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


 
REAUTHORIZATION OF THE U.S. DEPARTMENT OF JUSTICE: EXECUTIVE OFFICE FOR 
   U.S. ATTORNEYS, CIVIL DIVISION, ENVIRONMENT AND NATURAL RESOURCES 
    DIVISION, EXECUTIVE OFFICE FOR U.S. TRUSTEES, AND OFFICE OF THE 
                           SOLICITOR GENERAL

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

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                   COMMERCIAL AND ADMINISTRATIVE LAW

                                 OF THE

                       COMMITTEE ON THE JUDICIARY
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             SECOND SESSION

                               __________

                             APRIL 26, 2006

                               __________

                           Serial No. 109-132

                               __________

         Printed for the use of the Committee on the Judiciary


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



                                 ______

                    U.S. GOVERNMENT PRINTING OFFICE
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                       COMMITTEE ON THE JUDICIARY

            F. JAMES SENSENBRENNER, Jr., Wisconsin, Chairman
HENRY J. HYDE, Illinois              JOHN CONYERS, Jr., Michigan
HOWARD COBLE, North Carolina         HOWARD L. BERMAN, California
LAMAR SMITH, Texas                   RICK BOUCHER, Virginia
ELTON GALLEGLY, California           JERROLD NADLER, New York
BOB GOODLATTE, Virginia              ROBERT C. SCOTT, Virginia
STEVE CHABOT, Ohio                   MELVIN L. WATT, North Carolina
DANIEL E. LUNGREN, California        ZOE LOFGREN, California
WILLIAM L. JENKINS, Tennessee        SHEILA JACKSON LEE, Texas
CHRIS CANNON, Utah                   MAXINE WATERS, California
SPENCER BACHUS, Alabama              MARTIN T. MEEHAN, Massachusetts
BOB INGLIS, South Carolina           WILLIAM D. DELAHUNT, Massachusetts
JOHN N. HOSTETTLER, Indiana          ROBERT WEXLER, Florida
MARK GREEN, Wisconsin                ANTHONY D. WEINER, New York
RIC KELLER, Florida                  ADAM B. SCHIFF, California
DARRELL ISSA, California             LINDA T. SANCHEZ, California
JEFF FLAKE, Arizona                  CHRIS VAN HOLLEN, Maryland
MIKE PENCE, Indiana                  DEBBIE WASSERMAN SCHULTZ, Florida
J. RANDY FORBES, Virginia
STEVE KING, Iowa
TOM FEENEY, Florida
TRENT FRANKS, Arizona
LOUIE GOHMERT, Texas

             Philip G. Kiko, Chief of Staff-General Counsel
               Perry H. Apelbaum, Minority Chief Counsel
                                 ------                                

           Subcommittee on Commercial and Administrative Law

                      CHRIS CANNON, Utah Chairman

HOWARD COBLE, North Carolina         MELVIN L. WATT, North Carolina
TRENT FRANKS, Arizona                WILLIAM D. DELAHUNT, Massachusetts
STEVE CHABOT, Ohio                   CHRIS VAN HOLLEN, Maryland
MARK GREEN, Wisconsin                JERROLD NADLER, New York
J. RANDY FORBES, Virginia            DEBBIE WASSERMAN SCHULTZ, Florida
LOUIE GOHMERT, Texas

                  Raymond V. Smietanka, Chief Counsel

                        Susan A. Jensen, Counsel

                        Brenda Hankins, Counsel

                   Mike Lenn, Full Committee Counsel

                   Stephanie Moore, Minority Counsel


                            C O N T E N T S

                              ----------                              

                             APRIL 26, 2006

                           OPENING STATEMENT

                                                                   Page
The Honorable Chris Cannon, a Representative in Congress from the 
  State of Utah, and Chairman, Subcommittee on Commercial and 
  Administrative Law.............................................     1
The Honorable Melvin L. Watt, a Representative in Congress from 
  the State of North Carolina, and Ranking Member, Subcommittee 
  on Commercial and Administrative Law...........................     3

                               WITNESSES

Mr. Michael A. Battle, Director, Executive Office for United 
  States Attorneys, United States Department of Justice, 
  Washington, DC
  Oral Testimony.................................................     7
  Prepared Statement.............................................    10
Mr. Peter D. Keisler, Assistant Attorney General, Civil Division, 
  United States Department of Justice, Washington, DC
  Oral Testimony.................................................    30
  Prepared Statement.............................................    31
Mr. Matthew J. McKeown, Principal Deputy Assistant Attorney 
  General, Environment and Natural Resources Division, United 
  States Department of Justice, Washington, DC, on behalf of Sue 
  Ellen Wooldridge, Assistant Attorney General, Environment and 
  Natural Resources Division, United States Department of 
  Justice, Washington, DC
  Oral Testimony.................................................    35
  Prepared Statement of Sue Ellen Wooldridge.....................    35
Mr. Clifford, J. White, Acting Director, Executive Office for 
  United States Trustees, United States Department of Justice, 
  Washington, DC
  Oral Testimony.................................................    40
  Prepared Statement.............................................    41

          LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

Prepared Statement of the Honorable Chris Cannon, a 
  Representative in Congress from the State of Utah, and 
  Chairman, Subcommittee on Commercial and Administrative Law....     2
Prepared Statement of the Honorable Melvin L. Watt, a 
  Representative in Congress from the State of North Carolina, 
  and Ranking Member, Subcommittee on Commercial and 
  Administrative Law.............................................     4

                                APPENDIX
               Material Submitted for the Hearing Record

Prepared Statement of Paul D. Clement, Solicitor General of the 
  United States, United States Department of Justice, Washington, 
  DC.............................................................    61
Response to Post-Hearing Questions from Michael A. Battle, 
  Director, Executive Office for United States Attorneys, United 
  States Department of Justice, Washington, DC...................    64
Response to Post-Hearing Questions from Peter D. Keisler, 
  Assistant Attorney General, Civil Division, United States 
  Department of Justice, Washington, DC..........................    75
Response to Post-Hearing Questions from Matthew J. McKeown, 
  Principal Deputy Assistant Attorney General, Environment and 
  Natural Resources Division, United States Department of 
  Justice, Washington, DC........................................    84
Response to Post-Hearing Questions from Clifford, J. White, 
  Acting Director, Executive Office for United States Trustees, 
  United States Department of Justice, Washington, DC............    88


REAUTHORIZATION OF THE U.S. DEPARTMENT OF JUSTICE: EXECUTIVE OFFICE FOR 
   U.S. ATTORNEYS, CIVIL DIVISION, ENVIRONMENT AND NATURAL RESOURCES 
    DIVISION, EXECUTIVE OFFICE FOR U.S. TRUSTEES, AND OFFICE OF THE 
                           SOLICITOR GENERAL

                              ----------                              


                       WEDNESDAY, APRIL 26, 2006

                  House of Representatives,
                         Subcommittee on Commercial
                            and Administrative Law,
                                Committee on the Judiciary,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 2:58 p.m., in 
Room 2141, Rayburn House Office Building, the Honorable Chris 
Cannon (Chairman of the Subcommittee) presiding.
    Mr. Cannon. The Subcommittee will come to order.
    We apologize. You know, the worst thing that can happen 
here is when you get a vote right before a hearing, and you 
guys have to sit here and wait. We apologize for that and thank 
you for being here and thank you for patience.
    The Subcommittee on Commercial and Administrative Law is 
meeting this afternoon to receive testimony from five 
components of the Justice Department--at Department of Justice 
as part of the Subcommittee's continuing oversight efforts.
    These components are the Executive Office for United States 
Attorneys, the Civil Division, the Environment and Natural 
Resources Division, the Executive Office for United States 
Trustees, and the Office of the Solicitor General, the latter 
of which has submitted written testimony for the record.
    Our oversight responsibilities require us to examine the 
performance of these Justice Department components, evaluate 
how well they are positioned to achieved their goals, and 
determine both the adequacy of their funding levels and the 
need for any legislative changes to facilitate their mission.
    I should state at the outset that this has not been and 
will not be the only encounter the Subcommittee has with the 
Justice Department components within our jurisdiction. It is 
our intention to continually monitor the activities of these 
components throughout the year, and I expect this endeavor to 
be undertaken in the spirit of cooperation by the Members of 
this Subcommittee.
    I believe that effective oversight requires that we listen 
in order to learn so that we can intelligently question and 
suggest. The Committee must make sure the Department performs 
competently and fairly because the Department is directly 
responsible for supporting the President in his duty to 
faithfully execute the laws of the United States.
    It is imperative that the Department be conscious of the 
awesome power that has been entrusted to it and of its 
responsibility to ensure that this power is exercised in the 
interest of justice.
    I wish to stress the significance of today's hearing for 
both the Justice Department and Subcommittee Members. The 
information we receive from witnesses today will be of 
immediate value in determining the adequacy of funding levels 
proposed by the President in his budget request for the 
Department of Justice. It will also influence whether the 
Subcommittee needs to craft legislation to implement the issues 
outlined.
    It is interesting to note that the 5 Justice Department 
components represented at today's hearing account for more than 
2 billion in taxpayer dollars. These monies fund comprehensive 
litigation, appellate litigation, and administrative 
responsibilities. The broad mission of these components 
underscores the central role that their performance can play in 
significantly improving the lives, safety, and well-being of 
every American.
    In January, the President signed into law legislation 
reauthorizing the Department of Justice that included three 
provisions added at the insistence of our Subcommittee. These 
provisions included a mandate that the Attorney General 
designate a senior official in the Justice Department to assume 
primary responsibility for privacy policy.
    Among this office's responsibilities is the requirement to 
file with the White House and Senate Judiciary Committees an 
annual report on the Department's activities that affect 
privacy, including a summary of complaints of privacy 
violations. In addition, the law requires any Justice 
Department training or meeting activity at a facility that 
requires payment to a private entity for use to be specifically 
authorized by the Attorney General.
    Finally, the law requires the Executive Office of the 
United States Trustees to submit to Congress an annual report 
with respect to the program's efforts concerning bankruptcy 
crimes.
    These are important provisions, and I look forward to 
working with the Department on their implementation.
    [The prepared statement of Mr. Cannon follows:]

 Prepared Statement of the Honorable Chris Cannon, a Representative in 
    Congress from the State of Utah, and Chairman, Subcommittee on 
                   Commercial and Administrative Law

    The Subcommittee will please come to order.
    The Subcommittee on Commercial and Administrative Law is meeting 
this afternoon to receive testimony from five components of the 
Department of Justice as part of the Subcommittee's continuing 
oversight efforts. These components are: the Executive Office for 
United States Attorneys, the Civil Division, the Environment and 
Natural Resources Division, the Executive Office for United States 
Trustees, and the Office of the Solicitor General. The Solicitor 
General has submitted written testimony.
    By the way of explanation, our oversight responsibilities require 
us to examine the performance of these Justice Department components, 
evaluate how well they are positioned to achieve their goals, and 
determine both the adequacy of their funding levels and the need for 
changes in legislation to facilitate their mission. I should state at 
the outset, this has not been and will not be the only encounter the 
Subcommittee has with the Justice Department components within our 
jurisdiction. It is our intention to continually monitor the activities 
of these components throughout the year. I expect this endeavor to be 
undertaken in the spirit of cooperation by other Members of the 
Subcommittee.
    I believe that effective oversight requires that we listen in order 
to learn so that we can intelligently question and suggest. We do not 
undertake this process, though, without expectations from the Justice 
Department-expectations that are shared not only by the American people 
but also, I am sure, by the agency itself. We expect the Department 
should have performed competently and fairly, and that it should 
continue to do so. The Department is directly responsible for 
supporting the President in his duty to take care that the laws of the 
United States are faithfully executed. It is imperative that the 
Department be conscious of the awesome power that has been entrusted to 
it and of its responsibility to ensure that this power is exercised in 
the interest of justice and for the common good. We will work with the 
components we hear from today and continue to critically study their 
activities and needs.
    I wish to stress the significance of today's hearing for both the 
Justice Department and Subcommittee Members. The information we receive 
from the witnesses today will be of immediate value in determining the 
adequacy of funding levels proposed by the President in his budget 
request for the Department of Justice. It also greatly influences the 
crafting of necessary legislation in the future for the Department. An 
important part of the record on which the Committee will base future 
decisions will be the testimony at today's hearing.
    It is interesting to note that the five Justice Department 
components represented at today's hearing account for more than $2 
billion in taxpayer dollars. These monies fund comprehensive appellate 
litigation, support and administrative responsibilities. The broad 
mission of these components underscores the central role their 
performance can play in significantly improving the lives, safety and 
well-being of every American.
    For example, in January of this year, the President signed into law 
legislation reauthorizing the Department of Justice that included three 
provisions added at the insistence of our Subcommittee. These 
provisions included a mandate that the Attorney General designate a 
senior official in the Justice Department to assume primary 
responsibility for privacy policy. Among this officer's 
responsibilities is the requirement to file with the House and Senate 
Judiciary Committees an annual report on the Department's activities 
that affect privacy, including a summary of complaints of privacy 
violations. In addition, the law requires any Justice Department 
training or meeting activity at a facility that requires payment to a 
private entity for use of such facility to be specifically authorized 
by the Attorney General. Finally, the law requires the Executive Office 
for United States Trustees to submit to Congress an annual report with 
respect to the Program's efforts concerning bankruptcy crimes.

    Mr. Cannon. I now turn to my colleague Mr. Watt, the 
distinguished Ranking Member of my Subcommittee, and ask him if 
he has any opening remarks?
    Mr. Watt. Thank you, Mr. Chairman.
    I just want to briefly welcome the witnesses and indicate 
that this is the annual hearing process through which we learn 
about what the various divisions within the Justice Department 
over which we have jurisdiction have been doing over the past 
year and, importantly to them, learn what resources or 
additional resources they believe are needed to effectively 
meet their responsibilities.
    In the interest of time, I will submit the balance of my 
opening statement for the record in hopes that we might be able 
to get through with their testimony before I have to leave at 
3:30. So the more I can expedite that, the better off we are.
    So I'll yield back.
    Mr. Cannon. Without objection, the gentleman's entire 
statement will be placed in the record. Hearing no objection, 
so ordered.
    [The prepared statement of Mr. Watt follows:]

Prepared Statement of the Honorable Melvin L. Watt, a Representative in 
    Congress from the State of North Carolina, and Ranking Member, 
           Subcommittee on Commercial and Administrative Law



    Mr. Cannon. Without objection, all Members may place their 
statements in the record at this point. Without objection, so 
ordered.
    Without objection, the Chair will be authorized to declare 
recesses of the hearing at any point. Hearing no objection, so 
ordered.
    I ask unanimous consent that Members have 5 legislative 
days to submit written statements for inclusion in today's 
hearing record. Hearing no objection, so ordered.
    I'm now pleased to introduce the witnesses for today's 
hearing.
    Our first witness is Michael Battle, who is the Director of 
the Executive Office of the United States Attorneys. His office 
provides oversight, coordination, and support to 94 United 
States attorneys' offices across the Nation.
    Mr. Battle began his service with the executive office in 
June of 2005. Prior to this--or prior to his work there, Mr. 
Battle served as the United States attorney for the Western 
District of New York from January 2002 to May 2005.
    In June 1996, he was appointed by New York Governor Pataki 
to serve as a judge on the Erie County Family Court and was 
elected the following November to a full 10-year term.
    Mr. Battle is a past president of the Minority Bar 
Association of Western New York, and has been a member of 
numerous other organizations. Mr. Battle received his 
undergraduate degree cum laude from Ithaca College in 1977 and 
earned his J.D. from the University of New York Buffalo School 
of Law in 1981.
    Peter Keisler, our next witness, is the Assistant Attorney 
General for the Civil Division. Prior to his position, he 
served as Principal Deputy Associate Attorney General and 
Acting Associate Attorney General.
    Before joining the Department of Justice, Mr. Keisler was a 
partner in the Washington, D.C., office of Sidley Austin Brown 
& Wood. He also served as associate counsel to the President 
during the Reagan administration and as a law clerk to Justice 
Anthony Kennedy and Judge Robert H. Bork of the United States 
Court of Appeals for the District of Columbia Circuit.
    Mr. Keisler received his undergraduate degree magna cum 
laude from Yale College in 1981 and earned his law degree from 
Yale Law School in 1985.
    Our third witness is Matthew J. McKeown. Or do you 
pronounce that McKeown?
    Mr. McKeown. Mr. Chairman, it's McKeown.
    Mr. Cannon. McKeown. Okay. All right.
    We have a congressman who spells their name quite a bit 
like that and pronounces it differently. McKeown.
    He's the Principal Deputy Assistant Attorney General for 
the Environment and Natural Resources Division. Mr. McKeown is 
testifying in place of Assistant Attorney General Sue Ellen 
Wooldridge, who cannot be with us today because of family 
emergency.
    Before joining the division in October 2005, Mr. McKeown 
served as the Deputy Solicitor for the United States Department 
of the Interior, where, as the second in command, he led a team 
of more than 400 lawyers and support staff. At the Interior 
Department, he also served as the associate solicitor for land 
and water and was the special assistant to the solicitor.
    Mr. McKeown is a graduate of McGill University, and he 
obtained his law degree from the University of Oregon Law 
School.
    Our final witness is Clifford White, who is the deputy 
director for the Executive Office for United States Trustees 
and currently is serving as its acting director. Mr. White has 
testified on several occasions over the years. Welcome back.
    During the course of his 26 years of Federal service, Mr. 
White has served as an Assistant United States Trustee and a 
Deputy Assistant Attorney General within the Department of 
Justice and as Assistant General Counsel at the U.S. Office of 
Personnel Management.
    He is an honors graduate of the George Washington 
University and the George Washington University Law School.
    I extend to each of you my warm regards and appreciation 
for your willingness to participate in today's hearing. In 
light of the fact that your written statements will be included 
in the hearing, I request that you limit your remarks more or 
less to 5 minutes. So feel free to summarize and focus on the 
salient points of your testimony.
    You will note that we have a lighting system in front of 
you. It turns green. After 4 minutes, it turns yellow, and then 
it turns red. The red indicates 5 minutes are up.
    We actually are sort of interested in what you have to say, 
actually, here. So if you go beyond that, that's a little bit 
fine. But recognize that we have a lot of Members here today, 
don't we? Maybe we'll do two rounds of questioning. Who knows?
    But if you could sort of focus on that 5-minute light, so 
that would be helpful. And if it gets a little long, I'll tap 
the gavel or something to encourage you. And then we'll have 
Members ask questions in the order they arrive, and they'll 
take 5 minutes each.
    Pursuant to the directive of the Chairman of the Judiciary 
Committee, I ask the witnesses to please stand and raise your 
right hand to take the oath.
    [Witnesses sworn.]
    Mr. Cannon. The record should reflect that all of the 
witnesses indicated in the affirmative. You may be seated.
    And Mr. Battle, would you--oh. Mr. Battle, would you please 
proceed with your testimony?

TESTIMONY OF MICHAEL A. BATTLE, DIRECTOR, EXECUTIVE OFFICE FOR 
 UNITED STATES ATTORNEYS, UNITED STATES DEPARTMENT OF JUSTICE, 
                         WASHINGTON, DC

    Mr. Battle. Thank you, Chairman Cannon, Ranking Member 
Watt, and Members of the Subcommittee.
    It is my honor to be here today representing the 
outstanding men and women of the 94 United States attorneys' 
offices, and I thank you on their behalf for your continuing 
support of their efforts.
    Let me start by asking that you support the President's 
proposed United States attorneys' fiscal year 2007 budget 
request. We are seeking a total budget of $1.664 billion to 
support in excess of 10,000 positions. The request includes 
$23.2 million in enhancements, which will support an increase 
in 149 positions.
    The enhancements will fund such initiatives as national 
security and terrorism prosecutions, gang prosecutions, and 
child exploitation and obscenity prosecutions, also additional 
positions to prosecute identity theft and increased criminal 
debt collection enforcement.
    Preventing terrorism remains our top priority. On behalf of 
all the United States attorneys, I want to thank the Congress 
for renewing the USA PATRIOT Act. The PATRIOT Act strengthens 
our criminal laws against terrorism and continues to provide 
the legal authorities needed to detect and disrupt terrorist 
plans. Last year, we saw a significant success in terrorism 
prosecutions.
    Apart from terrorism prosecutions, we are continuing the 
important work of sharing terrorism and counterterrorism 
information. Our Anti-Terrorism Advisory Councils, also known 
as ATACs, are chaired by the U.S. attorneys and ensure that 
critical information regarding terrorism is shared among 
Federal, State, and local enforcement agencies. We also conduct 
terrorism training for our prosecutors across the country.
    The United States attorneys are also active in prosecuting 
gangs. Each United States attorney's office has an anti-gang 
coordinator, and last year, we trained the 93 coordinators at 
the National Advocacy Center to take on this fight.
    On March 31, 2006, the Attorney General announced a 
comprehensive anti-gang initiative that devotes extensive 
resources to defeating some of the most violent gangs in our 
country. Each of six sites will receive funds to incorporate 
prevention and enforcement efforts and to assist released 
prisoners as they re-enter society. By integrating prevention, 
enforcement, and re-entry, this initiative aims to address gang 
activity at every stage.
    Another program to keep our communities safe, Project Safe 
Neighborhoods, also known as PSN, continues to be one of the 
great success stories of the United States attorneys' offices 
in the Department of Justice. PSN is a multi-faceted approach 
to reducing gun crime, whereby each United States attorney 
tailors their prosecution strategy to fit the unique gun and 
violent crime problems in their district.
    Under PSN, Federal firearms prosecutions have increased 73 
percent since 2001. And more importantly, the rate of violent 
victimization by an offender armed with a firearm has declined 
by approximately \2/3\ over the last decade. As such, thousands 
of Americans are being spared the tragic consequences of gun 
crime.
    While on the topic of protecting our neighborhoods, I think 
it is important to report that we are continuing to investigate 
and prosecute major drug and money laundering organizations. 
The Organized Crime Drug Enforcement Task Force, also known as 
OCDETF, is a program the integral part of which is part of this 
effort. The OCDETF program combines the efforts of Federal, 
State, and local law enforcement agencies, along with the 
United States attorneys' offices.
    We are also addressing the growing threat of 
methamphetamine, also known as ``meth.'' In FY 2005, the United 
States attorneys' offices filed 5.5 percent more meth cases 
than the previous year and the highest total number ever. In 
the last 10 years, the number of meth cases filed and the 
number of defendants charged has quadrupled. Meth cases now 
have surpassed crack cocaine in frequency, making it third 
behind powder cocaine and marijuana in Federal case filings.
    We are also focused on providing support to victims of 
crime. In May 2005, with input from my office, the Attorney 
General issued guidelines for victim and witness assistance, 
explaining the new protections for victims set forth in the 
Crime Victims' Rights Act. We've also provided training to the 
United States attorneys' offices and the Department since 
passage of the Act. In January 2006, the Attorney General 
designated a Victims' Rights Ombudsman within our office at 
EOUSA to resolve complaints brought by crime victims.
    This brings me to one of the most tragic forms of 
victimization in our society, one involving children. The 
United States attorneys are committed to prosecuting child 
sexual assault and child pornography cases. Statistics show 
that during FY 2005, United States attorneys collectively filed 
in excess of 1,400 child exploitation cases involving child 
pornography, coercion, and enticement offenses against in 
excess of 1,500 defendants.
    To buttress our efforts against this scourge, the Attorney 
General announced in February 2006 the Project Safe Childhood 
initiative. Project Safe Childhood will bring together the 
United States attorneys, Internet Crimes Against Children Task 
Forces, and other Federal, State, and local enforcement 
officials to investigate and prosecute crimes against children 
that occur through the Internet and other electronic media.
    The Internet also facilitates intellectual property and 
computer hacking related to crimes that threaten significant 
segments of our economy. Since fiscal year 2001, specialized 
prosecution units focused on computer hacking and intellectual 
property, known as CHIP units, have been formed at 18 United 
States attorneys' offices. Last fiscal year, 350 defendants 
were charged with intellectual property offenses, nearly double 
the number charged in 2004.
    Another area involving our economy in which we are 
achieving great success is the area of corporate fraud. Since 
the creation of the Corporate Fraud Task Force in July 2002, 
over 970 corporate fraud convictions have been obtained through 
December 31, 2005. This includes more than 200 convictions of 
top managers, including CEOs and CFOs.
    Moreover, health care fraud continues to be a significant 
problem, and United States attorneys' offices play the lead 
role in prosecuting those cases.
    In civil cases, United States attorneys, working with the 
Civil Division, won or negotiated approximately 1.47 billion in 
judgments and settlements. Of that amount, more than 1.13 
billion went to repay the Medicare Trust Fund.
    As you can see by the examples that I've just given, the 
United States attorneys are committed to protecting and 
preserving the rights of Americans in many ways. This perhaps 
manifests itself most directly through the criminal civil 
rights prosecutions brought by the United States attorneys in 
coordination with the Department's Civil Rights Division. 
During fiscal year 2005, United States attorneys filed criminal 
civil rights cases against 131 defendants. This represents a 19 
percent increase in defendants charged over the prior year.
    Finally, the United States attorneys' offices continue to 
enforce the principle that no public official is above the law. 
In FY 2005, the United States attorneys' offices filed 441 
public corruption cases against 673 defendants.
    In closing, over the past several years, United States 
attorneys have taken on new responsibilities and initiatives. 
We have successfully carried out our mission in all of these 
areas, and we appreciate your continued support of our work. 
And I look forward to answering your questions today.
    Thank you.
    [The prepared statement of Mr. Battle follows:]

                Prepared Statement of Michael A. Battle




    Mr. Cannon. Thank you, Mr. Battle.
    Mr. Keisler, you're recognized for 5 minutes.

  TESTIMONY OF PETER D. KEISLER, ASSISTANT ATTORNEY GENERAL, 
     CIVIL DIVISION, UNITED STATES DEPARTMENT OF JUSTICE, 
                         WASHINGTON, DC

    Mr. Keisler. Thank you very much, Mr. Chairman and 
Congressman Watt.
    It's a great privilege for me once again to appear before 
you at this oversight hearing to discuss the work of the Civil 
Division and to respond to any questions you might have.
    The Civil Division, as you know, represents the United 
States in court in a wide variety of matters. We don't make 
policy, but we represent the people and the Departments and the 
Agencies that do.
    Virtually every executive branch agency, as well as Members 
of Congress, are clients of ours at one time or another. The 
cases we handle, therefore, touch upon virtually every aspect 
of the operations of the Federal Government.
    We represent the United States on a wide range of cases--
contract disputes, tort suits, loan defaults, and immigration 
cases, among others. We defend the constitutionality of acts of 
Congress and the lawfulness of Government regulations in court.
    We seek to recover monies lost to the Government through 
fraud, and we enforce important consumer protection statutes. 
We also help administer sensitive national compensation 
programs.
    The division employs approximately 660 attorneys and 
roughly 300 support personnel to perform these functions, and 
they're very busy. While civil had about 31,000 cases in fiscal 
year 2002, it had more than 52,000 in fiscal year 2005, a 70 
percent increase in 3 years.
    Notwithstanding this rapid growth, I'm very pleased to 
report that we have had a very successful year. Working 
together, as Mike just noted, the Civil Division and the U.S. 
attorneys' offices recovered more than $1 billion in monies 
defrauded from the Government. Annual recoveries have exceeded 
that $1 billion mark for 5 of the past 6 years. The division is 
exceedingly proud of these accomplishments, which have resulted 
from its close partnership with Mike's U.S. attorneys' offices.
    While our affirmative case work recovers billions for the 
United States Treasury, 86 percent of our litigation is 
defensive. These cases often affect significant budgetary and 
policy issues. As you know, the Government is the largest 
commercial actor in the world and the largest purchaser of 
goods and services.
    We have successfully defended the Government from 
exaggerated or meritless claims in a wide range of commercial 
and tort cases. Our efforts saved the Government more than $10 
billion in fiscal year 2005 alone.
    We have also successfully defended congressional and 
executive authority against numerous challenges to laws, such 
as the No Child Left Behind Act and the ``three strikes'' 
provision of the Prison Litigation Reform Act. And in July 
2005, the division successfully defended the Communications 
Decency Act's ban on knowingly transmitting obscenity via 
telecommunications devices to minors.
    In addition to these matters, our attorneys are also 
involved on the civil side of a variety of terrorism cases. We 
are particularly proud of our work in the terrorist financing 
area, defending the Government's actions in court to help shut 
down the flow of money to international terrorist 
organizations. We take seriously the Attorney General's charge 
to address terrorism and other threats to our country with the 
utmost integrity.
    The Civil Division has also administered sensitive national 
compensation programs established by Congress, such as the 
Vaccine Injury Compensation Program and the Radiation Exposure 
Compensation Act.
    We very much appreciate the interest and the oversight of 
this Committee, both from a budget and a policy standpoint. My 
written testimony describes the area that we feel is most in 
need of additional resources in FY 2007, immigration 
litigation, where the caseload has risen from 6,200 in fiscal 
2002 to more than 17,000 in fiscal 2005.
    I would, of course, be happy to address this and other 
areas of interest further. I do want to thank you again, Mr. 
Chairman, Congressman Watt, for the opportunity to appear 
before you and to respond to your questions.
    [The prepared statement of Mr. Keisler follows:]

                 Prepared Statement of Peter D. Keisler

    Chairman Cannon, Congressman Watt, and Members of the Subcommittee:
    I appreciate the opportunity to discuss the work of the Civil 
Division of the Department of Justice and our budget and resource needs 
for Fiscal Year 2007.
    The Division represents the interests of the United States in a 
wide range of civil matters. Our cases encompass virtually every aspect 
of the Federal government--from defending the constitutionality of 
Federal statutes to recovering money defrauded from Government 
programs, to the administration of national compensation programs, to 
the representation of Federal agencies and Government employees in a 
host of matters that arise as part and parcel of Government 
operations--contract disputes, allegations of negligence and 
discrimination, loan defaults, and immigration matters. The Division 
employs 660 attorneys and 295 full and part time employees who provide 
essential paralegal, administrative, and clerical support.
    In FY 2005, the Civil Division accomplished the following:

          Worked with the United States Attorneys to recover 
        more than $1 billion dollars lost through fraud against 
        Government programs;

          Protected the public fisc from billions of dollars in 
        claims arising from the Government's commercial activities;

          Protected the public fisc from over $1 billion 
        dollars in tort claims arising from the Government's past and 
        current operational programs and activities;

          Defended against challenges to Congressional and 
        Executive exercises of power;

          Played a major role in the administration of the 
        Vaccine Injury Compensation Program, which was established by 
        Congress;

          Represented individual Government employees sued in 
        connection with their performance of official duties; and

          In the period since the September 11th attacks, 
        defended the Federal government's coordinated response to those 
        attacks and the Administration's policies designed to prevent 
        future acts of terrorism.

                           NATIONAL SECURITY
 
   Among the laws and policies of greatest importance to the 
Administration, the Congress, and the public are those intended to 
protect our nation's security. Our leadership has committed itself to 
devoting all resources necessary to disrupt, weaken, and eliminate 
terrorist networks; to prevent terrorist operations; and to bring to 
justice perpetrators of terrorist attacks. And we in the Civil Division 
are privileged to contribute to this mission through our representation 
of the United States in litigation that relates to the Federal 
government's efforts to protect against threats to our national 
security. In fulfilling our litigation responsibilities, we take 
seriously the Attorney General's charge to address terrorism and other 
threats to the United States with integrity and devotion to our 
nation's highest ideals.
    Civil cases related to the war on terrorism often raise complex 
issues. And the consequences are large, as litigation losses in this 
area could undercut policies of crucial importance to the security of 
our citizens. By way of example, Civil Division attorneys have defended 
the Government in the following matters: challenges to the USA PATRIOT 
Act; decisions to freeze the assets of terrorist organizations; 
enforcement actions involving the detention and removal of suspected 
alien terrorists; and designations of Specially Designated Global 
Terrorists.
                               __________
    While national security cases are paramount, they nonetheless 
represent a small fraction of the cases and matters pending with the 
Civil Division in FY 2006. This vast and diverse workload is handled by 
our trial attorneys who spend their time on the front lines of 
litigation--preparing motions, taking depositions, negotiating 
settlements, conducting trials, and pursuing appeals.

                            WORKLOAD TRENDS

    Over the past four years, the Civil Division's caseload has 
increased by more than 70 percent. In FY 2002, we handled about 31,000 
cases and matters, but by FY 2005, our caseload exceeded 52,000. This 
increase is attributable to two main factors: (1) significant growth in 
the number of claims filed with the compensation programs; and (2) a 
dramatic rise in appellate cases resulting primarily from increased 
challenges to immigration enforcement actions.

                         IMMIGRATION LITIGATION

    The Office of Immigration Litigation (``OIL'') defends the 
Government's immigration laws and policies and handles challenges to 
immigration enforcement actions. At no time in history has this mission 
been so important, and never before has it consumed as many of the 
Department's resources as it does today.
    Immigration attorneys defend the Government's efforts to detain and 
remove foreign-born terrorists and criminal aliens. Since 9/11, OIL has 
handled and assisted in hundreds of cases involving aliens of national 
security interest. On average, OIL defends the detention and removal of 
approximately 1,500 criminal aliens each year. Vigorous defense of 
these cases is critical to our national security and the safety of our 
communities. OIL also provides liaison and training to all of the 
Government's immigration agencies, enabling enforcement efforts at and 
within our borders to enjoy dependable support before the courts.
    Immigration litigation has been the fastest growing component of 
the Civil Division's docket. The Division is responsible for handling 
or overseeing all Federal court challenges to decisions of the Board of 
Immigration Appeals (``BIA''), and the number of these challenges has 
grown significantly in recent years. OIL's docket of pending cases has 
nearly tripled in the past four years, growing from 6,200 cases in FY 
2002 to over 17,000 cases in FY 2005.
    This growth stems from several factors. In 2003, much of the growth 
was attributed to the Department's streamlining reforms, which 
increased the productivity of the BIA and thus helped clear a sizable 
backlog of cases. The backlog has since been cleared. Now, the growth 
stems primarily from heightened immigration enforcement activities 
pursued by the Department of Homeland Security and the rapid increase 
in the rate at which aliens appeal BIA decisions to the Federal courts, 
which has increased from 6 percent to 29 percent over the past four 
years. There is no reason to expect this rate to subside. Aliens now 
must turn to the courts to get the delay in removal that was once 
reliably provided simply by an administrative appeal to the BIA.
    This enormous growth has driven OIL's caseload per attorney to over 
155 in FY 2005, more than doubling the historic caseload of 60 cases 
per attorney. Favorable congressional action on the Division's FY 2007 
request would play a large part in addressing OIL's rising caseload. 
Without additional resources in FY 2007, the attorney caseload is 
expected to remain at the untenable level of 155 cases per attorney. 
The Division and the Department have responded to this crisis, 
assigning immigration cases to other attorneys throughout the 
Department. These stopgap measures, which task attorneys who lack 
experience and efficiency in handling immigration matters, are not a 
permanent solution.
    The Office of Immigration Litigation will continue to face an 
overwhelming workload in FY 2007. Therefore, the President requests in 
his FY 2007 budget a program increase of 114 positions (86 attorneys), 
57 FTEs, and $9,566,000 for immigration litigation.

                       PROTECTING THE PUBLIC FISC

    Our dockets are filled with cases that involve substantial monetary 
claims against the Government. The significance of these claims cannot 
be overstated.
    Our responsibilities have included: (1) the 122 Winstar suits in 
which hundreds of financial institutions have sought tens of billions 
of dollars for alleged losses that occurred in the wake of banking 
reforms enacted in the 1980s; (2) the Cobell class action--perhaps the 
largest ever filed against the Government; and (3) numerous complex, 
sensitive, and challenging tort cases based on Federal programs and 
activities, including defense and national security programs, law 
enforcement activities, and other Government operations, in which the 
Civil Division has successfully protected the public fisc from 
approximately $1 billion in unmeritorious tort claims in the last 
fiscal year.
    In thousands of other defensive monetary matters, our mission is to 
ensure that the will of Congress and the actions of the Executive 
branch are vigorously and fairly defended, and that meritless claims 
are not paid from the public fisc. Thus far, we have been largely 
successful. For example, seventy of the original 122 Winstar suits have 
been resolved without the Government paying any money whatsoever. And 
in 2005 alone, we defeated over $3.9 billion in groundless Winstar 
claims asserted against the United States.

                        RECOVERING FEDERAL FUNDS

    In any given year, about 15 percent of our cases involve 
affirmative litigation on which we work with United States Attorneys to 
enforce Government regulations and policies, and to recover money owed 
the Government from commercial transactions, bankruptcy proceedings, 
and fraud. The bulk of affirmative monetary recoveries stem from fraud 
suits. As in the last several years, health care in FY2005 accounted 
for the lion's share of the Department's fraud settlements and 
judgments--more than $1.1 billion was recovered in that year alone. 
This number includes both whistleblower claims and those initiated by 
the United States in independent fraud investigations. Most of the 
recoveries in this area are returned to the Medicare and Medicaid 
programs, but substantial recoveries also are returned to the Federal 
Employees Health Benefits Program, the Department of Defense TRICARE 
program, the Department of Veterans Affairs, and the Railroad 
Retirement Board. The coming fiscal year promises to continue, if not 
exceed, this trend. Health care fraud recoveries in the first four 
months of this fiscal year already exceed $600 million. The following 
recent recoveries illustrate our efforts in this area:
    We obtained $325 million from HealthSouth Corporation, the Nation's 
largest provider of rehabilitative medicine services. Allegations 
against HealthSouth included false claims for outpatient physical 
therapy services that were not properly supported by certified plans of 
care, administered by licensed physical therapists, or for one-on-one 
therapy as represented. Of similar magnitude was a recent settlement 
with Gambro Healthcare for $310 million to resolve allegations of false 
claims for Medicare and Medicaid in connection with dialysis services. 
Gambro Supply Corporation, the sham durable medical equipment company 
and a wholly owned subsidiary of Gambro Healthcare, paid a $25 million 
criminal fine and agreed to permanent exclusion from the Medicare 
program in a case handled collaboratively by our office and both the 
civil and criminal divisions in the Eastern District of Missouri.
    One of the largest areas of the Department's health care fraud 
caseload are matters against pharmaceutical companies or other related 
entities, charging various kinds of fraud on the Medicare and Medicaid 
programs in the pricing or delivery of drugs. To date, there have been 
more than more than $4.7 billion in criminal fines and civil recoveries 
in these cases, much of it returned to the Medicare and Medicaid 
programs. Indeed, there now are more than 150 qui tam cases filed by 
whistleblowers under the False Claims Act that allege various schemes 
associated with government drug plans.
    Just this past December, in a case jointly prosecuted with the 
United States Attorney's Office for the District of Massachusetts, 
Serono S.A., a Swiss biotechnical corporation, and its United States 
subsidiaries, entered into a global criminal, civil, and administrative 
settlement for $704 million, making it one of the largest health care 
fraud settlements the Department has reached. Serono Labs, one of the 
subsidiaries, pled guilty to two counts of conspiracy: the first, 
conspiring to introduce and deliver for introduction into interstate 
commerce, with intent to defraud or mislead, adulterated medical 
devices; the second, conspiring to knowingly and willfully pay illegal 
remuneration to health care providers to induce them to refer patients 
to pharmacies for the furnishing of the drug Serostim, for which 
payments were made in whole or in part by the Medicaid program. Serono 
Labs paid a criminal fine of $136.9 million and reached a civil 
settlement of its False Claims Act liability of $567 million. This 
amount was paid to the United States and to State Medicaid programs 
(the Federal share of which was $305 million).
    Finally, in the first settlement of its kind, the pharmacy benefit 
manager AdvancePCS agreed in 2005 to pay $137.5 million to resolve its 
civil liability in connection with soliciting and receiving kickbacks 
from pharmaceutical manufacturers and paying kickbacks to potential 
customers to induce them to contract with AdvancePCS. This 
investigation exposed the hidden financial relationships maintained by 
pharmacy benefits managers with drug manufacturers and health plans 
that ultimately influenced the nature and the brand of drugs prescribed 
to Medicare beneficiaries. We think the lessons learned in this case, 
which was handled with the United States Attorney's Office for the 
Eastern District of Pennsylvania, and its progeny will be particularly 
instructive as we monitor potential fraudulent conduct in the Medicare 
prescription drug program now coming on line.
    The Division is making the best use of available resources. These 
cases are highly complex and resource intensive. Investigative work 
includes massive document collections, witness interviews, research, 
and interagency coordination. Millions of taxpayer dollars are lost 
each year to health care fraud, and any effective effort to contain the 
cost of Medicare and Medicaid must also incorporate strategies aimed at 
stopping such fraud.

                       ALTERNATIVES TO LITIGATION

    In addition to its litigation work, the Civil Division also helps 
to administer alternatives to litigation. The Vaccine Injury 
CompensationProgram, for example, was created in 1986 by the National 
Childhood Vaccine Injury Act to encourage childhood vaccination by 
providing a streamlined system for compensation in rare instances where 
an injury results. The Vaccine Injury Compensation Trust Fund, from 
which compensation awards are paid to eligible claimants, derives its 
funding from an excise tax on vaccine manufacturers and provides 
reimbursement to the Departments of Justice and Health and Human 
Services, as well as to the Court of Federal Claims, for expenses 
related to the administration of the Program. To date, over 1,960 
families or individuals have been paid $1.58 billion.
    Similarly, Congress passed the Radiation Exposure Compensation Act 
(``RECA'') in 1990 to offer an apology and compensation to individuals 
who suffered disease or death as a result of the Nation's nuclear 
weapons testing program during the Cold War Era. In July 2000, RECA 
Amendments were enacted which significantly expanded the scope of the 
Act. Major changes included new categories of beneficiaries, expansion 
of eligible diseases, and geographic areas. Annual capped mandatory 
appropriations did not keep pace with the increased number of new claim 
filings and resulted in shortfalls of funds for eligible claimants. 
However, I am pleased to report that the Trust Fund is currently 
solvent. In FY 2005, Congress ensured adequate long-term funding by 
requiring that payments to certain RECA claimants be made from the 
Energy Employees Occupational Illness Trust Fund. Additional 
legislation conferred mandatory and indefinite funding status for the 
remaining RECA claimants beginning in FY 2006. To date, over 15,200 
claims have been approved, representing over $1 billion paid to 
eligible claimants or their surviving beneficiaries.

                              PERFORMANCE

    By concentrating on the Civil Division's top priorities, this 
testimony provides little elaboration on the thousands of cases and 
matters that form the traditional core of our work.
    The Civil Division has a longstanding commitment to maximizing the 
effectiveness of scarce Government resources. It is with pride that I 
can report that performance targets across the board were met or 
exceeded in FY 2005, as we succeeded in recovering substantial funds 
owed to the Government, defeating unmeritorious claims, and prevailing 
in the vast majority of cases involving challenges to the programs of 
some 200 client agencies.

                       PRESIDENT'S BUDGET REQUEST

    The President's FY 2007 request seeks 1,208 positions (834 
attorneys); 1,176 FTEs; and $213,286,000, which includes a program 
increase of 114 positions (86 attorneys) and $9,566,000 for immigration 
litigation. Also included in this request are the base resources 
required to maintain the superior legal representation services that 
have yielded such tremendous success, and additional funds to support 
the Office of Immigration Litigation's important mission.
    At this time, Mr. Chairman, I would be happy to address any 
questions you or Members of the Subcommittee may have.

    Mr. Cannon. Thank you, Mr. Keisler. I can assure you that 
we're going to revisit the issue of immigration and what's 
going on there. Thank you for your presentation.
    Mr. McKeown, right? Mr. McKeown.

  TESTIMONY OF MATTHEW J. McKEOWN, PRINCIPAL DEPUTY ASSISTANT 
 ATTORNEY GENERAL, ENVIRONMENT AND NATURAL RESOURCES DIVISION, 
UNITED STATES DEPARTMENT OF JUSTICE, WASHINGTON, DC, ON BEHALF 
     OF SUE ELLEN WOOLDRIDGE, ASSISTANT ATTORNEY GENERAL, 
   ENVIRONMENT AND NATURAL RESOURCES DIVISION, UNITED STATES 
             DEPARTMENT OF JUSTICE, WASHINGTON, DC

    Mr. McKeown. Thank you.
    Mr. Chairman, Congressman Watt, Members of the 
Subcommittee, I would like to convey Assistant Attorney General 
Wooldridge's apologies for not being here today because of her 
family emergency. She apologizes that she couldn't be here 
today.
    The division's mission is to enforce civil and criminal 
environmental laws to protect the health and environment of our 
citizens, to defend suits challenging environmental and 
conservation laws, and the 410 lawyers in the division 
currently are responsible for 6,800 cases in every judicial 
district.
    The division is committed to ensuring that American 
taxpayers are getting their money's worth. Altogether, the 
division has secured civil penalties, criminal fines, and 
clean-up costs for the U.S. Treasury that far exceed the 
division's share of the Department's budget.
    In the criminal enforcement context, the division continued 
to have great success with its initiatives to prevent shipping 
from illegal discharges in inland waterways as well as the 
initiative to protect workers from endangerment.
    Over the years, the division has come to recognize the 
importance of developing partnerships with U.S. attorneys' 
offices, State attorneys general, and other State and local 
officials across the Nation. So it's a pleasure to be here with 
Mr. Battle today. In pursuing joint enforcement cases, we are 
able to leverage our resources and increase our effectiveness.
    So I would stand for further questions that the Committee 
may have.
    [The prepared statement of Ms. Wooldridge follows:]
               Prepared Statement of Sue Ellen Wooldridge
                              introduction
    Chairman Cannon, Congressman Watt, and Members of the Subcommittee, 
I am pleased to be here today, along with my colleagues from the 
Department of Justice. I appreciate this opportunity to discuss the 
Environment and Natural Resources Division, one of the principal 
litigating Divisions within the Department, and to answer any questions 
that the Subcommittee may have about the Division.
    I will first summarize the Division's work and outline the scope of 
our responsibilities, which are essential to the implementation of 
Congressional programs to protect the nation's environment and its 
natural resources, and to defend the programs and activities of federal 
agencies. The Division has a long and distinguished history, and our 
attorneys have built a record that demonstrates their commitment to 
legal excellence. I will then discuss the resources that the 
Administration is requesting for the Division as part of its fiscal 
year 2007 budget.

       OVERVIEW OF THE ENVIRONMENT AND NATURAL RESOURCES DIVISION

    The Environment and Natural Resources Division's mission is to 
enforce civil and criminal environmental laws to protect the health and 
environment of United States citizens, and to defend suits challenging 
environmental and conservation laws, programs and activities. We 
represent the United States in matters concerning the protection, use 
and development of the Nation's natural resources and public lands, 
wildlife protection, Indian rights and claims, and the acquisition of 
federal property. Our enforcement activities are a critical component 
of environmental protection and help ensure that our citizens breathe 
clean air, drink clean water, and will be able to enjoy the country's 
public lands, wildlife and other natural resources for generations to 
come. In addition, the Division defends a wide range of vital federal 
programs and interests in cases that involve such diverse and critical 
matters as military training programs, government cleanup actions, 
resource management programs and environmental regulations. We 
represent virtually every federal agency and currently are responsible 
for over 6,800 active cases in every judicial district in the nation, 
utilizing the efforts of approximately 410 lawyers. Our principal 
clients include the U.S. Environmental Protection Agency (EPA) and the 
Departments of Agriculture, Commerce, Defense, Energy, the Interior, 
Transportation and Homeland Security. The Division is committed to 
ensuring that American taxpayers are getting their money's worth. 
Altogether, the Division has secured civil penalties, criminal fines, 
and cleanup costs for the U.S. Treasury that far exceed the Division's 
share of the Department's budget. For instance, the last fiscal year 
was a record breaking year in the Division's efforts to secure 
commitments by polluters to take action to remedy their violations of 
the nation's environmental laws. Actions taken by the Division in 
federal courts resulted in nearly $9.6 billion in settlements and 
court-ordered injunctive relief directed specifically at obtaining 
corrective measures to protect the nation's health, welfare and 
environment. While this number will fluctuate each year depending on 
the nature of the cases being resolved, it is truly a superb result, 
more than doubling our previous record of approximately $4.4 billion in 
Fiscal Year 2004. Additionally, courts imposed nearly $137 million in 
civil penalties for violations in environmental cases. According to EPA 
statistics, the environmental benefits attributable to these 
enforcement efforts include the reduction or treatment of nearly 
400,000 tons of pollutants from the environment. The Division has 
obtained benefits for human health and the environment that provide an 
impressive return on the taxpayer's dollar.
    These results reflect, among other things, the Division's 
continuing successes in addressing Clean Air Act violations within the 
petroleum refining industry. In the last fiscal year, the Division 
secured important and valuable settlements with ConocoPhillips Co., 
Valero Energy Corp., Sunoco Refinery, Inc., Citgo Petroleum Corp., and 
Chevron USA, Inc. More recently, the United States--along with the 
States of Illinois, Louisiana, and Montana--entered a settlement with 
Exxon Mobil that requires the defendant to reduce air pollutant 
emissions by more than 51,000 tons per year, at a cost of approximately 
$537 million, and to pay nearly $15 million for both a civil penalty 
and environmentally beneficial projects.
    Conserving the Superfund to ensure prompt cleanup of hazardous 
waste sites is also a top priority. In Fiscal Year 2005, the Division 
secured the commitment of responsible parties to clean up hazardous 
waste sites, at costs estimated at nearly $647 million. An additional 
$266 million in cost recovery to help finance future cleanup work was 
also secured. The Division continues to secure cleanups of 
unprecedented size and scope. Just this February, the Division reached 
a consent decree resolving our claims against Atlantic Richfield and 
NorthWestern Corporation in connection with the Milltown Reservoir 
Operable Unit, one of the numerous Superfund Sites within the Clark 
Fork River Basin in Montana. Under the terms of this decree, ARCO and 
NorthWestern will: remove the Milltown Dam and the millions of cubic 
yards of contaminated sediment accumulated behind it, at an estimated 
cost of $106 million; contribute toward the State's $12 million natural 
resource restoration plan; reimburse most of EPA's costs; and comply 
with various FERC requirements in connection with the decommissioning 
of the dam. The United States, on behalf of certain federal agencies, 
is also reimbursing $2.5 million of EPA's past costs. Other major 
Superfund cases that the Division resolved this past fiscal year 
require cleanup actions in Colorado, Illinois, New York, Pennsylvania 
and Washington.
    The Division also continues its national enforcement program to 
protect the nation's water by ensuring the integrity of municipal 
wastewater treatment systems. For example, in United States Washington 
Suburban Sanitary Commission (WSSC), the United States entered into a 
Consent Decree with WSSC, the sewerage authority for Montgomery and 
Prince George's Counties in Maryland, under which WSSC will undertake 
injunctive measures including inspection, rehabilitation, and repair 
requirements and changes in the operation and maintenance of its 
collection system. WSSC will also perform four ``supplemental 
environmental projects'' to reduce pollution loadings to the Chesapeake 
Bay and will pay a $1.1 million civil penalty, which the United States 
and Maryland will split. Five citizens groups intervened.
    In the criminal enforcement context, the Division continues to have 
great success with its enforcement initiative to prevent ships from 
illegally discharging pollutants into the oceans, coastal waters and 
inland waterways. Recent whistleblower awards to crew members should 
further aid detection and deterrence. In one recent case, United States 
v. Wallenius Ship Management, Pte., Ltd., the defendant Singapore 
shipping company and the former chief engineer of a vessel it managed 
pleaded guilty to violations associated with the illegal dumping of 
oily wastes and the overboard dumping of plastics. After a tip by crew 
members, the Coast Guard inspected the ship and discovered a multi-
piece bypass system hidden in various locations. The company will pay a 
$5 million fine with an additional $1.5 million payment devoted to 
community service projects and will serve a three-year term of 
probation and implement an environmental compliance plan. In another 
recent case, MSC Ship Management (Hong Kong) Ltd. pleaded guilty to 
having discharged approximately 40 tons of sludge through a bypass pipe 
manufactured on the ship and an even larger volume of oil-contaminated 
bilge waste. The company also made false statements to the Coast Guard, 
directed subordinates to lie to the Coast Guard, concealed evidence, 
falsified its oil record book and sought to cover up the falsification 
of records. The company was sentenced to pay a $10 million fine and 
will pay an additional $500,000 for community service projects.
    The Division has also successfully prosecuted several companies 
owned by McWane, Inc., the largest manufacturer of cast iron piping in 
the United States, with one major case still pending. McWane and its 
divisions have been cited by the U.S. Occupational Health and Safety 
Administration (OSHA) hundreds of times since the mid-1990s. In United 
States v. Union Foundry, an Alabama division of McWane pled guilty to a 
willful violation of an OSHA regulation that led to an employee's death 
and to violation of the Resource Conservation and Recovery Act. The 
company was ordered to pay a $3.5 million criminal fine, perform 
community service valued at $750,000 and serve three years probation. 
In United States v. Tyler Pipe, a Texas McWane division pled guilty to 
presenting false statements and to violating the Clean Air Act. It was 
ordered to pay a $4.5 million criminal fine and serve a five-year 
probation term, during which it must perform specified upgrades at a 
cost of approximately $24 million. In United States v. Pacific States, 
McWane and a company executive pled guilty to Clean Air Act violations 
in connection with operation of an iron foundry division in Utah. 
McWane was ordered to pay a $3 million criminal fine and serve a three-
year probation term. In United States v. McWane, Inc., a jury convicted 
the corporation (acting through a Birmingham-based division) and three 
high-ranking company officials of crimes related to six years of Clean 
Water Act violations. A fourth defendant pled guilty. McWane was 
ordered to pay a criminal fine of $5 million and perform community 
service valued at $2.7 million.
    Over the years, the Division has come to recognize the importance 
of developing partnerships with U.S. Attorneys' Offices, state 
Attorneys General and other state and local officials across the 
nation. In so doing, we are able to leverage our resources and increase 
our effectiveness. We have numerous successful examples of joint 
enforcement with the State Attorneys General. In one recent case 
involving the Clean Water Act's provisions governing discharge of storm 
water from large construction sites, the Division obtained a consent 
decree with Wal-Mart Stores, Inc.--the nation's largest retailer and 
one of its largest commercial developers--that resolved claims covering 
24 locations in 9 states. The United States was joined in the 
settlement by the States of Tennessee and Utah. Wal-Mart will pay a 
civil penalty of $3.1 million, undertake a supplemental environmental 
project to protect sensitive wetlands or waterways, and implement a $62 
million compliance program. This settlement is serving as a model in 
ongoing negotiations with other large commercial and residential 
developers.
    Although the public is generally familiar with the Division's role 
in enforcing environmental laws, about half of our attorneys' time is 
actually spent on non-discretionary cases. Many of our cases involve 
defending the United States for alleged violations of the environmental 
laws, for example, in connection with federal highway construction, 
airport expansion, or military training. Effective representation by 
Division attorneys in these cases is critical to agency implementation 
of Congressionally mandated programs and protection of the public fisc. 
In one recent case, Basel Action Network v. Maritime Administration, 
the Division successfully defended the Maritime Administration's 
decision to export 13 obsolete shipping vessels to the United Kingdom 
for dismantling, recycling, and disposal. The presence of deteriorated 
ships in the fleet has been a point of controversy in the past, and the 
Administration has worked hard to remove obsolete vessels. The 
Division's successful work in this case allowed the agency to move 
forward with a critical disposal program. In Air Pegasus of D.C. v. 
United States, the Division represented the Federal Aviation 
Administration (FAA) with respect to the FAA's restriction of airspace 
near and over the Capitol in the wake of the September 11, 2001 
attacks. In response, a company sued the United States for a Fifth 
Amendment taking because it could no longer operate a heliport near the 
U.S. Capitol. We successfully argued that the company did not have a 
compensable right to access public airspace. In Center for Native 
Ecosystems v. Forest Service, the Division represented the Forest 
Service in an Administrative Procedure Act claim challenging its 
livestock grazing authorizations in the Pole Unit of the Medicine Bow 
National Forest, near Laramie, Wyoming. Plaintiffs alleged violations 
of state water quality standards applicable at federal facilities under 
the Clean Water Act as well as claims under the Endangered Species Act. 
The court recently held for the Forest Service, determining that it had 
complied with the applicable water quality standards and Endangered 
Species Act requirements.
    In the wildlife and natural resources context, we have in the past 
year successfully defended a variety of federal agencies. For example, 
in Oceana v. Evans, both environmental and industry groups challenged 
fishing regulations promulgated under the Magnuson-Stevens Fishery 
Conservation and Management Act by NOAA Fisheries. The environmental 
groups argued that the regulations did not sufficiently limit over-
fishing and did not adequately analyze and protect essential fish 
habitat. Industry groups argued that the over-fishing restrictions were 
too stringent and exceeded the Secretary's authority. The Court ruled 
for NOAA on all important claims. In Northwest Environmental Advocates 
v. NMFS, we successfully defended the Army Corps of Engineers in a 
lawsuit that sought to enjoin it from proceeding with a channel 
deepening project in the Columbia River needed to provide for 
navigation to the Port of Portland. The plaintiffs challenged the 
Corps' actions under the Endangered Species Act as well as the National 
Environmental Policy Act. The Corps had worked hard to resolve 
difficult issues of sediment transport in the Columbia River and 
impacts on the salmon species, consulting with NOAA Fisheries, 
preparing a substantial environmental analysis, and even using outside 
peer reviewers to consider whether the Corps and NOAA had considered 
the best available scientific information. The Court ruled for the 
Corps on all counts, allowing the dredging to proceed.
    We also have protected the taxpayer from invalid or overbroad 
monetary claims against the United States, claims that sometimes 
involve hundreds of millions of dollars. As part of our responsibility 
to protect the public fisc against unwarranted claims, the Division 
prevailed against claimants who sought to recover for the conversion of 
railroad rights-of-way to multipurpose trails on an untimely basis. The 
Federal Circuit adopted the Division's argument on when the statute of 
limitations begins to run in such cases in Caldwell v. United States. 
Following that precedent, the Division succeeded in having three such 
cases dismissed this past year. The Division also succeeded in 
clarifying the compensation rights of landowners served by the Bureau 
of Reclamation. In Klamath Irrigation District v. United States, the 
Klamath Irrigation District and numerous other irrigation and 
improvement districts, businesses and individuals sought approximately 
$100 million based on the Bureau of Reclamation's operation of the 
Klamath Project during a serious drought in 2001. The court granted 
summary judgment in favor of the United States as to plaintiffs' 
takings claims, finding that any interest in project water was 
contractual and not a property interest compensable under the Fifth 
Amendment.
    The Division's docket also includes non-discretionary eminent 
domain litigation. This work, undertaken pursuant to Congressional 
direction or authority, involves acquiring land for important national 
projects. In one recent case, the Division represented the United 
States in litigation to acquire land needed for construction of a 
second fence and patrol zone along the San Diego-Tijuana border. 
Following a trial in which the landowner demanded just compensation of 
nearly $75 million, the jury returned a verdict that just compensation 
for this taking was $1.2 million. The Division also exercised the 
federal government's power of eminent domain to acquire land to: expand 
the National Defense University and Fort McNair; establish a port 
facility in Florida for the Navy to use in shipping weapons around the 
globe; provide a security buffer for the U.S. Southern Command 
headquarters; expand the safety zone next to the Marine Corps Air 
Station in Yuma, Arizona; facilitate the Army's transformation of a 
light infantry division to a Stryker Brigade Combat Team; improve 
security at the Puget Sound Naval Shipyard in Washington; and expand a 
Nellis Air Force Base flight zone.
    The protection of tribal resources has been among the duties of the 
Division from its earliest days. The United States holds title to 56 
million acres of lands in trust for the benefit of Indian tribes and 
their members, and the Division initiates litigation and defends suits 
seeking to protect these lands and resources from incursion by third 
parties. The Division represents tribal and federal interests in water 
rights, land-into-trust, and land claims adjudications. Recently, the 
Division settled three complex major water rights adjudications in 
which the United States had asserted water rights claims for the 
benefit of tribes. In the Snake River Basin Adjudication (Idaho), the 
Division worked with the Interior Department, the State of Idaho, and 
the Nez Perce Tribe to craft an historic settlement, ratified by 
Congress in the Snake River Water Rights Act. The Division also worked 
with the Department of the Interior, the State of Arizona, the Gila 
River Indian Community, and private water users to settle the Gila 
Community's water claims in In Re Gila River System and Source (Ariz.), 
which Congress ratified in the Arizona Water Settlements Act. A 
settlement in Arizona v. California concluded a 54-year-long original 
action in the Supreme Court, which dealt with, among other things, the 
claims of the Quechan Indian Tribe to water rights in the Colorado 
River. As part of its work litigating to protect land held in trust for 
Tribes, the Division recently settled Seneca Nation v. New York (Cuba 
Lake), an action asserting an unlawful trespass on tribal lands. This 
150-year-old dispute was resolved by a settlement among the United 
States, New York, and the Seneca Nation.
    The Division's work also includes defense of the United States in 
some thirty-one tribal trust lawsuits brought by twenty-eight different 
Indian Tribes alleging that the U.S. has mismanaged tribal assets and 
failed to provide an ``accounting'' of the money collected, managed and 
disbursed by the U.S. on behalf of the Tribes. These cases concern the 
scope of the duty owed to Tribes for land that the government has held 
in trust since the late 1800s and that has been used, among other 
things, for grazing, logging, and oil and gas exploration. Some of 
these cases seek an order requiring the U.S. to perform a multi-million 
dollar, multi-year accounting, and others seek a money judgment for 
losses the Tribes claim they have suffered. New claims may be filed 
through December 31, 2006. Over 250 Tribes have potential trust 
accounting and trust mismanagement claims. In the thirty-one cases 
filed so far, the Tribes claim they are owed more than $220 billion. 
The Division recently reached a settlement with one Tribe and is in 
settlement discussions with a number of others.

               ENRD'S BUDGET REQUEST FOR FISCAL YEAR 2007

    The Division receives its annual appropriation from the General 
Legal Activities (GLA) portion of the Justice Department's 
appropriation. For fiscal year 2007, the President has requested 
$95,051,000 for the Division within the Justice Department's GLA 
appropriation. The increase of $2,277,000 over the FY 2006 
appropriation is due to mandatory adjustments and allowances, including 
pay raises, other salary adjustments, and rent adjustments, which will 
allow the Division to maintain its current level of operations.

                               CONCLUSION

    The Environment Division takes pride in an exceptional record of 
assuring that polluters are made to comply with the law, violators of 
criminal laws are punished appropriately, and responsible private 
parties are made to clean up Superfund sites rather than leaving the 
taxpayer on the hook. We are also justly proud of our efforts to defend 
the Executive branch agencies when their actions are challenged over 
matters which are within the Division's jurisdiction. Both our complex 
and challenging affirmative and defensive work is vitally important to 
the implementation of both Executive and Congressional programs and 
priorities regarding public health and the environment, to the 
protection of the public fisc, and to the advancement of the public 
interest generally.
    I would be happy to answer, to the extent that I am able, any 
questions you might have about the Division and its work.

    Mr. Cannon. Thank you. To the point. Appreciate that.
    And Mr. White, you're recognized for 5 minutes.

  TESTIMONY OF CLIFFORD J. WHITE, ACTING DIRECTOR, EXECUTIVE 
OFFICE FOR UNITED STATES TRUSTEES, UNITED STATES DEPARTMENT OF 
                    JUSTICE, WASHINGTON, DC

    Mr. White. Thank you, Mr. Chairman, Mr. Watt.
    I appreciate the opportunity to appear before you to 
discuss the U.S. Trustee Program's recent efforts to promote 
the integrity and efficiency of the bankruptcy system and our 
request for appropriations for fiscal year 2007.
    Over the past year, we've continued to make progress in 
combating bankruptcy fraud and abuse. Last year, we took more 
than 50,000 civil enforcement actions in and out of court, 
yielding $594 million in debts not discharged, fines, 
penalties, and other monetary results. Over the past 3 years, 
we've taken about 165,000 actions, yielding more than $1.7 
billion in monetary results.
    We also continue to enhance our criminal enforcement 
capability. Led by a headquarters unit of 4 former career 
Federal prosecutors, plus an additional 25 program attorneys in 
the field who have been designated as special assistant U.S. 
attorneys, last year we increased the number of criminal 
referrals by 12 percent.
    We successfully carried out numerous other duties, such as 
expediting business reorganizations and overseeing private 
trustees. For these and other efforts and for establishing 
performance-based management systems, the Office of Management 
and Budget rated the U.S. Trustee Program as ``effective'' and 
gave us a numerical score that's among the highest 15 percent 
in the executive branch.
    Beginning on October 17th of last year, the U.S. Trustee 
Program assumed substantial new responsibilities to enforce and 
to implement many of the key provisions of the new bankruptcy 
reform law. As reported to you at a hearing last July, the 
program engaged in an extraordinary effort to develop 
comprehensive implementation plans so that we were prepared to 
carry out our duties on the general effective date of the new 
law.
    Now, the magnitude of the challenge of implementing 
bankruptcy reform increased with the additional burden of 
administering more than 725,000 cases that were filed during 
the 4 weeks before the effective date. Despite the difficulties 
presented by the pre-bankruptcy reform filing surge, we believe 
we've made great progress in enforcing and implementing the new 
law. We're acquiring valuable information every day as we gain 
experience enforcing the statute.
    In the area of means testing, we're timely processing 
chapter 7 cases and identifying cases that are presumed abusive 
under the new objective statutory standard. We're bringing 
motions to dismiss in more than 70 percent of the presumed 
abusive cases and are exercising our discretion not to file 
cases in which the debtor has special circumstances, such as 
expense adjustments caused by Hurricane Katrina.
    In the area of credit counseling and debtor education, 
we've approved well over 350 providers covering all districts 
within our jurisdiction. We excepted four districts from the 
requirements because of the impact of Hurricane Katrina.
    We are timely processing applications, and we have denied 
applicants on grounds such as failure to provide information in 
connection with ongoing IRS audits, for inappropriate 
relationships with third parties which may generate benefit for 
a private party, and for failure to make appropriate 
disclosures to clients about fees.
    Now that the initial approval process is concluded and 
reapprovals are underway, we're working closely with the IRS 
and the Federal Trade Commission to refine the application and 
post-approval auditing process. We will shortly publish a 
slightly revised application as an interim rule and will 
publish a more comprehensive rule for public comment not long 
thereafter.
    We're also carrying out numerous other responsibilities 
under bankruptcy reform, including in such areas as small 
business chapter 11 cases, debtor audits, and studies and data 
collection.
    The Administration has requested FY '07 appropriations of 
$236.1 million. This represents an increase of 11.6 percent 
over FY '06. The request includes $11.2 million in mandatory 
adjustments and $12.7 million in program enhancements that 
would be devoted exclusively to bankruptcy reform.
    These enhancements are $4.8 million to fund debtor audits 
required under the new law; and $7.9 million in enhancements 
requested but not appropriated last year, including 51 
additional positions, related facilities expansion, information 
technology, and studies and reports due to Congress.
    The U.S. Trustee Program is funded by bankruptcy fees. The 
FY '07 revenue projections submitted with our budget follow 
Congressional Budget Office filing projections that were made 
before the October spike in filings and before the subsequent 
decline in filings.
    This is an unprecedented opportunity for the U.S. Trustee 
Program to make bankruptcy reform work for all stakeholders in 
the system--debtors, creditors, and the general public. The new 
law provides us with important new tools to enhance the 
integrity and efficiency of the system. Enforcement and 
implementation of the law has presented many daunting 
challenges, but we believe that we are now off to an excellent 
start.
    I again thank you for the opportunity to appear here today 
and will be pleased to answer any questions from the 
Subcommittee.
    [The prepared statement of Mr. White follows:]

              Prepared Statement of Clifford J. White, III

    Mr. Chairman and Members of the Subcommittee:
    I appreciate the opportunity to appear before you to discuss the 
United States Trustee Program's (USTP or Program) recent activities, 
including our implementation of the Bankruptcy Abuse Prevention and 
Consumer Protection Act of 2005 (BAPCPA). This past year has been 
extraordinarily busy for the Program and the bankruptcy system. I will 
update you today on achievements in our key areas of responsibility, as 
well as highlight our significant progress in making the new bankruptcy 
reform law work as intended by Congress for the benefit of debtors, 
creditors, and the public.
    The United States Trustee Program is the component of the 
Department of Justice whose mission it is to promote the integrity and 
efficiency of the bankruptcy system by enforcing bankruptcy laws, 
appointing and overseeing private trustees, and carrying out important 
regulatory and administrative duties. In addition to our obligations 
under titles 11 and 28 of the United States Code, the Program has been 
given vast new responsibilities under the BAPCPA.
    promoting the integrity and efficiency of the bankruptcy system
    The USTP continues to make significant progress in combating 
bankruptcy fraud and abuse and taking other important actions to 
promote the integrity and efficiency of the bankruptcy system.
Civil Enforcement
    For the past five years, the centerpiece of the Program's anti-
fraud and abuse efforts has been the National Civil Enforcement 
Initiative. The Initiative focuses on wrong-doing both by debtors and 
by those who exploit debtors. The Program combats debtor fraud and 
abuse primarily by seeking case dismissal if a debtor has an ability to 
repay debts and by seeking denial of discharge for the concealment of 
assets and other violations. The Program protects consumer debtors from 
wrongdoing by attorneys, bankruptcy petition preparers, creditors, and 
others by seeking a variety of remedies, including disgorgement of 
fees, fines, and injunctive relief.
    Since FY 2003, more than 165,000 civil enforcement and related 
actions have been brought by the Program, yielding $1.75 billion in 
monetary results. In FY 2005, more than 50,700 actions were initiated 
that generated nearly $594 million in potential returns to creditors 
through debts not discharged and other remedies. USTP attorneys 
prevailed in over 96 percent of the actions resolved by judicial 
decision or consent in the fundamental areas of dismissal for 
substantial abuse (11 U.S.C. Sec. 707(b)), denial of discharge (11 
U.S.C. Sec. 727), fines against bankruptcy petition preparers (11 
U.S.C. Sec. 110), and disgorgements of debtor attorneys' fees (11 
U.S.C. Sec. 329).
    Following are illustrative examples of the variety of cases brought 
under the National Civil Enforcement Initiative.

          The Bankruptcy Court for the District of Oregon 
        revoked the discharge of a debtor who tried to discharge 
        $1,931,157 in unsecured debt. Discovery initiated by the U.S. 
        Trustee's office in Portland suggested the debtor had 
        transferred to his girlfriend more than $400,000 from a company 
        he controlled, and then concealed the transfer. He also 
        allegedly made false statements and false oaths in his 
        bankruptcy case.

          In response to a motion by the U.S. Trustee's New 
        York office seeking dismissal for substantial abuse, a debtor 
        converted to chapter 11. The debtor, a financial consultant, 
        earned almost $300,000 per year and listed $470,735 in 
        unsecured debt. Although his wife did not work, the debtor 
        scheduled the following monthly expenses relating to his four-
        year-old son: $1,650 for an apartment for an au pair, $516 for 
        the au pair, $1,375 for a private school, and $560 for day 
        care. Other scheduled monthly expenses included $6,307 for 
        apartment rent and utilities, $3,600 for recreation, $1,600 for 
        clothing, $1,121 for dry cleaning, $650 for transportation, 
        $560 for maid service, and $450 for telephone. The debtor also 
        maintained a condominium in Marseille, France.

          The Bankruptcy Court for the Central District of 
        California granted a motion to dismiss by the U.S. Trustee's 
        Los Angeles office, preventing the discharge of $316,571 in 
        debt on 79 credit cards. The debtor, who lived with his 
        parents, claimed no secured debt, no income, and no expenses. 
        The U.S. Trustee sought dismissal for substantial abuse because 
        the debtor incurred the credit card debt at a time when he 
        earned less than $8,000 a year.

          On motion of the U.S. Trustee's Pittsburgh office, 
        the Bankruptcy Court for the Western District of Pennsylvania 
        barred an attorney from practice before the bankruptcy court 
        after she misappropriated client funds. During a chapter 13 
        proceeding, the attorney attended the closing of a sale of her 
        clients' real property. A check for approximately $104,000 was 
        made payable to the chapter 13 trustee to pay off the mortgage. 
        The attorney deposited the check into her own account instead 
        of delivering it to the trustee. The sale proceeds were used, 
        at least in part, to pay the attorney's federal tax debt and to 
        pay other clients from whom she misappropriated funds.

    The Program has also pursued instances of creditor abuse. One 
recent example involved conduct by the financing arm of a national 
consumer goods manufacturer that was unfairly pressuring unrepresented 
debtors to reaffirm debt on goods, even though the manufacturer had 
asserted no lien or security interest in the goods and the debtors did 
not need to enter into a reaffirmation agreement in order to retain the 
goods. A coordinated response resulted in the courts denying the 
creditor's attempts to have debtors reaffirm dischargeable debts.
Criminal Enforcement
    Criminal enforcement is another key component of the Program's 
efforts to promote the integrity of the bankruptcy system. In 2003, the 
Criminal Enforcement Unit (CREU) was established to coordinate the 
criminal referral responsibilities carried out by our 95 field offices 
and to directly assist prosecutors in pursuing bankruptcy crimes. CREU 
has made a marked difference in the quality of our criminal program by 
providing extensive training, developing resource materials, and 
enhancing coordination for the benefit of USTP staff, federal 
prosecutors, and other law enforcement personnel.
    In FY 2005, the Program made 744 criminal referrals, a 12 percent 
increase over FY 2004. In many cases, USTP lawyers directly prosecuted 
or assisted the prosecution team in cases initiated as a result of 
criminal referrals made by Program offices. Four veteran career 
prosecutors within CREU, plus approximately 25 attorneys in field 
offices across the country who have been designated as Special 
Assistant U.S. Attorneys, are available to try cases involving 
bankruptcy crimes. In addition, the majority of Program field offices 
participate in bankruptcy fraud workings groups which are headed by 
U.S. Attorneys' offices and often involve the FBI, USPIS, IRS-CI, and 
HUD-OIG. With the enactment of 18 U.S.C. Sec. 158 as part of the 
BAPCPA, every United States Attorney office is required to designate a 
prosecutor and every FBI field office an agent who will assume primary 
responsibility for bankruptcy fraud cases. This provision will further 
strengthen existing working groups by formalizing points of contact and 
provide a foundation for establishing working groups where currently 
none exist.
    Some recent examples of successful prosecutions that originated 
with criminal referrals from the USTP follow.

          A former commodities trader and investment firm 
        executive was sentenced in the Northern District of Illinois to 
        190 years in prison and ordered to pay $1.4 million in 
        restitution following his conviction on 18 counts of bankruptcy 
        fraud, wire fraud, and money laundering, and one count of using 
        a fire to commit wire fraud. The defendant intentionally set 
        fire to his residence to obtain insurance money, making it 
        appear as if the fire were set by his elderly mother, who died 
        in the fire. After receiving the insurance proceeds, he 
        secreted them in an offshore account in Curacao. He later filed 
        bankruptcy and concealed the offshore account containing more 
        than $300,000. The case was prosecuted by the Program's 
        Regional Criminal Coordinator in Chicago, and an Assistant U.S. 
        Trustee from Atlanta testified as an expert witness.

          A debtor in the Western District of Tennessee was 
        sentenced to 46-months in prison for her use of two stolen 
        Social Security numbers in two bankruptcy filings and her 
        failure to disclose prior bankruptcy filings. The debtor was 
        also ordered to pay restitution. The Memphis office referred 
        the matter for investigation and a trial attorney from that 
        office served as a Special Assistant U.S. Attorney.

          A bankruptcy attorney in the Southern District of 
        Texas was sentenced to 30 months in prison and five years 
        probation based on her guilty plea to wire fraud and bankruptcy 
        fraud. The attorney defrauded her clients and their creditors 
        by incurring unauthorized charges on her clients' credit cards 
        and by taking possession of and using collateral her clients 
        intended to surrender to creditors. The Program's Houston 
        office referred the matter and assisted in the investigation 
        and prosecution.
Chapter 11 Reorganizations
    The Program carries out a wide array of responsibilities in chapter 
11 reorganization cases. Our primary role is to ensure that cases 
proceed expeditiously and with transparency in accordance with law. By 
statute, our principal responsibilities include: the appointment of 
official committees of creditors and equity holders; objections to the 
retention and compensation of professionals; the review of disclosure 
statements, particularly in smaller cases; and the appointment of 
trustees or examiners when warranted. Chapter 11 cases often present 
the Program with highly complex issues of law and require time 
intensive financial reviews.
    In FY 2005, the Program filed nearly 3,000 motions to convert or 
dismiss chapter 11 cases. The grounds for such motions, which are 
critical to the effective functioning of the reorganization provisions 
of the Bankruptcy Code, typically include failure to file financial 
reports or dissipation of estate assets without a reasonable likelihood 
of rehabilitation.
    Provided below are some recent examples of important actions taken 
by the Program in larger chapter 11 cases:

          After much negotiation, the Program reached a 
        stipulated agreement with the management services provider in 
        the chapter 11 case of Enron Corporation to reduce by $12.5 
        million the success fee it requested for its work in the case. 
        In reviewing the provider's motion for a $25 million success 
        fee, the U.S. Trustee initiated an investigation that uncovered 
        unacceptable billing practices and billing irregularities. The 
        bankruptcy court held a hearing on the motion, but withheld its 
        ruling pending the filing of a response by the U.S. Trustee. 
        The stipulated agreement was approved by the bankruptcy court 
        on March 24, 2006.

          The Tenth Circuit Court of Appeals in Houlihan Lokey 
        Howard & Zukin Capital v. Unsecured Creditors' Liquidating 
        Trust (In re Commercial Financial Services, Inc.), 427 F.3d 804 
        (10th Cir. 2005), affirmed a ruling by the Bankruptcy Appellate 
        Panel for the Tenth Circuit, denying fees to the financial 
        advisor for the committee of asset-based securities holders. 
        Upon objection by the Tulsa office and the unsecured creditors' 
        committee, the Bankruptcy Court for the Northern District of 
        Oklahoma denied fees of more than $1.9 million sought by the 
        financial advisor, which were determined according to a flat 
        monthly rate. The bankruptcy court did, however, allow fees of 
        $905,000 based on an hourly rate supported by contemporaneous 
        time records. The Bankruptcy Appellate Panel affirmed this 
        ruling and the financial advisor appealed. The Tenth Circuit 
        Court of Appeals ruled that the bankruptcy court appropriately 
        exercised its powers to require the financial advisor to report 
        the number of hours it worked and to calculate a reasonable fee 
        looking to rates charged by other financial advisors employed 
        in the case.

          Based upon action brought by the Boston office, the 
        Bankruptcy Court for the District of Massachusetts agreed that 
        a chapter 11 trustee should be appointed in related cases filed 
        barely 180 days after the debtors' reorganization plan was 
        confirmed in a prior chapter 11 case. In addition to objecting 
        to the debtors' request for financing, the U.S. Trustee noted 
        potential conflicts of interest of various professionals and 
        the debtors' failure to inform the court of the failed prior 
        chapter 11 case or to produce current financial information. 
        Within about six months after being appointed by the U.S. 
        Trustee, the chapter 11 trustee negotiated sales of the 
        debtors' assets, including the sale of a manufacturing facility 
        for approximately $181 million, a sum sufficient to pay general 
        unsecured claims in full and provide a substantial distribution 
        to equity holders.
Private Trustee Oversight
    One of the core functions of the United States Trustees is to 
appoint and supervise the private trustees who administer consumer 
bankruptcy estates and distribute dividends to creditors. The Program 
also trains trustees, evaluates their overall performance, reviews 
their financial accounting, and ensures their prompt administration of 
estate assets.
    In FY 2005, over 1.6 million consumer and other non-business 
reorganization cases were filed under chapters 7, 12, and 13 of the 
Bankruptcy Code in the 88 judicial districts covered by the Program. 
The U.S. Trustees oversee the activities of the approximately 1,800 
private trustees appointed by them to handle the day-to-day activities 
in these cases. With distributions by these trustees of about $5.3 
billion last fiscal year, the Program's effectiveness in this area is 
critical. The Program has continued to strengthen its partnership with 
the private trustee organizations to address areas of mutual concern 
and enhance the operation of the bankruptcy system. In preparation for 
assuming new responsibilities under bankruptcy reform, the Program 
worked closely with the trustees and provided extensive training.
    Two other ongoing efforts that have been undertaken to enhance 
consumer bankruptcy case administration are: the development of uniform 
trustee final reports which will improve access to case data and allow 
for greater analysis of the bankruptcy system; and coordination with 
the Internal Revenue Service on the use of a new protocol that enables 
trustees to obtain the federal tax refunds of debtors directly from the 
Service.
Management Accomplishments
    In January 2006, the Office of Management and Budget (OMB) 
completed its review of USTP operations under the Program Assessment 
Rating Tool and awarded the USTP its highest rating of ``effective.'' 
The Program's numerical score placed it among the top 15 percent of 
highly performing agencies in the Executive Branch. The OMB rating 
reflected the USTP's efforts over the past five years to adopt 
performance-based management systems, including better measurements of 
results achieved and tying programmatic success to budget formulation.

                           BANKRUPTCY REFORM

    The United States Trustee Program has responsibility for carrying 
out many key features of the bankruptcy reform law. From enactment of 
the BAPCPA in April through the general effective date of October 17, 
2005, the Program engaged in an extraordinary effort to develop 
comprehensive implementation plans and issue guidance necessary to 
accomplish our new and expanded responsibilities.
    The magnitude of the challenge of implementing bankruptcy reform 
increased substantially with the additional burden of administering the 
unprecedented number of bankruptcy cases filed immediately prior to the 
October 17 effective date. In the four weeks leading up to that date, 
more than 726,500 cases were filed in the 88 judicial districts covered 
by the Program. By contrast, post-October 17 filings have decreased 
substantially, with only about 115,000 cases having been filed in the 
subsequent five months. The filing rate is increasing at a moderate 
pace.
    Despite the difficulties presented by the pre-BAPCA filing surge, 
we have made great progress implementing and enforcing many of the new 
law's important provisions. Moreover, we are acquiring valuable 
information every day as we gain experience in enforcing statutory 
provisions and in carrying out wholly new responsibilities that were 
not previously part of our mission. We expect that we will be engaged 
in a significant amount of litigation as bankruptcy courts are called 
upon to interpret statutory provisions for the first time. Of important 
note is our coordination with the Justice Department's Civil Division 
in defending the early challenges to the constitutionality of the debt 
relief agency provisions of the BAPCPA.
    The new law provided substantial additional responsibilities to the 
Program primarily, but not exclusively, in five major areas: means 
testing; credit counseling and debtor education; small business chapter 
11s; debtor audits; and studies and data collection. This past year, we 
have dedicated significant resources to developing appropriate 
policies, procedures, and systems to ensure successful implementation. 
A critical part of our work has been outreach to the bench, the bar, 
other state and federal agencies, the private trustee organizations, 
and industry and consumer groups.
Means Testing
    The means testing provisions of the BAPCPA provide an objective 
approach for assessing a debtor's eligibility for chapter 7 relief. 
Under the means test, debtors with income above their State median 
income will be presumed abusive if they have a certain level of 
disposable income after the deduction of expenses allowed under the 
statutory formula. Among other things, United States Trustees must file 
a statement within 10 days of conclusion of the section 341 meeting of 
creditors if the case is presumed abusive. Within 30 days thereafter, 
the UST must file a motion to dismiss the case or provide an 
explanation as to why such a motion is not warranted.
    The Program has worked extensively with the Judicial Conference's 
Advisory Committee on Bankruptcy Rules in its development of the 
necessary official forms and accompanying rules to perform the means 
test. In addition, in the absence of a mandate by the Administrative 
Office of United States Courts to require data tagging software, the 
Program deployed its own partially automated system to expedite 
calculations of debtor information under the statutory means testing 
formula. Moreover, the Program made a major investment in training 
field personnel to perform the means test, including guidance to 
attorneys on the appropriate exercise of discretion in deciding whether 
to file a motion to dismiss a case under the presumed abuse standard. 
To that end, we issued a directive to ensure that our staff consider 
the adverse financial impact of Hurricane Katrina to generally 
constitute special circumstances that outweigh the presumed abuse 
criterion for dismissal.
    As of March 31, 2006, of the cases where a review had been 
completed, the Program had filed 84 motions to dismiss under 11 U.S.C. 
Sec. 707(b)(2) and 32 declination statements explaining why a motion to 
dismiss was not appropriate. The most common reasons for declination 
have been the debtor was a victim of Hurricane Katrina which supports 
an expense adjustment as a ``special circumstance,'' or the debtor 
experienced a post-petition change in status that supports an income 
adjustment, such as seasonal employment or disability.
Credit Counseling and Debtor Education
    The credit counseling and debtor education provisions of the reform 
law provide potentially salutary protections for consumer debtors by 
helping ensure that debtors enter bankruptcy with full knowledge of 
their options and exit with information to help them avoid future 
financial calamity.
    The USTP is charged with responsibility to approve eligible 
providers of credit counseling and debtor education services. 
Individual debtors generally must seek counseling from these providers 
as a condition of filing and receiving a discharge of debts. Although 
enforcement practices differ according to local court rules, USTP 
offices often are the primary agency ensuring debtor compliance.
    The USTP has determined that there is adequate capacity to provide 
debtors with credit counseling and debtor education services in every 
district within our jurisdiction, except for the four districts 
impacted most significantly by Hurricane Katrina. In those four 
districts, the Program temporarily waived the statutory requirements 
for credit counseling and debtor education due to infrastructure 
impediments and the dislocation of a large numbers of residents. As of 
the end of March 2006, the Program had approved 142 credit counseling 
agencies covering 88 judicial districts for pre-bankruptcy counseling. 
In addition to offering Internet and telephonic access, there are 754 
walk-in locations for credit counseling throughout 82 judicial 
districts. For post-bankruptcy debtor education, by the end of last 
month, the Program had approved 241 debtor education providers covering 
88 judicial districts. In addition to debtor education providers 
offering Internet and telephonic access, there are 915 walk-in 
locations in 82 judicial districts.
    Applications and reapplications from credit counseling agencies and 
debtor education providers are received and processed continuously. We 
are currently processing complete applications within 30 to 45 days of 
receipt, and work with applicants where there are deficiencies to 
collect additional information as needed so they can qualify for 
approval. Common reasons for the delay or denial of approval of credit 
counseling agencies are failure to demonstrate nonprofit status, 
failure to provide information in connection with on-going audit of an 
agency's activities by the Internal Revenue Service, failure to 
demonstrate independence of the board of directors, and inappropriate 
relationships with a third party which appear to generate private 
benefit to an individual or group. The delay or denial of debtor 
education provider applications generally relate to inadequate 
materials; failure to employ trained personnel; and fee disclosure 
issues.
    The Program is working with the Internal Revenue Service and the 
Federal Trade Commission to refine the application and post-approval 
auditing process. In addition, we are proceeding with formal rule-
making and, in the near term, expect to publish slightly revised 
applications as Interim Rules. Thereafter, we will publish in the 
Federal Register more comprehensive, proposed final rules for public 
notice and comment. This process will give the Program more latitude in 
developing standards that address the myriad issues that arise in the 
regulation of credit counseling agencies and debtor education 
providers.
Small Business Chapter 11 Cases
    The small business provisions of the BAPCPA establish new deadlines 
and greater uniformity in financial reporting to ensure that cases move 
expeditiously through the chapter 11 process before assets are 
dissipated. They also provide important new enforcement tools to the 
United States Trustees. To implement the BAPCPA's oversight provisions, 
the Program developed a new Monthly Operating Report (MOR) form for 
small business chapter 11 cases to make financial reporting simpler and 
more uniform. A pilot of the MOR is being conducted and, at a recent 
meeting of the Judicial Conference's Advisory Committee on Bankruptcy 
Rules, the Program presented its initial analysis. While it is still 
early in the process, the Committee voted to recommend the MOR form, 
with a few modifications, to be published for public comment as a 
proposed Official Form which the BAPCPA requires be promulgated by the 
Judicial Conference. The Advisory Committee also sought input from the 
USTP on drafting a form small business plan and disclosure statement 
which will be issued for public comment as well.
    Although it is too soon to measure the effect of the small business 
provisions in cases filed after October 17th, our field offices are 
tracking the new deadlines and routinely use the new initial debtor 
interview (IDI) provision to identify important issues early in the 
case. For example, the IDI process recently helped identify two cases 
as health care businesses that may require appointment of an ombudsman 
to protect patients. Other information yielded from the IDIs has 
included early disclosure of the failure of debtor businesses to file 
tax returns and the identification of financial irregularities 
requiring immediate corrective action or case dismissal.
Debtor Audits
    Under BAPCPA, the USTP must contract for random and targeted audits 
to verify the financial information provided by debtors. This provision 
will help the Program identify fraud, deter the filing of false 
financial information, and potentially provide a baseline for measuring 
fraud, abuse, and errors in the bankruptcy system. The debtor audits 
mandated by the BAPCPA will commence on October 20, 2006--18 months 
after the law's April 20, 2005, enactment date. Independent auditors 
will conduct random audits of no fewer than 1 of every 250 cases in 
each judicial district. They will also conduct targeted audits of cases 
filed by debtors with income and expenses higher than the norm of the 
district. An estimated 7,338 cases will be audited in the first year, 
with 6,338 random audits and 1,000 targeted audits. The Program expects 
to issue a Request for Proposals for contract auditors by the end of 
May.
Studies and Data Collection
    The BAPCPA requires the EOUST to undertake several studies, 
including (1) consulting with experts in the field of debtor education 
to develop, test, and evaluate a financial management training 
curriculum and materials; (2) evaluating the impact of the use of the 
IRS standards for determining the current monthly expenses under 11 
U.S.C. Sec. 707(b) on debtors and bankruptcy courts; and (3) evaluating 
the impact of the new definition of ``household goods'' in section 313 
of the BAPCPA.
    Data collection and extraction will be important to the successful 
completion of these studies, particularly those of the IRS standards 
and household goods, and to the effective and efficient processing of 
cases. Last year, a Senate Appropriations Committee Report endorsed the 
idea of the Administrative Office of the U.S. Courts (AOUSC) working 
with the U.S. Trustee Program on the development of data tags to 
provide an automated approach to extracting essential data from 
bankruptcy forms for such purposes as analyzing the means test, 
selecting cases for targeted debtor audits, conducting the evaluation 
studies, reporting to Congress, and processing cases more efficiently. 
A document containing data tags is sometimes referred to as a ``smart 
form'' that is, a form that is data-enabled so that, when it is saved 
into the industry standard Portable Document Format (PDF), it contains 
searchable data. I am pleased to report that the Program, in 
conjunction with the AOUSC, developed a smart form standard that was 
released to the bankruptcy form software vendors. AOUSC is now 
considering whether to make smart forms mandatory.

                FISCAL YEAR 2007 APPROPRIATIONS REQUEST

    The Administration has requested FY 2007 appropriations of $236.1 
million, including 1,519 positions and 1,486 workyears. This represents 
an increase of 11.6 percent over FY 2006. Included in the request is 
$11.2 million for mandatory adjustments to base necessary to meet pay 
and rent increases and to fund second year costs associated with the 
270 new positions approved in FY 2006. The budget also requests program 
enhancements totaling $12.7 million. The program enhancements would be 
devoted exclusively to bankruptcy reform--$4.8 million to fund the new 
debtor audits required under the BAPCPA which will commence on October 
20, 2006; and $7.9 million in enhancements requested, but not 
appropriated last year, including $5.1 million and 51 new positions for 
means testing and credit counseling, $2.3 million for related 
facilities expansion, $1 million for information technology, and 
$500,000 for statutorily mandated studies.
    The USTP is funded entirely from bankruptcy filing fees and chapter 
11 quarterly fees. As fees are collected, they are deposited into the 
U.S. Trustee System Fund and available to the Program as appropriated 
by the Congress. The FY 2007 revenue projections that accompany the 
USTP budget request follow Congressional Budget Office estimates for 
bankruptcy filings. These estimates were made prior to the pre-October 
17 bulge in bankruptcy filings and without regard to the subsequent 
concomitant filing decrease.
                               __________
    This is a time of unprecedented opportunity for the United States 
Trustee Program to make bankruptcy reform work for all stakeholders in 
the bankruptcy system, including debtors, creditors, and the public. 
The new law provides many important tools that will assist the USTP in 
enhancing the integrity and efficiency of the bankruptcy system. 
Enforcement and implementation of the new law has created many daunting 
challenges, but we believe that we are off to an excellent start.
    Thank you for the opportunity to testify on the recent activities 
of the United States Trustee Program. I am pleased to answer any 
questions from the Subcommittee.

    Mr. Cannon. Thank you, Mr. White.
    Mr. Watt has another engagement. So we're going to defer 
and recognize him for questioning.
    Mr. Watt?
    Mr. Watt. Thank you, Mr. Chairman.
    And let me assure the witnesses that the fact that I have 
to be somewhere else doesn't indicate a lack of interest in--it 
just is I had my day kind of messed up when we got all off 
schedule here. So I apologize for having to rush out.
    Mr. Battle, let me just ask you if you can give me a little 
bit more information about this gang violence initiative. What 
falls under the gang violence rubric, and what kinds of things 
your U.S. attorneys are going to be doing in terms of re-entry?
    I asked this question of the Attorney General at a prior 
oversight hearing and didn't really get a clear understanding 
of what was being proposed. Maybe--maybe it would be better for 
you to submit something to me in writing, if you have 
something. But at least elucidate a little bit for me.
    Mr. Battle. Thank you, Member Watt.
    One of the things we learned about a year ago, after the 
Attorney General announced the gang initiative, we went out and 
we canvassed the U.S. attorneys' offices to find out what the 
gang problem looked, walked, and talked like in their various 
communities. We had, at that point, been involved with the 
Project Safe Neighborhoods program for a number of years.
    And some of the feedback we were getting from U.S. 
attorneys was that some of the violence that was going on in 
the communities was being identified to them by the locals as 
perhaps being taken on as the involvement of some of the 
traditionally known gangs at that time, such as the Bloods and 
the Crips, but in other communities, different kinds of 
organizations. And one of the things that we've tried to do is 
identify exactly what that would be.
    What we found out was that there was no real formula, no 
real similarity, but that each gang problem in each of the 90-
plus districts was something that looked a little bit 
different, so that the U.S. attorneys were tailoring their 
response with their local partners based upon what exactly was 
going on in their community.
    A somewhat definition of a gang would be, of course, an 
activity taken on by three or more persons that would be 
involved together for the purpose of carrying out a specific 
act of violence or an act of criminality.
    We have since gained a little bit more focus and learned 
that no longer is it confined to the Crips and the Bloods, but 
there is a problem with MS-13 individuals being imported from 
parts of South and Central America, that these gangs are 
particularly violent.
    We've also learned that there are gang--there's gang 
activity that sort of transcends free society into the prison 
system. And in both situations, there is an activity on the 
part of all law enforcement to gain and share intelligence.
    So, to answer your question in some respects, it is a work 
in progress, but it is not something that is not being 
responded to. It's just being responded to on a case-by-case 
basis, peculiar to each particular district's needs as they 
identify their gang problem through their partnerships.
    On the re-entry question, sir, again several districts 
applied for and have re-entry coordinators. This was done 
before the gang initiative. Six sites were announced by the 
Attorney General several weeks ago. The re-entry program is, in 
fact, a work in progress and, again, does, I apologize, look a 
little bit different in each community.
    But what they're looking to do is reach out, working with 
State and local partners as well as Federal prison officials, 
to try to reach individuals close to their release dates and 
try to tailor, learn from them what they are going to need when 
they're released and provide those things to catch them when 
they do meet their release date and find their way back into 
the community.
    There's a faith-based component to it. There is a 
connection between the community and release officials for 
parole purposes and things of that nature. Probation 
departments are involved. There are educational components in 
situations where people need to get degrees or GEDs. And 
there's a component that would assist them or is being proposed 
to assist them in finding jobs.
    Those are some of the things that I've heard being 
discussed by the various U.S. attorneys, and each community's 
response is different depending on their resources at the State 
and local level and what their needs are. We think that which 
has been proposed by the Attorney General will simply add to 
those resources.
    Mr. Watt. Can you talk to me a little bit about the status 
of Project Seahawk and what plans have been made for 
transitioning it to the Department of Homeland Security?
    Mr. Battle. Yes, sir. In fact, as we speak and, from what I 
recall, the President--since Homeland Security was not in 
existence when Seahawk first came into existence, what we have 
learned now, appropriately, is that because Homeland Security, 
dealing with port security, is best suited, with the resources 
that it has, to deal with that very issue.
    It should be a seamless transition now to have 
responsibility and oversight for Seahawk to go to the 
Department of Homeland Security as opposed to the U.S. 
attorneys' offices. They have the resources and the expertise 
to do that.
    And so, what we're really talking about is a program that's 
going to continue in its present form, but it's going to have 
oversight by an Agency that is best suited with the resources 
to do it because the people that work there have been doing it 
for a long time.
    And the U.S. attorney of South Carolina will be a part of 
that. He will have a seat on the board, and he will certainly 
have a connection.
    Mr. Watt. Mr. White, are we still ramping up the number of 
bankruptcy judges required to do the bankruptcy reform bill? 
Where are we on that? And what additional resources are needed 
there?
    Mr. White. Well, that's, of course, not directly within our 
jurisdiction. But, yes, I am aware that bankruptcy judges are 
being recruited in furtherance of the additional judgeships 
that were created in the bankruptcy reform law.
    I don't have any more specific information on that. That's 
not part of our budget submission.
    Mr. Watt. Okay. Mr. Keisler, I'm wondering whether the--
your division has pursued any debt collection activities 
against corporate wrongdoers who have defrauded the Federal 
Government? Are you involved in those kinds of litigation? And 
give me kind of the extent of that effort and what's happening 
there.
    Mr. Keisler. It's a very vigorous and robust effort, sir. 
We have 77 attorneys within Washington, the Civil Division, who 
do nothing but work on fraud against the Government. And they 
work in partnership with attorneys in the different U.S. 
attorneys' offices, which also have been aggressively pursuing 
this.
    In each of the last----
    Mr. Watts. Is that primarily against individuals, or is--is 
it part individuals, part corporate?
    Mr. Keisler. Part of each, but predominantly corporate. 
Certainly, if you look at the amount of money recovered, 
overwhelmingly the dollars come from corporate defendants. 
Sometimes there are individuals involved. Often, they are 
individuals who are corporate officers at the same corporations 
that we're also filing suit against.
    The largest component by industry is the health care 
industry. You know, when the False Claims Act was first 
revitalized in 1986 with the qui tam provisions, the archetypal 
fraud defendant was a defense contractor. We still have defense 
contractors as significant fraud defendants. But over time, the 
health care industry has really become the lion's share of our 
fraud recoveries.
    I think it's a combination of the enormous amount of money 
that goes out from the Federal Government, the complexity of 
the regulations which I think creates temptations to try to 
game the system. But we are very aggressively pursuing this, 
these issues against anyone we get information has dealt 
fraudulently with the United States taxpayer.
    Mr. Watts. Thank you, Mr. Chairman.
    I appreciate your allowing me to go and still get to my 
meeting, and I'll yield back to the Chairman.
    Thank you all.
    Mr. Cannon. The gentleman yields back. I ask unanimous 
consent that all Members of the panel have 5 days to submit 
written questions for the panel. All Members of the Committee. 
Hearing no objection, so ordered.
    Thank you, Mr. Watt.
    Gee, where do we start here? Let's start with MS-13. This 
is a problem that goes beyond our cities here in America, where 
we've destabilized Honduras, probably also El Salvador. Are you 
working with those other countries to try and get a handle on 
this problem?
    Mr. Battle. I'm sorry, Mr. Chairman. I didn't hear the 
first part of your question.
    Mr. Cannon. I should have directed it to you, Mr. Battle.
    Mr. Battle. Okay.
    Mr. Cannon. But on MS-13, we now have a problem where we've 
got other countries destablized by our deportation of 
criminals. In fact, I believe that we have a treaty 
responsibility with Mexico and probably these other countries 
to inform them when we're sending--when we're deporting felons.
    Are we working with these other countries to help crush 
this problem, which is destablizing at least Honduras and 
probably El Salvador?
    Mr. Battle. From what I understand, the Assistant Attorney 
General for the Criminal Division just recently attended a 
conference in El Salvador, and we sent a member from EOUSA to 
be there who's been working on the gang problems with us in the 
U.S. attorneys' offices.
    From what I understand, and I was not present at that 
conference, there was much discussion with some of the member 
countries there that would fit within the categories that 
you've referred to, to talk about how to get their hands around 
this. And there seems to be a lot of enthusiasm amongst them to 
work together.
    Mr. Cannon. We--if I just might note for the future, we're 
likely to do something this year or maybe later this year with 
immigration reform. That means we're going to focus on many, 
many criminals who are now hiding from the system. And those--
the deportation of those criminals is going to be destabilizing 
to many countries.
    So what we're doing here with MS-13 is like we're way 
beyond the power curve. I mean, this is just--what has happened 
in Latin America is just atrocious. What is now reverberating 
in our own communities is the backside of that atrociousness.
    But it's a problem that's going to--going to surge in the 
next year or two or three as we focus on the criminal element 
here in America that is going to be dispossessed and probably 
ready to join a gang in some other country and then ready to 
bring their crimes back here because they're familiar with 
America.
    So I'm hoping that there is some--some focus on that since 
you guys are going to be the first defense on that. This is not 
going to be a State problem so much as a Federal problem.
    Mr. Battle. That's correct, Mr. Chairman. And again, the 
Assistant Attorney General reported to me or at a meeting that 
I attended that there seemed to be a level of cooperation that 
is moving in the direction of addressing that and many problems 
connected thereto.
    The U.S. attorneys' offices are aware of the fact that some 
of the individuals who have come from those parts of the world 
entered the U.S. and at some point parked for a while, if you 
will, in the western part of the United States, most 
importantly, central California.
    Well, they've now fanned out in different parts of the 
country. So we are watching the program.
    Mr. Cannon. We've got these thugs here in northern Virginia 
and Maryland. This is a big problem.
    Does your office have any coordinating activities with--
with prosecutors, Federal or others, in Mexico or Central 
America?
    Mr. Battle. From what I understand, we have been trying to 
work with Mexican authorities. I don't know the answer as to 
the others.
    Mr. Cannon. Just this is a growing problem, and it's going 
to just burgeon here if we are successful passing a bill that 
focuses on these criminals who are now hiding among us and 
preying, to a large degree, on their own ethnic minorities. And 
as that--as they get shoved out, they're going to prey on other 
people and become better known and more difficult to deal with.
    So we've talked about methamphetamine prosecutions are up 
5.5 percent. With all due respect, and I'm not sure of the 
numbers, but it seems to me that the abuse of meth has probably 
increased at a much more rapid rate than that Nation wide. 
Where are we going with this?
    Are we busting--in fact, you may have some comment on the 
displacement of the FBI's role in meth enforcement with DEA and 
the lag there. How is that working?
    Mr. Battle. From what I understand, there is a meth working 
group that's been stood up, and there's a conference to talk 
about those things in the next coming months. One of the things 
I've also learned, Mr. Chairman, is that methamphetamine, for 
some odd reasons, hasn't found its way to a lot of parts of the 
United States.
    Mr. Cannon. Right.
    Mr. Battle. And it seems that, again, it's one of those 
peculiarities that started out on the west coast and is 
starting to make its way very, very slowly east. In fact, I 
just recently attended a conference of--of drug court 
individuals in New York State during which most of them had not 
had any contact with methamphetamine coming through their court 
system.
    We have our hands around it, and we've seen it develop from 
mom and pop organizations and people cooking in the backs of 
trailer parks and in basements in homes. And now there's 
intelligence indicating that it's being imported into the 
United States from Mexico.
    The DEA is very much aware of that. They're on top of it. 
They've embarked upon a very aggressive educational program for 
schools and for parents, for young people. And we are--we are 
very much responding to the problem.
    Perhaps those numbers don't tell the whole story, but I can 
tell you that our effort to target it is taking on a lot of the 
resources in the U.S. attorneys' offices. And drug prosecutions 
have gone up in that area because we've identified it as a 
problem in many of the offices.
    Mr. Cannon. Again, this is a problem where we have mom and 
pops. And for odd reasons, Utah had a lot of mom and pops, but 
we're now seeing terrific inflows from Mexico. That has to 
stop. This is an incredibly destructive drug. I was just--ah, 
it's amazingly destructive.
    We need to have--we'll talk next year about this. It's not 
in all parts of the country yet, but where it is, it is growing 
very rapidly, and it is massively destructive.
    One other item you talked about, Mr. Battle, is child 
pornography and what you're doing there. This is a matter of 
grave concern. It seems to me that if we're going to get a 
handle on it, we need to not only work at a Federal level, but 
also empower States to be involved.
    One of the problems with that is that the States have 
regularly been overridden by the Federal courts when it comes 
to defining obscenity. It may be that wizard White would have 
recognized obscenity when he saw it, but no Federal court has 
granted that dignity to a State court that I'm aware of.
    And do you have any thoughts on that and what we can do 
there?
    Mr. Battle. What I can tell you, Mr. Chairman, is that we 
are--like we do in a lot of other areas, most recently in 
dealing with criminal activities--is partnering very closely 
with our State and local counterparts in dealing with these 
types of crimes.
    We've found that that's absolutely necessary, and that was 
my experience in western New York because this is a game of 
intelligence. Because a lot of the involvement of people in 
this area takes place in private settings and places that are 
otherwise, in some respects, undetectable.
    And so, with the announcement of the initiative most 
recently by the Attorney General, that came about based upon a 
recognition of the need for this because of information coming 
in from the U.S. attorneys' offices of what we were finding and 
how difficult it was to go about and ferret out this type of 
activity.
    So we will--we will use some of the models that we have in 
the past in dealing with partnerships on that level with 
Project Safe Neighborhoods and others to get underneath and 
deal with this type of crime, and we will be very aggressive in 
doing so.
    Mr. Cannon. Let me ask you a constitutional question. I 
recognize that that may not be your focus. But it seems to me 
that the idea that obscenity is protected by the first 
amendment really derives from the idea that obscenity is some 
kind of communication and that we find now with modern studies 
that the parts of the brain that deal with speech are not the 
same parts of the brain that deal with pornography and 
addiction to pornography.
    Would it be helpful if the Federal Government jurisdiction 
or the Federal court jurisdiction on this subject was limited 
so that States could find obscenity and not be overturned by 
the Federal courts saying that obscenity was speech or that the 
particulars in any given case constituted speech and, 
therefore, could not be restrained?
    Mr. Battle. Mr. Chairman, that's way over my head.
    Mr. Cannon. Say ``yes,'' so I could have a record because 
this has been one of my pet areas here, you know? [Laughter.]
    You don't need to do that, of course.
    Mr. Battle. I'll have to get back to you on that one.
    Mr. Cannon. I think this is one of the problems of our 
time. My Attorney General in Utah tells me that of people that 
look at child pornography, 40 percent, according to some 
studies, are people who then go out and touch and hurt 
children.
    If that is the case, and we're trying to figure that out, 
that is an epidemic. That is a problem that is way beyond 
anything we've ever thought of before and will require some 
different rethinking of that issue. And your office, in 
particular, is going to be on the cutting edge of that. So we 
will deal with that issue again in the future.
    Mr. Keisler, we talked about immigration, and you're 
certainly aware of some of the criticism of what's going on 
there. For instance, Judge Posner was very critical.
    He pointed out that ``the panels of this court reversed the 
Board of Immigration Appeals in whole or part in a staggering 
40 percent of 136 petitions.'' He goes on to say, ``Our 
criticisms of the board and the immigration judges have 
frequently been severe.''
    I don't know that--and he's a very, very thoughtful judge. 
I don't know that you could be more harsh than he was in this 
case. And this is Benslimane against Gonzalez.
    This raises a whole bunch of questions. You're asking for, 
I think, 86 new immigration judges. Or not judges, but rather 
attorneys to help prepare these cases. Are you familiar with 
this case and the criticism that's been levied?
    Mr. Keisler. I am, Mr. Chairman. And certainly, when any 
judge--and certainly as respected a judge as Judge Posner--uses 
language like that, we listen. We sit up and take notice.
    The immigration judges and the Board of Immigration 
Appeals, as you know, are not themselves within the Civil 
Division. They're a separate component of justice.
    Mr. Cannon. Right.
    Mr. Keisler. But, you know, the Attorney General, in 
response to the kinds of concerns that Judge Posner and, I must 
say, some others have expressed, has initiated a top to bottom 
review of the situation with immigration judges and the Board 
of Immigration Appeals. He's charged the Deputy Attorney 
General and the Associate Attorney General with examining that 
situation and deciding whether, both in terms of the quality of 
the decisions and the professionalism, we're doing all that we 
should be doing.
    And what the Attorney General has said is that an alien 
appearing before the Board of Immigration Appeals or an 
immigration judge may or may not be entitled to the particular 
relief that he or she seeks, but they are certainly entitled to 
be treated with professionalism and respect, and it's very 
important to him that they are.
    Certainly, from the perspective of my division, which 
litigates in defense of those decisions, the quality of those 
decisions is very important to our success in defending them 
before the Courts of Appeals. And language like Judge Posner's 
in an opinion generally precedes an order vacating the decision 
that we're trying to defend.
    So I think it is absolutely a commitment of the Department, 
from the Attorney General on down, to make sure that we find 
out whether those kinds of criticisms are warranted and, to the 
extent that they are, the situation is corrected.
    Mr. Cannon. Let me say it's very, very important to me that 
we treat people with respect. These people may end up here. We 
want them to love America and not hate the process, certainly 
not hate our great institutions.
    Are we not seeing a self-fulfilling prophecy here. As you 
have failed arrests, record-making, presentations, decisions 
through that process, you're ending up--and then many--many 
decisions being overturned, are you not then encouraging more 
people to appeal their decisions? And is that what's causing 
this big sucking sound that we hear that it's going to require 
another 86 attorneys?
    Mr. Keisler. Well, you know, there is no single factor. I 
think--our judgment is that the reason for the increased 
workload is not so much that as it is two other things. One is 
that the Department of Homeland Security has stepped up 
enforcement efforts. And insofar as enforcement activity has 
increased, you're going to have more challenges in court to 
those actions that are taken.
    The other thing is that the rate of appeal has gone up. It 
used to be in 2001 6 percent of board decisions were appealed. 
It's now 29 percent. Now some of that may be precisely----
    Mr. Cannon. And in that 29 percent, you're getting a huge 
number of overturns----
    Mr. Keisler. Well, actually----
    Mr. Cannon.--meaning that you're encouraging more people to 
appeal.
    Mr. Keisler. Right. We still actually have a pretty good 
success rate, Mr. Chairman, about 90 percent Nation wide. But 
certainly, in some circuits, like the 7th Circuit, it's going 
down.
    And that does--you know, every loss sets a bad precedent, a 
precedent that someone can cite in a later case. Every loss is 
an encouragement to someone to say, ``Maybe I should take it 
up. Maybe I can win like this other person did.'' So, 
certainly, there is a certain cycle to it, just like you said, 
in which defeats lead to more defeats.
    The other thing that I think is happening is that it used 
to be there was an extraordinary backlog in the Board of 
Immigration Appeals, and it would take years--up to 6 years 
sometimes--to resolve a case there. When that backlog was 
reduced, which I think was in everybody's interest because, 
whether an alien is going to achieve lawful status through that 
process or be ordered removed, it should happen sooner rather 
than later, rather than be tied up in administrative process.
    But it used to be somebody who maybe wanted to stay in the 
country for a few years could park themselves, so to speak, by 
filing an appeal of an immigration judge decision with the 
Board of Immigration Appeals, and it would just sit there. Now 
that the Board of Immigration Appeals is operating so much more 
efficiently, if you want to do that, you have to file a 
petition for review in the Court of Appeals. That's where you 
get the time to stay here.
    So what that means to me is that since I don't see 
enforcement efforts from the Department of Homeland Security 
going down and since I don't see that phenomenon of our Board 
of Immigration Appeals being more efficient changing, this 
problem of increased litigation is one we're going to be living 
with for the foreseeable future, and that's--that's why we're 
hoping for some more resources.
    Mr. Cannon. And if you get some kind of immigration reform, 
you're looking probably at the huge increase in throughput of 
appeals.
    Mr. Keisler. Well, it's--you know, each of--the situation 
is so much in flux, it's hard to know exactly which bill and 
which provision. There are some provisions in bills that have 
been discussed that would reduce the workload and some which 
would increase it.
    For example, you know, one proposal has been that in 
certain situations an alien seeking to challenge a removal 
decision would have to get a certificate of reviewability from 
a single judge. And if the judge denied that, there would be no 
further appeal. If that were passed, I presume there would be a 
diminution in the workload.
    There are other provisions which would create new judicial 
review opportunities, and those would presumably raise it up. 
So what the net effect will be of whatever bill is ultimately 
enacted, if one is, it's hard to tell. But it could go in 
either direction.
    Mr. Cannon. It's hard to tell if one will be enacted, but I 
suspect one will be. It's impossible to guess what the details 
will be, but you're going to have a great deal more activity at 
some level.
    Mr. Keisler. I think that's right.
    Mr. Cannon. And so, we need to be sort of focused on that. 
That could happen next cycle, the next budget cycle. So I'm 
deeply concerned.
    Let me ask a little deeper question here. I have a terrific 
concern, having served, by the way, in the Interior office as 
an Associate Solicitor and been associated with Interior Board 
of Land Appeals and other ALJ systems. Is part of the problem 
you're having here the result of having ALJs that really aren't 
independent?
    Mr. Keisler. I don't think it's a question of independence 
because I don't think insofar as Judge Posner and others have 
identified problems with the immigration judges is that they 
have been subjected to undue influence in any way.
    If there is a problem with the immigration court system, I 
think that's something that the review that the Attorney 
General has initiated will--will tell us. And not being part of 
that review, I wouldn't want to prejudge a diagnosis of that 
situation.
    Mr. Cannon. Do you have a sense that--that, for instance, 
in the attempt to clear up the backlog, there's been a focus on 
judges, some pressure on judges to get things done? That--not 
having them pre-decide, but at least pushing them to make 
decisions?
    Mr. Keisler. I think it is certainly the case that 
immigration judges have had to work especially hard in the last 
several years. And while I haven't seen statistics on it, I 
would expect that many of the immigration judges are processing 
many more cases than they used to and, I'm sure, would feel 
they could do even a better job if they had fewer such cases.
    One way the backlog in the Board of Immigration Appeals was 
dealt with was to say that in many cases, you know, single 
judges rather than three-judge panels would be deciding. So 
that doesn't necessarily mean each judge is deciding more 
cases. It might affect it in the other way.
    But I certainly have the sense that immigration judges feel 
they could do a better and more thoughtful job if they didn't 
have so many cases.
    Mr. Cannon. Do you get any sense that they react to 
pressure or respond to the direction of where they think the 
Attorney General may want them to go, as opposed to being 
independent?
    Mr. Keisler. I haven't seen that. I'm not in the best 
position to know. And as I said, the people who are really 
reviewing the immigration court system right now really will be 
in the best position to see how that job is being done. But I 
haven't had any sense that immigration judges or Board of 
Immigration Appeals judges are doing anything but calling them 
as they see it.
    Mr. Cannon. You know, I--I'll just tell you this panel is 
very concerned about ALJs and their role and the fact that 
you've got an Administration writing regulations to become law, 
often creating regulations through enforcement that never go 
through a process, and then are appealed to and decided by 
judges who are appointed by or serve at the will of--of the 
Administration.
    This is a major concern of mine. We're going to come back 
and look at the ALJ system, and we'll watch the BIA judges in 
particular on this issue. And so, we'll look forward to that 
report as it happens.
    Let me ask one other question. I've heard reports that DOJ 
declined some FCA cases because of resource shortages. Is that 
the case? Are we leaving money on the table here because we 
don't have the lawyers to handle them?
    Mr. Keisler. I haven't found myself in a situation where I 
had what I thought was a really compelling case and I said, you 
know, let's decline it because I can't figure out how we would 
staff that.
    Because it's not simply the 77 lawyers in the civil frauds 
unit. It's all of our U.S. attorneys' offices, many of which 
have extremely active offices. So, you know, while we don't 
give the reasons why we decline a case, I haven't in my tenure 
found a situation where there's a case I've really wanted to do 
that I felt I didn't have the manpower to take care of.
    Mr. Cannon. The job is tough, and I would never sit up here 
and tell you how to do it. You did mention earlier, when you 
were talking about--about HHS payments, Medicare payments, that 
there are a lot of them and therefore--and there are also some 
rules that are confusing or in which somebody could hide.
    There are rules that are really confusing and where doctors 
can't get direction. And we've had a couple of guys in my 
district who had gone through hell based on these kind of 
claims, and I'd just encourage a balance there. It's very hard 
to deal with. You've got to get the bad guys, but there ought 
to be a process. You need to be thinking about a process for 
deciding when a case is not meritorious and then dropping it.
    Not your division, but the Criminal Division, you know, 
brought a case, a very famous case against our--the organizers 
of the Salt Lake Olympics, and the case was dismissed after the 
presentation of evidence. It was horribly humiliating, and 
there was 5 million bucks in it or so in attorneys' fees for 
the defendants.
    We had another FTC case in Utah where there were a couple 
of million dollars spent in defense fees, and the case was 
dropped at the end of the--at the most humiliating presentation 
of evidence I've ever seen. It's a huge responsibility that I 
hope you--I'm sure you're concerned about. But I just throw it 
out because I worry a bit about the prosecutorial power, which 
is overwhelming.
    Mr. McKeown, can you give us a bit of an update on Cobell. 
I actually haven't had a lot of complaints about it recently. 
So I suspect it's not in such a terrible state. But where are 
we there, and what do we need to worry about?
    Mr. McKeown. Mr. Chairman, if it's okay, I would like to 
defer to my colleague, who actually manages the Cobell 
litigation.
    Mr. Cannon. That's right. That's right, it did--I was 
trying to get you off the hot seat here.
    Mr. Keisler. No, it's my pleasure. Mr. McKeown and I share 
Indian trust litigation because the Civil Division handles 
Cobell, which is the lawsuit brought by the class of individual 
account holders, and the Environment and Natural Resources 
Division handles the tribal trust cases, which are very similar 
in a lot of ways, but brought by the tribes.
    You know, the litigation has been ongoing since 1997. It 
has been, you know, regrettably an unusually contentious piece 
of litigation, as you know, Mr. Chairman. And we have several 
matters right now pending or recently decided by the Court of 
Appeals, which I think will help shape the litigation going 
forward.
    Most notably, in the fall, the Court of Appeals issued a 
decision vacating an injunction that would have defined in a 
particular way that kind of accounting the Department of the 
Interior would have to do that the Department of the Interior 
estimated would cost $10 billion to $14 billion to account for 
accounts that have at present about $400 million in them.
    The Court of Appeals said that one of the things that has 
to be taken into account in deciding what kind of accounting to 
do is the cost because there's always going to be a tradeoff 
between what you do and how accurate you make sure it is and 
what it's going to cost. And that Interior Department is owed a 
certain degree of deference in making that tradeoff. So we 
thought that was a very positive decision.
    We have issues before the Court of Appeals now. In 
particular, there's been a District Court order requiring the 
shutdown of Internet connectivity at several offices and 
bureaus within the Department of the Interior, and we've 
appealed that. And that was argued a couple of weeks ago. And 
we're awaiting a decision on that.
    So there is certainly ongoing activity in the case.
    Mr. Cannon. Perhaps one of you would know, this shutting 
down of Internet access is terrifically difficult for Interior 
or for users. Are there other things going on here in this case 
now that are disruptive to the Interior Department?
    Mr. Keisler. Well, yes, Your Honor. Or----
    Mr. Cannon. I wish.
    Mr. Keisler. Yes, Mr. Chairman.
    Mr. Cannon. No, actually, I like my job. [Laughter.]
    Mr. Keisler. It's an old habit. I'm used to the other 
forum. But, yes, there are.
    For example, there was an order issued which has been 
stayed, but if it were to go into effect would require that the 
Department of the Interior include in every written 
communication it sends out that might reach any member of the 
class, regardless of what the subject matter is--education, 
health, whatever--a statement that all trust-related 
information may be unreliable.
    So regardless of whether it's about something related to an 
interior school system that is run that goes to the parents or 
a benefit form for a particular program, it would be required 
to bear this legend, all trust-related information must--you 
know, may be unreliable.
    We have appealed that. We sought a stay. The Court of 
Appeals has stayed it and heard argument on that issue, too.
    There are also quite a few people who serve or have served 
at the Department of the Interior or the Department of Justice 
who are currently subject to orders to show cause why they 
should not be held in contempt. That's obviously a difficult 
personal situation, but I think, you know, there's nothing more 
I can say about that. Right now, those proceedings will run 
their course.
    So, yes, there are other issues that are pending that have 
been difficult for the Department of the Interior.
    Mr. Cannon. Is Judge Lamberth still the trial judge on this 
case?
    Mr. Keisler. Yes, sir.
    Mr. Cannon. Have you made any motions to change judges?
    Mr. Keisler. We requested that the Court of Appeals--in one 
of our most recent appeals, we requested that when it remand 
the case, it direct that the case be reassigned to a different 
District Court judge, and that request is pending with the 
Court of Appeals.
    Mr. Cannon. Thank you.
    Mr. White, just one question. Could you give us a sense of 
what's going on with bankruptcy? We've had a couple of stories 
in my district about the plummeting number of filings. I 
suspect that's because many people filed early, and now we have 
a little bit of a dearth.
    But are we into this long enough to have a sense of--any 
kind of sense what the effect is going to be?
    Mr. White. Well, I think the initial indications are 
positive, and I'll give a couple of examples. But you're quite 
right that the numbers of filings have gyrated quite a bit 
since just prior to October 17th. We had a bulge of almost 
three quarter of a million cases filed in the 4 weeks leading 
up to bankruptcy reform and only about 140,000 cases in the 5 
months thereafter.
    Obviously, it's still too early, with regard to passage of 
time and number of filings, to draw any firm conclusions, but 
we'd suggest that there have been two positive signs as we 
begin implementing and enforcing the provisions of bankruptcy 
reform that were given to us.
    First, with regard to means testing. Of the cases, what 
we're finding is that in the means test, the subjective formula 
that the debtor's financial statements are put through, we're 
finding that about 10 percent of the chapter 7 cases that filed 
are found to be presumed abusive. So it's a helpful--it's a 
helpful indicator and identifier of abuse.
    But the statute has given us flexibility, looking at 
special circumstances and other factors, that we don't have to 
file motions to dismiss in cases that we don't think merit it. 
So in 7 out of 10 of those cases that are presumed abusive that 
aren't voluntarily dismissed by debtors, we are filing motions.
    Now, again, it's a small universe of cases at this point. 
But the numbers, the percentages, they seem to make sense. The 
system seems to be working. We have an up and running system. 
The true test will be when the filings go up.
    Also in the area of credit counseling, which is a major 
innovation in the bankruptcy reform statute. In fact, it is 
potentially one of the most far-reaching and positive consumer 
protections in the statute. We have approved, as I say in the 
testimony, almost 400 credit counselor and debtor education 
providers.
    So the capacity has been there with the small number of 
filings. We still need to do more to ensure that as filings go 
up that we are able--we able to solicit and approve 
applications from capable providers.
    One of the concerns we had early on and that this 
Subcommittee expressed at the hearing last--last summer was 
also that unscrupulous providers, because it has been a 
troubled industry, not be approved. We think we've done a 
pretty good job with regard to screening out unscrupulous 
providers and, in fact, have gotten positive statements to that 
effect, even public statements from some of the consumer 
organizations.
    So we think that the start of the process with credit 
counseling, and debtor education likewise, has some positive 
signs. Too early, but we do think we're off to an excellent 
start and there's an infrastructure there. The true test will 
come as filings go back up.
    Mr. Cannon. Ten percent presumed abusive seems to be on the 
upper edge of what we were anticipating. Is that a temporary 
thing? Do you think that's going to go down? Or does that--I 
mean, obviously, this is an odd period, when you had so many 
pre-filings.
    Mr. White. Right. Yes.
    Mr. Cannon. Do you think that number is going to hold, or 
is there reason to think it would change?
    Mr. White. It would be too--I don't think I could give an 
informed response to that question because the one thing we can 
probably guess about the filers that we have now is that it's 
an anomalous group because we had that bulge of 725,000 cases. 
So I wouldn't dare make projections from that number.
    Mr. Cannon. Thank you. Are there any issues that have come 
up that have been difficult to implement that we need to maybe 
take a look at in adjusting the bill?
    Mr. White. Not at this point, Mr. Chairman. If, with the 
passage of time and more experience, we believe that there 
could be greater clarity or changes in the statute, then we 
would make those suggestions. But I have nothing to recommend 
at this time.
    Mr. Cannon. Just one more question. Mr. McKeown, you 
mentioned that much of ENRD's caseload involves defending 
Federal agencies. Would you give a typical example of ENRD's 
involvement in defending Federal agencies?
    Mr. McKeown. Oh, I think the best example, Mr. Chairman, is 
the defensive litigation we've done with the President's 
Healthy Forest Initiative. In one project for the Biscuit fire 
in Oregon, we successfully defended nearly a dozen requests for 
preliminary injunctions in six different lawsuits. And as you 
well know, if you can bat that kind of an average defending 
against PI requests, that's something to be very proud of.
    And since it's a presidential initiative, we're 
particularly proud that we were able to do that for our client.
    Mr. Cannon. Thank you.
    We have several written questions we will submit to you 
based upon their relevance. We appreciate your being here 
today, appreciate the job that you're doing, and thank you for 
coming.
    And with that, this Committee will be adjourned.
    [Whereupon, at 4:04 p.m., the Subcommittee was adjourned.]


                            A P P E N D I X

                              ----------                              


               Material Submitted for the Hearing Record

Prepared Statement of Paul D. Clement, Solicitor General of the United 
      States, United States Department of Justice, Washington, DC
    Mr. Chairman and Members of the Subcommittee: Thank you for 
inviting me to submit testimony regarding the Office of the Solicitor 
General in connection with the Committee's hearing.

                   I. THE SOLICITOR GENERAL'S DUTIES

    When Congress created the position of Solicitor General in 1870, it 
expressed high ambitions for the Office: the Solicitor General is the 
only officer of the United States required by statute to be ``learned 
in the law,'' 28 U.S.C. Section 505. The Committee Report accompanying 
the 1870 Act stated: ``We propose to have a man of sufficient learning, 
ability, and experience that he can be sent . . . into any court 
wherever the Government has an interest in litigation, and there 
present the case of the United States as it should be presented.''
    In modern times, the Solicitor General has exercised responsibility 
in three general areas.
    1. The first, and perhaps best-known, function of the Solicitor 
General is his representation of the United States in the Supreme 
Court. The late former Solicitor General Erwin Griswold captured the 
nature of this responsibility in observing:

        The Solicitor General has a special obligation to aid the Court 
        as well as serve his client. . . . In providing for the 
        Solicitor General, subject to the direction of the Attorney 
        General, to attend to the ``interests of the United States'' in 
        litigation, the statutes have always been understood to mean 
        the long-term interests of the United States, not simply in 
        terms of its fisc, or its success in particular litigation, but 
        as a government, as a people.

    This responsibility, of course, includes defending federal statutes 
challenged as unconstitutional on grounds that do not implicate the 
executive branch's constitutional authority when a reasonable defense 
exists. The Solicitor General also defends regulations and decisions of 
Executive Branch departments and agencies, and is responsible for 
representing independent regulatory agencies before the Supreme Court.
    The Supreme Court practice of the Solicitor General includes filing 
petitions for review on behalf of the United States. In this regard, as 
the Supreme Court has stated:

        This Court relies on the Solicitor General to exercise such 
        independent judgment and to decline to authorize petitions for 
        review in this Court in the majority of the cases the 
        Government has lost in the courts of appeals.

    The Solicitor General also responds to petitions filed by adverse 
parties who were unsuccessful in the lower federal courts in criminal 
prosecutions or civil litigation involving the government. Where review 
is granted in a case in which the United States is a party, the 
Solicitor General is responsible for filing a brief on the merits with 
the Court, and he or a member of the Office presents oral argument 
before the Court. The Solicitor General also files amicus curiae, or 
friend-of-the-court, briefs in cases involving other parties where he 
deems it in the best interest of the United States to do so. Although 
most amicus filings occur only after review has been granted, the 
Solicitor General also submits amicus briefs at the petition stage when 
invited by the Court to do so or, in rare instances, when Supreme Court 
resolution of the questions presented may affect the administration of 
federal programs or policies. The Supreme Court requested the Solicitor 
General to file an amicus brief at the petition stage 14 times during 
the October Term 2004 and has done so 13 times during the current Term 
(2005). The Solicitor General generally seeks and receives permission 
to participate in oral argument in those cases in which the government 
has filed an amicus brief on the merits.
    2. The second category of responsibilities discharged by the 
Solicitor General relates to government litigation in the federal 
courts of appeals, as well as in state appellate courts. With the 
exception of those government agencies granted independent litigation 
authority in the lower courts, authorization by the Solicitor General 
is required for all appeals to the courts of appeals from decisions 
adverse to the United States in federal district courts. The Solicitor 
General's approval is also required before government lawyers may seek 
en banc, or full appellate court, review of adverse decisions rendered 
by a circuit court panel. Additionally, government intervention or 
participation amicus curiae in federal appellate courts (as well as 
state appellate courts) must be approved by the Solicitor General. In 
addition, once a case involving the government is lodged in a court of 
appeals, any settlement of that controversy requires the Solicitor 
General's assent. In cases of particular importance to the government, 
lawyers from the Office of Solicitor General will directly handle 
litigation in the lower federal courts. Recent examples include the 
Microsoft antitrust appeal, important criminal sentencing issues when 
addressed by the courts of appeals en banc, and cases involving enemy 
combatants.
    3. In the third category of responsibilities are decisions with 
respect to government intervention in cases where the constitutionality 
of an Act of Congress has been brought into question at any level 
within the federal judicial system. In such circumstances, 28 U.S.C. 
Section 2403 requires that the Solicitor General be notified by the 
court in which the constitutional challenge has arisen and be given an 
opportunity to intervene with the full rights of a party.
                                 ______
                                 
    The various decisions discussed above for which the Solicitor is 
responsible are arrived at only on the basis of written recommendations 
and extensive consultation among the Office of the Solicitor General 
and affected offices of the Justice Department, Executive Branch 
departments and agencies, and independent agencies. Where differences 
of opinion exist among these components and agencies, or between them 
and the Solicitor General's staff, written views are exchanged and 
meetings are frequently held in an attempt to resolve or narrow 
differences and help the Solicitor General arrive at a final decision. 
Where consideration is given to an amicus curiae filing by the 
government in non-federal government litigation in the Supreme Court or 
lower federal appellate courts, it is not uncommon for the Solicitor or 
members of his staff to meet with counsel for the parties in an effort 
to understand their respective positions and interests of the United 
States that might warrant its participation.

           II. ORGANIZATION OF THE SOLICITOR GENERAL'S OFFICE

    The Office of the Solicitor General, when fully staffed, consists 
of 48 individuals, of whom 22 (including the Solicitor General) 
constitute its permanent legal staff and the remainder serve in 
managerial, technical, or clerical capacities. Of the 22 attorneys, 
four are Deputy Solicitors General, senior lawyers with responsibility 
for supervising matters in the Supreme Court and lower courts within 
their respective areas of expertise. Seventeen attorneys serve as 
Assistants to the Solicitor General. These lawyers are assigned a 
``docket'' of cases presenting a wide spectrum of legal problems under 
the guidance and supervision of the Deputies. Additionally, OSG employs 
four lawyers who are recipients of the Bristow Fellowships, a one-year 
program open to highly qualified young attorneys, generally following a 
clerkship with a federal court of appeals' judge. Bristow Fellows 
assist the Deputies and Assistants in a variety of tasks related to the 
litigation responsibilities of the Office. All of the attorneys in the 
Office have outstanding professional credentials.
    The authorized personnel levels and budget of the Office of the 
Solicitor General have remained relatively stable in recent years. The 
Fiscal Year 2007 funding request level is 49 workyears and $9,977,000.
    Most of these funds are committed for nondiscretionary items. For 
example, only two items, personnel-related costs and GSA rent, consume 
over 85 percent of the budget. However, the Office is employing various 
strategies to offset the otherwise rising costs, such as re-engineering 
our brief preparation process, modifying service/maintenance contracts 
and reducing overtime costs.

                          III. OFFICE WORKLOAD

    The following statistics may provide a helpful way of measuring the 
Office's heavy workload given the relatively small staff of attorneys. 
During the most recent completed Term of the Supreme Court, the October 
2004 Term (July 1, 2004 to June 28, 2005), the Solicitor General's 
Office handled approximately 3,237 cases in the Supreme Court. We filed 
full merits briefs in 58 cases considered by the Court (and presented 
oral argument in 52 of those cases),\1\ which represented 69% of the 
cases that the Supreme Court heard on the merits in that Term. The 
government prevailed in 73% of the cases in which it participated. We 
filed 22 petitions for a writ of certiorari or jurisdictional 
statements urging the Court to grant review in government cases, 911 
briefs in response to petitions for certiorari filed by other parties, 
and waivers of the right to file a brief in response to an additional 
2,230 petitions for certiorari. In response to invitations from the 
Supreme Court, we also filed 16 briefs as amicus curiae expressing the 
government's views on whether certiorari should be granted in cases in 
which the government was not a party. The above figures do not include 
the Office's work in cases filed under the Supreme Court's ``original'' 
docket (cases, often between States but involving the federal 
government, in which the Supreme Court sits as a trial court), and they 
also do not include the numerous motions, responses to motions, and 
reply briefs that we filed relating to matters pending before the 
Court.
---------------------------------------------------------------------------
    \1\ Of the 58 merits briefs filed, some were consolidated resulting 
in 1 oral argument.
---------------------------------------------------------------------------
    During this same one-year period, the Office of the Solicitor 
General reviewed more than 2,455 cases in which the Solicitor General 
was called upon to decide whether to petition for certiorari; to take 
an appeal to one of the federal courts of appeals; to participate as an 
amicus in a federal court of appeals or the Supreme Court; or to 
intervene in any court. Thus, during this one-year period, the Office 
of the Solicitor General handled well over 5,722 substantive matters on 
subjects touching on virtually all aspects of the law and the federal 
government's operations.

                             IV. CONCLUSION

    In carrying out the foregoing responsibilities, the other members 
of the Office and I have endeavored to adhere to the time-honored 
traditions of the Office of the Solicitor General--to be forceful and 
dedicated advocates for the government, as well as officers of the 
Court with a special duty of candor and fair dealing.
 Response to Post-Hearing Questions from Michael A. Battle, Director, 
Executive Office for United States Attorneys, United States Department 
                       of Justice, Washington, DC




  Response to Post-Hearing Questions from Peter D. Keisler, Assistant 
Attorney General, Civil Division, United States Department of Justice, 
                             Washington, DC




 Response to Post-Hearing Questions from Matthew J. McKeown, Principal 
 Deputy Assistant Attorney General, Environment and Natural Resources 
     Division, United States Department of Justice, Washington, DC



  Response to Post-Hearing Questions from Clifford, J. White, Acting 
 Director, Executive Office for United States Trustees, United States 
                 Department of Justice, Washington, DC



                                 
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