacture of nanotechnology-enabled products?

          How can Federal and State governments, industry, and 
        academia best cooperate to facilitate advances in 
        nanotechnology?

Questions for Mr. Michael Fancher:

          How does Albany NanoTech interface with the private 
        sector? What are the greatest barriers to increased academic/
        industrial cooperation in nanotechnology?

          How does the State of New York provide support to 
        Albany NanoTech and the University of Albany College of 
        Nanoscale Science and Engineering? How does this complement 
        funding from the Federal Government and the private sector? 
        What, if any, gaps remain?

          What is the workforce outlook for nanotechnology, and 
        how can the Federal Government and universities help ensure 
        there will be enough people with the relevant skills to meet 
        the Nation's needs for nanotechnology research and development 
        and for the manufacture of nanotechnology-enabled products?

          How can Federal and State governments, industry, and 
        academia best cooperate to facilitate advances in 
        nanotechnology?
        
        
    Chairman Inglis. Good morning, everyone.
    Thank you for joining us for this hearing on 
nanotechnology. It is good of you to come this morning to the 
Research Subcommittee on a topic of such small significance. I 
say that, of course, because what we are talking about here, 
science at the nanometer scale, starts at 1/75,000 of the width 
of a human hair. We are here to learn about nanotechnology, and 
I am excited to hear what our witnesses will have to say. So I 
will keep this opening statement small as well.
    I also want to welcome Ranking Member Hooley. I was 
encouraged by her insightful questions at the last Research 
Subcommittee hearing, and I am looking forward to what she will 
contribute this morning. I am also seeing that she and I are 
dressed in the right colors for Oregon, is that right? And 
Clemson University, I would point out, Dr. Kennedy.
    I am not a scientist by background, and I have got to 
confess that I didn't know enough about this subject until I 
had prepared for this hearing. I am not alone. A recent survey 
by MIT's technology review showed that more than half of all 
Americans have no familiarity with nanotechnology. That is a 
shame, because these technologies are changing the products we 
use and have the potential to revitalize our manufacturing 
base. We must be about educating our children in math and 
science if they will need to do these jobs. I know Ms. Hooley, 
being a former teacher, will have something to say about that 
as well.
    This morning, the President's Council of Advisors on 
Science and Technology released a report on the state of and 
outlook for nanotechnology in the United States. On the whole, 
the report is very encouraging, noting that we lead the world 
by most metrics, including funding, patents, and scientific 
publications. But one of the things I found troubling is that 
other countries are catching up, and not just in funding. I 
hope we can talk today about the ways the United States can 
maintain its status as a world leader in these emerging 
technologies.
    For those of us who are technologically challenged, like 
me, nanotechnology is the manipulation of matter at the 
molecular level to get results that just don't occur in larger 
lumps of atoms. It promises to impact virtually every field, 
with applications in fields from energy, to defense, to health 
care, to transportation. You can end up with things like gold-
covered nanoshells to target and burn cancer away or light-
weight, super strong materials structured at the smallest 
levels that could increase the efficiency of our airplanes and 
automobiles.
    Our experts can talk more about nanotechnology's 
implications, but what we really want to know is how to get it 
into products that we will use in the future. Nanotechnology is 
one of the few technologies where basic research meets the 
marketplace in venture capital startups and R&D at large firms. 
The witnesses here today will bring the process to life and let 
us in government know how we are helping and how we may be 
hurting advances in this very promising area.
    [The prepared statement of Chairman Inglis follows:]

               Prepared Statement of Chairman Bob Inglis

    Welcome. It's good of you to come to this hearing at the Research 
Subcommittee on a topic of such small significance. I say that, of 
course, because what we're talking about here--science at the nanometer 
scale--starts at a size 1/75,000th of the width of a human hair. We're 
here to learn about nanotechnology, and I'm excited to hear what our 
witnesses will have to say, so I'll keep this opening statement small 
as well.
    I also want to welcome our Ranking Member, Ms. Hooley. I was 
encouraged by her insightful questions in our last Research 
Subcommittee hearing, and I'm looking forward to what she will 
contribute to this hearing.
    I'm not a scientist by background, and I've got to confess that I 
didn't know enough about this subject until I had to prepare for this 
hearing. I'm not alone. A recent survey by MIT's Technology review 
showed that more than half of all Americans have no familiarity with 
nanotechnology. That's a shame, because these technologies are changing 
the products we use, and have the potential to revitalize our 
manufacturing base. We must be about educating our children in the math 
and science they will need to do these jobs. I know Ms. Hooley, being a 
former teacher, has a lot to say about this.
    This morning, the President's Council of Advisors on Science and 
Technology released a report on the state of, and outlook for, 
nanotechnology in the U.S. On the whole, the report is very 
encouraging, noting that we lead the world by most metrics, including 
funding, patents, and scientific publications. But one of the things I 
find troubling is that other countries are catching up, and not just in 
funding. I hope we can talk today about ways the U.S. can maintain its 
status as a world leader in these emerging technologies.
    For those of us who are technologically challenged--like me--
nanotechnology is the manipulating of matter at the molecular level to 
get results that just don't occur in larger lumps of atoms. It promises 
to impact virtually every field--with applications in fields from 
energy to defense to health care to transportation. You can end up with 
things like gold-covered nanoshells to target and burn cancer away, or 
light-weight, super-strong materials structured at the smallest levels 
that could increase the efficiency of our airplanes and automobiles.
    Our experts can talk more about nanotechnology's implications, but 
what we really want to know is how to get it into the products we will 
use in the future. Nanotechnology is one of the few technologies where 
basic research meets the marketplace in venture-capital startups and 
R&D at large firms. The witnesses here today will bring the process to 
life and let us in government know how we're helping and how we may be 
hurting advances in this very promising area.

    Chairman Inglis. With that, I would recognize Ms. Hooley 
for an opening statement.
    Ms. Hooley. Thank you, Mr. Chair.
    I am pleased to join you in welcoming our witnesses today 
to the oversight hearing on the National Nanotechnology 
Initiative, or the NNI. One of the signal accomplishments of 
the Science Committee in the last Congress was the development 
of the NNI authorization legislation, which was signed into law 
in December of 2003. Calling the technology revolutionary has 
become a cliche, but nanotechnology truly is revolutionary. A 
recent National Research Council report explains why this is 
so: ``The ability to control and manipulate atoms to observe 
and stimulate collective phenomena to treat complex material 
systems and to span length scales from atoms to our everyday 
experience provides opportunities that were not even imagined a 
decade ago.''
    Nanotechnology will have an enormous consequence for the 
information industry, for manufacturing, and for medicine and 
health. Indeed, the scope of this technology is so broad as to 
leave virtually no product untouched. The NNI is a coordinated 
federal R&D effort that seeks to ensure the United States is at 
the forefront of research to develop nanotechnology and is 
positioned to benefit from its many potential applications.
    The focus of this hearing is to review the initial 
assessment of the NNI by the President's Council of Advisors on 
Science and Technology. This assessment is mandated by statute 
and is required to cover both the content and the management of 
NNI.
    Mr. Chairman, as you know, the Co-chair of PCAST was 
scheduled to appear today to present a report. However, the 
Administration suddenly and inexplicably found a constitutional 
objection to this appearance. This extraordinary constitutional 
interpretation would prevent a member of a statutorily mandated 
Advisory Committee from presenting a mandated report to 
Congress. I would hope the Science Committee will formally 
object to this action and will strenuously assert Congressional 
prerogatives for access to information about the implementation 
of this federal program, and we will talk about that when we 
get through.
    One aspect of the NNI that the Advisory Committee report 
touches on and is of great interest to me is how the NNI helps 
facilitate commercialization of the technology. I believe that 
PCAST will have some recommendations for making the NNI more 
effective in this area. As the PCAST report points out, many 
states are investing in nanotechnology. And of course, the 
states play a leading role in economic development. Oregon is 
one of those states that has taken steps and made investments 
to help create new commercial enterprises founded on results 
flowing from nanoscience research.
    I am delighted that one of our witnesses this morning is 
Dr. John Cassady, who is Vice President for Research at Oregon 
State University, and I did wear these colors in his honor 
today. Mr. Cassady is closely involved with the Oregon 
Nanoscience and Microtechnologies Institute, of what we call 
ONAMI, a collaboration between Oregon's three major research 
universities, federal research agencies, and the state's 
thriving high-tech sector. Dr. Cassady will be able to describe 
how Oregon is supporting nanotechnology development and how 
ONAMI, which emphasizes rapidly commercializing new technology, 
works in partnership with the private sector.
    I hope to learn today how NNI could be more effective in 
helping transfer technology to the private sector and helping 
support the commercialization process. I will be interested in 
the experiences of our witnesses and in their recommendations.
    Mr. Chair, I want to thank you for calling this hearing, 
and I want to thank our witnesses for appearing before the 
Subcommittee today, and I look forward to our discussion.
    Thank you.
    [The prepared statement of Ms. Hooley follows:]

          Prepared Statement of Representative Darlene Hooley

    Mr. Chairman, I am pleased to join you in welcoming our witnesses 
today to this oversight hearing on the National Nanotechnology 
Initiative, or the NNI. One of the signal accomplishments of the 
Science Committee in the last Congress was the development of the NNI 
authorization legislation, which was signed into law in December 2003.
    Calling a technology ``revolutionary'' has become a cliche. But 
nanotechnology truly is revolutionary. A recent National Research 
Council report explains why this is so:

         ``The ability to control and manipulate atoms, to observe and 
        simulate collective phenomena, to treat complex materials 
        systems, and to span length scales from atoms to our everyday 
        experience, provides opportunities that were not even imagined 
        a decade ago.''

    Nanotechnology will have enormous consequences for the information 
industry, for manufacturing, and for medicine and health. Indeed, the 
scope of this technology is so broad as to leave virtually no product 
untouched. The NNI is the coordinated federal R&D effort that seeks to 
ensure the U.S. is at the forefront of research to develop 
nanotechnology and is positioned to benefit from its many potential 
applications.
    The focus of this hearing is to review the initial biennial 
assessment of the NNI by the President's Council of Advisors on Science 
and Technology. This assessment is mandated by statute and is required 
to cover both the content and the management of the NNI.
    Mr. Chairman, as you know, the co-chair of PCAST was scheduled to 
appear today to present this report. However, the Administration 
suddenly and inexplicably found a constitutional objection to his 
appearance. This extraordinary constitutional interpretation would 
prevent a member of a statutorily mandated advisory committee from 
presenting a statutorily mandated report to Congress. I trust the 
Science Committee will formally object to this action and will 
strenuously assert congressional prerogatives for access to information 
about the implementation of federal programs.
    One aspect of the NNI that the advisory committee report touches on 
and that is of great interest to me is how the NNI helps facilitate 
commercialization of the technology. I believe PCAST will have some 
recommendations for making the NNI more effective in this area. As the 
PCAST report points out, many States are investing in nanotechnology 
and, of course, the States play a leading role in economic development. 
Oregon is one of those States that has taken steps and made investments 
to help create new commercial enterprises founded on results flowing 
from nanoscience research.
    I am delighted that one of our witnesses this morning is Dr. John 
M. Cassady, who is Vice President for Research at Oregon State 
University. Dr. Cassady is closely involved with the Oregon Nanoscience 
and Microtechnologies Institute (ONAMI), a collaboration between 
Oregon's three major research universities, federal research agencies, 
and the state's thriving high-tech sector.
    Dr. Cassady will be able to describe how Oregon is supporting 
nanotechnology developments and how ONAMI, which emphasizes rapidly 
commercializing new technology, works in partnership with the private 
sector.
    I hope to learn today how the NNI could be more effective in 
helping transfer technology to the private sector and in helping 
support the commercialization process. I will be interested in the 
experiences of our witnesses and in their recommendations.
    Mr. Chairman, I want to thank you for calling this hearing and 
thank our witnesses for appearing before the Subcommittee today. I look 
forward to our discussion.

    Chairman Inglis. Thank you, Ms. Hooley.
    I might take the prerogative of the Chair just to mention 
that we do agree with you that it is disappointing that we are 
not going to be able to hear from the President's advisor on 
this. We had hoped that he would be here to testify. The good 
news, however, is that the report is available at the back of 
the room and on the web. It would have been nice to have had 
the opportunity to ask questions and to see the full 
presentation of that, and yes, Ms. Hooley, the Science 
Committee is expressing our desires in that area and expressing 
the prerogatives of the House to have access to that process.
    It was, however, a public process that developed the report 
and the report itself is public, so no secret deals here. It is 
just a matter that it would be better if he were here to make 
the presentation.
    So other Members are invited to make opening statements 
available for publication in the record this morning.
    [The prepared statement of Ms. Johnson follows:]
       Prepared Statement of Representative Eddie Bernice Johnson
    Thank you, Mr. Chairman, for calling this very important hearing 
today. I welcome our distinguished witnesses.
    The purpose of this hearing is to examine federal nanotechnology 
research and development and to explore the outlook for the future.
    Nanotechnology is the act of manipulating matter at the atomic 
scale. Regardless of the diverse opinions on the rate at which 
nanotechnology will be implemented, people who make it a habit to keep 
up with technology agree on this: it is a technology in its infancy, 
and it holds the potential to change everything.
    Research in nanoscience is literally exploding, both because of the 
intellectual allure of constructing matter and molecules one atom at a 
time, and because the new technical capabilities permit creation of 
materials and devices with significant societal impact. The rapid 
evolution of this new science and the opportunities for its application 
promise that nanotechnology will become one of the dominant 
technologies of the 21st century. Nanotechnology represents a central 
direction for the future of chemistry that is increasingly 
interdisciplinary and ecumenical in application.
    Currently, manufacturing methods at the molecular level are very 
unsophisticated. Methods such as casting, grinding, milling and even 
lithography move atoms in cumbersome and unyielding manners. It has 
been compared to trying to make things out of LEGO blocks with boxing 
gloves on your hands. Yes, you can push the LEGO blocks into great 
heaps and pile them up, but you can't really snap them together the way 
they should be attached.
    In the future, nanotechnology will let us take off the boxing 
gloves. We'll be able to snap together the fundamental building blocks 
of nature easily, inexpensively and in most of the ways permitted by 
the laws of physics. This will be essential if we are to continue the 
revolution in computer hardware beyond about the next decade, and will 
also let us fabricate an entire new generation of products that are 
cleaner, stronger, lighter, and more precise.
    I agree with the assessment that nanotechnology is one of the most 
promising and exciting fields of science today. I look forward to 
working with this committee on its advancement.

    [The prepared statement of Mr. Honda follows:]

         Prepared Statement of Representative Michael M. Honda

    Chairman Inglis and Ranking Member Hooley, thank you for holding 
this important hearing today. As we all have heard at prior hearings, 
the emerging field of nanotechnology may lead to unprecedented 
scientific and technological advances that will benefit society by 
fundamentally changing the way many items are designed and 
manufactured. It will take many years of sustained investment for this 
field to achieve maturity. There is an important role for the federal 
government to play in the development of nanotechnology, since this 
science is still in its infancy. This committee, the Congress, and the 
President all acknowledged that when we enacted the 21st Century 
Nanotechnology Research and Development Act in 2003.
    The interdisciplinary nature of nanotechnology presents a challenge 
for the scientific community and the research and development bodies of 
governments and industry, since it transcends traditional areas of 
expertise. In addition, nanotechnology will likely give rise to a host 
of novel social, ethical, philosophical, and legal issues. For these 
and other reasons, in the legislation this committee required the 
National Nanotechnology Advisory Panel to report back to the Congress 
on trends and developments in nanotechnology science and engineering; 
progress made in implementing the Program; the need to revise the 
Program; the balance among the components of the Program, including 
funding levels for the program component areas; whether the program 
component areas, priorities, and technical goals developed by the 
Council are helping to maintain United States leadership in 
nanotechnology; the management, coordination, implementation, and 
activities of the Program; and whether societal, ethical, legal, 
environmental, and workforce concerns are adequately addressed by the 
Program. I am pleased that this report is being released today and that 
it has found the program is working successfully, although I am 
troubled by the fact that we are not able to have Floyd Kvamme, Co-
chair of PCAST, which is serving as the NNAP, here with us today and 
urge the Administration to revisit its position on this policy.
    It is critical that the United States invests in nanotechnology and 
does so wisely. Other industrialized countries are already spending 
more per capita on nanotechnology than the US. Leading nanotechnology 
researcher Dr. R. Stanley Williams of Hewlett-Packard Laboratories 
believes that ``we are in a global struggle to dominate the 
technological high ground, and thus a large portion of the economy, of 
the 21st Century. The U.S. cannot outspend the rest of the world this 
time, so we must be by far the most productive at creating new 
technologies and the most efficient at bringing them to the 
marketplace. This will require coordination and cooperation across a 
wide variety of institutions and disciplines such as we have never seen 
before in the U.S. To fail places the wealth and security of this 
nation at serious risk.'' I look forward to hearing the thoughts of 
these distinguished witnesses about the role the Federal Government 
should play in helping to commercialize the fruits of its research 
investments, and the impact this will have on the future of 
nanotechnology.

    [The prepared statement of Mr. Carnahan follows:]

           Prepared Statement of Representative Russ Carnahan

    Mr. Chairman and Ms. Ranking Member, thank you for holding this 
important and very interesting hearing.
    The creation of the National Nanotechnology Initiative is a program 
with tremendous vision and I am thrilled to be supportive of the 
effort.
    Nanotechnology has the promise of allowing scientists to control 
matter on every length scale, including materials in the range of one 
to 100 nanometers. Science is allowing us to control material behavior 
by altering structures at the level of one billionth of a meter.
    The field includes three main categories of promise, materials and 
manufacturing, information technology and medicine. I am most eager to 
see what this technology can do for our nation's health and am hopeful 
that the utilization of nanotechnology will someday positively affect 
our economy and job market.
    I welcome the witnesses to our subcommittee today and look forward 
to hearing their testimony. Thank you.

    Chairman Inglis. It is now my pleasure to introduce to you 
our panel. Mr. Scott Donnelly is the Senior Vice President from 
General Electric Corporation, we are very pleased to have you, 
Mr. Donnelly. Dr. John Kennedy is the Director of the Center 
for Advanced Engineering Fibers and Films at Clemson University 
in South Carolina. And Ms. Hooley, we are in the right orange 
category here. I have got on Clemson orange here. Dr. John 
Cassady, who Ms. Hooley introduced earlier, is the Vice 
President for Research for Oregon State University. And Mr. 
Michael Fancher is Director of Economic Outreach at Albany 
NanoTech. He was very nice to invite me to come see what they 
are doing, and I suggested that August would be a good time to 
come to Albany, especially if you are coming from South 
Carolina in August. Dr. Kennedy will understand that.
    So we would be happy to start with your testimony, Mr. 
Donnelly.

 STATEMENT OF MR. SCOTT C. DONNELLY, SENIOR VICE PRESIDENT FOR 
  GLOBAL RESEARCH, CHIEF TECHNOLOGY OFFICER, GENERAL ELECTRIC 
                            COMPANY

    Mr. Donnelly. Thank you very much, Mr. Chairman. It is a 
pleasure to be here to testify with respect to this important 
technology.
    GE's research laboratories have been conducting basic and 
applied research for over 100 years. It is the primary mission 
of our research laboratories to investigate, develop new 
technologies, and most importantly transition those 
technologies in a consequential way into our General Electric 
businesses. As a result of the family of product lines in GE, 
data encompasses a very broad range of technologies in support 
of energy, aircraft engines, health care, security, water, and 
a number of other important commercial fields of interest.
    The cornerstone, frankly, of our research laboratories for 
over 100 years has been materials research. Our materials 
systems end up impacting in a significant way various different 
products in GE. As a result, nanotechnology is a very important 
area of focus for research for us and has been for a number of 
years.
    I think it is very important, the way we look at 
nanotechnology is not so much in the heart that sometimes is 
heard or some of the wonderful non-fiction work that has been 
published, but to recognize the incredible importance of this 
technology, it truly is a revolutionary way to look at material 
science and has an amazing number of properties that we think 
have revolutionized a lot of our GE products.
    So when we look at nanotechnology and the importance of 
this area of research, we really think about how that 
translates ultimately into our product lines. When we look at 
businesses like our aircraft engine business of today, for our 
customers it is very important to drive increasing fuel 
efficiency and lower emissions, and extending the time between 
maintenance intervals for our customers is incredibly 
important, and we look at nanotechnology as a very important 
way in developing new material systems that have the robust 
performance features to allow higher firing temperatures, more 
robust in terms of that their time on wing is very important to 
the economic model of that whole industry, frankly, and as a 
result is an important area for us to focus on.
    Our energy business is likewise and our conventional gas 
turbine technologies is very much like aircraft engines. There 
is a never-ending push for higher efficiencies and lower 
emissions, lower maintenance cycles, and this technology is 
very promising in a number of areas.
    It is also, we think, a very important technology as we 
think about renewable energies, things like solar cells and 
photovoltaics, as a new technology that gives us an additional 
number of materials to take a lot of very promising new 
technologies and actually make those technologies economically 
affordable and therefore increase the penetration of the amount 
of renewable technology that we deploy across the world.
    In addition to energy generation, we look very much at our 
consumer product lines and how we consume electricity, 
lighting, and appliances and technologies like that, in which 
we invest considerably, in our look at how you make those more 
efficient, how do you introduce new technologies that would 
replace conventional compression technology, let us say, with 
thermoelectrics, replace lighting with more highly efficient 
lighting, reduce things like mercury. All of these kinds of 
material systems, which for many years, have been dominant in 
this industry, we actually believe now can be replaced or 
looked at very differently with the suite of nanotechnology-
based materials.
    Other increasingly--when we look at our security business, 
the ability to do things that are very challenging in the 
security environment, like doing bio-detection of bio-agents in 
either the air or the water are enabled by a number of new 
technologies that we are looking at using nano-based labels for 
these product lines. And we also think it will have a pervasive 
impact in our health care business where we looked at both 
increasing a higher spatial and temporal resolution of our 
medical scanners, and frankly, introducing a whole new line of 
product lines and diagnostic pharmaceuticals that allow the 
targeting of specific biological activities in the body so that 
we can actually diagnose patients with specific diseases long 
before they would see symptoms of the disease in total. And a 
lot of that can be enabled by the use of these nanomaterials to 
give us the kind of signal that a doctor would look for to make 
a clinical determination very early on in a disease onset.
    So these are all very, very important technologies for us. 
The research in this area is very, very difficult: identifying 
new compositions, exploiting those new material systems that 
give you very robust characteristics that we haven't seen 
before, and just as importantly, learning how to process those 
materials. I always like to tell people we don't make nano-
sized high pressure turbine blades or nano-sized aircraft 
engines, and so the ability not just to identify these material 
properties but to learn the manufacturing process development 
by which you can make real products and real sizes and maintain 
the material characteristics that we saw at that nano scale is 
a very, very challenging task and one that requires a great 
deal of research, and frankly, time to occur.
    The federal role, when we look at what is going on through 
NNI, the funding for research and development activity and 
deployment that we see in agencies like the Department of 
Energy, the Department of Defense, National Institutes of 
Health, is very encouraging. These are relatively long-time 
constant technologies, as any material system has historically 
been, to develop and deploy these. So the Federal Government 
funding and support of those programs is very important. 
Frankly, the early adoption is very important to have an 
opportunity to deploy some of these technologies and get them 
into the field and learn how to control and manipulate them is 
very important. The funding that we see that goes through the 
National Science Foundation to universities is extremely 
important. In our research laboratories every year, we hire 
approximately about 100 new Ph.D. students, most of which are 
conducting research for us in material sciences, and many of 
them in the field of nanotechnology. The hundreds of graduates 
at the BS and MS levels that are hired into our GE businesses 
every year that have to understand and have an appreciation for 
what these material systems can mean in terms of the design of 
the next generation of aircraft engine or health care scanner 
is very important. And so the NSF funding that supports the 
nanocenters and improvement in those areas is very, very 
important.
    So in summary, nanotechnology is an extremely important 
technical field to us. It is one in which we are investing a 
great deal of funding. We are very supportive and appreciate 
the federal funding that is going into this; both the education 
as well as deployment through various agencies is very 
important, and we look forward to continuing to support that 
activity in the future.
    Thank you.
    [The prepared statement of Mr. Donnelly follows:]

                  Prepared Statement of Scott Donnelly

    Thank you Mr. Chairman, Ranking Member Hooley and Members of the 
House Research Subcommittee of the Committee on Science.
    My name is Scott Donnelly, and I am the Senior Vice President for 
Global Research for the General Electric Company. I am appearing here 
today to give you our perspective on the challenges and opportunities 
in the emerging field of nanotechnology.
    The term ``nanotechnology'' has quickly become one of the latest 
and greatest buzzwords and can mean different things to different 
people. At GE, we define nanotechnology as the ``ultimate material 
science,'' and we believe that the novel material properties found at 
the nanoscale can be leveraged to create completely new material 
performance levels for a wide spectrum of products and applications. 
The focus of our program at GE Research is to leverage these novel 
properties that are found at the nanoscale and develop methods to build 
materials from the nanoscale up to the macro world to capitalize on the 
enhanced performance characteristics demonstrated by these materials.
    We believe that nanotechnology has the potential to impact numerous 
industries. Some examples include:

          Energy, where new materials may enable improved 
        machine efficiency and decreased emissions or enable 
        alternative energy technologies

          Transportation, where the development of new, 
        lighter, stronger materials could increase jet engine 
        efficiency

          Homeland Security, where nanomaterials may lead to 
        improved and faster detection of chemical and biological 
        threats

          Health care, where the development of improved 
        diagnostic agents and equipment may lead to the diagnosis of 
        diseases before symptoms even appear

          Defense applications, where the development of new 
        materials may better protect our soldiers or their vehicles or 
        enable more electric ships.

    It is difficult to predict which industries are most likely to be 
impacted in the near-term and which will be impacted in the longer-
term. What is more likely is that in the nearer-term we will see 
nanotechnology making relatively incremental improvements to currently 
existing products; such as coatings for plastic and metals, or as 
additives to existing products. As with all new technologies, it will 
take longer to realize the truly revolutionary, game-changing 
technologies that will certainly come from nanotechnology.
    What is important to realize, is that this adoption and development 
route is not unique to ``nanomaterials,'' but is typical for all new 
material development.
    The primary barriers to commercialization of nanotechnology lie in 
the translation of a scientific innovation to a productive and cost-
effective technology. The process of transitioning a successful 
experiment or even a prototype in a laboratory to a reproducible, high 
quality, cost effective manufacturing process is a time consuming and 
expensive hurdle for any invention. And even more challenging with high 
risk, emerging technologies And in this context it is important to 
understand that nanotechnology is not an industry, but that it is an 
enabling technology that will likely impact many industries, but that 
the challenges and solutions for one area do not necessarily (and 
probably will not) translate to other sectors.
    The barriers to commercializing nanotechnology are not unique and 
are in fact the same for any new product or application and will 
require significant time and money--both from private industry and the 
government--to overcome. In addition, another hurdle nanotechnology 
will need to overcome as it is commercialized is the need to develop 
unique manufacturing processes to preserve the novel properties of the 
nanomaterials. To date there has been a large body of research in 
nanotechnology that has been done at Universities and there has been a 
significant effort to establish nano-based centers and user facilities 
at universities and national laboratories. Much of this has been done 
as part of the National Nanotechnology Initiative and has provided 
solid scientific innovation in the field of nanotechnology. In 
addition, this investment has started to lay the foundation for the 
nano-workforce that will be required in the future. Scientists and 
engineers across multiple disciplines, including chemistry, biology, 
physics, medicine, electronics, and engineering, will need not only to 
be able to work at the nanoscale but they will also need to have the 
ability to understand and develop new materials, devices, and systems 
that have fundamentally new properties and functions because of their 
nanostructure and because of the convergence of these multiple 
disciplines. Since GE has it's own corporate research center, we don't 
typically need the infrastructure provided by the user centers and 
facilities, and so we have had limited interaction with these sites. We 
do collaborate with Universities as part of our nanotechnology program, 
as well as other research programs, and we have found the NSF Goali 
program to be a good mechanism for collaborating with Universities.
    In closing, the Nation's nanotechnology program is poised to 
transition to the next phase of it's development. The effort to date 
has resulted in well-done science, and should continue, but the next 
phase must also address nanotechnology development--that is making 
nanotechnology a reality, so that the full economic potential of 
nanotechnology and the benefit to the Nation can be realized.
    Thank you Mr. Chairman for the opportunity to testify today, and I 
welcome any questions.

                    Biography for Scott C. Donnelly

    Scott C. Donnelly is Senior Vice President and Director of GE 
Global Research, one of the world's largest and most diversified 
industrial research organizations, and a member of the company's 
Corporate Executive Council. At Global Research, some 2,200 people--
including approximately 1,700 scientists, engineers and technicians 
from virtually every major scientific and engineering discipline--
concentrate their efforts on the company's long-range technology needs. 
The organization has research facilities in the United States, India, 
China and Germany, working in collaboration with GE businesses around 
the world.
    Prior to assuming his current position, Donnelly served as Vice 
President, Global Technology Operations for GE Medical Systems. In that 
role, he drove Six Sigma product development throughout the 
organization, enabled GE Medical Systems to introduce more reliable 
technology faster than ever before, including: the world's first multi-
slice CT scanner (LightSpeed), full-field digital mammography 
(Senographe 2000D), high-field open MRI (Signa OpenSpeed) and digital 
X-Ray (Innova 2000).
    Donnelly joined GE in 1989 as Manager of Electronics Design 
Engineering for GE's Ocean Systems Division in Syracuse, NY. He went on 
to serve in a variety of leadership roles for the Company, including 
engineering management positions with then-GE division of Martin 
Marietta in both Australia and the U.S.
    In 1995, he moved to GE's Industrial Control Systems business, 
where he held leadership positions as Manager of Technology and System 
Development, and later General Manager of Industrial Systems 
Technology. Donnelly was named a Vice President of General Electric in 
1997, when he assumed his previous role at GE Medical Systems.
    Donnelly is a 1984 graduate of the University of Colorado at 
Boulder, where he earned a Bachelor's degree in Electrical and Computer 
Engineering.
    Donnelly serves on the Industrial Advisory Committee of several 
engineering colleges, the Research Foundation of the Medical College of 
Wisconsin and the Center for Innovation in Minimally Invasive Therapy 
at Massachusetts General Hospital. He also serves as a Director of GE 
Capital Corporation and GE Capital Services Inc.




    Chairman Inglis. Thank you, Mr. Donnelly.
    Dr. Kennedy.

STATEMENT OF DR. JOHN M. KENNEDY, DIRECTOR, CENTER FOR ADVANCED 
        ENGINEERING FIBERS AND FILMS, CLEMSON UNIVERSITY

    Dr. Kennedy. Good morning, Chairman Inglis and Ranking 
Member Hooley. Greetings from South Carolina, Clemson 
University.
    Clemson University continues to climb in the national 
rankings, which bodes well for the State of South Carolina and 
its drive toward a knowledge-based economy.
    On behalf of the Center for Advanced Engineering Fibers and 
Films representing Clemson University, our university partners 
MIT, Clark Atlanta University, and supporting industries, I 
would like to thank the Committee for inviting me to testify.
    The National Nanotechnology Initiative provides a systemic 
program for helping the United States maintain its research and 
technical leadership in an increasingly competitive global 
environment. I am pleased to be here to provide CAEFF support 
for the initiative.
    CAEFF is one of 22 engineering research centers funded by 
the National Science Foundation. We provide an integrated 
research and education environment for the systems-oriented 
study of fibers and films. CAEFF promotes the transformation 
from trial-and-error development to computer-based design. The 
industry partners provide practical perspective on our research 
program. For these industries to leverage advances at the nano 
level, computer-modeling techniques that maximize engineers' 
understanding of and control over structure are required.
    The CAEFF team is very active in nanotechnology research. 
We are studying carbon nanotubes for bio-sensors, filtration, 
bio-compatibility, coatings, and infection prevention. We are 
also exploring nanotechnology to improve wound and incision 
healing and as a means for hydrogen storage. CAEFF supports a 
critical component of the U.S. manufacturing base.
    However, globalization is changing this industry. A 
significant portion of the commodity fiber industry has 
relocated outside of the United States. The polymer industry is 
adjusting, however, to globalization by focusing on value-added 
products, which ties well to the push for an economy driven by 
innovation.
    CAEFF is focusing its research on six product areas: carbon 
products for transportation, bio-based polymers, bio-inspired 
polymers, fibers and films for biotechnology, photovoltaic 
films, and sensing films. Each area supports specific 
commercial products that could help reshape the polymer 
industry. CAEFF derives its support from four sources: the base 
NSF-ERC grant, the State of South Carolina, industry membership 
fees, industry-supported research, and other federal support. 
The collective support for CAEFF has been outstanding, enabling 
us to be positioned as a national leader in polymer research.
    CAEFF is training a new workforce to develop nano-based 
applications. A team of universities led by our center is 
developing an undergraduate, macro-molecular engineering 
curriculum that addresses design at the molecular level. This 
exciting concept will combine features of materials science and 
engineering so that graduates can consider molecular or nano 
issues in the design of new value-added products.
    Another workforce issue is the supply of American citizens 
involved in nano research. One goal of CAEFF is to develop a 
diverse community of scholars trained in polymeric materials 
design. We are making great progress. The center has formed a 
partnership with Clark Atlanta University to increase the 
participation of African American faculty and students. 
Diversity in the center is also fostered by outreach through 
Women in Science and Engineering, the Girl Scouts, summer 
research, graduate assistantships in areas of national need, 
Hearst Fellowships, and the newly-funded Southeast Alliance for 
Graduate Education and the Professoriate.
    Our graduates are entering the workforce as engineers and 
scientists in the polymer industry. Many of them have taken 
jobs with our industry partners. Several have chosen to enter 
academe.
    The National Nanotechnology Initiative provides significant 
support for infrastructure, faculty, and students. As various 
components of the research mature, the challenge will be to 
transfer the technology into profitable business ventures. It 
is likely that an entirely new industry will be spawned from 
nanotechnology. This new industry will be comprised of small 
businesses that are exploiting research advancements. For these 
companies to survive, they may well need bridge funding.
    To accelerate the application of nanotechnology, agencies 
that have a major stake in applied research and development can 
bring nanotechnology into practice through demonstration 
programs. This paradigm was used successfully by NASA and DOD 
to accelerate the application of advanced composite materials 
25 years ago. These programs were partnerships between 
government and industry that drove industry to educate its 
personnel, develop infrastructure, and validated the advantages 
afforded by composites.
    Thank you for inviting me to testify before your 
Subcommittee today. I am fully supportive of the National 
Nanotechnology Initiative. It is a critical initiative with 
huge potential to impact the citizens of the United States. I 
would be glad to answer your questions.
    [The prepared statement of Dr. Kennedy follows:]

                 Prepared Statement of John M. Kennedy

Introduction

    Good morning, Chairman Inglis and Ranking Member Hooley. Greetings 
from South Carolina and Clemson University. Clemson University 
continues to climb in the national rankings which bodes well for the 
State of South Carolina and its drive toward a knowledge-based economy. 
On behalf of the Center for Advanced Engineering Fibers and Films 
(CAEFF), our university partners (the Massachusetts Institute of 
Technology and Clark Atlanta University), our 20 industry partners, and 
Clemson University, I would like to thank the committee for inviting me 
to represent CAEFF at this hearing. The National Nanotechnology 
Initiative provides a systemic program for helping the U.S. maintain is 
research and technology leadership in the increasingly competitive 
global environment. I am please to be here to provide CAEFF's support 
of the Initiative.
    The Center for Advanced Engineering Fibers and Films (CAEFF) is one 
of only 22 Engineering Research Centers funded by the National Science 
Foundation. The CAEFF research team consists of faculty and students 
from nine academic departments at Clemson University (the lead 
institution), MIT (a core partner), Clark Atlanta University (a core 
partner), Lehigh University, McGill University, the University of 
Illinois, and 20 industry partners. CAEFF provides an integrated 
research and education environment for the systems-oriented study of 
fibers and films. CAEFF promotes the transformation from trial-and-
error development to computer-based design of fibers and films. This 
new paradigm for materials design is revolutionizing fiber and film 
development.
    The NSF began funding CAEFF in 1998 and funding will continue 
through 2008, with research expenditures approaching $10 million 
annually. About 150 graduate students, 75 undergraduates, 15 high 
school students, and 50 faculty members support CAEFF's research 
program. Coordinated with CAEFF's research is an education program that 
is offering innovative multi-disciplinary courses, seminars, short 
courses, and workshops. The education experience is further enhanced by 
activities that emphasize teamwork and communication skills. CAEFF 
promotes diversity in its research team through scholarships, 
fellowships, and collaboration with universities that serve under-
represented populations.
    CAEFF is a cornerstone of Clemson University's research program. 
Several research niches, particularly nanomaterials, fall under CAEFF, 
and other developing research programs have been incubated in CAEFF. 
After 2008, CAEFF will be a self-sufficient research enterprise through 
additional government and foundation funding, industry sponsorship, and 
royalties from intellectual property.

Nanotechnology-Related Research

    The CAEFF team is very active in nanotechnology research that can 
potentially advance technology and impact our citizens' health and well 
being. Our researchers are using carbon nanotubes (highly ordered 
carbon structures) for biosensors, filtration, biocompatible coatings, 
and infection prevention. We are also exploring nanotechnology as a 
means for improving healing from surgery and wounds. Controlling cell 
growth through optimally changing the texture at the nano-level of 
sutures and meshes will strongly influence healing and repair of living 
tissue as in a hernia repair.
    We have also discovered that activated carbon fibers (carbon fibers 
with nano-sized pores) can be used to achieve 30 percent of the 
Department of Energy hydrogen storage target at room temperature and 
moderate pressure.
    Adding nanoparticles to fibers dramatically improves the cut 
resistance of the fibers. Consequently, we are presently working with a 
company to exploit this technology for protective clothing that would 
improve workers' safety. This technology could be useful for police 
officers, workers that process food or handling sharp materials such as 
glass or sheet metal, or our infantry.
    These areas point to nanotechnology that is being or is close to 
being applied in a commercial venture. However, CAEFF is also 
conducting fundamental research that provides results in new knowledge 
that may have impact on the way we make fibers or assembly materials. 
One of our research groups is trying to mimic the way spiders make 
fibers because spiders have optimized the fiber spinning process. They 
make a fiber with excellent properties at about room temperature and 
atmospheric pressure. Also, spiders do not use oil as the feedstock 
which is used for over 99 percent of all man-made fibers. All of the 
man-made fibers require various combinations of high temperature, high 
pressure, and toxic solvents. If we could mimic the process that 
spiders use to make fibers, then we could potentially develop processes 
that are less energy intensive and environmentally friendly.
    We have also learning how to assemble molecules. Once we know how 
to do this, we will be able to sense, capture, and destroy toxins. This 
technology could be applied to provide healthier hospitals and security 
against bio-terrorism.
    Another research group has learned how to blend materials to 
produce nanolayers. This technology has been termed smart blending. The 
implications of this technology are tremendous, so much so, that 
patents have been issued, several companies have licensed the 
technology and many more are interested. With smart blending, plastic 
parts have improved strength, food packaging prevents spoilage better, 
and static build up in plastic parts is minimized. We are just 
beginning to tap the potential of this exciting technology.

Interaction with Industry

    NSF Engineering Research Centers (ERC), like CAEFF, are required to 
have industrial partners on the research team. These partners help the 
ERC define the systems-level research program which is the key 
characteristic of an ERC. Systems-level research occurs on three 
planes--fundamental knowledge, enabling technology, and engineered 
system. Clearly, the industry partners provide practical perspective on 
what fundamental knowledge is needed, the technology that must be 
developed to make the research advancement a viable commercial product, 
and the experience to package the technology into a system for 
commercialization.
    By focusing on fiber and film technology, CAEFF supports a critical 
component of the U.S. manufacturing base. The fiber and film industries 
provide the consumer with synthetic fibers, nonwoven fabrics, multi-
layer films, flexible packaging, and state-of-the-art electronic 
components--just to name a few of its products. When CAEFF was selected 
as an NSF Engineering Research Center in 1998, economic projections 
indicated that the fiber and film industries could grow by 50 percent 
over the next ten years--if they responded to the needs of their 
customers by improving existing products, developing new products for 
future markets, and instituting more efficient, environmentally 
friendly processes. If it was apparent then that traditional research 
and development practices, basically a trial and error approach to 
product and process development, had not produced the breakthroughs 
necessary to revitalize these industries so crucial to our quality of 
life, today it is glaringly evident. A significant portion of the 
commodity fiber industry has relocated outside of the U.S. to take 
advantage of lower labor costs and to be close to the textile industry 
that they supply. Industry-wide restructuring has changed the operating 
philosophy of many major producers, who have increased profitability by 
reducing research and technical support. This point is driven home by 
the shift of polyester production from the U.S., Europe, and Japan to 
China, Japan and India and, closer to home, the regular announcements 
of textile plant closings in the southeast. However, the polymer 
industry is adjusting to globalization by focusing on value-added or 
``niche'' products and on products that are not labor intensive such as 
carpet and consumables. Development of value-added products ties well 
to the push for an economy driven by innovation.
    Since its inception, CAEFF's mission has been to arm industry with 
a unique modeling tool to design fiber and film processes and predict 
final properties of the fiber or film product. This modeling capability 
provides industry with the knowledge, in a user-friendly software 
package, to develop innovative fiber and film products. Some of our 
industry partners are using this capability in designing processes for 
new polymers. It is our belief that the fiber and film industries need 
to develop products and processes in advanced engineering environments 
that use computer modeling techniques and visualization to minimize 
experimentation, allow manipulation of both molecular and continuum 
information, and maximize engineers' understanding of and control over 
structure formation and resultant properties. The properties of films 
and fibers depend on their polymeric structure. In nearly all 
commercial fiber and film processes, this structure is created by the 
production process.
    In response to these industry and societal needs, the Center has 
developed a materials design environment, featuring an integrated model 
that allows users to design an entire fiber or film system by inputting 
precursor specifications, processing parameters, and desired 
properties. This virtual testbed will bring design improvements to 
current manufacturing systems, and also significantly reduces, if not 
alleviates trial-and-error experiments needed for the design of next-
generation fiber and film processes.
    Given the evolution of our research and the emerging needs of 
industry, CAEFF revised its strategic research plan in the last year. 
The primary change to the strategic plan was to establish six systems-
level product areas that complement the multi-length scale modeling 
effort that is the cornerstone of the vision and strategic plan of 
CAEFF. Each of the product areas supports an opportunity for the 
polymer industry to develop value-added products. CAEFF is uniquely 
position to conduct research in these product areas because each 
requires cross-disciplinary teams to make substantive systems-level 
research advancements. The six product areas were selected because they 
focus the modeling efforts on specific commercial products that could 
help reshape the polymer industry as globalization drives production of 
conventional fibers and films offshore. The research will enable 
industry to shorten the cycle from concept to commercialization.
    CAEFF presently has 20 industry partners that support our research 
with directed and undirected financial support and in-kind support. Our 
members represent a broad spectrum of companies from large to small and 
producer to user. The logos of our industry partners are shown on the 
chart below. Each member pays a membership fee that CAEFF management 
strategically directs to research, equipment and management. Some 
companies choose to provide additional funding for research specific to 
their needs. In this case, the company defines the research project. In 
many cases a confidentiality agreement is executed so that the company 
can exploit the results of the research that they sponsored.




    Our industrial collaboration, including transfer of intellectual 
property, is governed by a common CAEFF Membership Agreement that all 
companies must execute. The Membership Agreement provides each industry 
partner a seat on the Industrial Advisory Board (IAB). The IAB is the 
body that provides industry guidance on research direction and policy 
as discussed above. A primary function of the Membership Agreement is 
the transfer of intellectual property. The intellectual property policy 
in the Agreement is structured to favor licensing by industry partners. 
The following flow chart shows the licensing process that is called out 
in the Agreement. The key features of the intellectual policy are: an 
industry sponsoring research has first rights to a license resulting 
from their project; intellectual property resulting from research 
funded by NSF, the State, or other federal agencies will be offered to 
all of the industry partners; and CAEFF will place industry-experienced 
personnel on the committee that determines which intellectual property 
will be patented by Clemson University.
    The two greatest barriers to academic/industrial cooperation are 
the elimination or drastic reduction of central research and 
development staff in large companies and the existence of companies 
that have the vision to exploit new nanotechnology developed by CAEFF.

Support for CAEFF and Self Sufficiency

    CAEFF derives its support from four sources: the base NSF ERC grant 
(currently about $3.8 million annually), the state of South Carolina 
($1.0 million annually as cost share for the NSF ERC grant), industry 
membership fees (approximately $150,000 annually), industry supported 
research ($250,000 annually), and other federal support routed through 
CAEFF ($3.6 million annually). When CAEFF was in the formative stages 
the state and Clemson University provided even more support for 
renovation of space and salary support for CAEFF leadership to develop 
the research and education program. Additionally, the state has 
provided funding for the design and development of a new academic 
building on the Clemson campus for CAEFF and the School of Materials 
Science and Engineering. Construction of the building will commence 
when the next bond bill is approved by the South Carolina legislature.
    These funds can be divided into five broad categories: research, 
education, industry liaison, equipment, and management with the largest 
portion going to research, followed by education and equipment. 
Generally, the support for industry directed research his highly 
compatible with the research supported by NSF. We have used our 
modeling capability and experimental testbeds, developed with NSF 
support, on numerous industry sponsored projects.
    The support for CAEFF from NSF and the state has been outstanding, 
enabling us to be positioned as a national leader in polymer research. 
Professor Mike Jaffe (New Jersey Institute of Technology and former 
employee of Hoechst Celanese Corporation,) has suggests that CAEFF 
provides ``World leadership in modeling at Clemson CAEFF ERC.'' Without 
the NSF ERC and State support, the claim would not be possible. The NSF 
support for CAEFF will terminate in July 2008 as per ERC guidelines. 
CAEFF leadership is developing a strategic plan to assure that the NSF 
support will be replaced with funding from other resources.

Workforce Development for Nanotechnology

    For the most part, the workforce and those entering the workforce 
in the nanotechnology area have received traditional engineering or 
science educations which do not provide a systems perspective related 
to nanotechnology. This perspective is crucial for companies because 
virtually all nano-based applications are multi-disciplinary, requiring 
the talents of scientists and engineers from several disciplines. 
Further, most engineering programs teach design at length scales that 
are much greater than the nanoscale.



    The Center is graduating students with a broad, systems-oriented 
technical foundation; modeling, simulation, and visualization skills; 
the critical thinking skills necessary to both analyze and integrate 
information; an appreciation of the industry perspective; and the 
teamwork and communication skills necessary to function effectively in 
collaborative virtual design environments. CAEFF's integrated research 
and education programs have developed advanced materials design 
techniques that are communicated through courses, workshops and 
conferences, and outreach programs.
    CAEFF is working with a team of universities to develop an 
undergraduate macromolecular engineering curriculum that addresses 
design at the molecular level. This exciting concept will essentially 
bring together features of a materials science curriculum and those of 
engineering disciplines such as chemical and mechanical so that 
graduates will have background to consider molecular or nano issues in 
the design of systems. Adding molecular level considerations to the 
design process will expand the design envelope, leading to new value-
added products in transportation, medicine, defense, and national 
security.
    Thirty-three percent of South Carolina's population is minority, 
principally African-American, the opportunity exists to greatly 
increase the diversity in both the student body and the faculty. For 
the population of South Carolina's Land Grant University to reflect the 
demographics of the state, a long-term, well funded educational program 
must be implemented at all societal and educational levels in South 
Carolina so that all students realize the importance of higher 
education and have prerequisite academic credentials and/or enter into 
bridge programs that give them the opportunity to succeed in the 
rigorous academic environment of engineering and science disciplines. 
Consequently, the goal of CAEFF became to develop a diverse community 
of scholars trained in polymeric materials design. The various 
populations (pre-college, undergraduate, graduate and faculty) of this 
community of scholars will mirror the demographics of the State of 
South Carolina. Meeting this overall metric was very aggressive and 
will substantially exceed national engineering-wide averages for the 
involvement of women, under-represented racial minorities, and 
Hispanic-Americans. We are approaching our goals for under-represented 
racial minorities in our undergraduate and masters student populations. 
Outlined below are the components of CAEFF's diversity program.
    The Center has formed a partnership with Clark Atlanta University 
(CAU) to increase the participation of African-American faculty and 
students in the research and education programs of CAEFF. A research 
contract was awarded to CAU for the remainder of CAEFF's NSF lifetime. 
Faculty members and students from CAU are being integrated into CAEFF's 
research topics as core members of the research teams. CAU is being 
targeted to provide undergraduate and graduate students to CAEFF's 
programs at Clemson University. Our intent is to develop a dual degree 
program with CAU.
    Diversity in the Center has been fostered by outreach through Women 
in Science and Engineering, the Girl Scouts of the USA, and the 
Research Experiences for Undergraduates program. The Center has also 
secured supplemental funding to support diversity initiatives. 
Department of Education-funded Graduate Assistantships in Areas of 
National Need provide attractive financial incentive packages to 
minority and female students of superior academic ability from across 
the Nation. The Hearst Scholarship endowment targets a diverse, 
academically qualified and economically disadvantaged student 
population. The newly-funded Southeast Alliance for Graduate Education 
and the Professoriate will provide a mechanism for recruiting students 
from the University of Florida, the University of South Carolina, and 
the University of the U.S. Virgin Islands. This grant will also provide 
international opportunities for students through collaboration with the 
Latin American and Caribbean Consortium of Engineering Institutions.
    Our graduates are entering the workforce as engineers and 
scientists in the polymer industry. Many on them have taken jobs with 
our industry partners. Several have chosen to enter academe.

The Federal/State/Industry/Academe Nanotechnology Partnership

    The National Nanotechnology Initiative provides significant support 
for infrastructure, faculty, and students. As various components of the 
research mature, the challenge will be to transfer the technology in to 
profitable business ventures. It is likely that an entirely new 
industry will be spawned from the nanotechnology initiative. This new 
industry will probably be comprised of small businesses that fit a 
niche or are exploiting research advancements. For these small 
companies to survive, they may well need bridge funding which can be 
made available through the Small Business Innovative Research and Small 
Business Technology Transfer Programs, available from all federal 
agencies, and also the Advanced Technology Program which is run through 
the National Institute of Standards and Technology.
    To accelerate the application of nanotechnology and to identify 
unforeseen issues surrounding nanotechnology systems, agencies that 
have a major stake in applied research and development such as NASA, 
the Department of Defense, and the Department of Transportation can 
bring nanotechnology into practice through demonstration programs. This 
paradigm was used successfully by NASA and the Department of Defense to 
accelerate the application of advanced composite materials in the 
1970's and 1980's. These programs were partnerships between government 
and industry that drove industry to educate its personnel and develop 
infrastructure. It also provided validation of the advantages afforded 
by composites. Finally, after 20 to 25 years, advanced composites are 
being extensively used on commercial aircraft for major structural 
components. This large time lag was predictable because industry needed 
time to train a workforce, establish design methods, and build a 
database, all of which are required for confident application of 
composites in complex systems and structures.

Closure

    Thank you for inviting me to testify before your subcommittee 
today. I am fully supportive of the National Nanotechnology Initiative. 
It is a critical initiative with huge potential to impact the citizens 
of the U.S. I would be pleased to answer your questions.




    Chairman Inglis. Thank you, Dr. Kennedy. We look forward to 
those questions.
    Dr. Cassady.

STATEMENT OF DR. JOHN M. CASSADY, VICE PRESIDENT FOR RESEARCH, 
                    OREGON STATE UNIVERSITY

    Dr. Cassady. Chairman Inglis, thank you for holding this 
hearing on the National Nanotechnology Initiative. It is a 
privilege to be invited to testify before you this morning not 
only as a representative of Oregon State University and the 
Oregon Nanoscience and Microtechnologies Institute, ONAMI, but 
also as a scientist interested in the intersection of research 
and economic development.
    I also want to acknowledge how pleased we are at Oregon 
State that our representative, Congresswoman Darlene Hooley, is 
now serving as the Ranking Minority Member on this Research 
Subcommittee.
    I want to acknowledge the assistance of the leaders of 
ONAMI at Oregon State, the Dean of Engineering, Ron Adams, and 
the Director of ONAMI, Skip Rung, for input to this testimony.
    My perspective is not as an expert in the area of 
nanotechnology, but as a person trained in organic chemistry 
who moved into the interdisciplinary area of medicinal 
chemistry and was involved during my research career in the 
discovery and design of potential anti-cancer drugs. 
Nanotechnology touches health in a major way, and eventually 
will have a major impact in the area of diagnostics as well as 
drug delivery.
    As a faculty member, department chair, dean of a college of 
pharmacy, and now the new Vice President for Research at Oregon 
State, I have promoted programs that are interdisciplinary and 
translational, so one of the things that attracted me to Oregon 
was the Oregon experiment in innovation that led to ONAMI.
    Oregon is a small state, but it is thinking and planning in 
a big way as it moves in the direction of a commercialization 
alliance in micro and nanotechnology. All of the components 
were there in 2000, but they weren't aligned. There were 
institutional resources, our state's public research 
universities, Oregon State, University of Oregon, and Portland 
State, powerful research enterprises, the industrial 
infrastructure, companies comprising the Oregon ``Silicon 
Forest,'' Intel, HP, FEI, LSI Logic, Xerox, Tektronix, ESI, 
InFocus Systems, Pixelworks, Sharp, and many others.
    Another strength was our regional government laboratory, 
Pacific Northwest National Laboratory, PNNL. Then in 2002, an 
economic development report was commissioned by the state, 
which recommended the development of signature research 
centers. In 2003, the Oregon State legislature created the 
Oregon Nanoscience and Microtechnologies Institute, ONAMI, with 
an initial allocation of $21 million for support of operating 
costs and infrastructure.
    The state began a commitment to make innovation a high 
priority. The research universities, the high-tech industries, 
and PNNL joined together in aligned missions in a national 
model for collaboration.
    Let me describe one of the partnerships developed at Oregon 
State to create the Microproducts Breakthrough Institute, MBI. 
This institute, which is housed in a building on HP's campus, 
is a result of a collaboration between OSU and HP, which has 
donated the lab space, and PNNL, which is providing support 
through research collaborations and scientific personnel that 
are assigned to the project. When the institutes' laboratories 
become operational this year, up to 10 PNNL research staff are 
projected to be located at MBI in addition to faculty and 
students from OSU.
    Additional support from the state is expected, and this 
initial investment has leveraged over $5 million in support 
from the universities, $10 million from industry and private 
funding, and more than $30 million in competitive research 
awards. This cooperative venture is unprecedented and will lead 
to talented graduates, new technology, and corporate 
development.
    There are some barriers to collaboration. Some of these are 
cultural. On the academic side of the house, I think it is 
acceptance of new metrics for academic excellence and our 
reward system. On the corporate side of the house, control of 
intellectual property rights and confidentiality limitations 
are what lead to what I consider to be non-transparent 
communications, in addition, rapid changes in funding 
decisions, personnel changes, and corporate structure.
    Some of the barriers to protection, transfer and 
commercialization are lack of investment funds for IP 
protection, lack of gap funding for product development, and 
developing processes to make it easier to start businesses in 
the university.
    We also need to make it easier to do business with the 
university and streamline our IP licensing. There are workforce 
issues. There is an impact on graduate programs due to security 
issues, and we need to keep the funding for research and 
graduate programs a priority.
    In order to facilitate advances in these areas, one 
possible solution is to establish federal funding sources that 
set clear objectives related to translation of technology and 
economic development, put in place metrics to measure progress 
against these goals, and hold recipients accountable for 
funding for achieving these outcomes.
    It is the people of Oregon and the Nation that will benefit 
from programs like ONAMI. From individuals who can take 
advantage of such devices as compact portable home kidney 
dialysis devices to communities which experience economic 
prosperity with the establishment of new nanotechnology 
businesses and industry.
    In conclusion, I wish to thank you for this opportunity. 
Nanotechnology is an exciting new area, which will have 
tremendous impact across multiple fields of science. We are 
excited that in Oregon we have been able to develop a vision 
for significant partnerships, such as ONAMI, and that private, 
state, federal, and university investments have made the vision 
a reality.
    Thank you.
    [The prepared statement of Dr. Cassady follows:]

                 Prepared Statement of John M. Cassady

    Chairman Inglis, thank you for holding this hearing on the National 
Nanotechnology Initiative. It is a privilege to testify before you this 
morning, not only as a representative of Oregon State University (OSU) 
and the Oregon Nanoscience and Microtechnologies Institute (ONAMI), but 
also as a scientist interested in the intersection of research and 
economic development. I spent nearly forty years an academic research 
scientist and only recently closed my laboratory at Ohio State 
University to take the post of Vice President for Research at Oregon 
State University. I am very excited about the opportunity to oversee 
the OSU research enterprise and to work toward ensuring that innovation 
at the lab bench contributes to public life, be it through public 
education, outreach and engagement or business and industry. I also 
want to acknowledge how pleased we are at Oregon State University that 
our Representative, Congresswoman Darlene Hooley, is now serving as the 
Ranking Minority Member on this Research Subcommittee.
    My testimony to you this morning comes from the perspective of a 
research administrator. I am an organic chemist and spent most of my 
research career focused on the discovery and design of anticancer 
drugs; I am not an engineer by training nor am I an expert in 
nanotechnology. However, what I can speak to is the desire of 
researchers to ask questions and solve problems and what I believe is 
my responsibility as a research administrator to direct these questions 
in a way that works to sustain the Nation's economic development and 
global technological leadership, builds an educated workforce, and 
contributes to public health and security.
    I believe these were all goals in the development of the National 
Nanotechnology Initiative, which was envisioned as a roadmap for the 
Federal Government's investments in a critical area of science. In 
Oregon, we, too, kept these goals in mind as we mapped out our plan to 
be a part of this scientific revolution and designed a research 
institute that created innovative new partnerships that cross 
university, government and industry boundaries that have not previously 
been formally connected.
    Three words describe ONAMI: innovation, collaboration, and 
commercialization. The Oregon Nanoscience and Microtechnologies 
Institute is the first ``signature research center'' funded by the 
State of Oregon for the purpose of growing research and business 
development in order to accelerate innovation-based economic 
development in Oregon and the Pacific Northwest. Oregon policy-makers 
have the goal and desire to establish additional ``signature research 
centers'' that will lead to a long-term economic and competitive 
advantage for Oregon, including commercialization of academic research 
and the formation of new businesses.
    ONAMI is also an unprecedented and powerful collaboration involving 
Oregon's three public research universities--Oregon State University, 
Portland State University, and the University of Oregon; the Pacific 
Northwest National Laboratory (Richland, WA); the State of Oregon; and 
the emerging ``Silicon Forest'' high technology industry cluster of 
Oregon and southwest Washington.
    Many factors precipitated this focus on nanotechnology in Oregon. 
Businesses in Oregon were already leaders in industrial research and 
development. Intel employs 15,450 employees in Oregon and is the home 
of the headquarters of their semiconductor technology research and 
development unit. Hewlett Packard's Ink Jet headquarters are in Oregon 
and the company's largest and most advanced technology site with 3,900 
employees is also located in the state. FEI Company, LSI Logic, 
Tektronix, Xerox, Invitrogen, InFocus, Pixelworks and Electro 
Scientific Industries are just a few of the many other technology-based 
industries with a significant presence in the state. Our proximity to 
the Department of Energy's Pacific Northwest National Laboratory (PNNL) 
was also a factor. PNNL, a $650 million year research operation is the 
largest R&D operation west of Chicago and north of San Francisco. And, 
last, but certainly not least, Oregon's three largest research 
universities have world-class expertise and have decided to collaborate 
in three critical areas: Microtechnology-Based Energy, Chemical and 
Biological Systems; Safer Nanomaterials and Nanomanufacturing and 
Nanoscale Metrology for Nanoelectronics and other applications.
    Microtechnology-based Energy, Chemical and Biological Systems, led 
by Kevin Drost of Oregon State University and Landis Kannberg of the 
Pacific Northwest National Laboratory, integrate nanoscale materials 
science and mechanical microstructures to miniaturize a wide range of 
important devices for both military and commercial use. Translational 
research and commercialization efforts related to this work will be 
carried out by the Microproducts Breakthrough Institute (MBI), an ONAMI 
facility jointly staffed and operated by PNNL and Oregon State 
University.
    These technologies will have widespread commercial application and 
may well lead to whole new industries. Examples include compact power 
supplies for portable electronics; vehicular and auxiliary fuel cell 
systems; distributed biofuel, hydrogen, and chemical production at 
point-of-use; automotive cooling systems that operate using exhaust 
heat; and a new generation of distributed heating and cooling systems 
for residences with energy savings of approximately 50 percent. OSU 
researchers in this area are also working with an Oregon company, Home 
Dialysis Plus (HD+), to develop a compact kidney dialysis machine that 
will dramatically improve quality of life for end-state renal disease 
patients while also reducing treatment cost.
    The Safer Nanomaterials and Nanomanufacturing research, led by Jim 
Hutchison of the University of Oregon, is focused on developing 
functional nanomaterials and nanomanufacturing methods that 
simultaneously meet the need for high performance materials, protect 
human health and minimize harm to the environment. This initiative has 
been focused on the applications of mixed nanoscale and microscale 
systems to research problems such as those involved in 
nanomanufacturing. The initiative takes advantage of the world-class 
expertise within ONAMI in green chemistry, nanoscale materials and 
processes and the design and fabrication of microscale systems (such as 
microchannel reactors).
    Discoveries in nanoscience are providing new, powerful tools for 
achieving green chemistry goals such as reducing the use of hazardous 
materials and improving the efficiency of material and energy 
consumption. The opportunity exists to apply nanotechnologies to the 
invention of new products and processes that will produce superior 
products for less money and simultaneously enhance public security and 
protect our environment. Researchers within the ONAMI are at the 
forefront in defining this emerging field with their research programs 
that focus on safer/greener products and manufacturing methods for 
making products.
    The Nanoscale Metrology Initiative, critical to continued progress 
in semiconductors and other forms of nanoscale manufacturing, is led by 
John Carruthers, former Director of Components Research and Development 
for Intel, and Distinguished Professor of Physics at Portland State 
University (PSU). The team's efforts are supported by the PSU 
microscopy facility, which features one of the Pacific Northwest's most 
powerful transmission electron microscopes and other instruments that 
enable the characterization of nanostructures. The ability to design, 
fabricate and test nanoscale materials and devices depends entirely on 
the ability to image and measure them, which the network of ONAMI-
affiliated user facilities can provide.
    The purpose is to initiate additional research in nanometrology and 
testing of nanodevices and circuits that enables the implementation of 
nanoscale materials into useful electronic applications such as high 
density memories on silicon integrated circuits.
    This will leverage the large nanotechnology-related investments of 
LSI Logic, Nantero, Intel, Hewlett-Packard, ESI, FEI Company, and 
Invitrogen in Oregon's ``I-5 Technology Corridor'' between Portland and 
Eugene and ensure that a leading edge research and education capability 
will be established to further grow the global competitiveness of the 
nanotechnology industries there.
    All of these ONAMI partners came together with several goals in 
mind: to attract federal research investments in the Oregon and Pacific 
Northwest; to provide an outstanding collaborative environment for 
researchers who are at the forefront of innovation in their fields; to 
increase the impact of this research on Oregon industry; to develop 
superior workforce talent--especially growth in Ph.D.s; and to spin out 
the innovations and new companies that will provide the high-wage jobs 
of the future.
    At your request, I am providing to you today responses to the 
questions you posed examining the challenges and opportunities related 
to nanotechnology, based on our experiences at Oregon State University 
and with the Oregon Nanoscience and Microtechnologies Institute 
(ONAMI).

  How do Oregon State University (OSU) and the Oregon 
Nanoscience and Microtechnologies Institute (ONAMI) interface with the 
private sector? What are the greatest barriers to increased academic/
industrial cooperation in nanotechnology?

    In Oregon, the cooperation OSU and our other academic partners have 
with private sector via ONAMI is unprecedented. Perhaps most notably, 
Hewlett-Packard developed a very comprehensive inter-institutional 
agreement with OSU. As a part of this partnership, HP donated the use 
of a building on their campus in Corvallis, Oregon to accelerate the 
startup facility. This was a remarkable display of corporate 
citizenship. This facility serves as a product development space for 
new ONAMI-related companies while the three universities complete 
construction of additional ONAMI research facilities. HP donated the 
three-year lease of the building, valued at $2 million. The 
construction of new facilities, currently underway, is primarily funded 
through gifts and state appropriations.
    ONAMI Board members include senior executives from some of the 
world's leading nanotechnology companies: Hewlett Packard, FEI Company 
(the world leader in tools for nanotechnology, based in Hillsboro, 
Oregon), LSI Logic and Nantero (a partnership with a focus on 
nanotechnology-based semiconductor memory development, based in 
Gresham, Oregon), Pixelworks (the fourth fastest growing company in the 
U.S.), and Battelle (the operator of five national laboratories). The 
ONAMI board is chaired by a general partner of the state's leading 
venture capital firm and ONAMI has relationships with many others in 
the investment community. ONAMI's sponsored research includes research 
collaborations with HP, FEI, LSI, Nantero, Xerox, many smaller 
companies, and Intel. In several cases, we are able to work with 
industry research and production facilities that are far superior to 
anything most universities typically acquire. ONAMI also has a physical 
joint venture with PNNL/Battelle, which is a unique asset for not only 
performing cutting edge research, but translating that research into 
new products, new companies, and high-wage jobs.
    At Oregon State University, I also want to mention other efforts 
that keep the university connected to industry. In our College of 
Engineering, we have a very successful internship program, the Multiple 
Engineering Cooperative Program (MECOP). This internship experience is 
so sophisticated it bears little resemblance to the ordinary 
internships that are increasingly common in higher education. MECOP is, 
and has been since its inception more than 20 years ago, self-
supporting. Dues are paid by participating businesses and industry to 
support the staff needed to develop, monitor and fine-tune the program. 
The program is built on a high order of industry interaction with the 
university and its students; and it is continually improved as the 
University adjusts its curriculum on recommendations made by the 
industry partners. Participating industries include Freightliner, 
Boeing, Sun Microsytems, Tektronix and many, many others. Additionally, 
as at other institutions, OSU faculty are engaged in industry funded 
R&D, some researchers utilize their sabbatical leave to gain private 
industry experience and others take leaves of absence to help start up 
new companies.
    While our ties to private industry are strong, there are existing 
barriers to collaboration. The first is industry's need to own the 
intellectual property rights on research they pay for, which can be in 
direct conflict with faculty and student needs to publish their work, 
as well as, in some instances, public information laws. An additional 
barrier is the proprietary nature of private business strategic plans 
and their internal efforts to achieve them. It is often difficult for 
academic researchers to know if their work is relevant to industry 
needs when industry is trying to protect their product development 
efforts to ensure they are developing unique and competitive products 
for the marketplace.
    Academic and research funding traditions and cultures have 
traditionally not rewarded (through promotion, tenure, peer reputation) 
researchers for working in teams, performing industrially relevant 
research, patenting their inventions, or commercialization. In 
addition, unpredictable funding processes in both industry and academia 
also present challenges. Industry also is subject to frequent 
organizational restructuring involving staff turnover and reassignment.
    The lack of research funding for joint industry/university research 
is a critical barrier and has slowed down several promising 
opportunities. While larger businesses typically have some kind of R&D 
budget, this is not the case for smaller, emerging businesses. 
Generally there is a lack of university funding for what the military 
calls ``6.2'' research, research that seeks the application of basic 
science. The National Science Foundation (NSF) funds nearly exclusively 
basic science and does not typically fund development. The Defense 
Advanced Research Projects Agency (DARPA) is the best source for 
university 6.2 funding, but this often is for highly specialized 
devices with military applications and without a strong commercial 
market. ONAMI researchers have expressed a need for a source of funding 
that could be seen as ``a DARPA'' for commercial nanotechnology.

  How does the State of Oregon provide support to OSU and ONAMI 
for nanotechnology and other high-technology activities? How does this 
complement funding from the Federal Government and the private sector? 
What, if any, gaps remain?

    With unprecedented focus and consensus, Oregon has chosen to focus 
on Nanoscience and Microtechnologies as the state's first ``signature 
research center'', based on a clear finding that this represented the 
greatest overlap of (1) existing research excellence, (2) future market 
opportunity, and (3) Oregon's existing industrial strengths. In 2003, 
the State committed $21 million to ONAMI, and the Governor included $7 
million in the proposed state budget for 2005-6. In addition, there is 
a dedicated State of Oregon Innovation Economy Officer, a proposed 
statutory Oregon Innovation Council, and state-assisted mechanisms to 
increase the supply of venture capital by almost $140M, of which over 
$30M will be pre-seed and seed stage. The state's role is to assist the 
research institutions in increasing their capacity for competitive 
sponsored research and to assist entrepreneurs in commercializing new 
technology.
    Industry support of ONAMI's operation since its inception has 
totaled approximately $10 million in equipment, facilities use 
commitments, R&D, and gifts. Other research awards have totaled 
approximately $25 million, including federal awards from the Department 
of Defense and NSF, as well as foundation awards. Oregon State 
University's commitment thus far, outside of the specified state 
appropriations for ONAMI, is estimated to be approximately $3 million.
    Again, the gap between State, federal and private support is in 
support for investigations in technologies that are beyond the basic 
research, but not quite ready to be tested for commercialization. 
Smaller businesses often simply do not have research budgets to support 
these needs, and government funding for this stage of inquiry is not 
widely available.

  What is the workforce outlook for nanotechnology, and how can 
the Federal Government and universities help ensure there will be 
enough people with the relevant skills to meet the Nation's needs for 
nanotechnology research and development and for the manufacture of 
nanotechnology-enabled products?

    During the December 2004 Oregon Leadership Summit Steve Grant ,Vice 
President for the Technology & Manufacturing Group at Intel Corporation 
reported that, ``Over the last four years, Intel has hired 441 PhD's in 
engineering and computer science in Oregon. Only seven came from the 
Oregon University System. [Intel] hired 347 Master's degree engineers 
and only 11 percent came from Oregon schools. At the Bachelor degree 
level [they] did better, with 21 percent.'' Oregon is not producing 
enough highly skilled quality engineers to meet our hiring needs, 
especially at the graduate levels. However, this is not just the case 
in Oregon, it is a problem nationwide.
    Increased barriers to American colleges and universities for 
foreign students, as well as greatly enhanced opportunities for them at 
home, and a lack of progress in filling the pipeline with qualified 
American students are trends in direct opposition to an increased need 
for workers with advanced degrees in physical sciences and engineering. 
Without a trained workforce, the United States will find it hard to 
remain a leader in nanotechnology. Further, intense global competition 
has reduced industry's investment in scientific research, while the 
Federal Government investment in research that will lead to technology-
based economic development has stagnated. This is a confluence of 
unfavorable trends.
    I know you have heard this message repeatedly, but federal funds 
for physical science and engineering are a part of what is needed to 
address the work force issue. In the end, faculty and graduate students 
go where the money is and funding for nanotechnology research is 
critical for producing the graduate level workforce that 
nanotechnology-based industry needs. Since World War II, the Federal 
Government has supported training grants and research assistantships 
hand-in-hand with support for basic research. The combination of study 
and training is a successful avenue to train a highly educated 
workforce.
    We also need a greater emphasis on curriculum development at all 
levels with serious research on what academic skills are needed for the 
emerging technologies, best practices in science and engineering 
education need to be identified and disseminated throughout the 
academic community.
    What is also critical is inspiring young students, in elementary 
school, high school, and as undergraduates to see themselves as 
scientists and to be exposed to exciting new and multi-disciplinary 
trends. We need more students to find scientific concepts practical and 
approachable and we need to inspire them to consider careers in 
science. At Oregon State University, we are host to numerous outreach 
programs that try to get the attention of future scientists and 
engineers. Many of these programs, too, are federally funded, such as 
the NSF GK-12 graduate fellowship program, and the NASA Space Grant 
program, and I encourage you to continue to invest in these activities 
and to work toward ensuring that they are administered in a way that 
ensures their effectiveness. I also think that there should be ways to 
encourage novel curricular changes.

  How can Federal and State governments, industry, and academia 
best cooperate to facilitate advances in nanotechnology?

    It is generally recognized that university-based research is a 
long-term investment in the future. The Federal Government's support 
for basic research contributes to the discoveries and innovation that 
underpins the future technologies and knowledge that contribute to the 
well-being of our nation. However, as our scientists get involved in 
areas of research, such as nanotechnology, where there are demands for 
near-term delivery, many challenges emerge.
    In order to facilitate advances in these areas, one possible 
solution is to establish federal funding sources that set clear 
objectives related to translation of technology and economic 
development, put in place metrics to measure progress against these 
goals, and hold recipients of funding accountable for achieving 
outcomes. While this is not an appropriate direction to take with basic 
research, there are ways to designate a certain percentage of publicly 
funded research for multi-disciplinary teams focused on big and 
emerging fields with a potential for translation and commercialization. 
An example of this is the NIH Roadmap Initiative and the National 
Cancer Institute (NCI) National Cooperative Drug Discovery Programs 
(NCDDGs).
    As I noted earlier, three words describe ONAMI: innovation, 
collaboration, and commercialization. If Federal and State governments, 
industry, and academia can all keep these in mind as they examine 
avenues to advance nanotechnology research and development, it is the 
public that will benefit from individuals who can take advantage of 
such devices as compact, portable, home kidney dialysis devices to 
communities which experience economic prosperity with the establishment 
of new nanotechnology businesses and industry.
    In conclusion, I wish to thank you for this opportunity to address 
you today. Nanotechnology is an exciting new area which will have 
tremendous impact across multiple fields of science and throughout many 
aspects of our lives. We are excited that in Oregon we have been able 
to develop a vision for significant partnerships such as ONAMI and that 
private, State, federal and university investments have made the vision 
a reality.

                     Biography for John M. Cassady

    John M. Cassady received a B.A degree from DePauw University in 
1960 with a major in chemistry; he obtained his M.S. degree in 1962 and 
his Ph.D. degree in 1964 from Western Reserve University with a major 
in Organic Chemistry. Dr. Cassady was an NIH postdoctoral fellow from 
1965-1966 at the University of Wisconsin where he worked under the 
direction of Dr. Morris Kupchan on the isolation and structural 
elucidation of tumor inhibitors from plants. In 1966, he joined the 
faculty of the School of Pharmacy, Purdue University as Assistant 
Professor in the Department of Medicinal Chemistry and Pharmacognosy. 
He was promoted to Associate Professor in 1970 and Professor in 1974. 
He was appointed Associate Head of the Department of Medicinal 
Chemistry and Pharmacognosy in 1976 and became Head of the Department 
in January 1980. In 1987, Dr. Cassady was appointed as the Glenn L. 
Jenkins Distinguished Professor of Medicinal Chemistry and 
Pharmacognosy at Ohio State University College of Pharmacy. On July 1, 
2003 he returned to the faculty after more than 15 years as Dean. Dr. 
Cassady was appointed as Vice President for Research at Oregon State 
University, March 2005.
    Dr. Cassady holds membership in the American Chemical Society, 
American Society of Pharmacognosy (ASP), Academy of Pharmaceutical 
Sciences, British Chemical Society, AACR, ASHP, AAAS, Sigma Xi, Rho 
Chi, and the AACP. He has served on the nominating and publicity 
committees for the ASP, was scientific program chairman for the 1976 
annual meeting of the Society, was elected to the Executive Committee 
(1978-1981) and President (1993-1994) and is chair of the ASP 
Foundation Board (1995-present). He has served as a consultant to the 
National Institutes of Health and was a member of the Bioorganic and 
Natural Products Study Section from 1980-1984. He has served on the 
Editorial Advisory Board of the Journal of Natural Products and the 
Journal of Medicinal Chemistry. Dr. Cassady has served on the 
publicity, scientific program and awards committees for the Medicinal 
Chemistry Division of the American Chemical Society. He was appointed a 
member of the Long-Range Planning Committee of the Medicinal Chemistry 
Division from 1983-1986 and in 1987 he was elected Councilor for the 
Medicinal Chemistry Division. He was appointed to the National 
Association of Chain Drug Stores (NACDS) National Advisory Council from 
1997-2002. He was a member of the AACP National Commission on Graduate 
Education (1996-1998), Chair of the AACP Institutional Research 
Advisory Committee (1997-1998), and a member of the Ad Hoc Committee on 
Academic Budgeting and Accountability (1997-1998). He was elected AAAS 
Chair-elect for the Section of Pharmaceutical Sciences in 1997 and 
served as Chair from 1999-2000. He served on the ASHP Commission on 
Goals in 2001 and 2002. He currently serves on the Corporate Advisory 
Board of Pacific Northwest National Laboratories (PNNL).
    Dr. Cassady's research interests involved the discovery and design 
of anticancer drugs from natural products and nutraceuticals, 
specifically, the isolation, structural elucidation, and chemical 
studies of chemopreventive and antitumor agents from higher plants and 
the synthesis of potential antitumor agents. Other areas of research 
interest involved the design of enzyme inhibitors, including protein 
tyrosine kinases, synthesis of selective dopamine agonists as potential 
antipsychotic agents, anti-malarial and anti-Parkinson's agents from 
natural products. His research resulted in the publication of more than 
150 manuscripts and 150 abstracts and over $12,000,000 in research 
support from the NIH and other funding agencies. Dr. Cassady has 
developed strategic alliances between academic and corporate sectors. 
He led a strategic alliance with Pharmacia, served on the Corporate 
Advisory Board of Yuhai Phytochemicals, China, Dean's Advisory Board 
for Merck-Medco and as a consultant for Gaia Botanicals, Leadscope, 
Milkhaus and SSCI.
    Dr. Cassady was elected to membership in the Royal Society of 
Chemistry and American Association for Advances in Cancer Research, was 
elected a Fellow of the Academy of Pharmaceutical Sciences in 1979, a 
Fellow of the American Association of Pharmaceutical Sciences in 1987 
and a Fellow of the AAAS in 1990. Dr. Cassady received the Purdue 
University Cancer Research Award in 1981 and the Gisvold Lecture Award 
from the University of Minnesota in 1986. In June 1989, he was awarded 
the D.Sc. (Hon.) by DePauw University. He received the Research 
Achievement award in Natural Products Chemistry from the American 
Pharmaceutical Association in 1990. In 1991, he was appointed Honorary 
Professor to the Institute of Medicinal Plant Development by the 
Chinese Academy of Medical Sciences.




    Chairman Inglis. Thank you, Dr. Cassady.
    Mr. Fancher.

    STATEMENT OF MR. MICHAEL FANCHER, DIRECTOR OF ECONOMIC 
    OUTREACH, ASSOCIATE PROFESSOR OF NANOECO-NOMICS, ALBANY 
                            NANOTECH

    Mr. Fancher. Thank you, Mr. Chairman and Members of the 
House Research Subcommittee on the Committee on Science. I am 
appearing here today to provide our perspective on what we 
believe is a new model for technology, business, and education 
that creates what I would call a naturally occurring 
multiplier, or as PCAST refers to it as the innovation cluster 
with academia, governmental agencies, and industry each 
contributing and benefiting in their own way.
    It is important for the Science Committee to understand 
that nanotechnology is emerging from the discovery phase and is 
now entering the commercialization stage and that the NNI must 
evolve and expand its funding priorities to address the 
daunting technology, business, and economic challenges 
confronting the Nation's high-tech industries.
    As the promise of nanotechnology provides game-changing 
opportunities in a variety of applications as being better 
defined, as we heard from Scott Donnelly, it is becoming 
increasingly apparent that the cost to commercialize 
nanotechnology is rising exponentially.
    Chairman Inglis. Mr. Fancher, excuse me just a second.
    Mr. Fancher. Yes.
    Chairman Inglis. Do you want some slides up?
    Mr. Fancher. Yes, I am. This is just my intro.
    Chairman Inglis. Oh, okay.
    Mr. Fancher. Companies are seeking new models to 
collaborate.
    What I would like to do is just provide a few slides to 
describe what that model is, and so please bear with me.
    [Slide.]
    I think it is helpful to understand that--and we have heard 
already that Oregon is taking the--New York--the state has 
gotten involved in this, and New York State has, I think, done 
it in a way that I think can be replicated around the country. 
And when you look at the strategy New York State is focused on, 
it has been four key drivers: selecting an overarching 
discipline, such as nanotechnology, investing in state-of-the-
art infrastructure, focusing on world-class, hands-on education 
and training, not just Ph.D. and Masters in Engineering, but 
the whole supply chain, and then, of course, leverage public-
private partnerships.
    I would like to just spend a slide on each to give you an 
example.
    [Slide.]
    Well, nanochips. We have already heard about it. Nanochips 
are enabling defense, bio-health, sensors, aerospace, pervasive 
tether-free computing, communications, energy, and of course, 
automotive industry. I think the key element here, though, is 
the nanochip industry is probably the first industry that has 
begun integrating nanotechnology into a high-yield, low-cost 
production process mode. That means they are breaking the 
ground for other industries to adapt that technology, that 
process technology, to a variety of applications.
    [Slide.]
    A key driver, too, for New York State has been investment 
in state-of-the-art infrastructure. This is the Albany NanoTech 
complex. It will be at about $3 billion in assets by the end of 
2006 in addition to the facilities that you see there. We have 
around 750,000 square feet of cutting-edge facilities with 
85,000 square feet of clean rooms for what is known as ``300-
millimeter wafer process technology.'' That is important 
because 300-millimeter is the state-of-the-art of technology 
used by the computer chip industry. And it will be the platform 
on which nanotechnology is integrated for a variety of those 
applications that I already described.
    Our partners include Sematech, IBM, AMD, Micron, Tokyo 
Electron, General Electric, and ASML. We have 200 researchers 
at Albany NanoTech in the college and 300 industry scientists 
on site, and by the end of 2007, we will have around 1,600 
people in the complex.
    I would like to spend just two slides on workforce, because 
I think that is a particularly important challenge.
    [Slide.]
    And with that we have established the world's first college 
of nanoscale science and engineering. We have constellations in 
nanoscience, nano-engineering, nano-biotechnology, and nano-
economics, of which I am Associate Professor in that school.
    I think when you look at the challenge for the workforce, 
what you are looking at, and I am quoting the National Science 
Foundation, is that the United States will need two million 
nanotech-savvy workers by the year 2014. That is a daunting 
challenge when you consider that China is producing 250,000 
engineers and scientists per year while we are producing 56,000 
engineers and scientists, and I take that number from the 
American Electronics Association.
    When you look at the breakdown of that two million, 20 
percent will be scientists, and 80 percent will be the 
engineers, technicians, operators, business leaders, etc. So 
that means we need to start focusing on children 10 to 17 years 
old right now if we are going to make that objective.
    I would like to give a case in point on what Albany 
NanoTech has been doing in the College of Nanoscale Science and 
Engineering to meet those workforce needs.
    Well, as I have said, we have established the world's first 
college to break the walls down between the sciences so that 
everyone is talking common language between biology, 
computational science, physics, and chemistry. We have 
established partnerships with our community colleges, 
supporting the semiconductor manufacturing technology training 
program for the operators of the tools. We have high school and 
undergraduates doing internships in the program. And we also 
host the semiconductor equipment materials international 
workforce development institute, what we call a ``chip camp.'' 
It is a four-day exposure for your vocational students. And 
then finally, we have established a $6 million center for the 
construction trades.
    Again, I think what is important to understand is that 
atomic-scale manufacturing, if pushing all levels in the 
workforce to rise to new levels of expertise and training right 
down to the construction of the building to hooking up the 
equipment is all now very critical to the success of the 
overall commercialization.
    The third driver for New York State has been establishing 
the Center of Excellence in Nano-electronics by Governor Pataki 
back in 2001. This has been--and I am just doing this as a 
timeline, but it has been critical to provide the 
infrastructure and partnerships with industry, with the SAI, 
with the focus center, IBM, the anchor tenant, and the Center 
of Excellence with $150 million. We have a Sematech North 
program, Tokyo Electron R&D center, the first established 
outside of Japan is embedded in our facilities. Our complex was 
completed about a year ago. Albany NanoTech was formed. We have 
established the first college. We recently announced the $400 
million research center with ASML, one of the world leaders in 
lithography equipment. And then finally, we are closing on what 
we call the Center for Semiconductor Research, a partnership 
with Applied Materials, which is about $450 million.
    So I would like to take that focus of where we are, and now 
let us go take it to the global marketplace.
    I think it is important for you to understand that our 
competition is very steep, and it is global, and that what is 
happening in the nanochip world is global alliances. And when 
you look at what is going on in Albany, you are seeing a 
partnership that initially started with AMD, Sematech, and IBM 
and has now grown to Sony, Toshiba, and Chartered 
Semiconductor. Our competition is in Belgium. It is IMEK. It 
includes SD Phillips, and a few other companies, TSMC, and 
Motorola, and then, of course, Japan.
    The global R&D competition drives the industry clustering 
effect that PCAST mentioned. And for New York State, we have 
already achieved $8 billion of investment just since 2002. I 
think two----
    Chairman Inglis. Mr. Fancher.
    Mr. Fancher. Yes.
    Chairman Inglis. Hold on just a second.
    Mr. Fancher. Okay.
    Chairman Inglis. We are expecting votes at 11:15, so we 
probably need to move a little quickly.
    Mr. Fancher. Okay.
    [The prepared statement of Mr. Fancher follows:]

                 Prepared Statement of Michael Fancher

         A Successful New Paradigm for Innovation and Education

    University based, co-located with some of the biggest names in 
industrial innovation, and committed to building a thriving, educated 
and globally-competitive workforce, Albany NanoTech is a $3 billion 
enterprise dedicated to creating partnerships for leading edge 
nanotechnology innovations. Through its unique, vertically-integrated 
model that includes the world's first College for Nanoscale Sciences 
and Engineering at the University at Albany--State University of New 
York, Albany NanoTech's partnerships with business, government and 
academia have created the world's premier powerhouse for research, 
development, technology deployment, and education resource supporting 
accelerated nanotechnology commercialization.
    Albany NanoTech is the umbrella under which the CNSE and the five 
Centers operate; namely, the Center of Excellence in Nanoelectronics, 
Center for Advanced Technology in Nanomaterials and Nanoelectronics, 
Interconnect Focus Center, Nanoscale Metrology and Imaging Center, and 
the Energy and Environmental Technology Applications Center. The CNSE 
and the five centers are all located at Albany NanoTech and have access 
to its facilities, but the nature of our model--through which there are 
no divisions between disciplines, or between academia and industry--
means that there is great cooperation and cross-pollination among the 
various centers and between CNSE faculty and industrial partners. 
Faculty are involved in all of the centers and in some cases, the 
centers cooperate closely with one another to advance the science. 
Nobody is working in silos, and that is part of the reason why we have 
been able to get so much accomplished.

Partnerships

How does Albany NanoTech interface with the private sector?
    Albany NanoTech seeks to leverage resources in partnership with 
business, government, and academia to create jobs and economic growth 
for nanoelectronics-related industries. Governor George E. Pataki 
created a Center of Excellence in Nanoelectronics at Albany NanoTech's 
facilities in 2001 and since then has worked very closely on building 
relationships with leading industrial players in nanoelectronics like 
IBM, ASML, Tokyo Electron, and International Sematech. Since 2001, we 
have attracted over $1 billion in direct private investment and now 
have over 100 industrial partners many of whom are on-site, which 
represent companies of all sizes that share a commitment to 
nanotechnology innovation.
    Boasting over 100 partnerships with universities, federal labs, and 
industry such as RPI, Stony Brook University, Argonne National 
Laboratory, DARPA, NASA, General Electric, Honeywell, and IBM, to name 
a few, Albany NanoTech strives to help companies overcome technical, 
market, and business development barriers through technology 
incubation, pilot prototyping, and testbed integration support leading 
to targeted deployment of nanotechnology-based products.
    Albany NanoTech's partnerships encompass multi-year research 
programs with IBM, ASML, Tokyo Electron, Applied Materials, Infineon 
and Micron as well as sponsored research collaborations with national 
defense agencies, such as the Naval Research Laboratory and DARPA as 
well as start-up companies, such as Daystar Systems and Crystal IS. 
Small, medium and large corporate and university partners have access 
to state-of-the-art laboratories, shared user facilities, 
supercomputing capabilities, and an array of research and development 
centers serving the short-, medium-, and long-term nanotechnology 
development needs while training the workforce for the 21st century. 
Partners are able to collaborate formally and informally, establish 
strategic alliances, or form joint ventures and consortia within a 
technically aggressive and financially competitive environment.

The CNSE & Centers

What is the workforce outlook for nanotechnology, and how can the 
        Federal Government and universities help ensure there will be 
        enough people with the relevant skills to meet the Nation's 
        needs for nanotechnology research and development and for the 
        manufacture of nanotechnology-enabled products?
    According to National Science Foundation, the U.S. will need 
approximately two million nanotech savvy workers by 2014. Approximately 
20 percent of these workers are expected to be scientists, 80 percent 
must be highly-skilled engineers, technicians, business leaders, 
economists, etc., and that means children between the ages of 10 and 17 
need to be educated NOW about the field that will define their job 
market as adults.
    The location of the College in the Albany NanoTech complex provides 
students with a unique public-private education through research 
partnerships that are not available at any other college or university. 
This partnership allows maximum leveraging of synergistic resources to 
create a comprehensive, fully integrated powerhouse for the attraction 
and retention of highly qualified students to careers in the various 
disciplines of nanotechnology, from theoretical principles to 
experimental demonstrations and practical applications.
    As the first of its kind, the College provides a comprehensive 
education of the highest quality enabling the discovery and 
dissemination of fundamental knowledge concepts and new frontier 
scientific principles in the emerging interdisciplinary fields of 
nanotechnology, from nanosciences and nanoengineering to nanoeconomics. 
The College offers Ph.D. and M.S. degrees in the science and 
engineering tracks pertaining to the nanoelectronics, opto-electronic, 
optical, nano/micro-electro-mechanical, nano/micro-opto-electro-
mechanical, energy, and nanobiological fields with curriculum 
integrating the fundamental science principles of physics, chemistry, 
computational science and biology with the cross cutting fields of 
nanosciences, nanoengineering and nanotechnology.
    In addition, the College supports hands-on workforce training by 
providing access to state-of-the-art facilities, training the entire 
spectrum of technicians, operators and technical trades through 
partnerships with community colleges, high schools and leading industry 
players. CNSE has established partnerships with several community 
colleges providing the hands-on workforce component to their associate 
degree education necessary to operate nanotechnology equipment. The 
CNSE works with local undergraduate colleges and high schools by 
sponsoring year round and summer internships for students and by 
hosting in partnership with the Semiconductor Equipment and Materials 
International (SEMI) four day ``chip camps'' targeting high school 
vocational students to encourage then to consider carriers in 
nanotechnology through hands-on curriculum. Finally, Albany NanoTech 
participates in a $6 million workforce training partnership for 
nanotech infrastructure construction trades in partnership with M+W 
Zander, one of the world leaders in nanotechnology facility design and 
construction, the Watervliet Arsenal Partnership and New York State.

Research & Facilities

    The research performed at Albany NanoTech is broadly focused on all 
aspects of the emerging nanosciences including: nanoelectronics and 
microelectronics, Nano/Microsystems including MEMS, nanometrology, 
nanophotonics and opto-electronics, analytical sciences and process 
control, nanopower, and advanced computer modeling for nanosystems and 
processes.
    To assist in accomplishing these prominent research goals, Albany 
NanoTech consists of over 500,000 square feet of on-site office, 
laboratory, and cleanroom incubation facilities. The complex includes 
the only 200mm/300mm wafer facilities in the academic world that 
encompasses nanoelectronics; system-on-a-chip technologies; biochips; 
opto-electronics and photonics devices; closed-loop sensors for 
monitoring, detection, and protection; and ultra-high-speed 
communication components.
    Albany NanoTech has literally hundreds of tools, ranging from STMs 
and supercomputers to the ASML TWINSCAN AT:1500i scanner, the world's 
first 300mm wafer immersion lithography tool. Our tool arsenal is one 
of our best recruiting tools, since many of our scientists can do 
everything they need to advance their research right here.
    NanoFab 300 South, which opened in January 2003, is a 138,000-
square-foot technology acceleration facility that provides for business 
incubation, classrooms for the CNSE, workforce training, offices for 
Albany NanoTech, and large and small industrial sponsors and partners 
including IBM, TEL, Honeywell, and SEMATECH North. The facility also 
includes 16,000 square feet of cleanroom to support the SEMATECH North, 
IBM, and other next-generation nanotechnology research activities.
    Scheduled to be completed by the end of 2005, NanoFab 300-North 
features a 35,000 square foot Class 1-capable 300mm wafer R&D 
cleanroom, pilot prototype, incubation, and workplace training facility 
that will house a full nanoelectronics process line. The 500,000+ 
square-foot complex includes over 65,000 square feet of cleanroom space 
supporting the nanoelectronics-related industries. Albany NanoTech not 
only has the site where the world's first 300mm wafer immersion 
lithography tool was installed in August 2004, enabling partners like 
IBM to get a jump on this technology but Sematech has also announced 
that it is conducting the bulk of its research in extreme ultraviolet 
(EUV) lithography at its laboratories located at Albany NanoTech. The 
fact that two leading organizations in nanotechnology research--IBM and 
Sematech--have both announced major lithography research milestones in 
the past year and both of these took place at Albany NanoTech 
demonstrates the effectiveness of the model.

The NY ``Nano'' State

How does the State of New York provide support to Albany NanoTech and 
        the College of Nanoscale Science and Engineering at UAlbany-
        SUNY? How does this complement funding from the Federal 
        Government and the private sector? What, if any, gaps remain?
    New York and its industrial partners committed over $1.4 billion to 
establish five Centers of Excellence throughout the State in 
nanoelectronics, photonics, bioinformatics, information technology, and 
environmental systems. Each Center of Excellence acts as a bridge 
between scientific discovery and commercialization by supporting pilot-
prototyping development, workforce training and economic outreach. 
Combined, these distributed technology deployment centers represent a 
comprehensive nanotechnology commercialization effort reflecting 
regional strengths.
    Government support encouraging private and public investment in 
nanotechnology is a key to industry success and future economic growth. 
New York's tremendous support of nanotechnology development has caused 
industry leaders such as IBM, General Electric, and Corning to expand 
their research and development activities within the state. New York 
State's support for joint technology research, development and 
deployment in the form of state-of-the-art facilities and capabilities 
has played an important role in lowering the risk and cost for 
companies to accelerate the commercialization of nanotechnology.
    New York State already shows signs of being a `Nano Hub' and, in 
particular, the capital region is becoming the world's first 
`Nanopolis.' Since 2002, two of the world's most influential tool 
suppliers, Tokyo Electron and ASML, have chosen to open up their first 
cutting-edge R&D laboratories outside their home countries at Albany 
NanoTech. Smaller high-tech startups like Starfire Technologies and 
Evident Technologies that were incubated at Albany are growing and 
attracting venture capital funding. Finally, we are finding companies 
are actually moving to Albany from other parts of the world.

The Future & Recommendations

    Albany NanoTech's overarching goal is to become the Bell Labs of 
the new millennium--bringing the best minds together, whether they are 
in industry, government or academia, to work on leading-edge 
technologies that can revolutionize our lives in the coming decades. In 
the immediate term, this means building partnerships and creating a 
paradigm that practically compels companies that value leading-edge 
nanotechnology research to establish partnerships at Albany NanoTech if 
they want to remain competitive. In the long-term, it means re-
inventing and drastically speeding how innovation is brought to market.
    The College's goals are to completely redefine how scientists are 
educated by tearing down the traditional disciplinary silos in which 
they operate and by tearing down the barriers between the research 
institutions, community colleges, high schools, vocational schools and 
even the trades. We are confident that subjects like biology, 
chemistry, physics and medicine will become increasingly irrelevant in 
the coming decades as science merges around the development of tool 
sets and methodologies. In the immediate term, we want CNSE to be part 
of this redefinition of research and pedagogy. In the long term, we 
aspire to create a world-class academic center on par with--but not a 
clone of--the world's greatest research universities.
    Atomic-scale manufacturing requires a closer coupling between 
research, development and manufacturing. A new generation of 
institutions executing dynamic cross-industry, cross disciplinary 
models are emerging, such as Albany NanoTech, that are responding to 
the unique challenges and opportunities created by nanotechnology. 
These institutions are establishing a new paradigm for state-of-the-art 
research, education and technology deployment that offers the Federal 
Government a highly leveraged return on its investment in projects, 
programs and centers.
    Federal funding must recognize the emergence of new university-
based technology, educational, and business models that concurrently 
support long-term research, medium-term development and short-term 
manufacturing. Federal funding should reward universities and state 
governments who successfully pursue new paradigms for innovation and 
education by encouraging joint investments in shared-use infrastructure 
by industry. Federal investments in shared-use infrastructure 
supporting the entire continuum of nanotechnology research, development 
and manufacturing must be a strategic priority supporting. New business 
and technology models such as Albany NanoTech's is critical for U.S. 
industry to convert nanotechnology discovery into commercial 
opportunities supporting national industrial competitiveness and 
defense and security priorities.
    Shared investment and collaboration by industry, academia and 
government not only improves the probability of success, leading to 
economic growth for both small and large companies, but also provides 
the critical infrastructure necessary to support educational programs 
for the entire spectrum of workers to effectively compete in the 21st 
Century. Significant and consistent support for the operations of this 
university-based shared-use infrastructure by the Federal Government is 
critical for supporting the growth of small, medium and large 
companies, training the entire spectrum of nanotech savvy workers with 
hands-on educational programs, and achieving the grand challenges set 
forth under the National Nanotechnology Initiative (NNI) which are 
critical for national defense, public health and economic security. 
More specifically, continued support for the NNI should be a priority 
while recognizing that current programs neither effectively address nor 
accommodate less traditional models, and as such, requires a new 
category of funding to support ``Successful New Paradigms for 
Innovation and Education.''
    For more information about Albany NanoTech, its mission and its 
programs, visit our website at www.albanynanotech.org or contact 
Michael Fancher, Director of Economic Outreach at 
[email protected].



                     Biography for Michael Fancher

    Michael Fancher has been the Director for Economic Outreach at 
Albany NanoTech, University at Albany--SUNY for over six years. During 
that time he has supported the development of partnerships with high 
technology companies, industry consortia, governmental entities, 
research institutions, private financing and not-for-profit 
organizations. Specifically, he identifies opportunities to leverage 
financial, technological and market development resources by 
formulating strategic application-specific and technology-driven 
development programs. Michael also supports the business acceleration 
initiatives by coordinating federal, State and local financial and 
technical assistance programs for high technology business enterprises 
through each stage of technology commercialization. Mr. Fancher holds a 
Master's degree (international economics-finance) from the University 
at Albany-SUNY, an undergraduate degree in business administration 
(accounting & finance) from Syracuse University and is a Certified 
Public Accountant in New York State.
    Prior to joining Albany NanoTech, Michael served as Deputy Budget 
Director for the New York State Assembly Ways and Means Committee 
overseeing project development financing and program policy structures 
supporting university research, regional infrastructure, energy 
industry restructuring, public & private construction projects, 
environmental protection, procurement reform, transportation capital 
planning & industry regulatory issues. He was awarded the Governor's 
commendations for legislative achievement supporting business 
competitiveness and project development financing.
    As a Certified Public Accountant, Michael has provided audit, tax 
and financial planning services for business formation, expansion, 
merger and acquisitions and is experienced in financial and economic 
modeling.



                               Discussion

    Chairman Inglis. But while you have got that slide up, let 
me ask you the first question, if I may.
    Mr. Fancher. Yes.
    Chairman Inglis. You were actually in the process of 
answering a question that I had, and perhaps others on the 
panel have, which is where is our main competition? Who should 
we be concerned about?
    Mr. Fancher. I think, when you look at the competition from 
abroad, you are seeing the European Union as a very strong 
block that invests heavily in supporting the business--the 
similar model as what is at Albany NanoTech. When you look at 
Asia and Japan, they also have formed a similar model in Japan. 
France has also established in Grenoble, a similar model. So 
the model is validated, I think, by--but the competition--and 
the focus is similar. They are focusing on developing the 
expertise in this process technology to not only provide a 
platform for nanotechnology, but to take the knowledge base of 
processing and apply it to rolling production for 
photovoltaics, all types of different production of materials 
and substrates.
    Chairman Inglis. That is helpful.
    Mr. Donnelly, I should have mentioned that we are extremely 
happy to have General Electric in our District making gas 
turbines. I saw that operation recently. Amazing that you can 
run gases over those rotors that are the higher--the gases are 
being at a higher temperature than the melting point of the 
metal that comprises the rotors. It is amazing.
    So perhaps you--because you are in business at General 
Electric to make products, tell us how we, in the Federal 
Government, and folks like Dr. Kennedy in academia and Dr. 
Cassady, can help you get to products. What can we best do here 
in government and in the university to help you get a product 
into the marketplace?
    Mr. Donnelly. Well, all I can say is it is in two parts, 
Mr. Chairman. One is certainly students coming out of 
universities. So again, the funding that goes through NSF, you 
know, the people that try to figure out how to make those 
materials survive beyond their melting point, which is actually 
the tricky part of these systems, is all of that intellectual 
capital. So the, you know, the talent that we are able to bring 
in out of university systems on a constant basis to design that 
next generation is incredibly important to us.
    And other avenues that we see in terms of the federal role 
in things like next generation aircraft engines, you know, it 
is--you can't state the importance of where the military tends 
to go with things like JSF engine technology, which is 
important, obviously, for the military mission perspective. But 
that technology then floats and works its way down through our 
commercial aircraft engines, our energy businesses, and things 
like that.
    So I think when you look at the programs that the Federal 
Government funds, it helps to pull a lot of these very high 
performance, leading-edge technologies that might first show up 
in a military application but ultimately work their way into a 
commercial application as well. The same is true in the energy 
area. If you look at the DOE funding that is in place to help 
support and bring some of these new technologies to the market, 
frankly, before they might be economically suitable for wide-
scale deployment, it is a very necessary step to get that 
technology out on the marketplace and start working on the cost 
and validation of that, which ultimately ends in a very large 
business.
    Chairman Inglis. Okay. Dr. Kennedy, what do you think we 
could do, we, in the Federal Government, could do to help you 
accomplish your objectives of----
    Dr. Kennedy. I feel like that in terms of translating--
transferring nanotechnology into companies, you need graduate 
students that have broader perspective than just how to make 
polymers or how to make this nano-material, because they don't 
have it--they really don't have a business experience in their 
graduate education. And we are looking at that as universities, 
but one of the things that has happened in the polymer industry 
that we, as an ERC [Engineering Research Center] and the 
polymer industry, now are facing is central research at the 
polymer industries that was downsized because of globalization. 
And that is a void that now exists in commercialization. And 
the government and the universities really need to think about 
how that void can be replaced. And that is something that our 
center is actually thinking about right now.
    Chairman Inglis. Dr. Cassady, anything to add there from 
your perspective?
    Dr. Cassady. Well, I think it is interesting to look at 
this industry and maybe compare it a little bit to the biotech 
industry that developed. And I think that you really have two 
types of corporations that are moving into these fields. You 
have the GEs, the major, large corporations, but you also have 
a lot of start-up companies. I think if you look worldwide, and 
this is based on data, that probably about half of the start-up 
companies in this area are in the United States. So we are not 
doing too badly in terms of getting the companies to that 
stage. But if you actually look, government investment is as 
much in this area as corporate investment. So I think that 
there is a problem there in getting the 600 start-up companies 
into a stage where they can develop through investments. So to 
me, I think gap funding is important. At the university level, 
I think it is important to be able to protect intellectual 
property. One of the things that we don't have at the 
university is a way to operate like a business. For example, we 
have a lot of good ideas and innovations and intellectual 
property, but how do we pay to get those protected? And then 
once you have a--I guess I would call it almost an idea for a 
product, how do you get it through that gap so you can actually 
develop it into a product? And that needs investment.
    So I think that those are areas that need to be looked at. 
If you really want to talk about getting the innovation, 
especially out of our universities, into something that becomes 
a product or a company. I think there are only six nanotech 
companies out of the 600 in the United States that have 
received a second round of venture capital funding. And that, 
to me, is pretty limiting.
    Chairman Inglis. Thank you.
    I am happy to recognize Ms. Hooley.
    Ms. Hooley. I want to yield to Mr. Honda for a follow-up.
    Mr. Honda. Thank you very much.
    The comments to--the answers to the question of the Chair 
were very intriguing to me, and I have been reading through 
your testimonies, and it seems like there is one conclusion I 
come to on the question of what role the Federal Government has 
in commercialization. I think I heard Dr. Cassady say that we 
need to have gap funding. I hear other folks saying that there 
is a role--definite role of Federal Government in bridging the 
``Valley of Death'' so that research can reach 
commercialization in this area. This is not a nano industry. It 
is a nanoscale activity, which is an enabling technology.
    And so my question is, given the kinds of things that are 
going on today, and from your point of view, what is the 
further role--or what is an additional role that the Federal 
Government can play that may be considered by some folks in the 
Federal Government as corporate welfare? But it seems to me 
that we--in this new arena of nanoscale activities, that the 
Federal Government has a critical role to play with 
universities, start-ups, and established corporations to be 
able to help and assist in bridging this gap until we have 
reached that critical point where private investors can come in 
with some confidence and support commercialization. Is there a 
comment from any one of the four of you? And perhaps we could 
start with Dr. Cassady and then work to Dr. Kennedy and----
    Dr. Cassady. In the discussions that we have been having, 
one of the points that was made is that we need, and to be 
really frank with you, this is a new terminology to me, but 
what the military calls ``6.2 funding.'' It is DARPA type 
funding. And I think that the people at ONAMI feel like that 
there is a need for this sort of funding for this area. And 
again, I think that there is a role of government. And I know 
in some of the current discussions at the state level in 
Oregon, there is an issue that is being raised with regard to 
trying to attract more venture capital into this area. So part 
of it is that. We have a fairly good environment in Oregon.
    Mr. Honda. But what I am hearing you say is that there is a 
model out there that it should be applied to----
    Dr. Cassady. There may be a model, I think, that you could 
look at.
    Mr. Honda. And in spite of the fact that a lot of pressure 
is being put on states that the Federal Government still has a 
role?
    Dr. Cassady. I--you know, I would add another piece to it, 
because I think, you know, the collaboration between federal 
and state is going to be needed in order to optimize this 
approach.
    Mr. Honda. And to the Chair. Would this enhance our 
competitive edge globally?
    Dr. Cassady. I would think so.
    Mr. Honda. I just needed an opinion from the field, that is 
all. Perhaps the others have some more comments.
    Dr. Kennedy. I would like to reiterate some of my comments 
that the NASA activity 25 years ago, we had done a tremendous 
amount of research on composite materials. And the push that 
NASA provided and DOD provided by developing components for 
aircraft, such as wing flaps and wing boxes, really helped the 
industry. It pushed the industry to develop that technology. I 
think that is an important step that the Federal Government--
and that is consistent with the comment you heard on DARPA. So 
DOD, NASA, Department of Energy, those are some wonderful 
places where demonstration programs could benefit 
nanotechnology I think.
    Mr. Honda. I appreciate your patience. What you are talking 
about is basically a paradigm shift in how we do things, and 
this composite research took, what, 20 or 25 years to get to 
the point of commercialization? Is that something that the 
private sector can afford to do, given the time?
    I know the answer is no. The Federal Government--what you 
are saying is that has a critical role in helping to bridge 
this end.
    Dr. Kennedy. Well, the Federal Government funded that 
activity for----
    Mr. Honda. Right.
    Dr. Kennedy.--a very long period of time. But now what you 
are seeing now is aircraft that are having 50 percent, or a 
large fraction of their structure, made out of composite 
materials, and it just--it takes a while for the industry to 
develop the confidence to put something on an airplane where 
you have--where there is potential for disaster. So there are a 
lot of issues there.
    Mr. Honda. And the composite has been applied to the tail 
section of our commercial jets now. It is stronger, lighter, 
and more reliable. And this could be applied to, say, launching 
of satellites that could be lighter and stronger and carry a 
heavier payload and things like that.
    Dr. Kennedy. And that is where nanotechnology--those are 
opportunities for nanotechnology, I think.
    Mr. Honda. Thank you.
    Chairman Inglis. Mr. McCaul is going to be recognized, but 
he is going to come and take the Chair for a moment while I run 
to a vote in the Judiciary Committee.
    So Mr. McCaul and the Chair.
    Ms. Hooley. He came a long way.
    Mr. McCaul. [Presiding.] Yeah, I appreciate the promotion 
from being just a lowly freshman to the Chair of the 
Subcommittee.
    My District is from Austin, Texas to Houston. I have got 
high tech on either end. I have Dell, Samsung, Applied 
Materials. I also have the University of Texas, and so I have 
the research and development arm of the university. And I am 
very interested in this issue of nanotechnology as it applies 
to what I view as really a great partnership between industry 
and the universities. We have a lot of scientists at the 
universities that are interested in this partnership. I think 
it is good for industry as well.
    So I wanted to see, first, if you would comment on that, 
and then specifically, if you could discuss two issues. One is 
computer models being funded by NSF. I know that with the UT 
system that is very important with respect to nanotechnology. 
And then, second, in terms of the industry's collaboration, 
there is always the issue of intellectual property management 
and how they can properly protect intellectual property.
    So I know I am throwing a lot out there, but if--just to 
the panel as a whole, if you would comment on that.
    Mr. Fancher. Well, I will take a stab at the modeling, if 
you would like.
    I think it is important. You know, a science is a science, 
while it is limited to just an experiment, you get one data 
point, and you don't really have predictability in it if you 
change variables in that experiment, which is what is required 
for a manufacturing process. So once you have more 
predictability, it is just to turn into a technology. And that 
modeling is really a precursor or a critical event that has to 
happen in manufacturing so that you can start to have the 
confidence to control that production process to know that as 
you are changing your inputs a certain way, what the outcome 
will be.
    So that would be my--so yes, it is critically important.
    Dr. Cassady. I will take a stab at the intellectual 
property.
    I think that each institution is different, but I know at 
our institution, we have--and I would guess that probably the 
other Oregon institutions, we have to look at our process. I 
made the comment that we have to make it easier to do business 
with the university. And that is one of those barriers that 
occurs if you have too many steps in the process to approve 
these transfers of intellectual property and licensing.
    The second thing is partnerships. I think that we have to 
find a way to make these work, and I like the idea of trying 
different models around the country and then learning from one 
another as to what works and what doesn't work. And I think our 
experiment is going to be very interesting.
    I come from a background that was involved in--where NIH 
National Cancer Institute funds partnerships, inter-
institutional, and always involving a pharma partner in what 
they call ``national cooperative drug discovery programs.'' The 
bottom line, you want drugs, you want NDAs, and you want drugs 
going on the market. And I think those types of partnerships 
are excellent, and they are excellent places for students to 
learn.
    Dr. Kennedy. I would like to comment both on the 
intellectual property issue and on modeling, but I will pick 
modeling first.
    Our engineering research center was funded based on 
modeling. It was our view that we could help the fiber and film 
industry transform from a trial-and-error industry to a 
predictive industry, but that would require that we do modeling 
at both a core scale, which we call a continuum scale, and at 
the molecular level. And we are doing that now.
    But let me point out the kinds of advances that we have 
made. The initial algorithms that we were using to compute at 
the molecular level were indicating that to get an answer, it 
would take thousands of years, 105 years. We have 
modified those algorithms to the point where we can get that 
answer in several hours. That is a major advancement. But it 
still takes powerful computers and excellent computer 
infrastructure to do that. So we are making progress, and we 
are training students to use modeling in the fiber and film 
industry.
    Concerning intellectual property, I heard a woman from the 
Dow Company talk about their interaction with universities. And 
she pointed out that universities need flexibility in the way 
they approach intellectual property, and she was saying that it 
had been their experience that universities were very rigid in 
that regard and so much so that Dow was starting to utilize 
industries in other countries. Particularly, they are going to 
Europe to get research done. It says that the universities 
really need to take a hard look at that, and I think that has 
been suggested here. And it is something that we need to do.
    Thank you.
    Mr. Donnelly. I would comment on the modeling side. This is 
very important. It has been important for many years in terms 
of, first, gaining a better understanding of what is going on. 
And in terms of the cycle times for material systems, you 
reference the composites that took 25 years.
    This is quite common in any material system, nano or 
otherwise. The cycles are very, very long, and utilizing 
modeling to understand better what is going on and reduce the 
number of experiments is very important, especially as you get 
to the nano level. The degree to which you can experiment and 
truly understand the material behaviors is very, very difficult 
without augmenting that with a good modeling program. And so 
that is very important.
    IP from an initial standpoint, I can echo the Dow position 
as it has been articulated. Frankly, it is an enormous barrier 
to working with universities. I would say there is a great deal 
of variability. Some universities are very good to work with in 
this regard. Others are on the other end of the spectrum and 
virtually impossible to work with. And so it can be a 
significant barrier. The need to invest a great deal of funding 
over a long time and not have good IP terms and exclusivity, in 
many cases, frankly, just leaves industry to have to walk away 
and look other places for this capability, because having that 
intellectual property ownership is very important commercially. 
You really can't do it without it.
    Mr. McCaul. Well, thank you.
    And of course any suggestions to enhance that industry-
university relationship, I think the universities, to be 
competitive, sort of need to get with the program, so to speak, 
and start working. I think some have worked very effectively, 
and Dr. Kennedy, I was actually concerned to hear that some 
were not, but I think it is a great partnership for America.
    So the Chair recognizes the Ranking Member.
    Ms. Hooley. I didn't realize I was giving away all of my 
time to Mr. Honda, but that is okay. I thought you were going 
to ask him a short question.
    I am going to ask just a couple of very--I had some 
specific questions, but many of them have been asked--some very 
general questions. One is if there was one thing that we, the 
Federal Government, could do differently that would help us 
really be at the head of the class in terms of global 
competition, what would it be? And I will just start at one end 
with Mr. Donnelly and go to the other end.
    Mr. Donnelly. I think if you will look in--and this was--I 
referred to it a little bit earlier in the question by Mr. 
Honda, but when you think about new material sciences, of which 
nanotechnology is sort of the central theme of that right now, 
these are technologies that can bring a lot to new 
applications. That is how we have to look at it. At the end of 
the day, we are not doing nano because nano is something to do, 
but because we want to improve performance characteristics of 
some end application. It could be an aircraft engine. It could 
be a medical scanner. Any number of different things.
    Where the Federal Government can play an important role in 
that is more funding in the early stages of science and much 
more focused on the ``R'' side of R&D. References were made to 
NASA and a number of other military application programs. That 
money that is--you know, whether it is 6.2 money and things of 
that genre are really where that kind of research activity goes 
on for many years before you really get the technology 
insertion. And there are plenty of applications across our 
military and NASA and NIH where we have challenges in terms of 
things we want to achieve in new areas where new material 
science is ultimately the answer to that, but they are things 
that need to be nurtured for a number of years to really put 
money into that science side of it before you are going to see 
that in the end application.
    Ms. Hooley. Okay. So you would say more money into the 
research side?
    Mr. Donnelly. More money into the research side, more money 
into the 6.2s, more money into the real challenges we have in 
NASA and DOE and DOD and areas like that.
    Ms. Hooley. Dr. Kennedy.
    Dr. Kennedy. More money is always wonderful, but I think we 
have also got to look at workforce, very definitely. And when I 
say workforce, I think we have got to back up into the public 
education system and figure out ways to excite pre-college 
students about science, mathematics, and engineering. We 
graduate 56,000, I heard, engineers a year, and China's goal is 
to graduate a million engineers a year. Well, the competition--
you see where the--they are great minds. So we really need to 
reach out and involve other people in science and technology, 
and the Federal Government needs to think about that. And they 
are doing that. We have outreach programs that we participate 
in, NASA does, but we have really got to continue to push hard 
on that, I think.
    Ms. Hooley. Dr. Cassady.
    Dr. Cassady. Well, I certainly agree with both of those 
conclusions. I guess that my feeling is that something that 
would encourage the relationships between research teams in the 
research universities and these start-up companies in this 
industry that don't really have the R&D funding, I think that, 
to me, is a place where you could have a big impact. You know, 
there is something wrong when you have 600 start-up companies, 
only 10 percent of those got a first round of venture capital 
funding, and only 10 percent of those got a second round. So 
you really have a big gap there.
    The other point I would make is in terms of the workforce. 
Are there some issues that I think surround some of our 
concerns about national security that could have a big 
modulating effect on our ability to attract graduate students, 
international graduate students? Now I am very concerned about 
that. So I think if, you know, we don't want to have a double-
edged sword where all of a sudden they are gearing up, which 
they are, and then we make it less available because of certain 
regulations that may be placed. I am thinking in terms of 
export control, for example, as an area where we are seeing a 
potential really big impact on our ability to bring graduate 
students in from certain places and have them work as part of 
these teams.
    Those are a couple thoughts that I would have.
    Ms. Hooley. Before we go to Mr. Fancher, I want to ask a 
question.
    Is there the--being able to bring in graduate students or 
college students from other countries, is that a big problem 
for other universities? No?
    Dr. Cassady. Well, I am talking about a potential problem 
and the potential impact of export controls.
    Ms. Hooley. Okay.
    Dr. Cassady. For example, where we may be actually in a 
situation where we have to get students from certain places 
licensed to be able to have access to certain equipment to do 
their research.
    Ms. Hooley. Okay. Okay.
    Dr. Cassady. And if you do that, and I am not saying that 
we have gotten to the point where it has been done, but if you 
do that, I think it will have an impact on where students 
decide to come and do their graduate work.
    Mr. Fancher. Finally, I would say you are probably 
beginning to observe several states have entered the game of 
nanotechnology in a, I think, very complementary way to federal 
investments. But I think what you also are seeing is that there 
is a--I kind of am complementary to Scott's comments about 
focusing just on research. I think that it is time to begin 
focusing on the development and early manufacturing that the 
nanotechnology has come out of the lab and it is now ready to 
go into commercialization. And our competition is focusing 
their investments heavily in what I would call ``next 
generation Bell labs.'' PCAST noted that in their study back in 
2003. There is a--the cost is daunting to commercialize 
nanotechnology. It is increasing exponentially. We are 
producing lots of wonderful research, but to capture the 
economic rewards requires a focus on supply chain, getting your 
partners, leveraging the resources from the states, leveraging 
the resources from companies, industry to tackle that. And I 
think other--competition is doing that, and if we just look at 
the number of papers that are published, what you are going to 
be focused on is the success in the research, but we are not 
going to be fully realizing the benefits of development and 
manufacturing for homeland security, defense, and all of our 
other economic security.
    Ms. Hooley. All I know is having visited ONAMI and not 
having quite the wonderful floor space that you have in--
facility that you have in New York, that a couple of the 
products that have been--are in the stage of being developed 
really make a difference in people's lives. I mean, it is 
amazing what nanotechnology can do and really transforming how 
people live. And so it is--I mean, I think it is really 
important work you are doing, and I like the partnerships. And 
if you would--please, if you have any suggestions about what we 
can do and what we can do better, let us know.
    Thank you so much for taking your time to be here today.
    Chairman Inglis. Thank you, Ms. Hooley.
    I will recognize myself for another round of questions 
here.
    Mr. Fancher, it was very interesting to hear you talk about 
hands-on kind of learning, I think, in one of your slides. And 
the engineering statistics that you cited are of great concern 
to us on this committee, and we have talked about it a number 
of times here. And it seems to me, as a lure, that one of the 
things that would make engineering more interesting is if it 
is, as much as possible, hands-on education, so that it is not 
an abstract principle, but rather something that, ``Oh, I can 
see how that might work.'' And if you can see it, then it is an 
exciting thing to study. Like the law has stories that it tells 
in its cases. It is interesting to study law, because they are 
about people and they are about cases and they are about 
situations. If you make engineering that interesting, then 
hopefully we will keep a lot of students going at it.
    Another thing I wanted to comment on is the--I think I have 
heard comments on collaboration both in Mr. Fancher's 
testimony, and I wanted to congratulate Dr. Kennedy on what 
Clemson is doing. It really is significant, I think, that 
Clemson University is teaming with MIT. That is obviously 
significant, and with Clark Atlanta University. That is an 
exciting thing that you realize that your commitment to 
diversity and to expanding this--opportunities for engineering 
education from MIT north of you to Clark Atlanta University 
south of you, and so I wanted to congratulate you on that.
    Now what is the--those of us that are new to this 
nanotechnology get very excited about it. But help me to figure 
out the difference between what we should be expecting here and 
the hype. We have to be careful, I suppose, those of us that 
are novices at this, not to be carried away and think that we 
have found a perpetual motion machine or something like that 
and go running out and tell everybody to buy heavy in those 
areas. So does somebody want to help me figure out the 
distinction between the reality and the hype?
    Mr. Fancher. Well, I will take a stab, not to miss out on 
that opportunity.
    I think the hype a lot of times is what is often described 
as ``bottom up nanotechnology.'' And it is the concept of 
basically creating something molecule by molecule exactly the 
way you want it. Think of it as a statue from the inside out. 
The more closer to commercialization, though, is the top-down 
approach where you are integrating nanotechnology in 
incremental ways. And I would give an example. Maybe you are 
familiar with microsystems or MEMS. Okay. Well, game-changing 
performance improvements can be made or captured by integrating 
nano-materials onto these microstructures. So it is the--it is 
an incremental process, or an evolution of nanotechnology 
versus there are isolated examples of the revolutionary impact 
of nanotechnology. For example, the clothes that don't absorb 
dirt. You know, there are a few, but those will be fewer and 
far between. The other wins, I think, are going to be an 
incremental evolution. And the reason for that is that your 
supply chain--you know, just because you invent something, I 
mean, doesn't--you have to bring the whole supply chain along 
with you before it goes into production. The tool suppliers, 
materials, the chemistries. And it is one thing to make just 
one device. It is quite a completely different challenge to 
make a high-yield, low-cost production flow for that. It is a 
completely different challenge. And I think that is my--I hope 
that I--you know, at least from our perspective would kind of--
--
    Chairman Inglis. That is helpful. And Mr. Donnelly, 
something that you mentioned is interesting. You said R&D, we 
should really be focusing on the ``R'' part of that in 
government. And yesterday, I was with some folks from General 
Motors, and that is really what they were saying about 
hydrogen, that we really need for the government to be taking 
risk in the ``R'' part, I suppose, in your terminology, and 
leaving to companies like yours and General Motors to pick up 
from that. But tell me how you see that ``R'' part, the risk 
taking in the research area. I mean, that is, I assume, what 
you would say is what government has to do is take the risk in 
the research.
    Mr. Donnelly. I think that is true. And not the sole 
responsibility, obviously. Companies like ourselves are 
investing in the basic research, and we will continue to do 
that. But I think what happens, if you look at the government 
and willingness to take risk is to provide some early 
application opportunities for these technologies. I think one 
of the challenges in nanotechnology and for people to 
understand nanotechnology and sort of what is involved in this 
process is, perhaps, more difficult than a lot of other 
technologies we have talked about, because if people are 
expecting that, you know, some day, whether it is a year or 10 
years from now, you wake up and start buying nanotechnology 
products, people are really confused. I don't know what a 
nanotechnology product would be. Where the nanotechnology is 
going to be, it is truly enabling technology. So whether you 
are talking about enabling a technology that would allow more 
highly efficient ways to convert water to hydrogen, to enable 
the hydrogen infrastructure, or whether you are talking about 
an aircraft engine that gets, you know, better fuel economy 
because you can fire at a higher combustion temperature because 
of a nano-alloy and a high-pressure turbine blade, the places 
where the technology is going to make an impact, it is not 
going to be terribly obvious. And 99.9, probably, out of 100 
people in this country will never understand or know there is 
nanotechnology in the product they are buying. It is the change 
in that technology that is enabling that better performance or 
that higher reliability that is how the impact of 
nanotechnology manifests itself. And so it is hard, really, to 
go to the public and say, ``This is what nanotechnology is,'' 
because it is many different things, and it is going to 
manifest itself not as a nano-product but as something in a 
bigger product, everything from a semiconductor chip that runs 
at a higher speed or higher transistor densities to an aircraft 
engine turbine blade.
    So I think when you look at what the government role can 
be, and why I say to focus on the ``R'' side is that 
historically, the government applications, whether they be for 
security purposes or military purposes or energy infrastructure 
purposes, can have these challenges that can be solved by new 
material systems. And that is where I think the government can 
take those risks in those early applications and allow the 
technology to mature before it shows in the commercial sector.
    Chairman Inglis. Thank you.
    My time has expired, and I would recognize Ms. Hooley for a 
second round of questions.
    Ms. Hooley. Thank you.
    Mr. Donnelly, I am going to ask you this question, and then 
the rest of you can answer it afterwards.
    Bridging the gap between research--basic research and 
nanotechnology commercialization, as you have just explained, 
is an enormous challenge.
    The Advanced Technology Program at the Department of 
Commerce was designed to address this transition problem. And 
it currently supports projects in the nanotechnology area. Do 
you, or any of you, believe--or have had experience with this 
program, and if so, do you believe it is valuable and deserving 
to be continued--the support continued for it?
    Mr. Donnelly. Well, I am familiar with the NIST programs. I 
probably should preface by saying I am on the NIST Advisory 
Board, and so I am--or the ATP program, and so I am familiar 
with their programs.
    Ms. Hooley. Okay.
    Mr. Donnelly. And I think they do have value. They do 
encourage promotion of very novel, early-on technologies and 
promote the interaction, frankly, in many cases, between 
companies both large and small and universities and other small 
companies. And so I think that is an area on the research side 
where it has provided some funding to develop some novel 
technologies in clearly what is a pre-commercialization state. 
And so it is not necessarily targeted at an application that is 
DOE related or DOD or NIH related but really provides an avenue 
that historically will fund some very early technology, pre-
commercialization, and does promote what I would kind of refer 
to as some ``R'' funding well before you know where that 
application is going to go and where the development phase will 
go.
    Ms. Hooley. Do you think it has been successful?
    Mr. Donnelly. I think it has been largely successful. 
Again, it is a case of the government taking some risk and 
investing in some early technologies, and so you certainly 
would look at some of those programs and say, ``Nothing came of 
it.'' That is truly the nature of research.
    Ms. Hooley. Right.
    Mr. Donnelly. And we have to look at that as well. We 
invest in many things that don't happen, but some of the things 
turn out to generate some technologies to become very 
commercially important.
    Ms. Hooley. Do any of the rest of you have experience with 
that program and--yeah, Dr. Kennedy?
    Dr. Kennedy. Yes, ma'am. We have been very interested in 
the ATP program as our NSF money runs away and goes away in 
another three years, and we are looking for supplemental 
funding to keep our center running. And that is one of the 
places we will look is at ATP with our industry partners, 
because we do have 20 industry partners. So we are very 
positive about that program.
    It is not a big program. It is only, what, $200 million to 
$300 million, I believe, so it is not really, really big, and--
but I think it is a good idea. We have attended a number of 
their workshops, and so we are pretty positive about it, and we 
would like for it to stick around.
    Mr. Fancher. I would also comment. I think the NIST ATP 
program is extremely effective. And the reason for that is that 
it provides for the integration of several companies' 
technologies to work--to be integrated together. It is the 
funding to allow for those types of mid-range programs that are 
so critical to commercialization. So it is really pre-
commercialization, but it is--and I think NIST does a nice job 
of focusing on taking--selecting high-impact opportunities, 
things that are--you know, yes, there is risk, but if it hits, 
it will provide a broad impact on a variety of other companies 
that--for example, tool development or something like that. 
So----
    Ms. Hooley. Dr. Cassady, any----
    Dr. Cassady. I am not that familiar with the ATP program.
    Ms. Hooley. Okay.
    Dr. Cassady. But SBIR I am more familiar with. I think that 
that also plays a role in helping with early stages of business 
development. And that has actually been a mechanism to help 
faculty that wish to do this actually move into a business 
development phase. And that has been done very successfully in 
certain areas, and we just need to figure out how to make that 
process more efficient. But that is another mechanism that 
helps fill that gap.
    Mr. Fancher. I think it is also important to note, venture 
capital does not tread there. And everybody thinks----
    Ms. Hooley. Right.
    Mr. Fancher.--venture capital is early. No, venture 
capital----
    Ms. Hooley. No, venture capital wants to be where they know 
they are going to----
    Mr. Fancher. It is there generally where there is 
production already in place.
    Ms. Hooley. Yeah.
    Mr. Fancher. There are sales, and they are ready to take it 
global or something. There is a lot of research----
    Ms. Hooley. They are not risk-takers.
    Mr. Fancher. Yes. There is--a majority of the funding is in 
the research realm, very little in this development mid-range. 
And you are seeing it from NIST ATP. DOD, when they need 
something for the battlefield, they will fund in that space. 
And then Department of Energy, also. So there is--I think it is 
important to understand--and PCAST mentioned it. Research and 
development and manufacturing, they are two pieces of it. They 
co-exist, and they feed back and forth. And that is back to the 
workforce training. How do you do hands-on workforce training 
if you are only in the lab? You do work for hands-on exposure, 
because you have got actual, real-life--this is what your work 
environment is going to be. This is what you are going to get, 
you know, to work in with these kinds of tools or in this 
environment. And I think that is very engaging. Particularly, 
we expose kids in high school, even the vocational student kids 
are being brought in and rotated through. And in fact, our 
region, they are actually pushing forward to build a new high-
tech vocational school focused on this, and it really creates, 
I think, an avenue, a strategy for engaging a restructuring of 
the educational curriculum that is nano-centric, let us say.
    Ms. Hooley. I think it is interesting that you are looking 
at high-tech vocational training, because, at least in my 
state, when I look in the newspaper and look in the help wanted 
ads, the number of jobs tend to be in the highly skilled area. 
I mean, they are asking for not particular engineers, but 
highly skilled workers in a variety of things. And that seems 
to be where we are missing the boat. So I think it is 
interesting that you are looking at high-tech vocational 
programs.
    Mr. Fancher. Yeah. Well, if you were to look at a chip fab, 
a large chip fab, about 2,000 workers in it, about 20 percent 
of those are Ph.D.s and engineers. The 80 percent are 
operators, technicians. You know. I mean, you can--they make 
very good money----
    Ms. Hooley. Right.
    Mr. Fancher.--fixing these tools without even an associates 
degree. You are global. You are in demand. I mean, it is a very 
exciting opportunity. And what is nice is that there is a whole 
continuum so that you can go back to school. There is a--it is 
a nurturing--the industry provides--or the nanotechnology, I 
think, promises to have a whole continuum of opportunities for 
a worker to pursue lifelong education and training to work 
their way up the--you know, the pay scale and the technology 
responsibility scale.
    Ms. Hooley. Thank you.
    Chairman Inglis. Thank you, Ms. Hooley.
    Mr. Honda is recognized for a second round of questions.
    Mr. Honda. Thank you, Mr. Chair, and I hear a bell ringing, 
so I will be real quick.
    I want to thank the Chair and Ranking Member for putting 
this together. And the four of you have made today really a day 
well worth living, because the kinds of things that you are 
sharing with us is the kind of information that we need to hear 
constantly, because there seems to be some--at least in my 
opinion, some foot-dragging in this arena.
    I agree that we have to do a lot more in pre-high school 
education in the area of education and bringing along the 
community in terms of they are being critical consumers of 
products and also the idea of having ATP continue, which has 
been zeroed out.
    And I guess--there doesn't seem to be a disagreement also 
on the role of government in bridging the gap. My question 
would be, given that, how do you see us creating the solution 
set for the problems that you have described? And you know, 
with the short time, I would love to have that in writing so 
that it would give us a little bit more time to cogitate over 
the responses you may have, the solution sets that you may be 
suggesting from both the corporate, to the university, to the 
research arena. And that would be something that I would really 
love to have, because we are struggling here to be able to 
address everything from ATP to funding the gap.
    Thank you, Mr. Chairman and Ranking Member. And if you have 
an immediate response, I will take it.
    Mr. Fancher. I would love to take a shot at that.
    Actually, my written testimony, at the very end, it has my 
recommendations.
    I think, just as in the past four years of the 
nanotechnology initiative, investments were made in strategic 
critical research infrastructure. The National Labs, for 
example. Significant amounts of money were invested in the 
National Labs in key areas of nanotechnology, the same as NNI 
provided for key research at a variety of universities around 
the country. I think what is important to understand that--to 
help the smaller and medium-sized companies through the 
``Valley of Death,'' you can try to do it grant by grant, 
company by company, but you end up with winners and losers, and 
frankly you feel like you didn't get your money's worth. I 
think what is important is to begin to focus on focusing the 
investments in national resources. Ours, for example, is at--we 
view ourselves as a national nanotechnology resource. It is $3 
billion of investment there. To not leverage that for small and 
medium-sized companies in a variety of applications is a huge 
lost opportunity. The same, though, for rolling production of--
in polymers and fibers. There are different challenges there, 
but there is a need to focus the investment in key integration 
points. I think PCAST calls it ``innovation clustering.'' Now 
it is not to say that all of the jobs happen there. It is that 
middle that--what NIST ATP is trying to do, you are supporting 
it through infrastructure, and that lowers the risk, lowers the 
cost for the companies to engage work together, leverage each 
other's resources, and pull their resources towards a common 
end. And I could envision having centers like this established 
around the country in--focused on different production or 
applications for nanotechnology, depending on the particular 
area and in--of advancement. Certainly Europe is doing it. Asia 
is doing it. If we don't do it, I think we are going to find 
ourselves losing the economic rewards.
    Dr. Cassady. I would be pleased to provide further 
responses after I consult with colleagues, but I think the 
idea, and the idea that we are pursuing at Oregon State, is 
very similar, that is creates centers of innovation. Our 
research universities are centers of innovation, but find a way 
to create places where we can translate that out in a way that 
is more than rhetoric, that--where it actually occurs. And you 
need places where you can bring these teams together to move 
these ideas into products and eventually into businesses.
    Chairman Inglis. The gentleman yields back.
    And I want to thank you all for coming. As you hear, we 
have got votes on over at the House Chamber. Thank you for 
allowing me to run out to a couple of votes at the Judiciary 
Committee. As you see, we get our good exercise around here.
    And I very much want to thank you for coming to share your 
thoughts. It has been a very helpful hearing for me, and I am 
sure for others. And we look forward to working with you on 
these exciting developments.
    Thank you for coming.
    [Whereupon, at 11:45 a.m., the Subcommittee was adjourned.]

                              Appendix 1:

                              ----------                              


                   Answers to Post-Hearing Questions

Responses by John M. Cassady, Vice President for Research, Oregon State 
        University

Questions submitted by Representative Dave G. Reichert

Q1.  Under funding from the National Science Foundation and the Defense 
Advanced Research Projects Agency, researchers at Washington State 
University in my state are using nanotechnology to develop new energy 
production systems based on piezoelectric materials and nanotubes for 
energy switching. Although such technologies have significant potential 
for security and consumer applications, development of the technology 
for applications can be expensive and time consuming.

Q1a.  What role could national laboratories play in helping move 
significant new technologies enabled through nanotechnology from 
university research to applications?

A1a. I believe the best group to answer this would be our national 
laboratory administrators. We are working very closely with PNNL and I 
will discuss this with my counterpart there, Dr. Len Peters. Question 
is how they would view in-licensing. The partnerships we now have to 
develop joint proposals lead to access to support that academic PIS 
normally do not have. In some cases, this may lead to development.

Q1b.  When multiple organizations, all of which are funded by the 
Federal Government, are involved in such work, how can the universities 
continue to receive appropriate credit in accordance with the Bayh-Dole 
Act without directly licensing the technology to the national 
laboratories for further development?

A1b. These relationships are framed by agreements (MOUs) that address 
issues of licensing, commercialization and revenue sharing. That is if 
you mean by ``appropriate credit'' licensing income. These agreements 
are always negotiated up-front. The national lab might have first 
right-of-refusal on licensing the technology and could be involved in 
further managing development.
    These responses had input from Skip Rung, Director, ONAMI.

                              Appendix 2:

                              ----------                              


                   Additional Material for the Record


                         Statement of Bob Gregg
                        Executive Vice President
                              FEI Company

Chairman Inglis:

    Thank you for providing the opportunity for us to express our 
observations on the National Nanotechnology Initiative.
    I am Bob Gregg, Executive Vice President of FEI Company. Our 
corporate headquarters are in Oregon, and we have 1,800 employees. Our 
association with nanotechnology derives from the tools we build and the 
diverse international markets and customers that we serve. FEI 
develops, manufactures, distributes, and services transmission and 
scanning electron microscopes and dual ion and electron beam tools. Our 
tools enable nanotechnology by allowing materials and devices to be 
observed over a size range of eleven orders of magnitude. The tools are 
used to observe, characterize, manipulate, and modify structures. They 
allow human vision to be continuously extended from the naked eye to 
the macro- and micro-worlds, down to the meso- and the nano-scale and 
below. Because of the existence of these tools, the imaging of atoms is 
routine. This level of performance capability is necessary to further 
not only basic research, but also to enable industry to manufacture at 
economic levels of yield. Our products are used worldwide in academia, 
institutes, and industries for research, prototyping, and production. 
FEI's designated markets are NanoElectronics, NanoBiology, and 
NanoResearch. Our sales revenues are evenly distributed among the 
Asian, European and North American markets. In 2004 our revenues 
approached $500 million.
    We have been selected by the DOE as the primary contractor on the 
TEAM project which is intent on building the highest resolution 
electron microscope in the world. This instrument is targeting 
subatomic resolution levels and will lead to a new generation of more 
powerful research tools. FEI Company is also actively pursuing 
initiatives with government entities in the area of researching 
proteomics and in technical education.
    As a consequence of our business activities that are on the 
forefront of nanotechnology developments, we believe that we can offer 
a unique global perspective on the National Nanotech Initiative and its 
impact on U.S. economic development.
    Our comments are directed at actions that are needed to stimulate a 
more direct connection between academic science research and the 
economic growth of the Nation. The task is to prioritize and then 
channel the basic research we require into the academic research 
community in order for U.S. industry to meet its strategic objectives. 
The need is for a structured and sustained dialogue between U.S. 
industry and Government research policy makers. If we do not succeed in 
this, the U.S. will become a net importer of foreign nanotechnology-
based products in the future with serious negative consequences to the 
social welfare and standard of living of all U.S. citizens.
    We restrict our observations to the following points.

        1.  The announcement of the National Nanotech Initiative in the 
        year 2000 had the purpose of stimulating and directing science 
        to create a platform for new technologies and, by implication, 
        a basis for maintaining economic growth. The initiative has 
        succeeded admirably in revitalizing U.S. science. It has also 
        had the effect of catalyzing other nations and economic blocs 
        to actively compete for predominance in a future 
        nanotechnology-based global economy. The U.S. now trails 
        government investments in nanotechnology in Europe and Japan. 
        This impacts our potential for innovation and, in turn, 
        threatens our future economic growth.

        2.  Competitive government bodies appear to have taken a 
        business approach in positioning themselves for future success. 
        The fundamental difference with the NNI approach is that other 
        governments are gearing their strategies to rapid 
        commercialization of nanotechnology. The objective is a rapid 
        return-on-investment. Their approach is to focus their efforts 
        into specific industrial enterprises that play to their 
        strengths and then provide direct government investment to 
        industry to accelerate product time-to-market.

        3.  It can be argued that the commercialization of 
        nanotechnology is made more complex within the U.S. free-
        enterprise system, as there is no mechanism to allow government 
        to make direct investment into the industrial sectors.

            The current options for industry which are needed to 
        embrace scientific research at the nanoscale are:

                  To finance their own R&D. The trend here is 
                not encouraging as there is a shortage of skilled 
                manpower within the U.S., and companies are under 
                pressure to reduce overhead. The predictable result is 
                either a reduction in the level of research or 
                stretching the available R&D budgets by transferring 
                operations to regions where talent and cost savings 
                coincide.

                  To either identify (a) a scientific discovery 
                at a university that has a commercial fit and negotiate 
                the IP rights or (b) establish piecemeal, a research 
                program with a given university department. For 
                industry, this is a time-consuming, arduous task and 
                difficult to sustain; for the university, the time and 
                specific nature of the investigation may conflict with 
                current constraints-and-reward system within the 
                academic community.

                  To await academic business spin-offs financed 
                by VCs to evolve to the point of proof-of-concept and 
                engage in acquisition activity.

            Relative to the process of direct government investment to 
        industry, these routes extend the time needed for the 
        commercialization of nanotechnology and put the development of 
        U.S. nanotechnology-based international commerce at a 
        disadvantage.

        4.  The last observation is that the U.S. is now fighting a war 
        on two fronts. The obvious one is that against terrorism; the 
        unstated one is the battle to dominate future nanotechnology-
        based industrial markets. The costs of the former are causing 
        serious cuts in investment in the latter. As other nations 
        competing with the U.S. are not burdened by this dilemma, our 
        progress is again impeded. The long-term economic impact for 
        the U.S. at this point in a new era of technology shift could 
        be major and is probably being under-estimated.

    What can we do to improve our current situation?
    We note that research and development do not earn money--they cost 
money--and that our nation's wealth and prosperity is ultimately driven 
by the level and added value of our exports to other countries. Our 
economic growth is heavily influenced by our manufacturing industry. 
Our options to improve the NNI program within the existing national 
constraints are very limited and must focus on using the basic academic 
research resources available to us to directly contribute to economic 
growth. We must create mechanisms to allow existing industrial sectors 
that are now involved in building nanotechnology-based economies to 
communicate their basic research needs to government. The dialogue 
should be structured to enable industry to directly support government 
in setting priority areas and in creating and maintaining science/
technology roadmaps.
    In short, if the government is opposed to direct investment in 
industry to promote economic growth, it must use its power and 
responsibility to focus the efforts of the academic research community 
to support U.S. industry in competing in the coming nanotech-based 
economy.
    The government, through its funding agencies, would create the 
appropriate incentives and conditions for funding. These programs would 
not only have the intent of direct funding, but would also create an 
environment and the rewards to encourage academic research as a team 
effort (nanotechnology will need a multidisciplinary approach), 
establish clear performance guidelines (already a reality for 
industrial-based research), and a tangible result (science directed to 
economic benefit).
    We perceive that the original National Nanotechnology Initiative 
was carefully phrased, as the word ``technology'' implies an end 
product and thus some social/economic benefit. The current reality is, 
however, that all the funding is directed to ``nanoscience,'' and that 
while there is great promise of things to come, we have few new 
nanotechnology-based products in the public domain. This leads to a 
concern that, without more focus and evidence of progress, there could 
be either a public or political backlash that would be detrimental to 
U.S. commerce.
    We urge the Committee to take every action within its power and 
sphere of influence to accelerate the transition from academically 
based science to commercially relevant technology.
    We thank you for your attention.

    
    
