[Senate Hearing 109-414] [From the U.S. Government Printing Office] S. Hrg. 109-414 NOMINATIONS OF: KEITH E. GOTTFRIED, KIM KENDRICK, KEITH A. NELSON, DARLENE F. WILLIAMS, FRANKLIN L. LAVIN, ISRAEL HERNANDEZ, DARRYL W. JACKSON, AND DAVID H. McCORMICK ======================================================================= HEARING before the COMMITTEE ON BANKING,HOUSING,AND URBAN AFFAIRS UNITED STATES SENATE ONE HUNDRED NINTH CONGRESS FIRST SESSION ON nominations of: keith e. gottfried, of california, to be general counsel, u.s. department of housing and urban development __________ kim kendrick, of the district of columbia, to be assistant secretary for fair housing and equal opportunity, u.s. department of housing and urban development __________ keith a. nelson, of texas, to be assistant secretary for administration, u.s. department of housing and urban development __________ darlene f. williams, of texas, to be assistant secretary for policy development and research u.s. department of housing and urban development __________ franklin l. lavin, of ohio, to be under secretary for international trade, u.s. department of commerce __________ israel hernandez, of texas, to be assistant secretary for trade promotion and director general of the u.s. and foreign commercial service, u.s. department of commerce __________ darryl w. jackson, of the district of columbia, to be assistant secretary of export enforcement, u.s. department of commerce __________ david h. mccormick, of pennsylvania, to be under secretary for export administration, u.s. department of commerce __________ SEPTEMBER 15, 2005 __________ Printed for the use of the Committee on Banking, Housing, and Urban Affairs Available at: http: //www.access.gpo.gov /congress /senate/ senate05sh.html ______ U.S. GOVERNMENT PRINTING OFFICE 27-870 WASHINGTON : 2006 _____________________________________________________________________________ For Sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; (202) 512�091800 Fax: (202) 512�092250 Mail: Stop SSOP, Washington, DC 20402�090001 COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS RICHARD C. SHELBY, Alabama, Chairman ROBERT F. BENNETT, Utah PAUL S. SARBANES, Maryland WAYNE ALLARD, Colorado CHRISTOPHER J. DODD, Connecticut MICHAEL B. ENZI, Wyoming TIM JOHNSON, South Dakota CHUCK HAGEL, Nebraska JACK REED, Rhode Island RICK SANTORUM, Pennsylvania CHARLES E. SCHUMER, New York JIM BUNNING, Kentucky EVAN BAYH, Indiana MIKE CRAPO, Idaho THOMAS R. CARPER, Delaware JOHN E. SUNUNU, New Hampshire DEBBIE STABENOW, Michigan ELIZABETH DOLE, North Carolina ROBERT MENENDEZ, New Jersey MEL MARTINEZ, Florida Kathleen L. Casey, Staff Director and Counsel Steven B. Harris, Democratic Staff Director and Chief Counsel Mark A. Calabria, Senior Professional Staff Member Skip Fischer, Senior Staff Professional John O'Hara, Senior Investigative Counsel Tewana Wilkerson, Republican Staff Director, Housing and Transportation Subcommittee Jonathan Miller, Democratic Professional Staff Jennifer Fogel-Bublick, Democratic Counsel Sarah L. Garrett, Democratic Legislative Assistant Stephen R. Kroll, Special Counsel Joseph R. Kolinski, Chief Clerk and Computer Systems Administrator George E. Whittle, Editor (ii) C O N T E N T S ---------- THURSDAY, SEPTEMBER 15, 2005 Page Opening statement of Senator Enzi................................ 2 Opening statements, comments, or prepared statements of: Senator Santorum............................................. 3 Senator Dewine............................................... 4 Senator Reed................................................. 5 Senator Sarbanes............................................. 8 NOMINEES Keith E. Gottfried, of California, to be General Counsel, U.S. Department of Housing and Urban Development.................... 5 Prepared statement........................................... 26 Biographical sketch of nominee............................... 33 Kim Kendrick, of the District of Columbia, to be Assistant Secretary for Fair Housing and Equal Opportunity, U.S. Department of Housing and Urban Development.................... 9 Prepared statement........................................... 28 Biographical sketch of nominee............................... 46 Response to written questions of: Senator Santorum......................................... 102 Senator Reed............................................. 104 Senator Crapo............................................ 107 Keith A. Nelson, of Texas, to be Assistant Secretary for Administration, U.S. Department of Housing and Urban Development.................................................... 11 Biographical sketch of nominee............................... 61 Darlene F. Williams, of Texas, to be Assistant Secretary for Policy and Development and Research, U.S. Department of Housing and Urban Development.......................................... 12 Biographical sketch of nominee............................... 70 Response to written questions of Senator Reed................ 108 Franklin L. Lavin, of Ohio, to be Under Secretary for International Trade, U.S. Department of Commerce............... 18 Prepared statement........................................... 30 Biographical sketch of nominee............................... 77 Response to written questions of: Senator Sarbanes......................................... 111 Senator Shelby........................................... 113 Senator Dole............................................. 115 Israel Hernandez, of Texas, to be Assistant Secretary for Trade Promotion and Director General of the U.S. and Foreign Commercial Service, U.S. Department of Commerce................ 19 Prepared statement........................................... 31 Biographical sketch of nominee............................... 85 Darryl W. Jackson, of the District of Columbia, to be Assistant Secretary for Export Enforcement, U.S. Department of Commerce.. 20 Biographical sketch of nominee............................... 89 Response to written questions of Senator Shelby.............. 118 David H. McCormick, of Pennsylvania, to be Under Secretary for Industry and Security, U.S. Department of Commerce............. 21 Biographical sketch of nominee............................... 96 Response to written questions of Senator Shelby.............. 119 NOMINATIONS OF: KEITH E. GOTTFRIED, OF CALIFORNIA, TO BE GENERAL COUNSEL, KIM KENDRICK, OF THE DISTRICT OF COLUMBIA, TO BE ASSISTANT SECRETARY FOR FAIR HOUSING AND EQUAL OPPORTUNITY, KEITH A. NELSON, OF TEXAS, TO BE ASSISTANT SECRETARY FOR ADMINISTRATION, DARLENE F. WILLIAMS, OF TEXAS, TO BE ASSISTANT SECRETARY FOR POLICY DEVELOPMENT AND RESEARCH, U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT; FRANKLIN L. LAVIN, OF OHIO, TO BE UNDER SECRETARY FOR INTERNATIONAL TRADE, ISRAEL HERNANDEZ, OF TEXAS, TO BE ASSISTANT SECRETARY FOR TRADE PROMOTION AND DIRECTOR GENERAL OF THE U.S. AND FOREIGN COMMERCIAL SERVICE, DARRYL W. JACKSON, OF THE DISTRICT OF COLUMBIA, TO BE ASSISTANT SECRETARY FOR EXPORT ENFORCEMENT, AND DAVID H. McCORMICK, OF PENNSYLVANIA, TO BE UNDER SECRETARY FOR INDUSTRY AND SECURITY, U.S. DEPARTMENT OF COMMERCE ---------- THURSDAY, SEPTEMBER 15, 2005 U.S. Senate, Committee on Banking, Housing and Urban Affairs, Washington, DC. The committee met at 10:03 a.m., in room SD-538, Dirksen Senate Office Building, Senator Michael B. Enzi presiding. OPENING STATEMENT OF SENATOR MICHAEL B. ENZI Senator Enzi. This hearing will come to order. Today, the Committee will hold hearings on the first panel, nominations of Keith Gottfried, to be the General Counsel at the U.S. Department of Housing and Urban Development, Kim Kendrick to be Assistant Secretary of Housing and Urban Development for Fair Housing and Equal Opportunity, Keith Nelson to be Assistant Secretary for Administration, Department of Housing and Urban Development, and Darlene Williams to be Assistant Secretary for Policy Development and Research, also at the Department of Housing and Urban Development. The second panel will be comprised of nominees for the Department of Commerce. Before we begin, I would like the witnesses to rise, raise their hands so that I may administer the oath. [Witnesses sworn.] Senator Enzi. I would like to thank all the nominees who are going to come before the Committee today. Over the course of the last few months, my staff and I have had the pleasure of meeting with many of you. I am impressed with your credentials and I am confident that you have earned the honor of these nominations. As we move forward with your nomination process, I will be particularly interested in those nominees who will be dealing with export administration and enforcement with the Department of Commerce. As many of you know, I have been working to reauthorize the Export Administration Act for over 7 years now. During that time, my staff and I have worked diligently with all parties to craft legislation that would correct some of the shortcomings in the current temporary regulation. In some ways, we have been successful. I believe that we have educated some Members about the importance of creating a strong export control system. We have built consensus around some areas of reform. Unfortunately, we have not been successful in passing meaningful reform in the form of reauthorization of the Export Administration Act. The Department of Commerce plays a critical role in all of this. So far, the Department has streamlined some of the licensing process and relieved some of the burden of the technology companies by doing business overseas. I applaud them on their efforts. However, they need statutory authority to make substantive improvements to law enforcement and control mechanisms. Congress should be committed to granting that authority. The Federal Government has limited resources to deal with control of dual-use exports developed within the United States. Molding export controls that focus our priorities on those products and nations that may threaten our national security is good policy. Not only will it make controls more effective, but it also will strengthen our ability to craft multilateral controls that truly keep our dual use technology out of the wrong hands. It is very difficult for the United States to tell our international partners to stop selling goods and technology to bad actors, but we do not have a statute in place to control our own sales. I will continue to emphasize the importance of reauthorizing the Export Administration Act to my colleagues, this Committee, and elsewhere. I look forward to the Department of Commerce's continued role in this debate and trust they will continue to make progress to get that done. I look forward to the testimony of all the witnesses, and Senator Santorum. OPENING STATEMENT OF SENATOR RICK SANTORUM Senator Santorum. Thank you, Mr. Chairman. I appreciate it. I am pleased to introduce to the Committee three of the eight witnesses that are scheduled to testify here this morning. One in the first panel, Kim Kendrick, is a Pittsburgher, and two on the other panel. So if you will allow me to introducing all three of them, Mr. Chairman, even though only one of them is actually before you. Ms. Kendrick is someone who I have not had the opportunity to meet however, my staff, having talked to her recently, is very impressed with her personally and the tremendous wealth of experience that she will bring to the position of Assistant Secretary of Housing and Urban Development for Fair Housing and Equal Opportunity. She has tremendous experience in both her educational background as well as the work that she has done in the area of housing. She has a law degree from the University of Pittsburgh, as does my wife, and so, I will put in a good plug for that. She went on to work for Neighborhood Legal Services in Pittsburgh. She later served with the Department of Housing and Urban Development in several positions, in the Office of the General Counsel. She left HUD to go to the D.C. Housing Authority, where she served 7 years as General Counsel and in other positions at a time when the DC Housing Authority was placed in receivership and needed some strong leadership, and she was there to provide that. And after that, she spent 2 years working at Covenant House in Washington, DC, which as you know, Mr. Chairman, is one of the real outstanding philanthropic agencies not just in Washington but in many other cities, including Philadelphia, where they provide for housing services to troubled youth. And she returned to HUD early in 2004, and she serves as Senior Counsel to the Secretary. So she has a wealth of experience both inside of Government and outside of Government and will do, I believe, an outstanding job for the Department in this regard. I know she is joined here today with her parents and her sisters, and I want to welcome her and her family to the Senate. Two other individuals will be on your next panel, Mr. Chairman. One is David McCormick, whom I have gotten to know in his role as a community and business leader in Pittsburgh. He is a graduate of West Point, served as an Army Ranger and in the 82nd Airborne. And he earned his doctorate from Princeton University. He is Chief Executive Officer of Arriva, which is a successor company to a company started in Pittsburgh called Free Markets, and they are a major and important employer in our city and a high technology company, and he has a tremendous amount of skills in the area of technology. And for him to be nominated as Under Secretary of Commerce for Export Administration, you mentioned the concerns that you have there; he is a top flight business person, a top flight technologist, and someone who I think will be just a tremendous addition to this Administration. So, I want to introduce him to you, and I know his family is here also. And I want to thank you, Dave, for offering your services. As you can see, he is a young man and has a lot of enthusiasm to bring to the position. And finally, Darryl Jackson, who is from Philadelphia; he is to be nominated as Assistant Secretary of Commerce for Export Enforcement; another person, like so many in Pennsylvania with great experience and background to lend to our country. He is experienced in the practice of law. He got his law degree from Harvard University, and--Howard University, excuse me; I would have said do not hold that against him, but Howard, it is a great university, in 1977. [Laughter.] I did not mean to contrast that. He began his legal career in the Legal Defender Association of Philadelphia, where he worked for 3 years. He worked as a prosecutor in the Office of the U.S. Attorney here in the District of Columbia for 12 years. He became the Executive Assistant to the U.S. Attorney for Operations, where he was responsible for overseeing legal operations and implementing prosecutorial policy. Since 1992, he has been a partner at Arnold and Porter, where he worked as a civil litigator and a white collar criminal defense attorney. He has taught and lectured at George Washington National Law Center and Catholic University of America's Columbus School of Law. He is someone, again, who brings a wealth of experience to this position, and I know that he will serve his country well. Senator Enzi. Thank you very much. And I should mention that the reason that Senator Shelby is not chairing this meeting at the moment is that he is chairing the debate on Commerce, Justice, State appropriations over on the floor of the Senate, and that is not optional, either. So, I am filling in for him. And we have Senator DeWine with us, who is going to make an introduction from the second panel so that he can return to the Judiciary Committee, where we are trying to get the Chief Justice of the Supreme Court finished on confirmation. Senator DeWine. STATEMENT OF MIKE DeWINE A U.S. SENATOR FROM THE STATE OF OHIO Senator DeWine. Mr. Chairman, thank you for taking me out of order, and thank you for this opportunity to introduce my fellow Ohioan, Ambassador Frank Lavin of Canton, Ohio, an Ambassador whom President Bush has nominated to be the Under Secretary of Commerce for International Trade. Frank's background is quite impressive, including several advanced degrees related to international relations and economics from Georgetown, Johns Hopkins, and Wharton. Professionally, Frank has distinguished himself through over two decades of work in Asian affairs in both government and the private sector. I have known Frank for over two decades, dating back to when I was in the House of Representatives, and he was in the Reagan Administration. He worked in the Reagan Administration at the National Security Council as Deputy Executive Secretary. He went on to serve the White House in the Office of Political Affairs. Frank was previously nominated and served as the Deputy Assistant Secretary of Commerce for Asia and the Pacific, where he was responsible for commercial policy, assisting companies with market access, and trade negotiations for the region. He continued his connection with the region during the late 1990's as a banker and venture capitalist in Hong Kong and Singapore. It was therefore no surprise when President Bush nominated Frank to be Ambassador to Singapore, given his professional experience within the region. And as Ambassador, Frank Lavin helped oversee the successful negotiation and enactment of the United States-Singapore Free Trade Agreement. I believe, Mr. Chairman, Members of the Committee, it is important that we have someone in this position who knows business, knows our trade rights and responsibilities, knows our trade partners, and knows how to open markets to U.S. goods. It is particularly important to have someone like Ambassador Lavin, who has a thorough understanding of the countries in the Far East, which seems to be at the center of so many of our trade discussions today here in the Congress. Frank has a ground floor view of the region, both from his days in the private sector and from his years spent in Government service. Adding to his professional accomplishments, I would like to mention that the Ambassador is also a lieutenant commander in the U.S. Naval Reserves and is raising three wonderful children with his wife Ann. I wish them all the best during this confirmation process. Mr. Chairman, I thank you again for taking me out of order and allowing me to move ahead here. Thank you. Senator Enzi. Thank you very much. Mr. Lavin, thank you. Senator Reed, did you want to make any comments? COMMENTS OF SENATOR JACK REED Senator Reed. Mr. Chairman, I think we can proceed to the witness statements and questions. It would be fine. I just want to welcome today's nominees. Senator Enzi. Thank you. We will begin with the statements, then. Mr. Gottfried. STATEMENT OF KEITH E. GOTTFRIED, OF CALIFORNIA, TO BE GENERAL COUNSEL, U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT Mr. Gottfried. Thank you, Mr. Chairman and good morning. I would like to thank Senator Shelby, Senator Sarbanes, and distinguished Members of the Committee for giving me the great privilege and honor to appear before this Committee today as it considers my nomination to be General Counsel of the U.S. Department of Housing and Urban Development. I know this is a particularly busy time for the Committee, for the Senate, and accordingly, I am especially grateful to this Committee for expediting the confirmation process for myself and for the other nominees present today. I would also like to express my deep gratitude to President Bush and Secretary Jackson for the trust and confidence they have placed in me in putting forward my nomination for this very important position. I am honored by their willingness to entrust me with a leadership position on issues that are of great importance to our Nation and that are of great interest to me personally. As Secretary Jackson continues to lead HUD in strengthening our Nation's communities, promoting affordable housing, expanding homeownership opportunities for all Americans, particularly low- and moderate-income families, vigorously enforcing the fair housing laws, and of course, providing housing and other desperately needed relief to the victims of Hurricane Katrina, if confirmed, it would be for me the honor of a lifetime to serve as his General Counsel. Mr. Chairman, with your indulgence, I would like to introduce some family members. I would like to introduce my wife, Cindy. It is due to her love and support and with the grace of God that I am before you today, and it will be with her love and support and with the grace of God that I will be able to carry out, if confirmed, the important responsibilities that are before me. I thank her for being my closest adviser and my best friend. I would also like to introduce my mother Rosalie Gottfried, from whom I have learned many things, including the benefits that attach to homeownership and being a vested member of a community and who has sacrificed so much so that I could have the opportunity to pursue my personalized version of the American Dream. Mr. Chairman, I have been very blessed in my life. The most recent example of that being that my wife and I are expecting the birth of our first child in March. And as we anxiously anticipate the day that we become parents, my wife and I find ourselves very attentive, becoming more attentive to how to ensure that our children have access to the same opportunities that we had, including, of course, access to affordable housing. I cannot begin to articulate how honored and humbled I am to appear before this Committee. I come from a very modest upbringing. I could never imagine growing up in Queens, New York, in my neighborhood, that one day, I would be nominated by the President of the United States of America to serve the American people in this very important leadership position. I feel very strongly that to those who much is given, much is expected, and that as a member of a compassionate society, I have a duty to give something back to the Nation that has given me so much. The opportunity to serve as General Counsel of HUD would be a particularly fitting opportunity for me to give something back to this great Nation that has given me so much, not only because of my background as a lawyer, as a seasoned legal executive in the private sector, but also because of a deep personal connection I share with HUD's mission. In 1967, one year after the cornerstone was laid for the building that would become HUD's headquarters, the building now known as the Robert C. Weaver Federal Building, named after the first Secretary of the Department of Housing and Urban Development, my parents purchased their first home in Queens, New York, using a modest downpayment and a 30-year, fixed-rate mortgage. When their marriage dissolved some years later, my mother was extremely determined that we were not going to leave that home. She was not going to part with that home. We were not going to move to a much smaller rental apartment. My mother, the daughter of immigrants, had grown up in the Brighton Beach section of Brooklyn, New York, and she had shared with her parents and her three siblings a one-bedroom apartment. She knew all too well that that was not the environment that she wanted for her children. As a school teacher employed by the New York City Board of Education, she just retired, almost 40 years, my mother struggled for many years to be able to continue to make the monthly mortgage payments and to remain a member of the ownership society. Like President Bush and Secretary Jackson today, my mother recognized the value and benefits of homeownership. She believed, and I know continues to believe, the contribution that homeownership makes to a family's stable living environment. I learned from my mother many things, and I learned from her the benefits of being a part of a closely knit community where your neighbors feel like family and where homeownership translates into greater concern for your neighbors. Almost 40 years after purchasing her home, my mother remains deeply active and deeply committed to her community. Mr. Chairman, if confirmed, I would embrace the responsibilities and the duties of the Office of General Counsel with an abundance of enthusiasm, vigor, and dedication. Over the past few weeks, I have had the opportunity to get to know some of the staff members of the Office of General Counsel, and to date, I have been extremely impressed with the caliber and dedication of all the people that I have had the privilege of meeting, in particular, because HUD has been without a General Counsel since May 2004. I would like to recognize, acknowledge, and thank Kathleen Koch, who has served as acting General Counsel since that time. If confirmed, I will commit myself to assisting Secretary Jackson in his ongoing efforts to make HUD a more effective, efficient, and responsive institution, one that will operate in accordance with the highest ethical and professional standards both for its employees and for its program participants. I am also committed to assisting Secretary Jackson in his ongoing efforts to create a culture that inspires confidence in HUD's programs on Capitol Hill and with all our program participants and beneficiaries. Mr. Chairman, Members of the Committee, the Office of General Counsel at HUD is a great honor, a great responsibility, and a tremendous challenge. If confirmed, I look forward to working in a bipartisan manner with the Committee, other Members of Congress, as we together work to meet the challenges before us. As has been noted before this Committee in a number of hearings, the mission at HUD, the mission to provide affordable housing to all Americans, is not a Democratic mission; it is not a Republican mission; it is an American mission for all Americans. At this time, Mr. Chairman, I stand ready to answer any questions or address any comments that you or any other Members of the Committee may have. I thank the Members of the Committee for the honor and the opportunity to appear before you today. Senator Enzi. Thank you for your testimony. We have been joined by the Ranking Member of the Committee. Senator Sarbanes, do you have a statement that you would like to make? STATEMENT OF SENATOR PAUL S. SARBANES Senator Sarbanes. Thank you very much, Mr. Chairman, I appreciate that, because regrettably, I am not going to be able to stay this morning because of a number of conflicting engagements, but I do have an opening statement. First of all, I want to thank you very much for presiding over the hearing. I think we need to get people in these jobs. These are important positions, both at HUD and at Commerce, and I am going to comment in a moment about how long some of them have been vacant. I want to congratulate all the nominees both at HUD and the Department of Commerce. I hold public service in high esteem, and I appreciate the willingness of the nominees to serve the Nation. We have four important HUD positions; of course, HUD plays a crucial role in many communities across our country. Millions of people live in HUD-assisted housing. Millions more receive HUD-subsidized mortgages through the FHA program. About 220,000 people lived in FHA-insured single family homes that have been affected by Hurricane Katrina. Another 90,000 lived in FHA-insured apartments, and nearly 150,000 receive Section 8 vouchers or were living in public housing in those areas, so obviously, the reach of HUD into these communities is quite extensive. The Senate actually adopted, yesterday, an amendment I proposed to give authority to HUD to issue temporary Section 8 vouchers to get people housed. HUD contributes to the vitality of communities through the Community Development Block Grant program. It increases homeownership through FHA but also through the HOME program. The American Dream Down Payment Assistance Initiative helps low-income families afford decent housing. It also seeks to ensure that all Americans have equal access to affordable housing opportunities. I want to underscore that, without regard to race or gender, and it does all this in close partnership with State and local governments. Obviously, to meet these responsibilities, it needs top quality staff and top quality leadership, and have been concerned about these vacancies in key positions. There has not been a confirmed General Counsel at HUD since May 2004, almost 18 months. The position of Assistant Secretary for Administration has been open since February of this year. So, I look forward to reviewing the witnesses' statements and their papers and looking over the hearing records in the hopes that we can expedite the process of getting these important positions filled. Let me say a word about the second panel which the Chairman will bring before us involving the Department of Commerce. I have had the opportunity to meet with a number of these nominees. They have critical responsibilities for promoting American exports, assuring our businesses compete on a level playing field, increasing American competitiveness while protecting our defense industrial base. These are particularly challenging times. We have a trade deficit with China which may exceed $200 billion. The total current deficit is more than $700 billion, so we face a very difficult situation. We are seeing some effort to undermine the impact of U.S. antidumping and countervailing duty rules. These are all issues the nominees will have to confront. This Committee has had a good working relationship with the predecessors of the people going into these Commerce jobs. Senator Enzi has taken a strong leadership role with respect to the issue of export controls and promotions. I have been pleased to work with him in that effort. The former Under Secretary, Grant Aldonas, took a lead in the Trade Promotion Coordinating Committee Initiative. I hope that it will not lose its momentum. The one stop shops authorized in the 1992 Export Enhancement Act must continue to be used effectively. Mr. Chairman, I want to underscore the importance of the hearing, and I hope that we get these people in position. Let me, as I close, I want to pay a note of tribute to Timothy Hauser, who had a tragic death this summer. Mr. Hauser was a career civil servant who had served as Deputy Under Secretary for International Trade since 1991. He was a mainstay of our trade programs and of the Department of Commerce. I think his career was a model one. It exemplified the commitment, the knowledge, the expertise, and the dedication of literally thousands and thousands of career civil servants, and I want to take this opportunity to acknowledge his extraordinary contributions over the course of his career. Thank you very much. Senator Enzi. Thank you very much, and yes, we did have some interesting times together on the Export Administration Act Reauthorization and got it through the Senate 84 to 14, and then, September 11 happened, and everybody's focus changed, and we were not able to finish it. Senator Sarbanes. Right. Senator Enzi. So we will continue on that. Ms. Kendrick. STATEMENT OF KIM KENDRICK OF THE DISTRICT OF COLUMBIA, TO BE ASSISTANT SECRETARY FOR FAIR HOUSING AND EQUAL OPPORTUNITY, U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT Ms. Kendrick. Good morning, Senator. I want to thank Chairman Shelby, Ranking Member Sarbanes, and distinguished Members of this Committee. I appreciate your consideration today, especially in light of the important issues that face this Nation that require your valuable time. I would first like to thank President Bush for nominating me to serve as HUD's Assistant Secretary for Fair Housing and Equal Opportunity. I am also profoundly grateful to Secretary Alphonso Jackson for his strong support of my nomination and his encouragement during this nomination process. Before I go any further, I want to recognize some people who have been an important part of my life and who are with me today. First, I must acknowledge the most important sources of encouragement and support in my life, my parents, Louis and Gloria Kendrick. Senator Enzi. Welcome. Ms. Kendrick. After I was notified that President Bush nominated me for this position, I immediately called my parents to relay the good news. My father's first response was are you not glad that you have great parents? [Laughter.] As a matter of fact, I am. I can honestly say without their guidance, sacrifice, and love, I would not be sitting here before you today, and I want to publicly thank them for all that they have done for me. Also with me today are my two sisters, Toni and Jerri Kendrick, my nephew of 15 years, Louis Washington, who got to get out of school today. [Laughter.] My cousin, Sabrina Cobb, and my godchild, whom I think you have heard, Olivia Albury, who celebrated her first birthday just 2 weeks ago. I am blessed to have a number of great friends who came to lend support and encouragement today. I have colleagues with me today from HUD and former colleagues from both the District of Columbia Housing Authority and Covenant House Washington. Here also are friends that I have known and met through Leadership Washington, friends from the Greater Washington Area Chapter of the Women Lawyers Division of the National Bar Association, members of my sorority, Alpha Kappa Alpha, and a friend from college. I want to thank each of them for taking time out of their schedules to support me. I will not spend a lot of time telling you about my professional journey. You have heard Senator Santorum talk about that. As you already know, I have worked for over 20 years as a lawyer and that most of my legal career has been involved with matters associated with housing, starting as an attorney with Neighborhood Legal Services in Pittsburgh, Pennsylvania, and currently serving as legal counsel to a member of the President's Cabinet who is responsible for housing for the entire Nation. I do, however, want to share with you a bit about my personal background. I grew up in the Hill District, a number in Pittsburgh, Pennsylvania. At that time, it was the most economically depressed part of the city. However, our home life was rich, so rich that I had no idea other people considered us low income. One of the reasons I never felt deprived was because my family always had a house that we could call our own. My parents created a home atmosphere where my sisters and I were safe and free, free to become the successful women that we are today. I am particularly proud of my sisters. My sister Toni is a principal in an inner city school in Pittsburgh. Jerri is a graduate of Carnegie Mellon University, and she is one of a few African-American female program managers for Lockheed Martin. While the successes in our lives may not solely be related to the fact that our parents were and are homeowners, it did not hurt. The one thing that my career in housing has made very clear to me is that having a home is a critical step to achieving economic equality in this country. The Rev. Dr. Martin Luther King was assassinated on April 4, 1968, and the Fair Housing Act was enacted on April 11 of that same year. The significance of the two events cannot be ignored. His death brought to the forefront of this country the severe inequities in its social fabric. Dr. King often spoke about the inequities in the housing opportunities between whites and the minorities in this country. Unfortunately, Dr. King did not live to see the Fair Housing Act signed into law or see how fair housing in this country has led to a record number of minority homeowners. However, I do know that there is more to be done. As reported in the media yesterday, minorities are twice as likely as whites to get higher priced mortgages, and we must understand these disparities and work to eliminate them. Also, I am quite aware of the number of Americans who were displaced from their homes by Hurricane Katrina, and I know there is work to be done to get those families back into their homes. As the President's nominee for Assistant Secretary for Fair Housing and Equal Opportunity, I have been given an opportunity few people before me have been given; that is, to ensure equal access to housing for all Americans. If I am confirmed, I promise to diligently and enthusiastically carry out the duties for which I have been nominated, because I cannot think of a greater honor than to serve this Administration as the chief enforcer of the Nation's fair housing laws. As a little girl growing up in Pittsburgh, I could never imagine I would one day be sitting in a confirmation hearing before the U.S. Senate. This kind of personal journey is only possible in the United States, and it makes me immensely proud to be an American. Again, I thank you for your time, and I welcome any questions that you may have of me. Senator Enzi. Thank you very much. Mr. Nelson. STATEMENT OF KEITH A. NELSON, OF TEXAS, TO BE ASSISTANT SECRETARY FOR ADMINISTRATION U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT Mr. Nelson. Thank you very much. I would like to thank Chairman Shelby, Ranking Member Sarbanes, and distinguished Members of the Committee for holding this hearing today. It is a privilege to appear before you as the President's nominee to serve as Assistant Secretary for Administration at the U.S. Department of Housing and Urban Development. I am honored that President Bush has nominated me to serve in this position, and that this Committee is taking the time to consider my nomination. I also want to take a moment to introduce some of my family. Especially, I am very proud to introduce my wife, Julia Gomez Nelson, and also my mother, who came from Texas. Her name is Pamela Hudson Nelson, and she is missing part of her meeting today as Vice Chairman of the U.S. Commission of Fine Arts, and also my in-laws who traveled from Florida, Guillermo and Olema Gomez, who are here with us today, and I am very excited and thankful that they are here. Commitment to public service is a proud tradition in my family, and I have been honored to continue that tradition over the last 3-plus years at the U.S. Department of Labor. Since 2001, I have worked in management and administration at the Labor Department, most recently serving as Associate Deputy Secretary for Management. In this capacity, I have been involved in human resource matters, information technology, budget formulation, financial management, and general operations. One of our proudest accomplishments at the Department of Labor came recently, when the Office of Management and Budget recognized the Labor Department as the best-managed in the Executive Branch. Among Labor's most significant achievements was the collective bargaining agreement we reached earlier this year with Local 12 of the American Federation of Government Employees, which represents most of the Department's employees in the Washington, DC area. This agreement, the first since 1992, was the culmination of more than 3 years of mediation and negotiation. The Department of Labor also successfully migrated its payroll system to the National Finance Center. This is part of a governmentwide effort to shift certain services that are not mission-specific to certain designated government service providers. This was a significant endeavor, one that required our office to coordinate the efforts of our Chief Financial Officer, the human resources staff, and regional employees in order to prepare the Department's 17,000 employees for a new payroll system. In a more broad sense, my service at the Labor Department has allowed me to gain a clear understanding of the urgency of succession planning in the Federal Government. And through the extensive briefings and interviews that have characterized the confirmation process, I have come to appreciate how acute and serious this issue is for the Department of Housing and Urban Development. In addition to succession planning, HUD has also performed an assessment revealing various ``skill gaps'' between current personnel and those required to execute the mission most effectively. If confirmed, I hope to have the opportunity to provide the Department with the training and recruitment necessary to bridge those gaps. Through these and other areas of focus, I will keep lines of communication open with stakeholders to ensure that all interested parties receive a fair hearing. In conclusion, I am committed to the responsibilities and challenges that come with this position. Under the leadership of Secretary Jackson and Deputy Secretary Bernardi, I am confident that HUD will continue its progress to becoming a more efficient and effective operation in fulfilling its vital public mission. I want to thank you again for scheduling this hearing during what I know is a very busy time for the Senate. I am ready for any questions you may have. Senator Enzi. Thank you very much. Ms. Williams. STATEMENT OF DARLENE F. WILLIAMS, OF TEXAS, TO BE ASSISTANT SECRETARY FOR POLICY DEVELOPMENT AND RESEARCH U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT Ms. Williams. Thank you. I want to thank Chairman Shelby, Ranking Member Sarbanes, and Members of the Committee for convening this hearing during what I know is a busy legislative session. It is a privilege to be here with you today. I would like to express my appreciation to President Bush for the honor of being nominated as Assistant Secretary for the Office of Policy Development and Research. I am also grateful for your consideration today, so that I may continue my services to HUD and to Secretary Alphonso Jackson. Before I say a few words about my nomination, I would like to acknowledge and thank a very special person in my life, my mother, Ms. Julie Bernice Walker. Without her, this would not have been possible. Through her sacrifices, she paved this road and provided me with a bridge that has allowed me to experience incredible educational and career opportunities. I would also like to acknowledge in their absence, a sincere sacrifice on their part, my father, Mr. Francis Harold Williams, Sr.; my stepfather, Mr. Nathan Walker; my dear friend, Mr. Herbert Moore, Jr.; and of course, my two brothers, Harold, Jr., and Rodger, along with the many men and women throughout my corporate and Federal careers who are shining examples of excellence. The Office of Policy Development and Research, or PD&R, is a principal adviser to the Secretary providing support in policy development, applied social science and economic research on housing policy and issues, including, for example, advances in housing technology and evaluation and monitoring of the Department's programs. In fact, one of the very important responsibilities of PD&R is to conduct evaluations of Departmental programs to make sure they are operating effectively as Congress intended. If confirmed, I will work to ensure that this mission continues with professionalism and integrity. As for my personal background, on June 2, 2003, I joined HUD as the General Deputy Assistant Secretary for PD&R. As such, I have served as the general manager for the office during interim periods when the office was without an Assistant Secretary. One example of a critical initiative we undertook at PD&R was the establishment of HUD's research plan for each fiscal year. The role of the Assistant Secretary for PD&R is to establish an approved HUD research plan through the collaborative input of PD&R staff and HUD leadership. Under my leadership, PD&R developed a plan addressing research and survey activities early in the fiscal year, which ensured that staff could begin implementing the research plan once the appropriations were known. The research plan was important to PD&R because it established the work assignments for the fiscal year for staff and permitted implementation of an often lengthy and rigorous process. Prior to entering Federal service, I gained expertise in operations, marketing research, and corporate policy at the following corporations: Pacific Bell, now known as SBC; Eastman Kodak; Ryder Systems, Incorporated; and TXU, formerly known as Texas Utilities. I believe that my earlier experiences in PD&R along with these professional experiences in corporate America helped me to be an effective leader. I would be personally honored to have the opportunity to join the men and women of PD&R, who are among the best and brightest of the HUD workforce. Let me conclude by saying that I have a deep appreciation for Congress as an institution. I look forward to working with this Committee in an open and collaborative spirit to advance the goals of affordable housing, homeownership, and strong communities. Thank you for your kind attention, and I will be happy to answer any questions you may have. Senator, I respectfully request that my testimony be added to the record. Senator Enzi. Thank you very much. The complete testimony of everyone will be a part of the record, and there will be statements entered by people who have not been able to be here this morning. There will probably be some written questions that will be addressed from those who were not here and even some of those who are here, because time does place some constraints on us, and we will encourage you all to give as prompt an answer as possible, because I want to congratulate you on your nomination, and we want to make that a confirmation. So we will work with all speed to get that done. I want to welcome all the families and friends of the nominees. It is nice that there is that kind of support there, and I know that that is where each of you got some direction for your life, as was often mentioned. I used to be the Mayor of a boom town. It tripled in size while I was the Mayor. And the one thing that I noticed was that when a person got homeownership, their perspective changed. They suddenly become considerably more interested in the community, because they felt they had ownership not just in their house but in their community, and it is the American Dream. And you all are in charge of getting that dream to as many people as possible in the best way possible, and so, I challenge you with that. I do have a few questions that I want to ask, and I will begin in the same order that we spoke. Mr. Gottfried, I believe your experience as corporate counsel does provide a useful background for serving as HUD's General Counsel. However, I believe there are some substantial differences. Could you offer for the Committee what you see as some of those differences in responsibilities and duties of an agency general counsel in contrast to that of serving as a corporate general counsel? Mr. Gottfried. Thank you, Senator. There are many differences between serving as a general counsel of a publicly traded company and serving as general counsel of a Federal Cabinet Department. There are also many similarities. One of my goals as General Counsel of Borland Software Corporation was to have a zero tolerance policy with respect to ethics compliance. It was extremely important, particularly in light of the Sarbanes-Oxley Act of 2002, that we comply over and above what was required of us under that statute. Similarly, at an agency like HUD, an agency that grants significant amounts of money and has numerous program participants and beneficiaries, it is incredibly important that at HUD that we be an example of ethics and of compliance at the highest levels and that there be zero tolerance. At Borland Software, I managed tremendous amounts of litigation, and I can say with a lot of pride that substantially all the litigation that I inherited, and it was well into the tens of millions of dollars in paid liability if not higher when I became general counsel in 2000, by the time I left, all that litigation was resolved. HUD also has significant litigation where it is a defendant. Currently, there are approximately 510 cases where HUD is a defendant. That will be one of my priorities. One of my priorities will be helping to resolve that litigation. For every dollar that we have to pay out in litigation costs, that is a dollar that is not going to go to help people gain access to affordable housing or in increasing access to homeownership. Now, a great difference, of course, is that when I was at Borland Software in the private sector, and I wanted to settle a case, I would go talk to my CEO and my board, and it was fairly easy to do that. Obviously, in a Federal Cabinet Department, as General Counsel, it is not just the Secretary and I and possibly the Deputy Secretary making that decision. I have a very important co-counsel or lead counsel in the Department of Justice, and I will have to consult and work collaboratively with them. In my corporate law background, when I was a lawyer at Skadden Arps, I had to work with lawyers all the time and lots and lots of lawyers on the other side of the table or three different sides of the table, so that is nothing new for me. And I look forward to building a collaborative relationship with the people at the Department of Justice and other agencies and obviously the Solicitor General from time to time. Senator Enzi. Thank you. Ms. Kendrick, I understand that you have been Secretary Jackson's primary advisor on RESPA. As you know, the Committee has a variety of concerns regarding the RESPA rule as previously proposed. If confirmed, is the Secretary's intention for you to remain as his primary counsel on RESPA, and could you share with the Committee what is the current status of HUD's RESPA efforts? Ms. Kendrick. The Secretary has not made a decision, Senator, on whether I should remain as his chief advisor on RESPA. I will leave that to him after the confirmation process. But what we are doing on RESPA today is, as you may know, we held seven roundtables to discuss the RESPA issue this summer. We had four in Washington, DC, one in Chicago, one in Los Angeles, and one in Fort Worth. We wanted to get a sense around the country of what the industry and consumers were thinking about RESPA, what they are interested in, what they do not want, what they do want, and is RESPA viable? Is it viable to do a RESPA rule this year? And so, this year, we are still in that thought process. There is no rule in a drawer. We have not made a decision about whether there will be a RESPA rule, and before we even think about whether we are going to do a rule, we will come back and see the Senate; we will talk to the House Members, we will talk to everyone, sir. Senator Enzi. Thank you, and I hope he does rely on you. I am sure you have a great deal of expertise on that and can continue that. Mr. Nelson, the GAO has testified before this Committee that HUD's financial management systems cannot currently provide the day-to-day information needed by its managers to effectively manage and monitor the Department's programs. I believe it is critical that HUD have reliable financial and accounting systems. Do you share this concern with respect to the critical importance of reliable financial and accounting systems, and do you have any thoughts for addressing those deficiencies? Mr. Nelson. Thank you for your question, Senator. That GAO report is certainly one that we are very interested in trying to close those recommendations one-by-one. In fact, there is a very useful report that I have seen that we keep track of on a monthly basis of all the GAO reports and Inspector General reports that we are needing to deal with and close down these recommendations. Certainly, financial management is an important point of any department and agency, and if you do not get the data right, and you do not have the numbers right, it is very difficult to operate efficiently and effectively. So that is a key concern, and if confirmed, I will work very hard along with the CFO to establish better measures for that. Senator Enzi. Thank you. Ms. Williams, HUD over the last decade or so has been increasingly reliant on outside contractors to perform many of its responsibilities. I know that is not an issue solely in the research area, but it does seem that most of the research produced by HUD is conducted by outside parties. I am concerned about HUD's ability to effectively monitor those contractors. Could you detail for the Committee your relevant experience in monitoring and evaluating contract performance? Ms. Williams. Thank you, Senator. The Office of Policy Development and Research is comprised of professionals with backgrounds in social science along with engineering, architecture, and many of the skills that are necessary not only programmatically for the Office to determine the types of research that need to be conducted but also for further monitoring and evaluation. Additionally, many of the members, the 156 individuals have been involved in other program offices prior to joining the Office of Policy Development and Research, so we are going to continue to use the talent that we have. We are also putting into place a succession plan to ensure that we continue to have great HUD content. As you have indicated, we have relied significantly on outside contractors, but that does not mean that the individuals within the program areas as well as within the Office of Policy Development and Research are not quite often extensively involved in the contracting arena. Senator Enzi. Thank you. Mr. Gottfried, you mentioned in your testimony your experience practicing before the SEC and your understanding of how regulatory agencies work. I believe it is vital for an agency general counsel to have a strong knowledge and appreciation of administrative procedures, particularly rulemaking. Could you offer the Committee a little more detail about your interaction with Federal agencies and your knowledge of administrative procedures? Mr. Gottfried. Yes, as a lawyer in New York, most of my career has been as a mergers and acquisitions and public company lawyer with substantial expertise in securities laws and in negotiating with the Securities and Exchange Commission to get large, billion dollar transactions completed. I have not done a lot of work with administrative procedures, like the Administrative Procedure Act. Most of my compliance work was in complying with securities laws and the numerous regulations of the Securities and Exchange Commission. Senator Enzi. Thank you. Ms. Kendrick, I believe your past experience working at a public housing authority will prove invaluable to HUD. I also find it interesting that part of your responsibilities were defending the D.C. Housing Authority against fair housing complaints. Could you share with the Committee any reflections you gained from, as you state in your testimony, being on both sides of the issue, and do you believe a greater focus on public housing authorities should be a greater priority for HUD? Ms. Kendrick. Thank you, sir. The appreciation I received from my experience is that everyone is entitled to a decent, safe, sanitary unit that can be accommodated for a disability. I think it is very important that persons with disabilities have decent housing, they have available housing, and that public housing authorities and private landlords should make that effort to make sure that those accommodations are met, especially in the public arena, where public housing authorities and other people who receive public dollars, they should be required to make their units adaptable for persons with disabilities. And I gained a strong appreciation, because if you have ever seen people who are in wheelchairs who cannot find housing, people who have children who are in multiple wheelchairs who do not have housing, it is very sobering, and it must be incumbent upon public housing authorities to make sure those units are available, because they are receiving public dollars for housing people. Senator Enzi. Thank you. Mr. Nelson, earlier, I asked Ms. Williams about contractors performing their responsibilities and the ability to effectively monitor those contractors. Could you comment on that issue as well? Mr. Nelson. Certainly. Thank you, Senator. Contracting is more important than ever now in the Federal Government with more and more contractors doing work that is really not mission specific to Federal agencies, and so, writing and executing good contracts is paramount. Where we can, if confirmed, I will try to really build on performance- based contracting, where if vendors do jobs faster and better, they will get rewarded, and if they do it slower, they will be penalized. And those types of contracts are going to move the Government forward in this arena. Senator Enzi. Thank you. And Ms. Williams, you get kind of the key question of the issue of the day, which is Katrina. One of the things I have noticed in areas hit by hurricanes and flooding is that some homes stand up better than others. Generally, it is the newer, better ones that survive, and one of the programs administered under PD&R is the Partnership for Advancing Technologies in Housing Initiative, known as PATH. Now, this program is intended to encourage the development of innovative buildings and technologies. Could you share with the Committee any thoughts you have on whether increasing research into this area may result in the development of technologies which advance the capabilities of homes to withstand wind and flood damage? Ms. Williams. Yes, sir; thank you, Senator. The Partnership for Advancing Technologies in Housing, as you have indicated, has been very involved with Katrina and even last season, when we had the terrible devastation in Florida and the other areas in the United States. And although this has been a terrible devastation, I am pleased to share with you that PATH and the Office of Policy Development and Research have already contributed somewhat by noting where there are sites available for temporary housing in the region and also by already focusing, as you have indicated, on available resources and information, alternative housing, building technologies such as modular, and flood-proof housing. Yes, I do believe that more research in this area would be a very positive element for HUD, and we are already doing great work in that area, so we will continue. Senator Enzi. Thank you very much. I want to thank this panel for their testimony and their answers to the questions but most of all for your enthusiasm for what you are about to undertake. That goes a long way in making sure that the jobs get done more than adequately, and I am convinced that we will have an outstanding team at HUD with this group of people. So do your best, do what is right. Thank you very much. And a vote is imminent, so rather than interrupt the next panel, I will recess so I can run over and come right back so we can do the next panel, hopefully without interruption. That is usually not the way things work out around here, however, so we will recess. [Recess.] Senator Enzi. We will go ahead and reconvene the hearing. I appreciate all of your patience. We will begin with the second panel. It is Mr. Franklin Lavin, the Under Secretary of Commerce for International Trade designee, U.S. Department of Commerce; Mr. Israel Hernandez, the Assistant Secretary of Commerce and Director General of the U.S. Foreign and Commercial Service designate, U.S. Department of Commerce; Mr. Darryl W. Jackson, the Assistant Secretary of Commerce designate for the U.S. Department of Commerce; and Mr. David H. McCormick, the Under Secretary of Commerce for Export Administration of the U.S. Department of Commerce. I thank all of you for being here today. I will ask if you can condense your remarks so that we can hopefully finish this before the next set of votes. Senator Enzi. So without further ado, Mr. Lavin. STATEMENT OF FRANKLIN L. LAVIN, OF OHIO, TO BE UNDER SECRETARY FOR INTERNATIONAL TRADE U.S. DEPARTMENT OF COMMERCE Mr. Lavin. Thank you, Mr. Chairman and to the other Members of the Committee. I am very grateful for the opportunity to---- Senator Enzi. Excuse me; I am sorry. Could you please rise so I can swear you in? [Witnesses sworn.] Thank you. Be seated, and I apologize for interrupting. Mr. Lavin. I am grateful to appear here today, and I also want to thank Senator DeWine for his very gracious introduction, and I am proud that he represents my home State. My wife and three children cannot be here today, separated as we are by the oceans and the miles, but they are certainly here in spirit, and I am honored that my in-laws are here today, retired Congressman George Whartley and his wife, Barbara are able to join us. Thank you for your presence. Senator Enzi. Welcome. Mr. Lavin. I would also like to recognize my fellow Commerce nominees here on the panel, and if confirmed, I look forward to working with them. Taking your guidance, Mr. Chairman, I would like to submit written testimony for the record, but maybe I can offer just a brief comment in summary. It has been a privilege for me to serve the President and the American people, Mr. Chairman, as the U.S. Ambassador to Singapore. I am very honored that the President and Secretary Gutierrez have asked me to serve as Under Secretary of Commerce for International Trade. If confirmed, I will be guided by three principles: First, I firmly believe that there are tremendous export opportunities for U.S. companies, large and small. We produce world class goods and services, and we can win in the global marketplace. The second principle is that we must use all the tools at our disposal to ensure that American businesses face fair competition. We must enforce the rules; we must hold our trading partners accountable to the agreements that they have signed. Third, cooperation between the Legislative Branch and ITA is essential for a constructive international trade policy. I look forward to working with the Senate on the vital issues that we face. The men and women of the International Trade Administration are a talented and dedicated group. Their mission is vital to the economic security of the Nation, and if confirmed, I would be honored to join them. Thank you for your time. I would be happy to answer any questions the Committee may have. Senator Enzi. Thank you, and thank you for your brevity. Mr. Hernandez. STATEMENT OF ISRAEL HERNANDEZ, OF TEXAS, TO BE ASSISTANT SECRETARY FOR TRADE PROMOTION AND DIRECTOR GENERAL OF THE U.S. AND FOREIGN COMMERCIAL SERVICE, U.S. DEPARTMENT OF COMMERCE Mr. Hernandez. Mr. Chairman, good morning. Thank you for granting me this hearing today. I will also condense my remarks, and I will submit one for the public record. Senator Enzi. Yes, your full statements, for all of you, will be in the record. Mr. Hernandez. Great. I am also privileged to be here alongside with Ambassador Frank Lavin and others who will be within the Department of Commerce, if confirmed. If confirmed, I pledge to define and lead the U.S. Foreign and Commercial Service based on a clear and strategic mission to ensure that small and medium-sized companies gain greater access to international markets. I will ensure that the team of specialists within the service have the tools necessary to anticipate commercial interests of our American exporters and rapidly adapt to the ground to meet their needs. Organizations are only as good as their people, and I will work to foster a diverse environment where women and men of the Commercial Service continue to grow in discipline and expertise. I will also be a disciplined and accountable steward of the people's money, and I will commit to a thorough assessment of our resources to ensure that the Service not only meets but also exceeds the highest expectations, and I will work to build on the essential relationships with the Federal and State level. Thank you for your time, and I will be happy to take any questions following our comments. Senator Enzi. Thank you. Excellent job. Mr. Jackson. STATEMENT OF DARRYL W. JACKSON OF THE DISTRICT OF COLUMBIA, TO BE ASSISTANT SECRETARY OF EXPORT ENFORCEMENT, U.S. DEPARTMENT OF COMMERCE Mr. Jackson. Mr. Chairman, thank you, and my thanks to Senator Santorum for his wonderful introduction this morning. I am honored to be here today as the President's nominee for the position of Assistant Secretary of Commerce for Export Enforcement. The President has my deepest gratitude for the trust and confidence he has reposed in me, and I would also like to thank Secretary Gutierrez, with whom I look forward to serving. Several days ago, as you know, we marked the fourth year since the tragic events of September 11, 2001, occurred. In his Patriot Day 2005 proclamation, President Bush stated that, ``The mission that began on September 11 continues.'' The President went on to discuss the military's continuing role in keeping us safe at home, and also noted that, ``Thousands of other Americans, from intelligence analysts to border guards to countless others, are doing vital work to help defend America and prevent future attacks.'' Those who work at the Bureau of Industry and Security's Export Enforcement Division play an important role in that critical task. They vigorously enforce the export regulations concerning dual-use goods and technology, as well as the antiboycott laws. Their goal is to keep the most sensitive dual-use goods out of the most dangerous hands. As a top priority, they pursue violations that involve weapons of mass destruction proliferation, terrorists and terrorist support, and unauthorized military use. That approach is consistent with views that the President expressed in his 2003 remarks concerning Libya's pledge to dismantle its weapons of mass destruction programs. Therein, the President said that, ``Opposing proliferation is one of the highest priorities of the war on terror'' because the danger is, ``dramatically increase when regimes build or acquire weapons of mass destruction and maintain ties to terrorist groups.'' In carrying out their mission, those who work in Export Enforcement protect our national security, while also advancing the foreign policy and economic interests of the United States. If confirmed, I look forward to joining them in their mission. Meeting these challenges is of the utmost importance for our generation. That we do so is also of great importance to younger generations, which look to us for their protection. I will bring to the position the full range of my experience, which includes more than a decade as a Federal prosecutor and more than a decade as a litigation partner in a private corporate law firm. As I close, I would like to remember my departed parents, Woodrow and Elizabeth Jackson, who would be very pleased today, and without whose unwavering devotion and support I would not be here. I would also like to thank my wife, Amy, who is here today, as well as our two sons, David and Matthew, for their continuing support. I would like to conclude by thanking the Committee for its prompt consideration of my nomination. If confirmed, I look forward to working with you and your staff. I would be happy to answer any questions that you have. Thank you. Senator Enzi. Thank you very much. Mr. McCormick. STATEMENT OF DAVID H. McCORMICK, OF PENNSYLVANIA, TO BE UNDER SECRETARY FOR EXPORT ADMINISTRATION U.S. DEPARTMENT OF COMMERCE Mr. McCormick. Thank you, Mr. Chairman. It is a great honor for me to be here today as the President's nominee for the position of Under Secretary of Commerce for Export Administration. I thank the President and Secretary Gutierrez for their confidence and trust. I would also like to thank my wife, Amy Richardson, and our three young children for their ongoing support and dedication and good behavior up until this point. As its name suggests, the Commerce Department's Bureau of Industry and Security, which I would lead as Under Secretary, operates at the intersection of issues involving industry and national security. The Bureau's primary mission is administering and enforcing U.S. dual-use export controls, but its responsibilities go far beyond that. Across a wide range of activities from ensuring U.S. industry compliance with international arms control treaties to monitoring the health for our own defense industrial base, from implementing the Defense Priorities Allocation System to spearheading ongoing high technology cooperation talks with India, the Bureau's central objective remains the same: Establishing a strong foundation of security upon which U.S. exports can grow and U.S. industry prosper. As the former CEO of a global technology company, I understand very personally the challenges U.S. companies face in maintaining competitiveness and negotiating their way through an ever-changing regulatory environment. I recognize, too, that both U.S. prosperity and security in the longer-run depend on Government's ability to minimize the burdens it places on industry, creating an economic climate where businesses can prosper. At the same time, as a former soldier and concerned American, I also fully appreciate the critical importance of protecting the country's security by ensuring that our sensitive technologies do not fall into the wrong hands. Our national nightmare on September 11 made all too clear that these sensitive technologies in the hands of our adversaries, or even potential adversaries, abroad pose a devastating and unacceptable threat to us at home. If confirmed, I am committed to pursuing policies that advance these complementary objectives, enhanced security and expanded trade. Indeed, in today's rapidly changing, technology-driven environment, one cannot be achieved without the other. I am devoted also to bringing focused leadership and management to the Bureau of Industry and Security and acting as a conscientious steward of the valuable taxpayer resources that would be entrusted to this office. I would like to conclude my remarks by thanking the Committee for its prompt consideration of my nomination and reiterating my commitment to work closely with you. I am happy to answer any questions you may have at this time. Thank you. Senator Enzi. Thank you very much, and I do want to express my deep appreciation for the brevity of your statements. Your full statement will be a part of the record, and that gives us a chance to hopefully ask a few questions before we get interrupted by a vote again. Sometimes, those votes seem like a huge nuisance, but apparently, it is our most important job, so we have to leave for those. I will begin with Mr. Lavin. One important Commerce Department function involves joint export trade, whereby U.S. exporters can cooperatively access foreign markets that might be out of reach to them individually, and joint export trade is facilitated by antitrust safe harbors, including the Webb- Pomerine Act and the Export Trading Company Act, which is administered by Commerce. Export associations using these provisions account for many billions of dollars worth of export trade annually, supporting good jobs across a wide range of manufacturing and foreign service sectors in the national economy. So amazingly, at a time when the U.S. trade deficit is a subject of huge public concern, and we need all the export successes we can possibly muster, a blue ribbon panel of antitrust scholars, the Antitrust Modernization Commission, has decided to study whether these successful export trade measures should be repealed. I am aware that the Under Secretary for International Trade, Grant Aldonas, wrote to the Antitrust Modernization Commission in March affirming Commerce's support for joint export trade and for the current statutory work. I would like for you to share your views on that to see how similar or dissimilar they might be. Mr. Lavin. Thank you very much, Mr. Chairman. I very much support the position held by my predecessor that the establishment of the Joint Export Trade Mechanism gives our exports flexibility to work together in the international arena that allows them to compete more effectively. To the extent that the antitrust concerns are valid, I think that we should remind ourselves that it is an issue which would apply in the domestic U.S. market, but when we are looking at a more competitive international market, the ability of particularly the small and medium-sized enterprises to work together is something we should find ways to facilitate and not impede. Senator Enzi. Thank you. Mr. Hernandez, if confirmed, you will be the lead office for trade promotion for the Federal Government, a mission near and dear to the heart of this Committee, of course. Do you believe that the current structure of the Federal Government for trade promotion is appropriate? Are there areas for improvement? To the extent there are areas where the structure and the process could be improved, could you provide the Committee with some sense of how you would go about that? Mr. Hernandez. Yes, sir. Mr. Chairman, I think that there are mechanisms in place at this point to make sure that those agencies that work on trade are united, and that is through the Trade Promotion Coordinating Committee, which is led by the Department of Commerce and in many ways affords us the opportunity to leverage our resources so that we have seamless assistance to companies that need assistance overseas. There are units within SBA, within Ex-Im Bank, within the Departments of Agriculture, Commerce, and State, and we work together to help, in many ways, companies do better business abroad. So, I think there is a mechanism for us to help companies, for those who do trade, as far as finding better ways. I think I will be actively engaged in working with these agencies to figure out how we can find better opportunities for businesses to do commerce overseas. Senator Enzi. Thank you. Mr. Jackson, a Department of Commerce Inspector General report stated the Bureau of Industry and Security's level of cooperation with other Federal agencies, including the U.S. Attorney's office, the Department of Homeland Security, the FBI, and other agencies was deficient. It has also noted that cooperation with the intelligence community is similarly lacking. Can you assure the Committee that you are prepared to work closely with other agencies of the Federal Government, including law enforcement agencies, in the best interests of the national security of the United States? And any suggestions you have for ways that it can be done? Mr. Jackson. Thank you, Senator, for that question. It is a very important one, and I am certainly fully prepared to work broadly with other law enforcement agencies as well as the intelligence community in my current role. I had the experience of doing so both as a line prosecutor in the U.S. Attorney's office here, where I worked cases that involved task forces from various agencies, Federal and local, and also had that responsibility at a higher level when I was the Executive Assistant U.S. Attorney for Operations, the number three position, and coordinated our law enforcement efforts at a higher policy level. So I know the importance of coordination and the impact that it can bring to a law enforcement position, and I certainly look forward to that aspect of the job. Senator Enzi. Thank you. Mr. McCormick, the Department of Commerce has made significant progress on regulations that help streamline the licensing process for technology and other goods, but there is still work to do, and I know the Department needs the statutory authority to improve law enforcement procedures and collect increased penalties. This year, at a meeting of the President's Export Council, Commerce Secretary Gutierrez and Acting Under Secretary Peter Lichtenbaum both shared my interest in getting an EAA bill done. I am committed to getting the job done. Could you please explain the current efforts of the Department in streamlining the licensing process for technology and what you need from the Congress in the near future to help you get the job done? Mr. McCormick. Thank you, Senator, and thank you for your leadership on this issue, and thank you to Senator Shelby and others for their leadership on this issue as well. I would say first that you are right: There has been real progress made in terms of streamlining the licensing process. If you look at the 2004 data, which I suspect you are familiar with, the amount of licenses that have been processed with roughly the same resources have increased by about 25 percent, while the cycle time has gone down by about 20 percent. So there has definitely been a focus on productivity. With that said, there is much more to be done, and one critical component of that would be a renewal of an EAA that has broad support and broad consensus. And that would put, clearly, the Bureau of Industry and Security in a position to more forcefully and effectively execute its mission of managing, overseeing, and enforcing the export of dual-use items. Senator Enzi. Thank you. The Department of Commerce is working by the interagency process on a number of proposed rules in relation to the export controls, and because this is the Committee of jurisdiction for those rules, we hope to continue to be consulted on the Agency's process and look forward to working with you on that. Mr. Lavin, you authored a very insightful article in Foreign Affairs in 1994 that described the Chinese approach to international negotiations and how that approach differs from that of the United States. You have since served as U.S. Ambassador to Singapore, from which vantage point you have been able to observe United States-China negotiations for the past several years. Can you offer the Committee some insight on whether the disparities in negotiating strategies have been adequately addressed by the United States? What recommendations would you make to improve the United States posture in bilateral negotiations with China? Mr. Lavin. Thank you, Mr. Chairman. As you know, we were able to successfully conclude a United States-Singapore Free Trade Agreement about 18 months ago, and that provided a very interesting contrast to some of my work both in government and in banking in China. Singapore is a much more advanced society economically, comes from a British colonial tradition and uses British corporate law. It is a much more rules-based society and has a firm philosophical commitment to open trade. China, again, all those criteria I think suffers from the fact that they did not have a strong inherited legal tradition. It is a much less advanced country economically, although they have seen rapid economic progress. Even though they have moved away from a Marxist economic orientation, there can still be a bureaucratic hangover in that regard in many sectors, which is to say there is lack of a broad consensus on trade liberalization, although it does tend to dominate. So, I found trade negotiation with China far more incremental, far more adversarial, and far more protracted. It took an enormous amount of time to gain consensus on a particular point, and it took an enormous amount of time, then, to get to implementation and enforcement with a point, and I think some of what we see in dealing with China is this is what we have when we are dealing with a less advanced economy that does not come from an open market tradition. I think my first word of advice would be we have to apply resources accordingly. We are simply not going to make the kind of progress in China that we might make with other, more advanced economies, and we have to devote significantly greater resources to try to move ahead. And I think we have to realize the time horizon in building a consensus and trying to move toward an agreement is just going to be longer than it is in market-oriented economies. Senator Enzi. Thank you. I have been reading The World is Flat by Friedman. Mr. Lavin. Yes, sir. Senator Enzi. Hoping kids across the Nation will read that book. It scares the heck out of me. Mr. Lavin. It is very well done. It is a new era. Senator Enzi. It should increase a lot of interest in science, technology, and commerce and the way it is going to be in the global economy. So, I appreciate the answers from all of you, and I look forward to your confirmation and working with you. The record, of course, will remain open subject to call of the Chair with the approval of the Ranking Member so that additional questions can be submitted for your answers in writing if anyone from the Committee desires it. So, I thank everyone for their participation today. This hearing is adjourned. [Whereupon, at 11:43 a.m., the hearing was adjourned.] [Prepared statements, biographical sketches of nominees, response to written questions, and additional material supplied for the record follow:] PREPARED STATEMENT OF KEITH E. GOTTFRIED General Counsel-Designate, U.S. Department of Housing and Urban Development September 15, 2005 Chairman Shelby, Senator Sarbanes and distinguished Members of the Committee, my name is Keith Gottfried, and I thank you for giving me the great privilege and honor to appear before this Committee today as it considers my nomination to serve as General Counsel of the U.S. Department of Housing and Urban Development. I know that this is a particularly busy time for the Senate and, accordingly, I am especially grateful to this Committee for expediting the confirmation process for myself and the other nominees present today. I would like to express my deep gratitude to President Bush and Secretary Jackson for the trust and confidence they have placed in me in putting forward my nomination for this very important position. I am honored by their willingness to entrust me with a leadership position on issues that are of great importance to our Nation and which are of deep interest to me personally. As Secretary Jackson continues to lead HUD in strengthening our Nation's communities, promoting affordable housing, expanding homeownership opportunities for all Americans, particularly low- and moderate-income families, meeting President Bush's goal of at least 5.5 million new minority homeowners before the end of the decade, ending chronic homelessness, vigorously enforcing fair housing, civil rights, and antidiscrimination laws, and, of course, providing housing and other desperately needed relief to the victims of Hurricane Katrina, it will be the honor of a lifetime to serve as his General Counsel. With your indulgence, I would like to introduce my wife Cindy. It is due to her love and support, and with the grace of God, that I am before you today and it will be with her love and support, and with the grace of God, that, should I be confirmed, I will be able to carry out the important responsibilities that will be before me. I thank her for being my closest adviser and my best friend. I would also like to introduce my mother Rosalie from whom I first learned the benefits that attach to homeownership and being a vested member of a community, and who has sacrificed so much so that I would have the opportunity to pursue my personalized version of the American Dream. Mr. Chairman, I have been very blessed in my life, the most recent example of that being that my wife and I are expecting the birth of our first child in March. As we anxiously anticipate the day we become parents, my wife and I find ourselves becoming more attentive to how to ensure that our children will have access to the same opportunities that we had. Over the past two decades, I have had wonderful and enriching career opportunities to work for a number of prestigious organizations, first as an accountant and auditor with the Philadelphia office of Arthur Young & Company, one of the predecessor firms to Ernst and Young LLP, and then later as a lawyer focused on corporate transactions and securities law compliance for two excellent law firms, first, following law school, at Blank Rome LLP in Philadelphia and then, for most of the 1990's, at Skadden, Arps, Slate, Meagher & Flom LLP in New York. During my tenure at Skadden Arps, I counseled clients in a variety of industries on mergers, acquisitions and other corporate transactions aggregating tens of billions of dollars. I also counseled clients with respect to corporate governance issues, securities law compliance, SEC reporting issues, and New York Stock Exchange and Nasdaq compliance. As a function of my securities law compliance work, I practiced extensively before the Securities and Exchange Commission and developed an understanding of, and deep respect for, how regulatory agencies work. In June 2000, I relocated to Silicon Valley to join Borland Software Corporation as its General Counsel and Chief Legal Officer. Borland is a publicly traded, Nasdaq-listed software development company headquartered in Scotts Valley, California. During my tenure as General Counsel of Borland, I significantly overhauled almost every aspect of the company's worldwide legal function to make it more efficient and responsive to the needs of the company and more in tune with the company's business objectives as well as to have the company serve as a model of state-of-the-art corporate governance and disclosure practices. I also was responsible for overseeing the company's implementation of the necessary systems and processes to comply with the requirements of the Sarbanes-Oxley Act of 2002, which had recently been enacted. As General Counsel of Borland, I strived for the highest levels of transparency and accuracy in all of our public disclosures and communications, whether they were press releases, analyst conference calls, or periodic filings with the SEC. I also strived to create a culture that accorded respect for, and adherence to, the highest standards of ethical conduct. In addition, as General Counsel, though I am not a litigator by training, I achieved an impressive track record in managing and resolving complex, potentially high-exposure litigation. I cannot begin to articulate how honored and humbled I am to appear today before this Committee. I come from a very modest upbringing and never did I imagine growing up in Queens, New York that one day I would be nominated by the President of the United States to serve the American people in this position. I feel very strongly that to those to whom much is given much is expected and that, as a member of a compassionate society, I have a duty to give something back to the Nation that has given me so much. The opportunity to serve as General Counsel of HUD would be a particularly fitting opportunity for me to give something back to our Nation, not only because of my background and experience as a lawyer and as a seasoned legal executive in the private sector, but also because of a deep personal connection that I share with HUD's mission. In 1967, one year after the birth of HUD and one year after the cornerstone was laid for HUD's current headquarters, the building now known as the Robert C. Weaver Federal Building, my parents purchased their first home in Queens, New York using a modest downpayment and a 30-year, fixed-rate mortgage. When their marriage dissolved some years later, my mother was extremely determined to keep our home--notwithstanding much advice to the contrary that she should sell it and move the family to a much smaller rental apartment. My mother, the daughter of immigrants, had grown up in the Brighton Beach section of Brooklyn, where she shared a one-bedroom apartment with her parents and three siblings, so she knew all too well that this was not the environment she wanted for her family. As a schoolteacher employed by the New York City Board of Education, my mother struggled for many years to keep our home and to remain a member of the ``ownership society,'' often taking on extra class coverage assignments at her school as well as additional work in after-school, weekend, and summer school programs, to be able to continue to make the monthly mortgage payments. Like President Bush and Secretary Jackson today, my mother recognized the value and benefits of homeownership. She believed, and continues to believe, that homeownership plays an immeasurable contribution to a family's stable living environment. From the time I was an infant until I left home to attend college, I lived in the same home and maintained the same group of friends. I also had numerous surrogate parents among our neighbors and the parents of my friends, something of obvious comfort to a working single parent. Because of my mother's strong determination to remain a homeowner, neither my sister nor I ever had to switch elementary, middle, or high schools. While our home was modest in size, we each had our own bedroom. Not sharing a bedroom meant that I had a place to retreat to each evening after clearing the dinner table, a place where I could focus on my schoolwork in an atmosphere of relative quiet and take advantage of the opportunities afforded to me by the New York City public school system. I learned from my mother first-hand the benefits of being part of a closely knit community where your neighbors feel like family and where homeownership translates into greater concern for your community and the welfare of your neighbors. In addition to working as a schoolteacher and her numerous ancillary jobs, my mother was an active and concerned member of the community, leading a Girl Scouts troop, tutoring neighborhood children for little or no compensation, and serving as an executive officer of the local chapter of CancerCare, a national, nonprofit organization that provides free, professional support services to anyone affected by cancer. My mother's home and community continue to be sources of great pride to her. Almost 40 years after purchasing her home, my mother remains deeply active in, and committed to, her community. Just a few weeks ago, she convinced all the neighbors on her block to organize a neighborhood block party so that the ``old-timers'' and those who more recently had moved onto her block or into the community could get to know each other. Mr. Chairman, if confirmed, I would embrace the responsibilities and duties of the Office of the General Counsel with an abundance of enthusiasm, vigor, and dedication. Over the past few weeks, through a variety of briefings, I have had the opportunity to familiarize myself with some of the responsibilities of the Office of General Counsel, the myriad of statutes and regulations that apply to the programs that HUD administers or has enforcement authority over, and how the Office of General Counsel ensures that HUD achieves its mission consistent with applicable law and Congressional intent. To date, I have been extremely impressed with the caliber and dedication of all the staff members in the Office of General Counsel that I have had the privilege of meeting. In particular, because HUD has been without a General Counsel since May 2004, I want to acknowledge and thank Kathleen Koch who has served as the Acting General Counsel since that time. I am also extremely committed to assisting Secretary Jackson in his ongoing efforts to make HUD a more effective, efficient, and responsive institution, one that will operate in accordance with the highest ethical and professional standards, both for its employees and for its program participants. Additionally, I am committed to assisting Secretary Jackson in his ongoing efforts to create a culture that inspires confidence in the integrity of HUD's programs on Capitol Hill and with all of our program participants and beneficiaries. I am very respectful of the independence of the Government Accountability Office and the HUD Inspector General. I also appreciate the valuable oversight functions that they perform. If confirmed, I will dedicate myself to building on the constructive working relationships that have developed during the course of the current Administration between the Office of the General Counsel and both the GAO and the HUD IG. I would also seek to be a catalyst for the development of constructive working relationships between the Office of the General Counsel and the Members of this Committee, as well as other Members of Congress. Mr. Chairman and Members of the Committee, the Office of General Counsel at HUD is a great honor, a great responsibility, and a tremendous challenge. If confirmed, I look forward to working in a bipartisan manner with this Committee and other Members of Congress as we meet the challenges before us. As has been noted a number of times in prior hearings of this Committee, the mission at HUD is neither a Democratic nor a Republican mission, but rather a mission on behalf of all Americans. At this time, Mr. Chairman, I stand ready to answer any questions or comments that you or the other Members of the Committee may have. I thank the Members of the Committee for both the honor and the opportunity to appear before them today. ---------- PREPARED STATEMENT OF KIM KENDRICK Assistant Secretary-Designate, U.S. Department of Housing and Urban Development September 15, 2005 Chairman Shelby, Ranking Member Sarbanes, and distinguished Members of the Committee, I appreciate your consideration today, and welcome this opportunity to share my vision for the future of the Office of Fair Housing and Equal Opportunity at the Department of Housing and Urban Development. I would first like to thank President Bush for nominating me to serve as an Assistant Secretary at HUD. I also appreciate Secretary Jackson's strong support of my nomination and his encouragement during this process. This is truly an immense honor. Before I go any further, I want to recognize some of the people who have been important in my life and are here with me today. First, I must acknowledge the most important sources of encouragement and support in my life: My parents Louis and Gloria Kendrick and my two sisters, Toni and Jerri, my nephew Louis, and one of my three godchildren, Olivia. After I heard that the President had nominated me, I immediately called my parents to relay the good news. My father's first response was, ``Aren't you glad you had great parents?'' As a matter of fact, I am. I can honestly say that without their guidance, sacrifice, and love, I would not be sitting before you today, and I want to publicly thank them for all they have done for me. I feel blessed to have a number of friends, former colleagues, fellow church members, associates from the Greater Washington Area Chapter, Women Lawyers Division, National Bar Association (GWAC) and members of my sorority, Alpha Kappa Alpha, all here supporting me today. I grew up in the Hill district of Pittsburgh. And although it was the most economically depressed part of the city, my home-life was rich--so rich that I had no idea other people considered us low income. One of the reasons I never felt poor was because my family always had a house we could call our own--not an apartment or a rented house, but a home with a mortgage in our name. My parents created a home atmosphere where my sisters and I felt safe and free--free to become the women we are today. My older sister, Toni, is an educator. She is a principal in an inner- city middle school, where every day she has to deal with more than just educating her students. Jerri, my younger sister, is an engineer. When Jerri graduated from Carnegie Mellon University, there were few African-American women in her class and in her field of study. Today, she is one of a few African- American women program managers who work for Lockheed Martin. While our successes may not be solely related to the fact that our parents were homeowners, it did not hurt. President Bush understands the power of homeownership and has worked to expand it to new segments of the population. I am proud that this Administration has created 2.3 million new minority homeowners since June 2002, and will create in excess of 2.2 million more by 2010. I want to tell you a little about my professional history. I first began working with HUD in the winter of 1987, when I took a job as a trial attorney for the Department. For 8 years, I made certain that HUD program offices not only followed the Nation's housing laws, but also helped reinforce the housing laws through litigation, including the fair housing laws. In 1995, I became the General Counsel for the District of Columbia Housing Authority. In that position I was responsible for defending the Housing Authority against complaints from public housing residents and from complaints from HUD. I defended the Housing Authority against fair housing complaints and accusations. I am grateful to have had the opportunity to examine the fair housing question from both sides, and I fully understand the responsibilities and challenges associated with enforcing the Fair Housing Act. I also have experience managing a staff and running a large organization. For almost 4 years, I was responsible for managing and operating 3,000 units at the Columbia Housing Authority. My time at the DC Housing Authority allowed me to move beyond the legal field to an area where I could address the challenges facing low-income persons searching for housing. This experience made very clear to me that having a home is a critical step to achieving economic equality. The Rev. Dr. Martin Luther King was assassinated on April 4, 1968, and the Fair Housing Act was enacted on April 11, 1968. The significance of the two events cannot be ignored. His death brought to the forefront of this country the severe inequities in its social fabric. Dr. King spoke often about the inequities in housing opportunities between whites and other minorities. Unfortunately, Dr. King did not live to see the enactment of the Fair Housing Act or to see how fair housing in this country has led to a record number of minority homeowners. As the President's nominee for Assistant Secretary for Fair Housing and Equal Opportunity, I have been given an opportunity few people before me enjoyed: To ensure equal access to housing for all Americans. HUD's Office of Fair Housing and Equal Opportunity has initiated a number of actions in the last several years. For example, HUD, under the leadership of Secretary Jackson, recently published a study that took a look at how persons with disabilities are treated in the housing rental market. The results of the study show that people with disabilities experience more discrimination when seeking rental housing than do racial minorities. This is a problem that demands immediate attention and, if I am confirmed, I can promise it will be one of my highest priorities. I would also take a look at the manner in which HUD's fair housing complaint process works. As it stands right now, HUD may be unintentionally discouraging some people from filing complaints because of overly confusing paperwork and procedures. We need a system that is complainant-friendly and quick to process violation claims: A system that can work without the involvement of lawyers and the inevitable delays that can bring. When we accomplish this, we will be able to return to the business of improving people's lives. Last, it is becoming clear that predatory lending is on the rise. In order to affect widespread change, we need to move beyond prosecution and do a better job educating borrowers and lenders about this kind of lending and its consequences. If we are successful, we will be able to stop predatory lending before it starts. If confirmed, I promise to diligently and enthusiastically carry out the duties for which I have been nominated, because I cannot think of a greater honor than to continue serving this Nation. As a poor girl growing up in Pittsburgh, I never imagined I would one day be sitting in a confirmation hearing before the U.S. Senate. This kind of personal journey is only possible in the United States, and it makes me immensely proud to be an American. Again, thank you very much for your time, and I welcome any questions you might have. PREPARED STATEMENT OF FRANKLIN L. LAVIN Under Secretary-Designate, U.S. Department of Commerce September 15, 2005 Mr. Chairman, Senator Sarbanes, and distinguished Members of the Committee, thank you for the opportunity to appear here today. I want to thank Senator DeWine for his gracious introduction. I admire his service, and I am proud that he represents my home State. I would also like to recognize my fellow Commerce nominees here on the panel, and if confirmed, I look forward to working with David McCormick, Israel Hernandez, and Darryl Jackson. Mr. Chairman, it has been a privilege to serve the President and the American people as the U.S. Ambassador to the Republic of Singapore. I am honored that President Bush and Secretary Gutierrez have asked me to serve as Under Secretary of Commerce for International Trade. If confirmed, I will be guided by three principles. First, U.S. companies can compete internationally. I firmly believe that there are tremendous export opportunities for U.S. companies, large and small. We produce world-class goods and services, and we can win in the global marketplace. The second principle is that we must use all of the tools at our disposal to ensure that American businesses face fair competition. We must enforce the rules. And we must hold our trading partners accountable to the agreements they have signed. Third, cooperation between the legislative branch and ITA is essential for a constructive international trade policy. I look forward to working with the Senate on the vital issues we face. Let me elaborate on these principles. U.S. businesses are capable of competing and winning in the global market. Americans are resourceful, innovative, and quite nimble at adapting to change. We are living in an era of economic transition, but I have no doubt that American companies can successfully grapple with this challenge. Advances in technology allow even the smallest U.S. firms the opportunity to do business outside our borders. I have spent a number of years in the public and private sectors helping U.S. companies navigate the international marketplace. I firmly believe that there are tremendous export opportunities for all U.S. companies, large and small. We must use all of the tools at our disposal to ensure that American businesses face fair competition. We must enforce the rules. And we must hold our trading partners accountable to the agreements they have signed. Government must be a cooperating partner, opening markets and enforcing the rules that govern free trade. The Office of the U.S. Trade Representative negotiates trade agreements on behalf of all Americans. ITA then oversees compliance with, and enforcement of, all trade agreements. ITA is involved in every step of the implementation process. The Senate is uniquely positioned to know first-hand about trade problems encountered by constituent companies. You have my commitment that ITA will work closely with Congress and remain attuned to any concerns about ITA-related matters. If confirmed, I will maintain an on-going dialogue with the Senate about trade and attendant commercial issues. As an example of these principles, I would like to cite the Singapore FTA. It committed Singapore to maximum liberalization for bilateral trade in goods and services. It included state- of-the-art commitments in e-commerce, customs cooperation, transparency, and the protection of intellectual property rights, and it incorporated a constructive model for workforce and environmental matters. Since this FTA went into effect in 2004, U.S. exports have grown at a run-rate of almost 30 percent. In closing, I would like to express my enthusiasm about ITA's critical mission. The men and women of ITA are professional and dedicated. The mission of ITA is to create economic opportunity for American workers and businesses by promoting international trade, opening foreign markets, ensuring compliance with trade laws and agreements, and supporting U.S. commercial interests at home and abroad. The men and women of ITA work around the world to support that mission. I firmly believe that their work has never been more critical to both our economic well-being and our national security. If confirmed, I would be honored to lead them in this endeavor. Thank you for your time. I would be happy to answer any questions that the Committee may have. PREPARED STATEMENT OF ISRAEL HERNANDEZ Assistant Secretary and Director General-Designate U.S. Department of Commerce September 15, 2005 Mr. Chairman, Ranking Member Sarbanes, and distinguished Members of the Committee, thank you for granting me this hearing today. I am humbled and honored to be here as President Bush's nominee for the position of Assistant Secretary for Trade Promotion and Director General of the United States and Foreign Commercial Service. I am also privileged to be here alongside Ambassador Frank Lavin with his nomination to be Under Secretary of the International Trade Administration, Mr. Darryl Jackson to be Assistant Secretary of Commerce, and Mr. David McCormick to be Under Secretary of Commerce for Export Administration. I would also like to thank President Bush and Secretary Gutierrez for supporting my nomination and note how proud I will be to work under their leadership. If confirmed, I look forward to working with each of you to ensure America builds on its status as the world's largest exporter. Although my family was able to attend my hearing before the Commerce, Science, and Transportation Committee, they are unable to attend today's hearing. Instead, they are supporting my sister Veronica who is recovering well from a recent surgery. Even so, many friends and loved ones are here today and I thank them for their support. Before I expand on the importance of trade and market- oriented economies, I would like to call attention to the Department of Commerce's Hurricane Katrina relief efforts. Although we are involved in many aspects of this effort, Commerce Secretary Gutierrez recently established a nationwide Hurricane Relief Call Center (888-4USADOC or 888-487-2362) to shepherd all private sector in-kind donations. The Department of Commerce will serve as the repository for these contributions and help steer each contribution to families and businesses in need of our help. Phone lines at the Department of Commerce will be staffed by caseworkers from 8 a.m. to 8 p.m. EDT, 7 days a week. By establishing the Call Center, the Department of Commerce has teamed with the White House, Department of Homeland Security, and other agencies involved in the relief and rebuilding effort. In the 21st century, opening our doors to trade is the surest way to create opportunity for all Americans. Trade is not mere economics. Free and open trade is economic diplomacy, which promotes the spread of ideas, friendships, and the habits of liberty--and ultimately encourages the spread of democracy, economic stability, and stronger partnerships. I come before this Committee during a unique and transformational moment in history. A time when democracy is taking hold around the world and we are experiencing a great shift in economies around the world. The pursuit of liberty and new opportunities was a motivating force in bringing our Founding Fathers to this great land, and it is this freedom that has become the foundation for the entrepreneurial spirit embedded in the hearts and minds of the American people. From the first electric light--to the first flight--to nanotechnology, the entrepreneurial spirit that exists today has created a dynamic and vibrant community of enterprises second to none. Government must create an environment where entrepreneurs and risktakers can realize their dreams. Giants like Ford and Microsoft were not so long ago small businesses striving to realize the dreams of Henry Ford and Bill Gates. Today, small businesses create 70 percent of new American jobs, employ the majority of American workers, and are responsible for the majority of our Nation's economic output. Small business owners are economic patriots taking risks and pursuing dreams. A vibrant small business sector is necessary for the economic health of our country. If confirmed, I pledge to define and lead the U.S. and Foreign Commercial Service based on a clear and strategic mission to ensure that small- and medium-sized businesses gain greater access to international markets. I will ensure that the team of specialists within the Service has the tools necessary to anticipate the commercial interests of our American exporters and rapidly adapt on the ground to meet their needs. The U.S. and Foreign Commercial Service, created by Congress a quarter century ago, does what no other entity in the United States can do--provide a global infrastructure in more than 80 countries and a domestic platform in 109 cities with the exclusive purpose of promoting American goods and services. We ensuring a level export playing field abroad, and in 2004, the volume of those export sales exceeded $26 billion. The Commercial Service offers end-to-end export solutions helping smaller firms increase profits and lower risks in accessing markets otherwise difficult to enter. The worldwide network of trade specialists provides export counseling, customized market research, trade leads, and advocacy to help companies compete in global markets. This worldwide network is essential to today's market economy in which 95 percent of the world's consumers live outside of the United States. U.S. exports support millions of American jobs. Approximately 1 of every 5 factory jobs--or 20 percent of all jobs in America's manufacturing sector--depends on exports. Moreover, research shows that workers in jobs supported by exports typically earn wages higher than the national average. If confirmed, I will serve as a disciplined and accountable steward of the people's money. I will commit to a thorough assessment of our resources to ensure that the Commercial Service not only meets but also exceeds the highest expectations. I will work to build on the essential relationships with partners at the Federal, State, and local level--such as the Trade Promotion Coordinating Committee (TPCC). The TPCC is a critical interagency task force that leverages scarce resources and provides a ``one-stop'' shop for American companies wanting to expand and sell the goods and services in foreign markets. Theodore Roosevelt was right when he said, ``[t]he best executive is the one who has sense enough to pick good men to do what he wants done and self-restraint enough to keep from meddling with them while they do it.'' Organizations are only as good their people, and I will work to foster a diverse environment where the women and men of the Commercial Service continue to grow in discipline and expertise--an environment where our people have the tools and capability to provide the highest quality of service to our constituents--American businesses and their employees, owners, and communities. I will hold myself and the entire organization to a standard of accountability that demands integrity, efficiency, and effectiveness. I hail from the Southwest Texas border, an area often considered one of the final U.S. frontiers. I am privileged to be here with you today, and my presence is a testament to America's place as a haven for dreamers and doers. My loved ones--my family and my friends--along with our diverse community, represent America's potential, and I wish to thank them for all they have done (and will do) to support me in this important post. Still today people from around the world see America as a land of freedom and opportunity. The President once said, ``[w]e in the United States live in liberty, trade in freedom, and grow in prosperity.'' We certainly face challenges, but we also face a world of great opportunities, and a choice on how to proceed. If confirmed, I look forward to the challenge of helping ensure that our Nation--and its economy--remains a beacon for the world. Thank for your time. I will be happy to answer any questions you might have and welcome your comments.
RESPONSE TO WRITTEN QUESTIONS OF SENATOR SANTORUM FROM KIM KENDRICK Q.1. On April 5 of this year, I sent a letter to Secretary Jackson urging him ``to consider refraining from issuing the final LEP guidance until concerns about its unfunded costs, its potential for unintended consequences at the local level and its legal liabilities for affordable housing providers are sufficiently addressed.'' I am told that HUD officials have advised affordable housing operators that the final guidance will call for translating ``vital documents'' and providing oral interpretation services to persons with limited English proficiency free of charge to that person and at the project's expense. Has HUD performed any cost studies to determine how much these services will cost the industry? A.1. Executive Order (EO) 13166, signed on August 11, 2000, requires all Federal agencies to ensure that programs receiving Federal financial assistance provide meaningful access to LEP persons. The Order charges the Department of Justice (DOJ) with responsibility for providing LEP Guidance to other Federal agencies and for ensuring consistency among each agency- specific guidance. On June 12, 2002, DOJ issued LEP guidance that directed all Federal agencies to use the DOJ guidance as the model. Based on DOJ's instruction, HUD published proposed guidance for its recipients on December 19, 2003. HUD made extensive changes based on the comments it received and will soon publish the final guidance. HUD is sensitive to the cost concerns of affordable housing providers. Following DOJ's guidance, our guidance requires that HUD recipients conduct a four-factor analysis to determine whether there is a need to provide language services to beneficiaries relative to costs and recipients' resources. After applying the four-factor analysis, a recipient may determine that an effective LEP plan for its particular program or activity includes the translation of vital written materials into the needed language to ensure equal treatment and equal access of LEP persons to the recipient's programs and activities. Q.2. Again, referring to my letter to Secretary Jackson, I urged HUD to consider as one possible solution, ``The Department itself should provide translation and oral interpretation services directly to the LEP population in order to achieve cost effectiveness, uniformity in the quality and delivery of service, and to minimize the burden on affordable housing providers.'' I am aware that the Office of Multifamily Housing intends to provide translations of the four HUD model leases and the Resident Rights and Responsibilities brochure in a limited number of languages. Q.2.a. Could you specify which documents should be considered ``vital''? Has HUD considered translating these important documents at the Department's expense? A.2.a. DOJ guidance explained, Whether or not a document (or the information it solicits) is ``vital'' may depend upon the importance of the program, information, encounter, or service involved, and the consequence to the LEP person if the information in question is not provided accurately or in a timely manner. HUD's guidance applies this same principle. HUD does not determine which of the recipients' documents are ``vital.'' The recipients make this determination. Q.2.b. Do you believe having HUD specify and translate ``vital documents'' is a more cost-effective solution that would achieve uniformity in the quality and delivery of service? A.2.b. It is not practical for HUD to translate recipients' vital documents because vital ``may depend upon the importance of the program, information, encounter, or service involved, and the consequence to the LEP person if the information in question is not provided accurately or in a timely manner.'' Only the recipient can determine this. Q.3. As you know, in HUD's multifamily housing programs, all members of the household who are 18 years of age and older must sign the lease. Another recommendation I urged Secretary Jackson to consider is revising the definition of who is LEP so that it does not include any member of a household where at least one of the signatories to the lease in that household is proficient in English. Is this a revision that HUD could accept? Please explain. A.3. Your concern has been raised by the multifamily housing industry groups. HUD is giving consideration to this issue. It will be an issue I will deal with before the issuance of the final guidance. Q.4. There is a document on the HUD FHEO website to which I would like to call your attention. ``Know Your Rights Are You Limited English Proficient'' (http://www.hud.gov/offices/fheo/ promotingfh/leprights.pdf), lists the following among the examples of what may be discrimination based on national origin, ``You call the landlord to report an emergency, but they cannot help you because they only speak English and they cannot understand your language.'' Please explain the rationale behind HUD using this example as advice for tenants. A.4. This concern has also been brought to HUD's attention. The subject document will be revised to be consistent with HUD's final guidance when it is issued. Q.5. Last, I have been told that FHEO is already proceeding with investigations of LEP-related complaints, even though the final guidance to HUD's funding recipients has not been released. Q.5.a. How are affordable housing operators supposed to know what their LEP obligations are before the final guidance is issued? A.5.a. EO 13166 sets forth the compliance standards that federally assisted program and activities must follow. It states that, . . . the compliance standards that recipients must follow to ensure that the programs and activities they normally provide in English are accessible to LEP persons and thus do not discriminate on the basis of national origin in violation of Title VI of the Civil Rights Act of 1964, as amended, . . . HUD uses the Title VI compliance standards for national origin when conducting reviews for LEP. HUD's guidance is consistent with DOJ Policy Guidance entitled, ``Enforcement of Title VI of the Civil Rights Act of 1964--National Origin Discrimination Against Persons with Limited English Proficiency,'' dated August 16, 2000. Q.5.b. Under your tenure as Assistant Secretary of FHEO, will fair housing policies be finalized and publicly distributed (in the Federal Register for instance) before your office investigates and takes actions against affordable housing operators and/or public housing agencies? A.5.b. No additional fair housing policies are necessary. HUD uses the Title VI compliance standards for national origin as the basis for its compliance reviews of its federally assisted recipients. REPONSE TO WRITTEN QUESTIONS OF SENATOR REED FROM KIM KENDRICK Q.1. There has been a significant drop in the number of fair housing complaints where a reasonable cause determination has been issued in the past few years. What will you do to increase the effectiveness of enforcement? What will you do to increase the number of systemic investigations of violations of the Fair Housing Act by your staff ? A.1. I, too, am concerned about the drop in charges in recent years. I am pleased to report that the numbers are trending up again, but I am still not satisfied. HUD is the Federal agency with the primary responsibility for enforcing the Fair Housing Act. People who file complaints with us expect prompt and just resolutions of their cases. HUD has made great strides in reducing the time it takes to investigate cases. The Department is currently analyzing its operations to ensure that we maintain quality in the process. Moreover, the Office of Fair Housing and Equal Opportunity and the Office of General Counsel are exploring ways they can work closer in the planning and conduct of investigations so we can complete cases faster, with more effective outcomes. I will work to increase training opportunities for HUD investigators, drawing on significant expertise at HUD and other organizations. The training we will provide at the National Fair Housing Training Academy will make a significant contribution to that effort. HUD is completing revisions to HUD's Title VIII (Fair Housing Act) handbook, which provides improved instruction and updated information on the conduct of a fair housing investigation. The handbook provides guidance on every stage of a fair housing complaint from intake through investigation all the way to adjudication. This will increase the effectiveness of HUD's investigative activities. While HUD's fair housing enforcement function provides critical redress for individuals who face discrimination, we will not eliminate discriminatory barriers in the housing market through the enforcement of individual cases alone. This past year, HUD created the Office of Systemic Investigations to initiate large-scale cases on behalf of the public interest. The consolidation of this responsibility in one unit will allow HUD to better address novel and complex cases in lending and against large developers. I will ensure HUD also continues to work closely with the Department of Justice on joint investigations and in the referral of pattern-and-practice cases. Q.2. In your opinion does the Office of Fair Housing and Equal Opportunity currently have enough funding to support fair housing enforcement? Does it have enough staff ? What programs or projects to support fair housing enforcement would you like to see initiated in FHEO if you are confirmed? Will you ensure that FHEO will have enough travel funds to provide for on-site investigations in every case? A.2. With the funds available, HUD and its State and local partners currently investigate more than 9,000 housing discrimination complaints each year, while also conducting compliance reviews and investigations of HUD-funded recipients. Of course, this does not represent the full extent of housing discrimination in America. HUD's national housing discrimination studies, conducted in 2000, show that racial minorities experience some form of different treatment on average, in over 20 percent of the time they seek housing. HUD's disability study, issued this year, showed that hearing- impaired persons using a TTY face some form of different treatment than half of the time they make a call to inquire about housing. People in wheelchairs, visiting apartment buildings in person, are treated differently one-third of the time. It is true that HUD does not have the resources to pursue every entity that engages in discrimination. Still, HUD can educate both consumers and housing providers about their rights and obligations under the law through our high-profile cases. In particular, I would like to bring more Secretary-initiated cases, more cases on behalf of people with disabilities, and more cases that combat predatory lending. The newly created Office of Systemic Investigations provides a mechanism for us to do so. I believe on-site investigations are critical to the successful and appropriate resolution of a case. As Assistant Secretary, I will work to make sufficient travel funds available for fair housing investigations. Q.3. FHEO established a fair housing training academy and it is mandatory that substantially equivalent State and local agencies attend, often to the exclusion of other available fair housing education. However, many FHAP agencies report that the courses lack substance and the teachers are not the best in the field. Evaluations have been completed by all attendees. Will you review these evaluations personally to determine if the Fair Housing Academy is meeting its goals and expectations? A.3. The National Fair Housing Training Academy just completed its first year of operation successfully providing training to over 600 attendees. In the coming year, the Academy will include some advanced courses that will meet the training needs of our more experienced investigators. Like any new project, I am sure the Training Academy will have to make adjustments and improvements as it moves forward. It will need to modify and expand the curriculum to best meet the needs of fair housing investigators. To that end, the feedback that we receive from attendees is invaluable. We look forward to receiving their suggestions and using them to guide this project. Q.4. The current Office of Fair Housing and Equal Opportunity has very few written resources that provide education and outreach about the Fair Housing Act and other civil rights laws that the Office enforces. What are your plans to provide written educational materials for industry, advocates, and enforcers? In particular, given that Secretary Jackson announced in early August, in conjunction with the issuance of HUD's Disability Discrimination Study, that HUD intends to ``educate both consumers and landlords about the rights of disabled individuals,'' what are your plans to develop materials and programs to conduct this education? A.4. HUD has produced some excellent resource material, available in multiple languages, to inform people of their fair housing rights and what they can do if they believe they have experienced housing discrimination. At conferences, conventions, and fairs, the Department regularly distributes brochures, posters, and forms people can use to report discrimination. Moreover, the Department provides thousands of pages of resource material on fair housing at http://www.hud.gov/ fairhousing. Persons searching on Google need only type in ``HUD'' and ``fair housing,'' and HUD's fair housing home page is the first site retrieved. HUD has made numerous improvements to that page to make it more user-friendly. From any public library, you can visit that site and learn how to file a complaint with HUD; read the charges HUD has recently issued; and learn about your rights as a person with a disability under the Fair Housing Act and other civil rights laws. There is also information on the responsibilities of a housing provider and the additionally responsibilities of providers of federally assisted housing. HUD also funded the creation of the written and web-based resource materials produced by Fair Housing Accessibility FIRST at http://www.fairhousingfirst.org/. This program promotes greater compliance with the Fair Housing Act's accessibility compliance among private developers. You can also find and read every fair housing research publication. When HUD published its most recent study, ``Discrimination Against Persons with Disabilities: Barriers at Every Step,'' in August, the Department made that report available at http:// www.hud.gov/offices/fheo/library/dss-download.pdf, along with a Guidebook for Practitioners at http://www.hud.gov/offices/fheo/ library/dss-guidebook.pdf. The Department produced the guidebook as a resource for disability and fair housing advocates so they can address discrimination in their communities. The National Fair Housing Training Academy will also use the guidebook as training for fair housing practitioners. The findings also underscore the importance of continued funding of the much-praised FIRST program. In addition, HUD and the Department of Justice have issued a joint statement on reasonable accommodations under the Fair Housing Act, which answers some of the most frequently asked questions regarding reasonable accommodations. Beyond this, HUD provides education and outreach grants to fair housing organizations, often placing an emphasis on a particular education need (that is, outreach to people with disabilities or to Hispanics and Latinos). The National Fair Housing Training Academy will begin cataloging these materials to make them available to all fair housing groups. Q.5. We have heard complaints that different fair housing HUB and program offices take different positions on interpretations of the Fair Housing Act, Section 504 of the 1973 Rehabilitation Act and Title VI of the 1964 Civil Rights Act. What will your office do to address possible inconsistencies among your offices? A.5. It is important that HUD offices have a consistent interpretation of the Fair Housing Act. The training underway on the new Title VIII handbook should go a long way to address this. Under my leadership, HUB directors will continue to have weekly phone calls to discuss problems and concerns with cases. I will also have quarterly meetings with HUB directors to address policy and interpretation of the Fair Housing Act and our requirements. Furthermore, I will provide regular guidance on precedent setting issues to ensure uniform interpretation on novel issues. Q.6. How is HUD planning to make sure in the wake of Katrina that those dislocated voucher holders of Section 8 housing choice/ tenant-based vouchers or 811 mainstream vouchers are matched with and placed in accessible housing that meets their needs? And if they are in communities without such rental stock, what contingencies can HUD take to ensure they do not wind up homeless? A.6. After the tragedy suffered by so many in the Gulf region, it is important that we not only provide people with a place to call home, but also ensure that they can access that home. To achieve this, many groups, including State and local housing providers and the housing industry must work together. As an initial step, I propose that HUD require all its recipients to survey the availability of their accessible units and give priority for those units to evacuees who require those accessibility features. HUD should also issue guidance to all HUD recipients reminding them of their duty to comply with the requirements of Section 504. HUD will coordinate with FEMA to ensure that there is access into its manufactured housing, as needed, to identify the location of mobile home parks with accessible manufactured housing or other accessible units, and to issue letters with appropriate design standards. I understand that the Manufactured Housing Consensus Committee, a Federal Advisory Committee, is exploring providing guidance to all trailer home manufacturers encouraging them to produce manufactured housing units that are accessible. On a longer-term basis, HUD should remind local governments that are housing evacuees with disabilities in nursing homes that consistent with Olmstead, this should not be considered permanent housing for those persons. RESPONSE TO WRITTEN QUESTIONS OF SENATOR CRAPO FROM KIM KENDRICK Q.1. I am pleased that HUD has decided to hold public forums to discuss proposed reforms to RESPA. This is a welcomed change from previous attempts to reform RESPA that appeared to have taken place without any regard to stakeholder opinions. However, it is my understanding that these meetings have not been recorded and no public record of what transpired in the meetings exists. Can you explain HUD's reasoning for not recording these meetings and if officials plan to record future meetings? A.1. The RESPA Reform Roundtables that HUD held this summer with representatives of industry, including small business entities, and consumers, although publicly announced for purposes of information and transparency of HUD processes, were established as informal meetings. One of HUD's objectives in conducting the Roundtables was to initiate a meaningful and productive discussion of issues surrounding the home settlement process and how these issues might be addressed through possible changes to HUD's RESPA regulations or other means, and HUD's view was that this objective could be best achieved through an informal meeting setting. HUD's concern was that the recording of these meetings would lend a formality to the meetings, which HUD thought would be counterproductive. HUD was also concerned that the recording of the meetings would have presented a chilling effect on the participants and their willingness to voice proposals or comments about possible RESPA reform, or how they voiced these proposals, which would definitely be counterproductive to the objective of the Roundtables. To ensure, however, transparency on this process, HUD allowed members of the media to view the Roundtables and report to the public on the views, proposals, and comments expressed, and who said them but not with every statement being recorded. By all accounts, HUD believes its RESPA Reform Roundtables were well-received and a success. HUD learned much from the discussion at the roundtables and we are in the process of considering the information, views, and proposals presented. No actions have yet been decided, and we have not ruled out the possibility of additional meetings, perhaps issue-specific meetings. Q.2. Also, since you attended the series of roundtables on RESPA reform, do you think there is consensus among the industry on RESPA reform efforts, particularly on packaging and the GFE? A.2. I believe there is consensus on areas of RESPA for which change would be welcomed by the industry, and the GFE is one such area. Consensus on specific changes, however, whether changes to the GFE or packaging, would depend, upon the specific proposal for change presented by HUD. With respect to both packaging and the GFE, HUD received several suggestions at the Roundtables. Another positive outcome of the Roundtables, in addition to the information received by participants from HUD, was the willingness of the participants to be open to suggestions for changes and the commitment to consider proposals for change, whether offered by HUD, the industry, consumers, or other interested parties. RESPONSE TO WRITTEN QUESTIONS OF SENATOR REED FROM DARLENE WILLIAMS Q.1. In recent years, HUD has had difficulty in releasing reports in a timely way. For example, the HUD publication, ``A Picture of Subsidized Households,'' has not been updated with data past 1998. The current ``Worst Case Housing Needs Report,'' based on 2003 data, is apparently completed but has yet to appear, and the last ``Worst Case Housing Needs Report,'' based on 1999 data, with ``an update for 2001,'' did not appear until January 2004. How, as Assistant Secretary for Policy Development and Research, would you work to improve this record? A.1. PD&R releases over 60 publications per year. Also, 800 publications are available on PD&R's website, www.huduser.org, and more than 4.5 million documents are downloaded every year from the site. The two specific publications you refer to are among PD&R's in-house publications. I recognize that they are very important to Congress and other PD&R users. Work on the next ``Picture of Subsidized Households'' publication is almost complete. If confirmed as Assistant Secretary, I would make it a priority to make this publication available as soon as possible. The Worst Case Needs for Housing Assistance Reports were first issued at the direction of the Senate Appropriations Committee in 1991 and are based on national data from the American Housing Survey (AHS), which is funded by PD&R's Research and Technology account. A Worst Case Needs for Housing Assistance--A Report to Congress, based on the 2003 AHS data, which first became available in June 2004 for analysis, is ready for Department-wide clearance but Hurricane Katrina has delayed the review process. The Departmental clearance process typically takes 3 months. If confirmed, I will work to ensure that Congress receives this Worst Case Needs for Housing Assistance Report before the end of the 2005 calendar year. The Office of Policy Development and Research has a strong record of issuing objective, methodologically sound research publications that are relied upon by policymakers, academic institutions, housing advocates, and the construction, real estate, and finance industries. If confirmed as Assistant Secretary, I will work to build on this record of achievement and ensure that PD&R remains a nationally recognized source of sound and objective housing and economic information. Finally, Congressional assistance and support for PD&R, including funding for its Research and Technology account, is critical for the successful completion of its duties. Sound and objective data is the foundation for informed policy decisionmaking. If confirmed as Assistant Secretary, I will do my utmost to bring about the timely issuance of sound and objective research. Q.2. HUD possesses a significant quantity of data on the housing and housing needs of low-income people in the path of Katrina. Much of the most up-to-date data has not been made available publicly, such as on the ``Picture of Subsidized Households'' website. Will you make it a priority to make those data available to the public so that they can understand the impact the storm has had in their area and can use these data in aiding the recovery of the Gulf region? A.2. As you mention, PD&R maintains a great deal of information on assisted housing and low-income housing needs. PD&R regularly updates its files on assisted housing programs, and already has contributed to HUD's Katrina-related effort: (1) by providing maps on locations of HUD properties and participants to the Secretary; and (2) by making available, on very short notice, information on participants in multifamily assisted programs in the areas impacted by the hurricane, so that PHAs across the country could confirm that families applying for assistance were, in fact, impacted by Katrina. PD&R staff are beginning to work now on a geographic information system (GIS) application that will provide more extensive tabulations, maps, and modeling of housing outcomes in the States impacted by Katrina. As Assistant Secretary, I would lend my best efforts to ensure that data that would be useful to the public in responding to this disaster would be available to the public. Q.3. In a recent GAO report, HUD was found to lack transparency in presenting the Fair Market Rent data. It was very difficult to replicate the results or determine how individual FMRs were determined. Since that report, HUD has made considerable progress in showing where the fiscal year 2006 Fair Market Rents released June 2, 2005, came from. Twelve weeks later (and 6 weeks late), HUD released 70 FR 50138 that proposed changes to the 50th Percentile Fair Market Rents but did not provide sufficient information to replicate or understand how an individual community scored on the various criteria. The notice was released on August 25, 2005, with only a month of comment time. Are you committed to making the work of PD&R where it relates to the administrative work of HUD transparent and useful to the end users, the tenants, and PHAs that must live with these results? A.3. Senator Reed, I can assure you that, if confirmed, I am committed to continuing PD&R's efforts to make data related to PD&R's administrative work as transparent and useful as possible to those affected by the decisions made based on the data. PD&R's Fair Market Rent (FMR) documentation websites are a primary example of how, when staff and resources are available, the public can be made better informed about how data are used to make decisions affecting their lives. PD&R has made available sufficiently extensive data that allows localities to replicate virtually all FMR determinations. There are times, however, when statutory constraints related to the privacy of the American people, and the accuracy of the data used for HUD's administrative decisions, may come into conflict with the goals of transparency of methods and usefulness of data. For example, the FMR Documentation websites cannot, under the Privacy Act of 1974, 5 U.S.C. Sec. 552a, use the same special tabulations of the 2000 Census used by PD&R to benchmark the FMRs. The FMR Documentation websites demonstrate how the 2000 Census base rents are calculated, but that demonstration does not always exactly match PD&R's results due to rounding in the data on the website. The 50th percentile FMR determination presents another such case. Two of the data elements used to make the 50th percentile FMR determinations cannot be released to the public because of Privacy Act considerations. Like the data used to benchmark FMRs to the 2000 Census, the underlying data on the concentration of affordable housing units from the 2000 Census is a special tabulation of rental housing units available for use only to Sworn Census Officials (PD&R has several on staff). A rounded version of this special tabulation is provided that does not allow the public to produce the same results as PD&R because the rounding of data at small geography levels (tracts) introduces differences that are compounded when many rounded data elements are summed. The data on concentration of voucher tenants is derived from individual tenant records in HUD's administrative data systems. While HUD and PD&R can report the results of analysis of these data, HUD and PD&R are prohibited by law from releasing the source data to the public. The August 25, 2005 Notice clearly stated that HUD could not release the data used to make the 50th percentile FMR determinations. The Privacy Act barrier to disclosure was part of the justification for applying stricter scrutiny of the data under HUD's Information Quality Guidelines. RESPONSE TO WRITTEN QUESTIONS OF SENATOR SARBANES FROM FRANKLIN LAVIN Q.1. What specific issues would you place at the top of the agenda of the Trade Promotion Coordinating Committee? A.1. The TPCC is a critical tool for making export opportunities more available to U.S. businesses. My priorities, if confirmed, will be to implement the 2005 National Export Strategy, coordinate an interagency component to the President's Asia Pacific Partnership for Clean Development, and use the TPCC to broaden the base of U.S. companies that export.
The 2005 Strategy focused on making sure that U.S. small businesses are aware of and possess the tools they need to take advantage of recent market openings such as CAFTA. In addition, the TPCC is focusing on seven other key markets (Japan, South Korea, China, India, Russia, EU, and Brazil) where United States Government trade promotion resources can have the biggest impact. The Department is helping to coordinate an interagency component to the President's Asia Pacific Partnership for Clean Development. This partnership focuses on practical measures that can be taken by countries in the Asia-Pacific region to create new investment opportunities, build local capacity, and remove barriers to the introduction of clean, more efficient technologies. U.S. companies are leaders in many of these technologies, and the TPCC agencies will engage these companies to help them participate in projects that are part of this partnership. I would like the TPCC agencies to develop private sector partnerships that encourage more U.S. companies to export. The latest Census figures show that of the 1.5 million U.S. manufacturing and wholesales firms only 225,000 of them export. One study showed that as many as a third of nonexporting firms would export if they had the right information and assistance. The Department is currently piloting a number of innovative partnerships with the private sector (for example, Fed Ex and PNC Bank). One of my goals will be to develop these and other partnerships into a larger strategy to get more U.S. companies exporting. Q.2. The U.S. trade deficit with China is rapidly increasing and will likely exceed $200 billion by year-end. What specific steps do you propose to help United States exporters penetrate Chinese markets and deal with the imbalance? A.2. If confirmed, I intend to pursue a three-pronged approach to helping United States business export to China. First, we need to take every step we can to improve market access for United States companies in China. We will continue to press China to adhere to its WTO commitments. We will use the annual JCCT process, the Trade Review Mechanism of the WTO, and bilateral senior-level meetings in this effort. Second, we need to reach out to companies in the United States to make sure they understand the opportunities of the China market. We will step up our trade promotion efforts to assist United States companies in locating qualified buyers in China. This will include a series of focused trade events during 2006, continued improvements to our China Business Information Center (CBIC), and full implementation of the American Trading Centers (ATC) initiative which will particularly help small and medium United States companies enter the market in a broader range of Chinese cities. Third, we need to vigorously enforce our laws against unfair trade practices. If confirmed, I can assure you that we will use every tool at our disposal to rigorously enforce the rights of U.S. business under our trade laws. Indeed, the Bush Administration has put in place more antidumping duty orders on products from China (29) than were put in place during the prior 8 years (25). In addition, the Commerce Department is currently enforcing 57 antidumping duty orders on goods from China, more than twice the number of orders being enforced with respect to the next largest country (Japan, 26). I have spent 15 years helping United States businesses compete in Asia and while China is a challenging market for United States business, it can also be very rewarding. Despite these challenges, U.S. businesses have had some success. United States goods exports to China have more than tripled during the past 10 years, increasing from $9.3 billion in 1994 to $34.7 billion in 2004. Much of this growth has taken place following China's accession to the WTO in 2001. The average annual growth rate between 2002 and 2004 was 28.5 percent; almost double the average increase from 1994 to 2001 (15.2 percent). Q.3. The currency imbalance between the United States and China encourages U.S. companies to move manufacturing to China and ship finished goods back to the United States for sale. Almost 60 percent of China's exports are now produced by companies funded by foreign capital. In a 1994 Foreign Affairs article, you seemed to advocate ameliorating Chinese trade barriers through inbound United States investment--which could lead Chinese companies to purchase American technology and American goods such as machine tools--rather than through an export-based strategy aimed at the Chinese consumer market. Is that still your view? A.3. I believe there are three important elements to our China strategy: First, we must continue to push for improved market access for U.S. companies, using bilateral negotiations and the WTO process to continually improve our companies' ability to compete. Second, we must expand export promotion for United States products and companies, helping match suppliers with buyers, and familiarize new-to-market companies with the challenges of China. Third, we need to ensure the rigorous enforcement of our trade laws so that no Chinese exporter can use unfair means to compete in the United States. This multiprong approach, if consistently pursued, should yield positive results for American exporters. As to the question of United States-China investment, I believe that as bilateral economic engagement continues to grow, so will prospects for bilateral investment. It should be noted that Chinese investment in the United States can bring benefits for United States companies and workers, for example, job creation. Of course, such transactions should be subject to CFIUS review where appropriate. Q.4. Would you favor the United States taking actions such as initiating a WTO case or the imposition of tariffs to encourage the Chinese to allow the value of the remnimbi to reach a realistic level? A.4. The Administration has been clear in its position that China should move toward a market-based flexible exchange rate and there has been some progress on that front. The Treasury Department has the lead for the Administration on that issue and I would refer you to that agency for further details. Q.5. If confirmed, you will be involved in the current round of WTO negotiations. What importance would you assign to U.S. antidumping and countervailing duty laws in the overall strategy of the Office of International Trade Administration? A.5. Preserving the effectiveness of the antidumping and countervailing duty laws is crucial to the overall strategy of the International Trade Administration in the current round of WTO negotiations. I believe that strong antidumping and countervailing duty laws are critical for maintaining support for trade liberalization. We must ensure that our workers and businesses are protected against unfair trade, while gaining the great benefits of larger global markets. Working with the USTR, the International Trade Administration has been very active in the negotiations on the issues of antidumping and countervailing duty trade remedy measures--tabling many papers to promote our objectives in these negotiations. I will continue to work hard to ensure that the United States' concerns, including those identified by Congress in the Trade Promotion Authority, are addressed as part of the WTO Rules negotiations and that antidumping and countervailing duties remain effective remedies against unfair trade. RESPONSE TO WRITTEN QUESTIONS OF SENATOR SHELBY FROM FRANKLIN LAVIN Q.1. Mr. Lavin, unlike its predecessors, the National Export Strategy for 2005 is silent on the matter of tied aid. Obviously, you cannot be expected to comment on reports with which you have not been involved. For the record, though, could you provide the Committee your view on the extent to which foreign tied aid practices remain a problem. A.1. While tied aid remains an issue, it has become less of a problem. Tied aid now averages between $3 and $4 billion, down from an average of $10 billion in the early 1990's. We will continue to match any violation of OECD rules. Because of the success in negotiating disciplines on tied aid in the OECD, most tied aid now occurs in social sectors like education, basic medical care, rail, water, and waste water. While tied aid is less injurious when used to fund projects in noncommercial sectors, it is not the most effective use of development dollars. Q.2. The issue of intellectual property rights, particularly involving China, has been a significant problem for decades, costing American manufacturers billions of dollars in lost revenue, and there is little indication the problem will go away anytime soon. The National Export Strategy report for 2005 devotes considerable space to this recurring problem. Apart from continuing to raise the issue in bilateral discussions with Chinese counterparts, can you provide the Committee some indication of what measures you are considering to help affect significant change in this nefarious practice by Chinese industry? A.2. The International Trade Administration (ITA) currently has four initiatives underway on the IPR problem: Policy Efforts: Through the commitments secured at the Joint Commission on Commerce and Trade (JCCT), and in other fora, we are working to ensure that China has in place and enforces the policies needed to ensure adequate protection of intellectual property. This includes seeing a substantial increase in the number of criminal prosecutions of violators of foreign IP rights in China, ensuring that Chinese Government agencies and enterprises use only legal software; strengthening efforts to rid trade fairs of fake goods; ensuring timely accession by China to the WIPO global Internet treaties; and enhancing bilateral cooperation between United States and Chinese law enforcement agencies on combating IP infringing activities. Capacity Building: In cooperation with other United States agencies and the United States business community, ITA has conducted numerous training programs for Chinese officials and business executives over the past several years. For example, we have conducted IPR enforcement seminars and training focused on criminal and customs enforcement. These efforts are aimed at ensuring that China has the trained personnel necessary to ensure protection for IPR. We will continue to expand these efforts. Outreach to U.S. Industry: We are working on a variety of programs to ensure United States companies are aware of the need to protect their IP in China and to give them the information on how to accomplish this goal. For example, in 2004, ITA's China Office organized over a dozen seminars across the United States addressing how small and medium enterprises can protect their IP. We are working with interagency colleagues to implement an even more ambitious IP outreach program for 2005. Metrics: We are working with other United States Government agencies and United States industry to ensure that we have the metrics necessary to track future trends in China's IP situation. The ability to benchmark China's performance in IP protection and enforcement will continue to be a priority for us. All of these activities are undertaken in coordination with the Department of Commerce's broader IP initiatives, which include the creation of a new position at DOC--a Coordinator of International Intellectual Property Enforcement, the stationing of additional United States Government IP experts in China and the launching of the Patent and Trademark Office's IP Academy to train foreign officials, including Chinese, in IP law and regulations. If confirmed as Under Secretary for the International Trade Administration, I would like to explore the following: Initiate a United States Government-Industry ``Best Practices Initiative'' for manufacturers looking to protect their intellectual property in China throughout its distribution chain. Help U.S. business make it as difficult as possible for IP crimes to occur. Reinvigorate policy discussion in China to increase market access for United States products in China, with a focus on expanding legal distribution channels for United States products currently unavailable in China's market. The easier the legal distribution channels become, the less attractive the illegal channels. Cooperate with Chinese indigenous industry coalitions to raise awareness of the importance of protection of Chinese intellectual property. As the Chinese increasingly develop their own intellectual property, this should foster an indigenous constituency sympathetic to our message. RESPONSE TO WRITTEN QUESTIONS OF SENATOR DOLE FROM FRANKLIN LAVIN Q.1. Mr. Lavin, if confirmed by the Senate, in your role overseeing the Committee on the Implementation of Textile Agreements (CITA) what is your view of the future of the Chinese textile safeguards? A.1. The Administration is committed to finding a solution to the problems we are confronting in the textile sector, particularly with respect to imports from China. There is broad support in our textile and apparel industries for a comprehensive approach to textile trade with China that would provide greater certainty in the marketplace. We are currently engaged in negotiations with China aimed at reaching a broad textile agreement. United States negotiators met with Chinese officials again on this issue on September 26-28. Assuming we have successful negotiations with the Chinese, it is our intent to have an agreement that extends through 2008. I can assure you that we will continue to exercise our rights, as circumstances warrant, to invoke the textile provision of China's Accession Agreement to the World Trade Organization. Q.2. Mr. Lavin, in your time as United States Ambassador to Singapore, that country was identified as a major center for the transshipment of textiles. What actions did you and your staff take to reduce this illegal trade? A.2. Singapore is the world's largest transshipment center. For a ship to get from anywhere in the Indian Ocean or South Asia to anywhere in the Pacific, including the United States west coast, it typically has to go through the port of Singapore. Singapore's role as a major transshipment center raises the possibility of illegal transshipments through that port. The U.S. Government has spent much time, effort, and money over the last several years establishing stricter controls over transshipments through Singapore and working with the Singaporean Government to increase their knowledge and prosecution of such illegal shipments. The United States-Singapore FTA requires an unprecedented level of cooperation between the United States and Singaporean Customs services, with a particular emphasis on preventing illegal textile transshipments and rules-of-origin fraud. One textile fraud expert at DHS ICE headquarters told us that the United States-Singapore FTA is the strongest of any FTA for Customs cooperation and antitransshipment procedures for textiles. The FTA provides for criminal, civil, and administrative penalties to deter circumvention and imposes additional obligations related to information sharing and investigations. For instance, the FTA requires textile producers to retain production and shipping documents for 5 years (the same as in the United States) rather than only 2 years, as under previous regulations. This makes it easier for United States and Singapore Customs to carry out investigations of alleged transshipment and other illegal activities. As a result of the FTA, all Singapore textile manufacturers, subcontractors, and exporters must register with Singapore Customs and reregister every 2 years, the first part of a process of enhanced transparency and enforcement. Singapore also now provides to United States Customs and Border Protection (CBP) monthly reports of survey results, including factory profiles, capacity, types of goods produced, and any anomalies they spot. The goal is to ensure that Singapore-based firms are actually capable of producing what they claim to be producing. Singapore Customs has increased its number of personnel to handle this new enforcement workload. The Administration takes seriously its responsibilities to prevent fraudulent textile shipments. When we have approached Singapore with actual cases of textile fraud, they have responded effectively. While it predates the FTA (and my tenure as Ambassador), in one case in 1999, we found a Singapore-based company engaged in several million United States dollars worth of fraudulent labeling and approached the Singapore Government for assistance. They closed the company down. In early 2004, my Embassy hosted a CBP textile production verification team, known as a ``Jump Team.'' Its job was to verify production capabilities of more than a dozen Singapore companies of interest. The Jump Team's final report did not reveal illegal export activity per se, but did report that several companies had not implemented document retention required for exports to the United States. The team identified these companies to Singapore Customs as entities to be scrutinized to ensure compliance. As the world's largest transshipment port, we can be sure Singapore will remain a potential venue for illegal transshipment activities, and it will remain a challenge for Singapore authorities to know for certain what is inside the 21 million containers that pass through each year. But in my 4 years as Ambassador, we have pressed hard for Singapore to tighten its trade controls and enforcement and we have seen an impressive growth in Singapore's cooperation with us across a wide range of trade control activities, including preventing illegal textiles transshipments. If confirmed, illegal transshipment of textiles will continue to be a priority. Q.3. According to the National Council of Textile Organizations, NCTO, ``China is a textbook case of how a foreign government has used a network of illegal subsidies and government interventions in order to destroy foreign competition, both in the United States as well in many other countries.'' Mr. Lavin, in your extensive dealings with China, have you been aware of China using subsidies or government intervention to damage a foreign competitor? If so could you provide the Committee examples and proposed remedies? A.3. China is very aggressive in the marketplace and its practices can be detrimental to United States companies. The U.S. Government needs to be at least as equally aggressive in market access and remedies as well as in export promotion. Using the Joint Commission on Commerce and Trade (JCCT) gives us a multiprong approach and will improve market-operating conditions. Improving the operating environment in China for United States business is a long-term effort and, if confirmed, I am committed to using every tool in our toolbox, including strict enforcement of antidumping laws. Q.4. The United States has put forward a proposal in the Doha Round negotiations to clarify that member countries are permitted to distribute antidumping and countervailing duties, as the United States currently does under the Continued Dumping and Subsidy Offset Act. Specifically, this proposal states that members may distribute the duties collected when respondent companies continue to dump or receive subsidies any way that WTO member countries see fit. Do you support efforts to allow countries to distribute antidumping and countervailing duties to the harmed industries in the Doha negotiations? Please explain the reasoning behind your answer. A.4. As you know, the United States' enactment of the Continued Dumping and Subsidy Offset Act (commonly known as the Byrd Amendment) was challenged before the World Trade Organization (WTO) by 14 countries that claimed the law violated the antidumping and countervailing duty agreements. Although the United States staunchly defended its right to distribute collected antidumping and countervailing duties, arguing that the relevant WTO agreements were silent on this issue, the WTO Appellate Body found that the law was WTO inconsistent in that the disbursements were a ``specific action'' against dumping and subsidies that are not permitted under the WTO antidumping and countervailing duty agreements. Because our laws were not brought into compliance by the deadline of December 27, 2003, several of the complaining WTO Member countries, including Canada, the EU, Japan, and Mexico, have been authorized to impose sanctions against goods from the United States. All 4 of those countries are now imposing duties on selected U.S. products in retaliation for our failure to come into compliance with the WTO decision. Congress has instructed Commerce to engage on this issue in the context of the WTO Rules negotiations and I understand that Commerce have raised the issue. If confirmed, I will ensure that the Department continues our engagement on this issue as the Doha Round progresses. We need to find a resolution to this issue that respects Congressional direction and satisfies WTO rules or U.S. companies and U.S. consumers will continue to be exposed to retaliation. RESPONSE TO WRITTEN QUESTIONS OF SENATOR SHELBY FROM DARRYL JACKSON Q.1. Mr. Jackson, some of us in Congress are concerned about the transfer of militarily sensitive technology to foreign nationals residing in the United States whose countries of origin have active programs in these areas, for example, Iran and China. A 2004 report by the Department of Commerce Inspector General was highly critical of the Bureau of Industry and Security's handling of the deemed export issue, including in the issuance of licenses and in the monitoring of compliance with those licenses. Can you comment for the Committee on whether the issue of deemed exports is receiving the attention it deserves by BIS? Is there room for improvement there? A.1. I consider the deemed export regulations to be a necessary part of the U.S. Government's efforts to prevent the harmful diversion of controlled dual-use technology to foreign nationals. If confirmed, I will work to ensure that enforcement of these regulations is robust. I am also sensitive to the important role that foreign scientists and other non-Americans play in America's companies, universities, and research institutes. Accordingly, if confirmed I will work with industry, the academic community, and other Government agencies to increase awareness and understanding of the deemed export requirements to prevent and deter violations of the deemed export rule. The Office of Inspector General report that you refer to recommended that BIS implement programs to verify compliance with special conditions in deemed export licenses. I understand that BIS is finalizing development of protocols for conducting such compliance reviews of selected deemed export licenses, similar to the procedures currently in place to conduct foreign end-use verifications. President Bush's fiscal year 2006 budget request, as passed by the Senate and the House, provides BIS with resources to implement this new compliance verification program, and would enable selected deemed export compliance reviews in sensitive sectors beginning in fiscal year 2006. Q.2. Mr. Jackson, the United States proposal to provide India with nuclear technology under the Next Steps in Strategic Partnership program could have serious implications for this country's nonproliferation policy. Providing even commercial nuclear technology to a country that is not a signatory of the Nonproliferation Treaty and that has tested nuclear weapons could be seen as undermining the credibility of U.S. policy in a very crucial area. And, I should remind the Committee that the Administration imposed sanctions on two Indian scientists for selling nuclear technology to Iran. What specific Red Flag Guidance will be provided to exporters of items that formerly required licenses for exports of goods to India under the new Export Administration Regulation amendments of August 30? Can you state that no personnel employed at any Indian Space Research Organization facility or site that has been removed from the Entities List as a result of the Strategic Partnership policy has any relationship with any Indian Defense Research and Development Organization office, facility, or site responsible for India's ballistic missile program? Have there been any denials to India since last September when Commerce first amended the EAR under the NSSP? If so, what kinds of exports have been denied? A.2. I support the policy of President Bush in working toward a strategic and economic partnership with India, in recognition of the steps India has taken to meet its obligations as a nation with advanced nuclear technology. Our relationship with India has progressed via a series of reciprocal steps, in which Indian actions have made possible United States steps. As a result, I understand that India has strengthened its internal and external controls on sensitive technologies, thereby allowing the United States to ease certain dual-use export controls with regard to India. One of the key steps India took was passing legislation to enhance its export control system and strengthen its enforcement capabilities. Additionally, under Phase I of the NSSP, the United States and India reached an agreement on procedures for conducting end-use checks on sensitive United States-origin dual-use items exported to India. It is my understanding that BIS's Export Control Officer has been actively and successfully conducting such checks. If confirmed, I will make enforcement of the U.S. export control laws with respect to India a top priority, and I will work to prevent the diversion of sensitive items to proscribed nuclear weapons and missile activities. I look forward to working closely with you, your staff, and the Committee on this very important issue. RESPONSE TO WRITTEN QUESTIONS OF SENATOR SHELBY FROM DAVID McCORMICK Q.1. Mr. McCormick, some of us in Congress are concerned about the transfer of militarily sensitive technology to foreign nationals residing in the United States whose countries of origin have active programs in these areas, for example, Iran and China. A 2004 report by the Department of Commerce Inspector General was highly critical of the Bureau of Industry and Security's handling of the deemed export issue, including in the issuance of licenses and in the monitoring of compliance with those licenses. Can you comment for the Committee on whether the issue of deemed exports is receiving the attention it deserves by BIS? Is there room for improvement there? A.1. Deemed export controls are an important part of the overall mission of the Bureau of Industry and Security (BIS) and, if confirmed, I will make this area one of my top priorities. I understand that BIS has undertaken a major deemed export outreach program over the past year to ensure that those covered by deemed export controls, particularly in the academic and research communities, are aware of the current requirements. I also have learned that BIS is currently reviewing extensive public comments on changes that the Department of Commerce Inspector General recommended be made to the deemed export controls. If confirmed, I will be closely involved in making decisions on any potential changes to the deemed export controls and otherwise working to make this important program continues to meet our national and economic security needs. Q.2. Mr. McCormick, the United States proposal to provide India with nuclear technology under the Next Steps in Strategic Partnership program could have serious implications for this country's nonproliferation policy. Providing even commercial nuclear technology to a country that is not a signatory of the Nonproliferation Treaty and that has tested nuclear weapons could be seen as undermining the credibility of U.S. policy in a very crucial area. And, I should remind the Committee that the Administration imposed sanctions on two Indian scientists for selling nuclear technology to Iran. What specific Red Flag Guidance will be provided to exporters of items that formerly required licenses for exports of goods to India under the new Export Administration Regulation amendments of August 30? Can you state that no personnel employed at any Indian Space Research Organization facility or site that has been removed from the Entities List as a result of the Strategic Partnership policy has any relationship with any Indian Defense Research and Development Organization office, facility, or site responsible for India's ballistic missile program? Have there been any denials to India since last September when Commerce first amended the EAR under the NSSP? If so, what kinds of exports have been denied? A.2. I fully support President Bush's policy toward India and, if confirmed as Under Secretary, look forward to implementing it fully, with full attention to its national security aspects. Concerning the Red Flag Guidance you mentioned, it is my understanding that U.S. exporters are advised of their obligation to know their customers when exporting to an end- user formerly listed on the Department of Commerce Entity List. BIS strongly urges exporters to use Supplement No. 3 to Part 732 of the Export Administration Regulation (EAR), ``BIS's `Know Your Customer' Guidance and Red Flags,'' when exporting or reexporting to any entity in India. BIS officials have told me that exporters are specifically advised that exporting to an entity formerly listed on the Entity List constitutes a ``Red Flag'' to be resolved prior to export. Concerning your question regarding Indian Space Research Organization facility personnel, the answer to this question requires access to classified information and, as a nominee, I am not authorized to review classified information. It is my understanding, however, that the Indian Space Research Organization facilities, which were recently removed from the Entity List, are involved in India's civilian satellite program and not with its space launch vehicle program. If confirmed, I would be happy to follow up on this question in greater detail. Finally, with respect to denied export license applications, BIS officials inform me there have been denials to India since the October 2004 revisions to the EAR made in conjunction with the United States-India Next Steps in Strategic Partnership (NSSP). As a nominee, I do not have access to information on what kinds of exports have been denied. I have asked BIS officials to provide this information to you in a separate transmittal. Q.3. Mr. McCormick, a recent article in The Wall Street Journal stated that the FBI has estimated that there are as many as 3,000 Chinese ``front companies'' in the United States actively seeking to illegally acquire militarily sensitive dual-use technologies. Those efforts are in addition to the large number of licenses legitimately provided to United States companies exporting dual-use items to China. Similarly, a June article in the Washington Times reported that a Chinese front company won a contract from a system manufacturer involved with the Navy's Aegis battle management radar system and proceeded to steal details of that highly sensitive technology, which may have contributed to China's development of its own Aegis-type radar system. There are very serious national security considerations involved in the position for which you have been nominated. Can you assure the Committee of your commitment to ensure that national security will not be jeopardized in deference to commercial interests and that the gravity of the issue of dual- use export controls will receive the attention it deserves? A.3. I am committed to vigorously pursuing BIS's national security mission. Having proudly served in the U.S. Army, I am keenly aware of the importance of a dual-use export control system that keeps sensitive goods and technologies out of the hands of our adversaries and potential adversaries. If confirmed, I will work to ensure that the dual-use licensing process, from regulation to enforcement to outreach, prevents exports that would undermine U.S. security. By paying close attention to the security requirements of dual-use trade, we can also support legitimate trade in dual-use items. I would note that, with respect to China, BIS has aggressively pursued enforcement cases involving unauthorized exports, particularly those which involve goods which could support Weapons of Mass Destruction programs or are intended for unauthorized military use. If confirmed, I will accord the highest priority to the effort to prevent illegal diversions of dual-use goods and technologies to China. I look forward to working closely with you, your staff, and the Committee, to fulfill our common commitment to protecting our Nation's security. Q.4. Have there been any denials to India since last September when Commerce first amended the EAR under the NSSP? Is so, what kinds of exports have been denied? A.4. The Bureau of Industry and Security (BIS) denied 64 license applications for exports to India during the period of September 2004 to September 2005. The United States does not approve license applications for exports intended for use in programs of concern, such as India's ballistic missile, space launch vehicle, nuclear weapons, and unsafeguarded nuclear power program. The majority of the items that were denied for export to India were low-level items not elsewhere specified on the Commerce Control List (CCL) intended for these programs of concern or items that posed a risk of diversion to such programs. In addition, BIS denied other items that were controlled on the CCL, including: Oscilloscopes, vibration test equipment, general electronic testing equipment, telecommunications equipment, information security hardware and software, dosimeters, isostatic presses, ceramic materials, and technology for steam generators.